M/s. K Raheja IT Park (Hyderabad) Private Limited,, Hyderabad v. Commissioner of Income Tax-II, Hyderabad

ITA 1038/HYD/2014 | 2006-2007
Pronouncement Date: 07-11-2014 | Result: Allowed

Appeal Details

RSA Number 103822514 RSA 2014
Assessee PAN AACCK1914G
Bench Hyderabad
Appeal Number ITA 1038/HYD/2014
Duration Of Justice 5 month(s) 11 day(s)
Appellant M/s. K Raheja IT Park (Hyderabad) Private Limited,, Hyderabad
Respondent Commissioner of Income Tax-II, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 07-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 07-11-2014
Assessment Year 2006-2007
Appeal Filed On 26-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA.NO.1038 1039 & 1040/HYD/2014 ASSESSMENT YEAR 2006-2007 2007-2008 & 2009-2010 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. PAN AACCK1914G VS. COMMISSIONER OF INCOME TAX-II HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. ARVIND SONDE FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 16.09.2014 DATE OF PRONOUNCEMENT : 07.11.2014 ORDER PER B. RAMAKOTAIAH A.M. THESE THREE APPEALS ARE BY ASSESSEE AGAINST THE ORDER OF LD. CIT-II HYDERABAD PASSED UNDER SECTION 263 OF INCOME TAX ACT 1961 DATED 28.03.2014 FOR THE ASSES SMENT YEARS 2006-07 2007-08 AND 2009-2010. SINCE COMMON ISSUE IS INVOLVED ALL THE CASES ARE HEARD TOGETHER AND D ISPOSED OF BY THIS COMMON ORDER. ASSESSEE HAS RAISED MORE OR LESS COMMON GROUNDS IN ALL THE ASSESSMENT YEARS AND FOR THE SAK E OF RECORD THE GROUNDS IN A.Y. 2006-07 ARE EXTRACTED HEREUNDER . GROUND 1 : ERRONEOUS AND PREJUDICIAL ORDER 1.1. THE LEARNED CIT ERRED IN HOLDING THAT THE ASSESSMEN T ORDER DATED DECEMBER 30 2011 PASSED BY THE A.O. UNDER SECTION 143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ALTHOUGH THE 2 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. TWIN CONDITIONS REQUIRED TO BE FULFILLED FOR EXERCI SING THE JURISDICTION ARE NOT SATISFIED. 1.2. THE LEARNED CIT ERRED IN OBSERVING THAT SINCE THE APPELLANT IS NOT ENTITLED TO A DEDUCTION UNDER SECT ION 32(IIA) OF THE ACT THE ASSESSMENT ORDER IS PREJUDI CIAL TO THE INTEREST OF THE REVENUE ALTHOUGH THE APPELLA NT DID NOT MAKE ANY SUCH CLAIM IN ITS RETURN OF INCOME NOR THIS FORMED THE BASIS OF THE SHOW CAUSE NOTICE INVOKING JURISDICTION UNDER SECTION 263 OF THE ACT. GROUND NO.2 : BUSINESS INCOME VS. INCOME FROM HOUSE PROPERTY. 2.1. THE LEARNED CIT ERRED IN HOLDING THAT RENTAL I NCOME EARNED ON LETTING OUT THE IMMOVABLE PROPERTY IS TO BE ASSESSED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY AS RETURNED BY THE APPELLANT AND ACCEPTED IN THE ASSESSMENT PROCEEDINGS. GROUND 3: DEPRECIATION ON ASSETS. 3.1. WITHOUT PREJUDICE TO GROUND 2 IN CASE THE INC OME OF THE APPELLANT IS CLASSIFIED AS BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY THE APPELL ANT OUGHT TO HAVE BEEN ALLOWED DEPRECIATION IN RESPECT OF ITS ASSETS INCLUDING THE BUILDINGS AND FITTINGS AN D MACHINERY THEREIN. THE APPELLANT PRAYS FOR THE FOLLOWING RELIEF : (A) THE HONBLE TRIBUNAL BE PLEASED TO HOLD THAT T HE ASSESSMENT ORDER DATED DECEMBER 30 2011 IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND HENCE THE CIT WAS NOT JUSTIFIED IN EXERCISING T HE JURISDICTION UNDER SECTION 263 OF THE ACT. (B) THE HONBLE TRIBUNAL BE PLEASED TO HOLD THAT RENTAL RECEIPTS ARE ASSESSABLE AS INCOME FROM HOUSE PROPERTY AND NOT AS BUSINESS INCOME. THE APPELLANT CRAVES LEAVE TO ADD ALTER OMIT OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEA L AT ANY TIME BEFORE OR AT THE TIME OF THE APPEAL TO ENABLE THE LEARNED INCOME TAX APPELLATE TRIBUNAL TO DECIDE THE APPEAL ACCORDING TO LAW. 3 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. 2. IN THE COURSE OF APPEAL PROCEEDINGS ASSESSEE H AS RAISED AN ADDITIONAL GROUND IN ASSESSMENT YEARS 200 6-07 AND 2007-08 AS UNDER : THE ORDER DATED MARCH 28 2009 PASSED BY THE LD. CIT U/S.263 OF THE ACT IS BEYOND THE PERIOD OF LIMI TATION AS THE ISSUE ON WHICH REVISION HAS BEEN MADE BY HIM IS ON AN ITEMS WHICH WAS NOT THE SUBJECT MATTER OF RE- ASSESSMENT PROCEEDINGS AND THEREFORE THE PERIOD OF LIMITATION BEGINS FROM COMPLETION OF THE ORIGINAL ASSESSMENT I.E. OCTOBER 31 2008 AND NOT FROM THE COMPLETION OF THE RE-ASSESSMENT I.E. DECEMBER 30 2011. 2.1. SINCE ADDITIONAL GROUND IS LEGAL AND DOES NOT REQUIRE ANY FRESH VERIFICATION OF FACTS AFTER CONS IDERING THE OBJECTIONS FROM THE D.R. THE SAME IS ADMITTED. 3. WE HAVE HEARD THE LD. COUNSEL MR. ARVIND SONDE AND LEARNED CIT-DR MR. P. SOMASEKHAR REDDY AND PERU SED THE PAPER BOOKS AND VARIOUS CASE LAW PLACED ON RECO RD. 4. ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MAINTENANCE OF SOFTWARE TECHNOLOGY PARK. IT DERIVES INCOME FROM OPERATION AND MANAGEMENT OF TECHNOLOGY PARK (I ) RENT FOR LEASE OF SPACE AND (II) INCOME FROM MANAGEMENT OF F ACILITIES. THESE INCOMES HAVE BEEN OFFERED TO TAX UNDER THE HE AD INCOME FROM HOUSE PROPERTY AND PROFITS AND GAINS OF BUSINESS OR PROFESSION RESPECTIVELY. ASSESSMENT FO R A.Y. 2006- 07 UNDER SECTION 143(3) WAS ORIGINALLY COMPLETED ON 31.10.2008 ACCEPTING THE LOSS RETURNED WITH CERTAIN ADJUSTMENTS. ON THE REASON THAT ASSESSEE HAS RECEIV ED SUBSIDY OF RS.3.07 CRORES A.O. INITIATED PROCEEDIN GS UNDER SECTION 147 AND COMPLETED THE RE-ASSESSMENT PROCEED INGS VIDE ORDER DATED 30.12.2011. IN THE ASSESSMENT YEAR 2007 -08 4 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 31.1 0.2007 DECLARING TOTAL LOSS OF RS.7 04 29 000 AND BOOK PRO FIT OF RS.14 92 30 662. SUBSEQUENTLY ASSESSEE FILED A REV ISED RETURN ON 02.03.2009 DECLARING TOTAL LOSS OF RS.4 61 96 21 0. THE RETURN WAS ACCEPTED U/S 143(1). LATER A.O. REOPENED ON THE REASON OF RECEIPT OF SUBSIDY AND COMPLETED THE ASSE SSMENT UNDER SECTION 143(3) READ WITH SECTION 147 VIDE ORD ER DATED 30.12.2011. FOR AY 2009-10 THE ASSESSMENT WAS COMPL ETED U/S 143(3). IN ALL THESE YEARS ASSESSEES COMPUTATI ON OF INCOME WAS ACCEPTED ASSESSING THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND SERVICES INCOME UND ER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION. 5. LD. CIT ISSUED NOTICE DATED 17.02.2014 F OR THE IMPUGNED YEARS ASKING THE ASSESSEE TO FILE ITS OBJE CTIONS WHY THE RENTAL INCOME ALSO NOT BE TREATED AS INCOME UN DER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION IN LINE WITH THE JUDGMENT OF ITAT BANGALORE IN THE CASE OF M/S. GLOBAL TECH PARK P. LTD. VS. CIT 119 TTJ 421. 6. ASSESSEE FILED ITS OBJECTIONS WHICH ARE PARTLY EXTRACTED BY LD. CIT IN THE ORDER CONTESTING THAT THE ORDERS PASSED BY A.O. ARE NEITHER ERRONEOUS NOR PREJUDICIA L TO THE INTERESTS OF REVENUE. AS FAR AS THE ERRONEOUS PART OF THE ORDER IS CONCERNED ASSESSEE SUBMITTED THAT THE INCOMES W ERE CORRECTLY OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF UNITED COMMERCIAL BANK LTD. VS. CIT 32 ITR 688 FOR THE PROPOSITION THAT THE INCOMES ARE TO BE ASSESSED UNDER THE SPECIFIC HEAD WHICH IS NOT ONLY PROPER BUT ALSO OBL IGATORY. ASSESSEE ALSO RELIED ON THE JUDGMENT OF HONBLE SUP REME 5 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. COURT IN THE CASE OF EAST INDIA HOUSING LAND DEVELO PMENT TRUST LTD. VS. CIT 42 ITR 49 TO CONTEND THAT THE I NCOME RECEIVED ON LEASING OUT THE PROPERTIES WAS CORRECTL Y OFFERED UNDER THE HEAD HOUSE PROPERTY. IT ALSO RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F KARNANI PROPERTIES LTD. VS. CIT 82 ITR 547 FOR THE SAME PR OPOSITION. ASSESSEE ALSO DISTINGUISHED THE JUDGMENT OF THE ITA T IN THE CASE OF GLOBAL TECH PARK P. LTD. ACIT 119 TTJ 421 SUBMITTING THAT THE COMPOSITE RENT RECEIVED THEREIN WAS ALLOWE D TO BE ASSESSED AS BUSINESS INCOME WHEREAS THE ASSESSEE WA S DISTINCTLY RECEIVING THE RENTAL INCOME AND SERVICE INCOME SEPARATELY WHICH WERE OFFERED ACCORDINGLY UNDER SEP ARATE HEADS. MOREOVER IT ALSO CONTENDED THAT A.O. HAVE B EEN CONSISTENTLY ACCEPTING THE SAID CLASSIFICATION OF T HE INCOMES FROM THE INCEPTION OF THE COMPANY AND THEREFORE AS SESSEE HAS NOT ERRED IN OFFERING THE SAME INCOME UNDER THE HEA D INCOME FROM HOUSE PROPERTY. SINCE THE SAME WERE ACCEPTED IN THE SCRUTINY ORDERS UNDER SECTION 143(3) THE ORDERS CAN NOT BE CONSIDERED AS ERRONEOUS IN NATURE. 7. CONTENDING THAT THE ORDER IS ALSO NOT PREJUDICI AL TO THE INTERESTS OF REVENUE ASSESSEE SUBMITTED THAT IN COME WHICH HAD BEEN OFFERED UNDER THE HEAD INCOME UNDER HOUSE PROPERTY IF TREATED AS BUSINESS INCOME THE DEDUC TION OF 30% ON NET RATABLE VALUE AS WELL AS CLAIM OF 1/5 TH OF PRECONSTRUCTION INTEREST IN RESPECT OF HOUSE PROPER TY HAS TO BE WITHDRAWN. HOWEVER ASSESSEE COULD BE ENTITLED TO D EPRECIATION ON ALL ITS ASSETS INCLUDING BUILDINGS FITTINGS ETC . AND THE CLAIM OF INTEREST IN ITS ENTIRETY IN THE YEAR OF LIABILIT Y. CONSEQUENTLY IT WAS SUBMITTED THAT THE DEPRECIATION CLAIMED NOW ON THE ASSETS TO BE MORE THAN THE CLAIMS ALREADY MADE UNDE R THE 6 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. HEAD HOUSE PROPERTY AND GAVE WORKING NOT ONLY FOR THE IMPUGNED YEARS BUT ALSO FOR THE SUBSEQUENT PERIOD U P TO A.Y. 2012-2013 TO SUBMIT THAT ASSESSEES LOSS CLAIMED WO ULD BE CONVERTED TO UNABSORBED DEPRECIATION AND TILL A.Y. 2012-2013 THERE WOULD BE NO TAX LIABILITY. IT GAVE DETAILED S UBMISSIONS ON THE WORKING IN EACH YEAR SO AS TO SUBMIT THAT THE O RDER IS ALSO NOT PREJUDICIAL TO THE INTERESTS OF REVENUE. 