9911796707
TMI Blog2001 (11) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... rading business of compressors. We think it proper to discuss the issue on the basis of facts relating to asst. yr. 1990-91. During the assessment proceedings it has been noticed by AO that deduction under s. 32AB to the tune of Rs. 2,51,141 claimed by assessee. He further noted that the assessee's claim was supported by the report of auditor in Form 3AA as required under s. 32AB(5). On detailed examination by AO, he found that the assessee had shown service charges receipts of Rs. 11,57,220 and warehousing income of Rs. 2,20,900 under the heads "other income" and made the claim of s. 32AB on these income also treating as business income. The AO asked the assessee to explain the nature of service charges receipts and warehousing income. The assessee replied through its letter, dt. 23rd Feb., 1993, as under: "In response to your query regarding the services rendered of Rs. 11,57,220 kindly note that we have a fullfledged service possibility of providing watchman facilities, sweeping facilities, plumbing facilities and maintenance of electrical equipments, since we are fully geared to provide such facilities. For our tenants we have been providing such facilities and charging them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised for storing goods of various parties. For this service the appellant has received service charges which are calculated on the basis of the tonnage of the goods stored and the period of time during which such goods have remained in the warehouse. The godowns have not been let out on monthly basis. In my view, the warehousing income is in the nature of profit of business. 4.2(b). Regarding the service charges of Rs. 11,57,220, admittedly these service charges are incidental to letting out of house property owned by the appellant company. During the year the appellant company has received rental income from such properties at Rs. 3,61,906 which has been assessed as income under the head "Income from house property". In addition to the rental income received from the tenants, the appellant company has received service charges from the same tenants for services like watch and ward, lift, plumbing, electricity, sweeping and other services for maintenance of the house property which has been let out. The service charges are recovered on monthly basis from the tenants along with the monthly rent. Providing such services cannot be said to be a business activity of the appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before us. He referred and relied on his submissions made before the Revenue authorities through letter dt. 24th June, 1994, to CIT(A), 25th Feb., 1993, and 26th Feb., 1993 to AO. 5.1 The alternative contention of the learned authorised representative was that if these income are not accepted as income for business, then same may be treated as income from house property. The learned authorised representative referred and relied on a number of judgments as per list placed on record. 6. On the other hand, the learned Departmental Representative controverted the submissions of the learned authorised representative and supported the order of the AO. 7. We have considered the rival submissions of parties, perused the records and gone through the decisions cited by the learned authorised representative. The facts of these cases are different than the facts of the case under appeal. The decisions cited in para I of assessee's list in paper book are related to letting out the property and furniture and in para II these decisions are related to letting out property and Income from property. In short the controversial issue under consideration is whether "service charges" was 'Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said letter that the assessee fully agreed to provide such facilities to their tenants and charging them on monthly basis. It has also been mentioned in the said letter that the assessee had fullfledged service possibility of providing facilities. This reply as well as other submissions and arguments of learned authorised representative is not supported by any evidence or material on which basis it can be said that such service was provided in the organised manner with sole motive to earn profit and that it was not incidental to the letting out of the properties. Further, the assessee did not maintain separate accounts of expenditure in ledger. Separate P&L a/c also has not been prepared to know the net profit from those activities. At the time of hearing before AO, the assessee simply estimated some expenses and claimed it against those receipts of service. The details of expenditure claimed by the assessee in both the years are reproduced below: Asst. yr. 1990-91 Asst. yr. 1991-92 Total % Claimed Total % Claimed Staff salary 5,41,535 50% 2,70,767 4,79,168 50% 2,39,834 Bldg. repairs 3,14,318 60% 1,88,591 5,21,146 60% 3,12,688 Depreciation 1,37,754 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profession. The CIT(A) confirmed the order of AO with the finding that service charges income were not the income in nature of profit of business and, therefore, such income does not qualify for deduction under s. 32AB of IT Act. The learned authorised representative reiterated his submissions and arguments before us which he had made before Revenue authorities. The important submission of the learned authorised representative was that the relief under s. 32AB is allowed on business income as per Parts II and III of the Sch. VI of Companies Act as certified and quantified by the auditor in their statutory audit report as well as in their report in prescribed form for the claim under s. 32AB. He further contended that benefit of s. 32AB is allowable on the income of service charges irrespective of its taxability either under s. 28 or under s. 56 for the purpose of income-tax. On the other hand, the learned Departmental Representative supported the order of Revenue authorities. 9.1. We have considered the rival submissions of both the parties and perused the record. The central point of argument of the learned authorised representative was sub-ss. (1) and (3) of s. 32AB. The impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.1. After having heard both the parties on the above additional ground of appeal, the AO is directed to calculate the interest under s. 234B in accordance with the provisions of the IT Act, in accordance with judgment of Hon'ble Supreme Court in CIT vs. Ranchi Club Ltd. and in accordance with the decision of Tribunal in the case of S.K. Patel Family Trust vs. Asstt. CIT (2001) 71 TTJ (Ahd) 121 as well as in accordance with latest amendments in relation to these sections after giving reasonable opportunity of hearing to the assessee. 11. In the result, the appeal of assessee [ITA No. 4488/Ahd/94] is partly allowed for statistical purposes. ITA No. 3362/Ahd/1994 for asst. yrs. 1990-91—By assessee: 12. Now, we take up appeal of assessee against the order of CIT(A), dt. 15th June, 1994, for asst. yrs. 1990-91 relating to s. 154. Since the issue is covered by the additional ground taken by the assessee in ITA No. 4488/Ahd/94, therefore, this appeal become infructuous and same is treated as infructuous. In the result, the appeal of assessee is dismissed. ITA No. 4489/Ahd.1994 for asst. yrs. 1991-92—By assessee 13. Now, we take up appeal of assessee for asst. yr. 1991-92. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uj) 68 : (1994) 206 ITR 112 (Guj) referred by learned Departmental Representative. it has been found that the issue is covered by the decision of Hon'ble Gujarat High Court; respectfully following the same and in view of that, the order of the CIT(A) is confirmed.
17. In the result, the appeal of assessee is dismissed.
ITA No. 4406/Ahd/94—By Revenue and C O No. 149/Ahd/1998—By assessee for asst. yrs. 1991-92:
18. The Revenue has filed appeal against order of CIT(A) for asst. yr. 1991-92 and the assessee has filed cross-objection. The Revenue raised the ground relating to "warehousing charges" which has been accepted as "business income" by the CIT(A) and accordingly deduction under s. 80HHC allowed on that income of warehousing charges. The cross-objection of assessee supported the order of CIT(A). Since on identical facts and circumstances, the CIT(A) has held in asst. yrs. 1990-91 that 'warehousing charges' was the income from business and Revenue has not filed any appeal against that order. In view of this fact, we do not find any merit in the appeal of Revenue.
19. In the result, the appeal of Revenue is dismissed and the cross-objection of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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