7.1 GIST OF THE OBJECTIONS OF ASSESSEE ARE SU MMARIZED BY LD. CIT AS UNDER : A) THE ORDER OF THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF REVENUE. EVEN IF IT IS PRESUMED THAT THE ORDER IS ERRONEOUS THE SAME IS NOT PREJUDICIAL TO THE INTERESTS OF REVENUE. B) FOR CONSISTENCY PURPOSE THE CASE NEEDS TO BE CONSIDERED FROM A.Y 2004-05 AND THE ASSESSEE SUBMITTED COMPUTATION FOR ALL THE YEARS STARTING FROM A.Y 2007-08 STATING THAT IT IS THE OLDEST YEAR THAT CAN BE REOPENED. ACCORDING TO THE ASSESSEE THERE IS NO CHANGE IN TAX COMPUTATION EVEN IF THE INCOME IS ASSESSED AS BUSINESS INCOME. C) THE HEADS OF INCOME PRESCRIBED IN THE INCOME TAX ACT ARE MUTUALLY EXCLUSIVE AND THE CASE OF THE ASSESSEE FALLS UNDER THE CATEGORY OF 'HOUSE PROPERTY'. D) THE ASSESSEE IS SHOWING RENTAL RECEIPTS AND RECEIPTS FROM SERVICES SEPARATELY. E) EVEN IF THE ASSESSEE IS IN THE LINE OF BUSINESS OF LETTING THE INCOME WOULD FALL UNDER THE HEAD OF 'HOUSE PROPERTY' AS THE INCOME TAX ACT CLEARLY MANDATES SUCH HEADS. F) THE ASSESSEE RELIED ON VARIOUS CASE LAWS INCLUDING THAT OF APEX COURT AND ALSO STATED THAT THE DECISION OF BANGALORE BENCH OF ITAT IN 7 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. THE CASE OF GLOBAL TECH PARK PVT LTD (28 SOT 45) IS DISTINGUISHABLE BECAUSE IN THE SAID CASE ENTIRE ACTIVITY WAS CONDUCTED IN ORGANIZED MANNER WITH A MOTIVE TO EARN PROFIT OUT OF INVESTMENT MADE BY THE ASSESSEE AS A COMMERCIAL VENTURE. IN THE CASE OF THE ASSESSEE INCOME IS RECEIVED FROM TWO STREAMS VIZ. LEASE RENTAL AND FACILITY MANAGEMENT WHERE AS M/S. GLOBAL TECH WAS APPARENTLY DERIVING COMPOSITE INCOME. G) IN VARIOUS OTHER CASES THE DEPARTMENT ITSELF ARGUED THAT THE INCOME IS FROM HOUSE PROPERTY. H) THE ORDER OF THE AO IS NOT PREJUDICIAL TO THE INTERESTS OF REVENUE AS THE TAX BENEFIT ON LEASED INDUSTRIAL UNITS ON ACCOUNT OF ADDITIONAL DEPRECIATION WOULD OFFSET THE GAINS TO BE ON ACCOUNT OF DISALLOWANCE OF 30% DEDUCTION REPAIRS AND MAINTENANCE AS WELL AS AMORTIZATION OF PRE-CONSTRUCTION PERIOD INTEREST. 8. HOWEVER LD. CIT DID NOT AGREE WITH THE SAME AND REJECTED THE OBJECTIONS VIDE PARA 5 OF THE ORDER AS UNDER : 5. THE FOLLOWING OBSERVATIONS ARE MADE ON THE SUBMISSIONS OF THE ASSESSEE: A) AT THE OUTSET IT MAY BE STATED THAT THE COMPUTATIONS FILED BY THE ASSESSEE REGARDING INCOME OF VARIOUS YEARS ARE NOT ACCEPTABLE. IT IS A PLAIN FACT THAT THE DEPRECIATION RATE FOR BUILDINGS WHICH ARE THE MAIN BUSINESS ASSETS OF THE ASSESSEE IS 10% WHERE AS THE ASSESSEE CLAIMING 30% DEDUCTION ON REPAIRS AND MAINTENANCE UNDER THE HOUSE PROPERTY B) THE RULE OF CONSISTENCY IS NOT APPLICABLE TO C ASES OF PATENTLY WRONG CLAIMS. IN THE CASE OF APOLLO HOSPITALS ENTERPRISE LTD (300 ITR 167) THE MADRAS HIGH COURT HELD THAT 'IF WRONG CLAIMS AVAILED PARTICULARLY QUOTING WRONG APPLICATION OF LAW ARE N OT ALLOWED TO BE REVIEWED A CHAOTIC SITUATION WOULD ARISE PUTTING A BIG DENT TO THE EXCHEQUER HAVING NEGATIVE REPERCUSSIONS ON THE DEVELOPMENTAL ACTIVITIES OF TH E COUNTRY' THEREFORE THE RULE OF CONSISTENCY IS NOT 8 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. APPLICABLE BESIDES THE PROCEEDINGS OF EACH YEAR A RE DIFFERENT AND THERE IS NO 'RES JUDICATA' TO TAX PROCEEDINGS. C) THE ISSUE IN FOR EXAMINATION IN THIS CASE IS WHETHER THE INCOME FROM LEASING OUT OF UNITS OF THE 'INDUSTRIAL PARK' IS INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS?' D) ADMITTEDLY THE MAIN OBJECT OF THE ASSESSEE IS TO CARRY ON THE BUSINESS OF DEVELOPERS OF LAND BUILDING AND REAL ESTATES'. THEREFORE PROFIT MOTIV E IS INHERENT IN THE ACTIVITY OF THE ASSESSEE. E) ONE VERY IMPORTANT FEATURE IS THAT THE ASSESSEE I S A JOINT VENTURE OF K. RAHEJA GROUP PRIVATE LTD AND APIIC LTD. IN PURSUANCE OF THE JV AGREEMENT APIIC ALLOTTED LAND TO THE ASSESSEE AT CONCESSIONAL RATE FOR DEVELOPING MARKETING AND SELLING. ALSO ADEQUATE NUMBER OF JOBS NEED TO BE CREATED BY THE ASSESSEE WHICH CLEARLY SHOWS THAT THE ENTIRE ACTIVITY IS AIM ED AT INDUSTRIAL DEVELOPMENT AND EMPLOYMENT GENERATION IN THE STATE OF AP AND NOT SIMPLE LETTIN G OF PROPERTIES. IN THE DIRECTORS' REPORT ALSO THE PR OJECT IS DESCRIBED AS BUSINESS ACTIVITY OF INFRASTRUCTURE DEVELOPMENT. EFFORTS IN MARKETING AND JOB CREATION ARE ALSO EXPLAINED IN DETAIL. F) IF THE ASSESSEE WAS SIMPLY LETTING OUT THE PROPERTY THE INCOME WOULD PROBABLY FALL UNDER INCOME 'HOUSE PROPERTY'. IF HE IS ENGAGED IN ORGANIZED ACTIVITY OF EXPLOITING COMMERCIAL ASSETS FOR BUSINESS PURPOSE THE INCOME WOULD BE FROM BUSINESS. NO DOUBT THE HEADS OF INCOME ARE MUTUALLY EXCLUSIVE. YET A RECEIPT CAN MANIFEST IN DIFFERENT FORMS DEPENDING ON THE CONTEXT MAKING IT FIT INTO AN APPROPRIATE HEAD OF INCOME SUITING SUC H CONTEXT. G) IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD (227 ITR 172) THE APEX COURT HELD THAT 'WHERE QUESTION IS TAXABILITY OF A CERTAIN REC EIPT OF MONEY AND DEDUCTIBILITY OF CERTAIN AMOUNT FROM THAT RECEIPT THE SAME IS TO BE DECIDED ACCORDING T O PRINCIPLES OF LAW AND NOT IN ACCORDANCE WITH ACCOUNTANCY PRACTICE'. THEREFORE PRINCIPLES OF LAW 9 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. SHALL GOVERN THE CASE AND NOT THE PRACTICE FOLLOWED BY AN ASSESSEE. H) VERIFICATION OF THE RETURN OF INCOME FILED BY THE ASSESSEE REVEALS THAT ON ITS OWN ADMISSION THE ACTIVITY IS SHOWN AS 'BUILDERS PROPERTY DEVELOPERS' . IN THE TAX AUDIT REPORT ALSO IT IS CLEARLY INDICATE D THAT THE ASSESSEE IS IN THE BUSINESS OF 'REAL ESTATE DEVELOPMENT/LEASING AND HOTELIERS'. ALL THE ITEMS O F RECEIPT AND EXPENDITURE INCLUDING THE LEASE RENTALS ARE SUBJECT TO AUDIT UNLIKE THE CASE OF SIMPLE LETTING OUT OF PROPERTY. MERELY BECAUSE THE ENTITIES OCCUPYING THE PREMISES DEDUCT TDS U/S. 194I THE CHARACTER OF THE INCOME CANNOT BE CHANGED. AS PER THE SETTLED PRINCIPLES OF LAW THE CHARACTER IN THE HANDS OF THE PAYER AND PAYEE NEED NOT BE SAME. I) IT IS ALSO PERTINENT TO NOTE THAT ON ITS OWN ADMISSION THE ASSESSEE APPROACHED THE AUTHORITIES AT DEPARTMENT OF INDUSTRIAL POLICY AND DEVELOPMENT TO OBTAIN APPROVAL FOR THE 'INDUSTRIAL PARK' AS PAR T OF HIS BUSINESS ACTIVITY WITH A VIEW TO OBTAIN BETT ER RETURNS FROM THE COMMERCIAL ASSETS. J) THE FOLLOWING IMPORTANT FEATURES ARE PRESENT IN THE ACTIVITY OF THE ASSESSEE AS SEEN FROM THE ACCOUNTS VIZ. THE ASSESSEE AVAILED HUGE PROJECT TERM LOANS BANKS TO CONSTRUCT THE BUILDINGS HE IS SPENDING HUGE AMOUNTS AS PROJECT SUPPORT FEES AND ALSO AS SELLING & MARKETING EXPENSES. THIS CLEARLY SHOWS THE ASSESSEE ENGAGED IN SYSTEMATIC ACTIVITY OF BUILDING AN INDUSTRIAL PARK AND MARKET THE SPACE ALSO BY SPENDING HUGE AMOUNTS. THEREFORE THIS IS A CLEAR CASE OF COMMERCIAL EXPLOITATION ON ASSETS FOR THE PURPOSE OF BUSINESS. K) NONE OF THE CASE LAWS CITED BY THE ASSESSEE SUPPORT THE PREPOSITION THAT IRRESPECTIVE OF THE CONTEXT THE INCOME HAS TO BE ASSESSED AS HOUSE PROPERTY INCOME. L) THE ASSESSEE IS ALSO TRYING TO MAKE AN ARTIFICIAL DISTINCTION BETWEEN HIS CASE AND THAT OF OF GLOBAL TECH PARK PVT LTD. MERELY BECAUSE THE ASSESSEE IS RECORDING ENTRIES FOR LEASE RENT AND FACILITY MANAGEMENT SEPARATELY THE ACTIVITIES WOULD NOT BE 10 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. DISTINCT AND SEPARATE. IN REALITY WITHOUT FACILITY MANAGEMENT NONE WOULD TAKE THE PREMISES ON LEASE BECAUSE THE UNITS NEED STRONG INFRASTRUCTURAL SUPPORT WITHOUT WHICH THE CONCEPT OF 'INDUSTRIAL PARK' WOULD ITSELF BE MEANINGLESS. M) IT IS ALSO INCORRECT ON THE PART OF THE ASSESSEE T O STATE THAT THE ORDER IS NOT PREJUDICIAL TO THE INTE RESTS OF REVENUE BECAUSE THE CLAIM OF ADDITIONAL DEPRECIATION WOULD OFFSET THE GAINS. THE ASSESSEE WOULD NOT FIT INTO THE AMBIT OF SECTION 32(IIA) AS HE IS NOT PRODUCING ANY ARTICLE OR THING NOR HE IS ENGAGE D IN GENERATION OR DISTRIBUTION OF POWER. BESIDES TH E PRIME ASSETS OF THE ASSESSEE ARE THE BUILDINGS WHICH DO NOT FALL UNDER THE DEFINITION OF PLANT. N) THE A.O. DID NOT EXAMINE ANY OF THESE FACTS AND ALLOWED THE CLAIM WITHOUT ANY VERIFICATION. THEREFO RE JUDICIOUS VIEW WAS NOT TAKEN BY HIM TO STATE THAT H E TOOK ONE OF THE POSSIBLE VIEWS. O) IN THE CASE OF BOSTON ANALYTICS LTD (20 12-TIOL- 605-ITAT-MUM) THE MUMBAI BENCH OF ITAT HELD THAT 'THE VIEW TAKEN BY THE AO SHOULD NOT BE A MERE VIEW IN VACUUM BUT A JUDICIAL VIEW'. P) AS PER DECISION OF THE CHENNAI BENCH OF ITAT IN THE CASE OF BHARAT OVERSEAS BANK LTD ( 152 TT J 546) (CHENNAI) (TRIB.) WHEN THE ORDER OF THE ASSESSING OFFICER WAS SILENT ON THE CLAIM MADE BY ASSESSEE AND ALLOWED SUCH CLAIM WITHOUT ANY DISCUSSION IT WAS HELD THAT SUCH AN ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. Q) THEREFORE THIS ARGUMENT IS DEVOID OF MERIT AND THE ORDER IS CLEARLY ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 6. IN LIGHT OF THE ABOVE IT IS HELD THAT THE ORDE R OF THE AO PASSED U/S. 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. IT IS ALSO HELD THAT THE INCOME FROM LEASE RENTALS IS 'BUSINESS INCOME' AND NOT INCOME FROM 'HOUSE PROPERTY'. THE AO IS DIRECTED TO COMPUTE THE INCOME OF THE ASSESSE E IN LIGHT OF THE ABOVE DIRECTION. 11 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. 9. LD. CIT PASSED SIMILAR ORDERS IN IMPUGNED ASSESSMENT YEARS. ASSESSEE IS CONTESTING THE SAME. AS BRIEFLY STATED IN ASSESSMENT YEARS 2006-07 AND 2007-08 ASSE SSEE HAS FURTHER RAISED ADDITIONAL GROUNDS THAT THE ORDERS P ASSED BY CIT ARE TIME BARRED. 10. LD. COUNSEL REFERRING TO THE ORDER OF LD. CIT TOOK OBJECTION FOR THE FIRST OBSERVATION OF THE CIT THAT ASSESSEE WOULD BE ELIGIBLE FOR 10% DEPRECIATION CLAIMED WHER EAS IT WAS CLAIMING 30% DEDUCTION ON REPAIRS AND MAINTENANCE. IT WAS SUBMITTED THAT LD. CIT DID NOT CONSIDER THE BASIS F OR THE ABOVE DEDUCTIONS. IT WAS SUBMITTED THAT ASSESSEE WOULD BE ENTITLED FOR DEPRECIATION AT 10% OF THE ASSET COST WHEREAS UNDER THE HEAD HOUSE PROPERTY 30% DEDUCTION IS ON INCOMES RECEIVED AS RENT. SINCE THE BASIS FOR CALCULATIONS ARE DIFFE RENT THE QUANTUM OF ALLOWANCE WHICH ASSESSEE WOULD BE ENTITL ED IF THE INCOME IS TREATED AS INCOME FROM BUSINESS IS MUCH MORE THAN THE DEDUCTION ALREADY CLAIMED ON THE INCOME. IT WAS SUBMITTED THAT LD. CIT WRONGLY CONSIDERED THE PERCENTAGES ALO NE TO REJECT ASSESSEES CONTENTIONS WITHOUT EXAMINING THE FACTS. IT WAS FURTHER SUBMITTED AND EXPLAINED WITH THE HELP OF TH E DETAILS FILED BEFORE THE LD. CIT THAT THERE MAY BE REDUCTIO N IN LOSS CLAIMED BUT THE DEPRECIATION WHICH IS TO BE ALLOWED TO THE ASSESSEE WOULD TAKE CARE OF NOT ONLY THE LOSSES SO CLAIMED BUT FURTHER CLAIM WOULD BE THERE TILL A.Y. 2012-2013 OF MORE THAN RS. 1 CRORE IF COMPUTATION WAS DISTURBED. 11. COMING TO THE MERITS OF THE CASE IT WAS THE SUBMISSION THAT ASSESSEE HAS CORRECTLY OFFERED THE INCOME UNDER THE HEAD HOUSE PROPERTY TO THE EXTENT OF RE NTS RECEIVED. LD. COUNSEL TOOK US THROUGH THE PRINCIPLE S LAID DOWN 12 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. BY THE HONBLE SUPREME COURT ON THE ISSUE FROM THE VERY FIRST CASE RELIED UPON BY ASSESSEE I.E. UNITED COMMERCIA L BANK LTD. VS. CIT 32 ITR 688 FOR THE PROPOSITION THAT I NCOMES ARE TO BE ASSESSED UNDER CORRECT HEAD AND THEN EXPLAINED T HE PROPOSITIONS LAID DOWN IN THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF EAST INDIA HOUSING AND LAND DE VELOPMENT TRUST LTD. VS. CIT 42 ITR 49 AND THEN THE FACTS IN THE CASE OF M/S. S.G. MERCANTILE CORPORATION P. LTD. 83 ITR 70 0 TO SUBMIT THAT THE DECISION OF THE HONBLE SUPREME COURT THER E ALSO SUPPORTS ASSESSEES CONTENTION. IT WAS SUBMITTED TH AT LIABILITY TO TAX UNDER THE HEAD HOUSE PROPERTY IS ON THE OW NER OF THE BUILDING OR LAND APPURTENANT THERETO WHICH IS FACTS IN ASSESSEES CASE. IN THE CASE OF M/S. S.G. MERCANTIL E CORPORATION P. LTD. (SUPRA) ASSESSEE IS DEVELOPING THE PROPERTIES ON LEASE BASIS AND IS NOT OWNER OF THE P ROPERTY. THIS FINDING IS GIVEN IN PAGE 705 OF THE ABOVE SAID JUDG MENT OF THE HONBLE SUPREME COURT. THEREFORE IN THAT CASE THE INCOMES WERE HELD NOT TO BE ASSESSED UNDER THE HEAD HOUSE PROPERTY. LD. COUNSEL ALSO DISTINGUISHED THE FACTS IN THE CAS E OF GLOBAL TECH PARK P. LTD. (SUPRA) WHICH RELIED ON THE HON BLE KARNATAKA HIGH COURT JUDGMENT IN THE CASE OF BALAJI ENTERPRISES VS. CIT 225 ITR 471. IT WAS SUBMITTED T HAT IN THE CASE OF BALAJI ENTERPRISES (SUPRA) THE FACTS ARE TH AT THE FIRM TOOK PROPERTY ON LEASE TO BUILD STRUCTURES THEREON AND LEASED OUT THEM TO TENANTS. AT THE END OF THE DISSOLUTION OF THE FIRM THE PROPERTY WAS TO BE HANDED-OVER TO LESSEES. IN T HOSE FACTS OF THE CASE THE HONBLE KARNATAKA HIGH COURT HELD THA T INCOME CANNOT BE ASSESSED UNDER THE HEAD HOUSE PROPERTY AND WAS TREATED AS INCOME FROM BUSINESS. AS THE FACTS ARE DISTINGUISHABLE LD. COUNSEL SUBMITTED THAT ASSESSE ES INCOMES ARE CORRECTLY ASSESSED UNDER THE HEAD INCO ME FROM 13 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. HOUSE PROPERTY TO THE EXTENT OF RENTALS RECEIVED. IT WAS SUBMITTED THAT SINCE A.O. HAS CORRECTLY ASSESSED TH E INCOMES THE ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO T HE INTERESTS OF REVENUE TWIN CONDITIONS WHICH ARE REQUIRED TO BE SATISFIED FOR INVOKING THE JURISDICTION UNDER SECTION 263. 12. COMING TO THE ADDITIONAL GROUND RAISED THAT TH E ORDER WAS TIME BARRED LD. COUNSEL SUBMITTED THAT T HE ORDERS WHICH ARE REVISED BY LD. CIT ARE THE ORDERS PASSED CONSEQUENT TO THE PROCEEDINGS UNDER SECTION 147. HE REFERRED T O THE ORDERS OF A.O. UNDER SECTION 143(3) READ WITH SECTION 147 DATED 30.12.2011 WHEREIN THE ONLY ISSUE CONSIDERED BY A.O . WAS WITH REFERENCE TO SUBSIDY RECEIVED FROM GOVERNMENT OF A.P. WHICH WAS BROUGHT TO TAX. IT WAS THE SUBMISSION THA T THE ISSUE OF ASSESSING UNDER CORRECT HEAD WAS CONCLUDED BY EA RLIER ORDERS IN A.Y. 2006-07 BY THE ORDER OF A.O. DATED 3 1.10.2008 AND INTIMATION UNDER SECTION 143(1) DATED 30.09.200 8 FOR A.Y. 2007-08. HE RELIED ON THE JUDGMENT OF HONBLE P & H HIGH COURT IN THE CASE OF CIT VS. DARSHAN SINGH 277 ITR 53 AND ALSO THE DECISION OF RAJASTHAN HIGH COURT JAIPUR BE NCH IN THE CASE OF CIT VS. HEMRAJ UDYOG 259 ITR 420 FOR THE PR OPOSITION THAT THE ORDERS ARE SOUGHT TO BE REVISED ON THIS IS SUE WERE THE ORIGINAL ORDERS NOT THE ORDERS UNDER SECTION 147. T HEREFORE THE LD. CIT DOES NOT HAVE JURISDICTION TO REOPEN THE AS SESSMENT AFTER EXPIRY OF LIMITATION PERIOD. 12.1 LD CIT(DR) RELIED ON ORDERS OF CIT TO SUBMI T THAT AO DID NOT EXAMINE THE CORRECT HEAD UNDER WHICH THE INCOMES ARE TO BE ASSESSED AND THEREFORE ORDERS OF CIT U/S 263 ARE JUSTIFIABLE. 14 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. 13. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RIVAL CONTENTIONS VIS--VIS THE AVAILABLE DETAILS P LACED ON RECORD IN THE PAPER BOOK BY ASSESSEE IN ALL THE YEA RS. FIRST OF ALL THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT ASSESSEE IS RECEIVING INCOMES FROM RENTALS AS WELL AS SERVIC E INCOME FROM ITS INDUSTRIAL PARK. ASSESSEE WAS OFFERING THE INCOME FROM RENTALS UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND SERVICE INCOME UNDER THE HEAD BUSINESS. IT WAS AC CORDINGLY ASSESSED BY A.O. SUBJECT TO SMALL MODIFICATIONS. FO R A.Y. 2006- 07 THE ORDER UNDER SECTION 143(3) WAS PASSED ON 31. 10.2008. THEREFORE THE TIME LIMIT FOR REOPENING THE ASSESSM ENT ACTUALLY ON THIS ISSUE STARTS FROM THIS DATE AND ENDS ON OR BEFORE 31.03.2011. THE ASSESSMENT CAN BE REVISED I.E. TWO YEARS FROM THE END OF A.Y. IN WHICH THE ORDER WAS PASSED. AS F AR AS A.Y. 2007-08 IS CONCERNED THERE WAS NO ORDER UNDER SECT ION 143(3) BUT THERE IS AN INTIMATION UNDER SECTION 143(1) DAT ED 30.09.2008. THEREFORE THE ISSUE WHETHER THE INCOME WAS TO BE CONSIDERED AS INCOME FROM BUSINESS OR HOUSE PROPERT Y GOT CONCLUDED BY THE INTIMATION AND NON-SELECTION OF SC RUTINY AT THAT POINT OF TIME. IN THESE TWO YEARS WHAT THE LD. CIT AS SPECIFIED IN THE ORDER UNDER SECTION 263 REVISED T HE ORDERS PASSED ON 30.12.2011 IN THESE YEARS CONSEQUENT TO THE PROCEEDINGS UNDER SECTION 147 WITH REFERENCE TO REC EIPT OF SUBSIDY OF RS.3 07 20 000 IN A.Y. 2006-07 RS.20 51 60 000 IN A.Y. 2007-08. AS SEEN FROM THE ORDERS THE ISSUE WH ICH WAS DECIDED IN THOSE YEARS IN LATER ORDER WAS WITH RE FERENCE TO THE SUBSIDY RECEIVED IN A.Y. 2006-07 AND SUBSIDY AND S HORT TERM CAPITAL GAIN IN A.Y. 2007-08. THE ISSUE OF ASSESSIN G THE CORRECT INCOME UNDER THE HEAD BUSINESS OR PROFESSION OR HOUSE PROPERTY WAS NOT AN ISSUE AT ALL IN THOSE ORDERS. THEREFORE IN OUR VIEW EXERCISING THE JURISDICTION BY LD. CIT TO REVISE THE 15 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. ORDERS UNDER SECTION 263 ON AN ISSUE WHICH WAS ALRE ADY CONCLUDED BY EARLIER ORDER CANNOT BE JUSTIFIED. 14. WE RELY ON THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CWT VS. DARSHAN S INGH 277 ITR 53. IN THAT CASE THE FACTS ARE AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS WT RETU RN FOR THE ASST. YR. 1977-78 ON 2ND FEB. 1978 DECLARING NET WEALTH OF RS. 4 11 100. THE ASSESSMENT WAS COMPLETE D UNDER S. 16(3) OF THE ACT ON 8TH MARCH 1978. THE ASSESSEE THEREAFTER FILED A REVISED RETURN ON 31S T MAY 1979 DECLARING NET WEALTH OF RS. 4 49 130. THE STA ND OF THE ASSESSEE WAS THAT WHILE PREPARING THE ORIGINAL RETURN THE SHARE OF IMMOVABLE PROPERTIES INHERITED FROM HI S FATHER WAS LEFT OUT INADVERTENTLY. REASSESSMENT WAS COMPLETED ON 12TH FEB. 1980 ON THE NET WEALTH OF RS. 4 48 365. THE WTO INCLUDED A SUM OF RS. 2 500 BEING THE AMOUNT OF CDS. VIDE HIS ORDER DT. 4TH DEC. 1981 THE CWT EXERCIS ING JURISDICTION UNDER S. 25 OF THE ACT SET ASIDE THE ASSESSMENT ORDER DT. 12TH FEB. 1980 ON THE GROUND THAT THE QUESTION OF VALUATION OF INTEREST OF THE ASSESS EE IN PREET PALACE THEATRE HAD NOT BEEN GONE INTO. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNA L AND SUBMITTED THAT THE ORDER REVISING THE ASSESSMENT WA S NOT JUSTIFIED AS THE QUESTION OF VALUATION OF THE ASSE SSEES INTEREST IN PREET PALACE THEATRE STOOD SETTLED IN T HE ORIGINAL ORDER OF ASSESSMENT DT. 8TH MARCH 1978 W HEREIN THE WTO HAD ACCEPTED THE VALUATION OF INTEREST OF T HE ASSESSEE IN THE SAID PROPERTY AND THE SAID ORDER HA D BECOME FINAL. IT WAS FURTHER EXPLAINED THAT IN THE ASSESSMENT ORDER DT. 12TH FEB. 1980 THE WTO HAD MERELY ASSESSED THE ADDITIONAL WEALTH OFFERED BY TH E ASSESSEE IN THE REVISED RETURN. THE SAID ORDER DID NOT DEAL WITH THE ISSUE ABOUT THE VALUATION OF THE PREET PAL ACE THEATRE. THIS SUBMISSION WAS ACCEPTED AND THE ORDER OF THE CWT PASSED UNDER S. 25(2) OF THE ACT WAS SET AS IDE. HELD THAT WHILE EXERCISING POWER OF REVISION OF TH E ORDER DT. 12TH FEB. 1980 THE CWT HAS FAILED TO NOTICE T HAT THE 16 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. SAID ORDER DID NOT DEAL WITH THE QUESTION OF VALUAT ION OF INTEREST OF THE ASSESSEE IN THEATRE WHICH HAD BECOM E FINAL AS PER ORDER DT. 8TH MARCH 1978. THE CWT COULD NOT HAVE EXERCISED POWERS AGAINST THE SAID ORDER AS THE LIMI TATION UNDER S. 25(3) WHICH IS TWO YEARS HAD ALSO EXPIRED WITH REGARD TO THE SAID ORDER. THE TRIBUNAL WAS RIGHT I N VACATING THE ORDER OF THE COMMISSIONER OF WEALTH TA X. 14.1. AS CONSIDERED IN THE ABOVE DECISION THE ORD ERS SOUGHT TO BE REVISED I.E. ORDER DATED 30.12.2011 D ID NOT DEAL WITH THE QUESTION OF ASSESSING UNDER THE CORRECT HE AD BUT ONLY THE ISSUE OF SUBSIDY HAS BEEN DEALT WITH. THE ISSUE OF ACCEPTING UNDER THE CORRECT HEAD WAS ALREADY CONCLU DED AT THE TIME OF ORIGINAL ASSESSMENT FINALIZED VIDE ORDER DA TED 31.10.2008 FOR A.Y. 2006-07. LIKEWISE EVEN THOUG H THE ORDER UNDER SECTION 143(3) WAS NOT PASSED INTIMATION UN DER SECTION 143(1) WAS ALREADY ISSUED IN A.Y. 2007-08 AND IN TH E REOPENING ASSESSMENT THE ISSUE WAS NOT TAKEN-UP BY A.O. AT ALL. AT LEAST FOR THE A.Y. 2006-07 THE ORDERS SOU GHT TO BE REVISED HAS BARRED BY LIMITATION. AS PER THE PROVIS IONS OF THE ACT EVEN AN INTIMATION UNDER SECTION 143(1) ALSO B ECOMES AN ASSESSMENT AFTER EXPIRY OF THE PERIOD FOR ISSUANCE OF NOTICE UNDER SECTION 143(2). THEREFORE IN A.Y. 2007-08 AL SO TECHNICALLY SPEAKING THE ORDER OF CIT U/S 263 GETS TIME BARRED. 15. WE ALSO RELY ON THE DECISION OF CIT VS. HEMRAJ UDYOG 259 ITR 420. IN THE SAID CASE IT HAS BEEN HE LD THAT : 2. THE ORIGINAL ASSESSMENT WAS COMPLETED ON 16TH DEC. 1988. WHILE FRAMING THE ASSESSMENT THE ASSES SEE WAS GRANTED DEDUCTION UNDER S.32AB AT THE RATE OF 2 0 PER CENT OF THE BOOK PROFITS. AS ASSESSEE WAS AGGRIEVED ON CERTAIN ADDITIONS/DISALLOWANCES MADE IN THE ORIGINA L ORDER HE PREFERRED AN APPEAL BEFORE THE CIT(A). OUT OF TH ESE GROUNDS TAKEN BEFORE THE CIT(A) TWO GROUNDS WERE R EJECTED AND ON THE THIRD GROUND REGARDING DEPRECIATION THE CIT(A) REMANDED THE MATTER BACK TO THE AO FOR FRESH 17 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. CONSIDERATION. FOLLOWING THE DIRECTIONS OF THE CIT( A) AND AFTER EXAMINING THE ISSUE RELATING TO DEPRECIATION THE AO MADE A FRESH ASSESSMENT ORDER ON 27TH DEC. 1989. SUBSEQUENTLY THE CIT ASSUMING THE JURISDICTION UND ER S. 263 OF THE ACT ISSUED A SHOW-CAUSE NOTICE TO THE A SSESSEE DT. 31ST DEC. 1991. AFTER HEARING THE ASSESSEE TH E CIT(A) WAS OF THE VIEW THAT THE DEDUCTION OF RS. 2 66 255 GRANTED TO THE ASSESSEE UNDER S. 32AB WAS NOT PROPER AND HE NCE IT RENDERED THE ASSESSMENT TO BE ERRONEOUS AND PREJ UDICIAL TO THE INTERESTS OF REVENUE. AFTER GIVING DUE OPPOR TUNITY OF HEARING TO THE ASSESSEE THE CIT MADE AN ORDER UNDE R S. 263 OF THE ACT DIRECTING THE AO TO REFRAME THE ASSE SSMENT AFTER RE-EXAMINING THE CLAIM OF THE ASSESSEE FOR DE DUCTION UNDER S. 32AB OF THE ACT. 3. IN APPEAL BEFORE THE TRIBUNAL THE TRIBUNAL HELD THAT PERIOD OF LIMITATION STARTS WITH EFFECT FROM THE DA TE OF ORIGINAL ASSESSMENT ORDER DT. 16TH DEC. 1988 SINC E THE ISSUE RELATED TO DEDUCTION UNDER S. 32AB STOOD SETT LED IN THE EARLIER ORDER ITSELF. THE SUBSEQUENT ASSESSMENT ORDER WAS FOR A LIMITED ISSUE OF DEPRECIATION ONLY. THE T RIBUNAL ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN EVERY ERROR IN THE ORIGINAL ASSESSME NT DISCOVERED AFTER THE FRESH ASSESSMENTS ARE MADE WO ULD GO ON ENLARGING THE LIMITATION PERIOD. THUS THE TRIBU NAL HAS QUASHED THE ORDER OF CIT UNDER S. 263 ON THE GROUND OF LIMITATION. HELD THAT THE CIT HAS THE POWER TO REVISE THE ORDER OF THE AO ON THE ISSUES WHICH ARE NOT TAKEN IN APPEAL BEFORE THE CIT(A) BUT IF THE LIMITATION HAS EXPIRE D CIT CANNOT REVISE THE ORIGINAL ORDER OF ITO BEYOND THE PERIOD OF LIMITATION. THE PERIOD OF LIMITATION IN T HIS CASE IS TWO YEARS FROM THE DATE OF ORDER SOUGHT TO BE REVISED I.E. 16TH DEC. 1988 BUT THE ORDER OF CIT UNDER S. 263 IS DT. 26TH FEB. 1992 I.E. BEYOND T WO YEARS. THE ORDER OF REVISION WAS BARRED BY LIMITATI ON.. 15.1. FOLLOWING THE PRINCIPLES LAID DOWN ABOVE WE UPHOLD THE ADDITIONAL GROUNDS RAISED BY ASSESSEE IN THESE TWO YEARS THAT LD. CIT ORDER UNDER SECTION 263 REVISING A SUBSEQUENT ORDER UNDER SECTION 147 ON AN ISSUE WHIC H DID NOT ARISE IN THAT ORDER WAS BARRED BY LIMITATION. 18 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. 16. APART FROM THE ABOVE EVEN ON MERITS WE ARE OF THE OPINION THAT THE ORDER OF A.O. IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF REVENUE SO AS TO RE VISE THE SAME UNDER SECTION 263. ASSESSEE HAS BEEN CONSISTENTLY O FFERING THE INCOMES UNDER THE HEAD INCOME ON HOUSE PROPERTY A S FAR AS THE RECEIPTS OF RENTS ARE CONCERNED AND UNDER THE H EAD BUSINESS AS FAR AS THE SERVICE FEE AND MANAGEMENT FEE ON MAINTENANCE ARE CONCERNED. NOT ONLY IN THE IMPUGNED YEARS EVEN IN EARLIER YEARS ALSO THE INCOMES WERE ACCEPT ED AS SUCH. SINCE THE LD. CIT CANNOT REVISE THOSE ORDERS THESE ORDERS ARE NOT SUBJECT MATTER OF PROCEEDINGS U/S 263 AND THERE FORE THE ISSUES ARE CONCLUDED THEREIN ACCEPTING ASSESSEES C ONTENTION. ON THE RULE OF CONSISTENCY ALSO IT CANNOT BE MODIF IED IN A LATER YEAR. HOWEVER IT IS NOT ON RULE OF CONSISTENCY AL ONE. AS SEEN FROM THE ORDERS PASSED BY THE AUTHORITIES AT THE TI ME OF ASSESSMENT THEY HAVE ACCEPTED THE BIFURCATION OF R ENTAL INCOME AND SERVICES INCOME AND RENTAL INCOME WAS AC CEPTED UNDER THE HEAD HOUSE PROPERTY. AS RIGHTLY POINTED OUT BY ASSESSEE IN THE SUBMISSIONS BEFORE THE LD. CIT THAT ASSESSING INCOMES UNDER HEAD BUSINESS WAS NOT PREJUDICIAL TO THE INTERESTS OF REVENUE CONSIDERING THAT A HIGHER CLAI M OF DEPRECIATION WAS ALLOWABLE ON THE PROPERTIES WHEN C OMPARED TO 30% ALLOWANCE FOR REPAIRS ON THE INCOMES ASSESSE D WE AGREE THAT THE ORDERS ARE NOT PREJUDICIAL TO THE IN TEREST OF REVENUE. 17. LD. CIT ERRED IN RELYING ONLY ON THE ITAT ORDE R IN THE CASE OF GLOBAL TECH PARK P. LTD. ACIT (SUPRA) WHEREIN THE COORDINATE BENCH RELIED ON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF BALAJI ENTERPRISES VS. CI T 225 ITR 471. AS SEEN FROM THE JUDGMENT OF HONBLE KARNATAKA HIGH 19 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. COURT THE FACTS IN THE SAID CASE WERE THAT ASSESSEE FIRM EVEN THOUGH CONSTITUTED TO CARRY ON BUSINESS OF DEALING IN REAL ESTATE AND SETTING UP DEVELOPMENT AND EXPLOITATION OF COMMERCIAL COMPLEX IN MARKET THEY HAVE NOT OWNED T HE PROPERTY BUT WERE DEVELOPING THE PROPERTIES OBTAINE D ON LEASE HOLD OR ON FREE HOLD BASIS AND FURTHER LEASING THE PROPERTIES AFTER DEVELOPMENT TO THE LESSEES. IN THOSE FACTS OF THE CASE THE INCOMES ARE CORRECTLY HELD AS ASSESSABLE UNDER THE HEAD BUSINESS. FURTHER IN THE SAID CASE OF GLOBAL TEC H PARK P. LTD. (SUPRA) THE INCOMES RECEIVED WERE COMPOSITE INCOMES FOR BOTH LEASING AS WELL AS MAINTENANCE AND A.O. HAS NO T BIFURCATED THEM AT ALL. IN THAT CASE CONSTRUCTION A ND MAINTENANCE OF INDUSTRIAL PARK WAS INDEED HELD AS BUSINESS ACTIVITY. HOWEVER IN ORDER TO ARRIVE WHETHER A PARTICULAR INCOME IS TO BE ASSESSED UNDER HOUSE PROPERTY OR B USINESS THERE ARE MANY ASPECTS WHICH REQUIRE EXAMINATION. F IRST OF ALL ONE HAS TO ENQUIRE WHETHER ASSESSEE IS OWNER OF THE PROPERTY OR NOT. THEREAFTER ASSESSEES NATURE OF ACTIVITIES ARE TO BE ANALYSED VIS--VIS THE ACTIVITIES/AGREEMENTS ENTERE D BY ASSESSEE WITH REFERENCE TO VARIOUS LESSEES AND TO VERIFY WHETHER RENTAL INCOME IS SEPARATELY RECEIVED OR AS A COMPOSITE RENT BUT BIFURCATED BY ASSESSEE. THE TERMS OF AGREE MENT THE PERIOD OF LEASE THE CONDITIONS OF LEASE ETC. ALSO REQUIRED TO BE EXAMINED. THEREFORE IN ORDER TO TAKE A DECISION WH ETHER A PARTICULAR INCOME IS TO BE ASSESSED UNDER THE HEAD HOUSE PROPERTY OR UNDER THE HEAD BUSINESS MANY MORE FA CTS ARE REQUIRED TO BE EXAMINED. IN THIS CASE NEITHER THE A.O. NOR THE LD. CIT EXAMINED ANY OF THESE ASPECTS BUT DECIDED SIMPLY ON THE PRINCIPLES OF LAW. THEREFORE WE ARE UNABLE TO GIVE ANY FINDING ABOUT THE CORRECTNESS OF THE ACTION OF EITH ER A.O. OR LD. CIT IN COMING TO A PARTICULAR CONCLUSION WHETHER TH E INCOME IS 20 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. ASSESSABLE UNDER HOUSE PROPERTY OR BUSINESS IN THE ABSENCE OF FACTS IN THESE YEARS. 18. HOWEVER AS FAR AS THE LAW IS CONCERNED THE HONBLE SUPREME COURT AS EARLY AS 42 ITR 49 IN THE CASE OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. VS. CIT ON THE FOLLOWING FACTS HELD AS UNDER : THE APPELLANT COMPANY WHICH WAS INCORPORATED WITH THE OBJECTS OF BUYING AND DEVELOPING LANDED PROPERTIES AND PROMOTING AND DEVELOPING MARKETS PURCHASED 10 BIGH AS OF LAND IN THE TOWN OF CALCUTTA AND SET UP A MARKET TH EREIN. THE QUESTION WAS WHETHER THE INCOME REALIZED FROM T HE TENANTS OF THE SHOPS AND STALLS WAS LIABLE TO BE TA XED AS BUSINESS INCOME UNDER SECTION 10 OF THE INCOME TA X ACT OR AS INCOME FROM PROPERTY UNDER SECTION 9. HELD THAT THE INCOME DERIVED BY THE COMPANY FROM SH OPS AND STALLS IS INCOME RECEIVED FROM PROPERTY AND FAL LS UNDER THE SPECIFIC HEAD DESCRIBED IN S. 9. THE CHARACTER OF THAT INCOME IS NOT ALTERED BECAUSE IT IS RECEIVED BY A C OMPANY FORMED WITHIN OBJECT OF DEVELOPING AND SETTING UP M ARKETS. NOR BECAUSE OF THE FACT THAT THE COMPANY WAS REQUIR ED TO OBTAIN A LICENCE FROM THE CALCUTTA MUNICIPALITY TO MAINTAIN SANITARY AND OTHER SERVICES AND FOR THAT PURPOSE HA D TO MAINTAIN A STAFF AND TO INCUR EXPENDITURE DID THE I NCOME BECOME PROFITS OR GAINS FROM BUSINESS WITHIN THE MEANING OF SECTION 10. NOR WAS THE CHARACTER OF THE INCOME ALTERED MERELY BECAUSE SOME STALLS WERE OCCUPIED BY THE SAM E OCCUPANTS AND THE REMAINING STALLS WERE OCCUPIED BY A SHIFTING CLASS OF OCCUPANTS. THE PRIMARY SOURCE OF INCOME FROM THE STALLS WAS THE OCCUPATION OF THE STALLS A ND IT WAS A MATTER OF LITTLE MOMENT THAT THE OCCUPATION WHICH W AS THE SOURCE OF THE INCOME WAS TEMPORARY. INCOME-TAX IS UNDOUBTEDLY LEVIED ON THE TOTAL TAXAB LE INCOME OF THE TAXPAYER AND THE TAX LEVIED IS A SINGLE TAX ON THE AGGREGATE TAXABLE RECEIPTS FROM ALL THE SOURCES; IT IS NOT A COLLECTION OF TAXES SEPARATELY LEVIED ON DISTINCT H EADS OF INCOME. BUT THE DISTINCT HEADS SPECIFIED IN S. 6 IN DICATING THE SOURCES ARE MUTUALLY EXCLUSIVE AND INCOME DERIVED F ROM DIFFERENT SOURCES FALLING UNDER SPECIFIC HEADS HAS TO BE COMPUTED FOR THE PURPOSE OF TAXATION IN THE MANNER PROVIDED 21 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. BY THE APPROPRIATE SECTION. IF THE INCOME FROM A SO URCE FALLS WITHIN A SPECIFIC HEAD SET OUT IN S. 6 THE FACT TH AT IT MAY INDIRECTLY BE COVERED BY ANOTHER HEAD WILL NOT MAKE THE INCOME TAXABLE UNDER THE LATTER HEAD. 18.2. THEREAFTER THE HONBLE SUPREME COURT HAS ANOTHER OCCASION TO RE-VISIT THE ISSUE IN THE CASE OF KARNANI PROPERTIES LTD. VS. CIT WEST BENGAL 82 ITR 547 WH EREIN THE HONBLE SUPREME COURT CONSIDERED THE FACTS AND HELD AS UN DER . THE ASSESSEE-COMPANY OWNED HOUSE PROPERTIES POPULARLY KNOWN AS KARNANI MANSION IN PARK STREET CALCUTTA. THE SAID KARNANI MANSION CONSISTS OF NUME ROUS RESIDENTIAL FLATS AND OVER A DOZEN SHOP PREMISES. A LL THOSE WERE LET OUT TO DIFFERENT TENANTS ON A MONTHL Y RENTAL BASIS. THE TENANTS IN RESPECT OF EACH OF THE FLATS AND SHOPS LET OUT HAD TO MAKE A MONTHLY PAYMENT WHICH INCLUDED CHARGES FOR ELECTRIC CURRENT FOR USE OF L IFTS FOR THE SUPPLY OF HOT AND COLD WATER FOR THE ARRANGEMENT F OR SCAVANGING FOR PROVIDING WATCH AND WARD FACILITIES AS WELL AS OTHER AMENITIES. THE TRIBUNAL FURTHER FOUND THAT THE ASSESSEE-COMPANY PURCHASES FROM THE CALCUTTA ELECTRIC SUPPLY CORPORATION HIGH VOLTAGE A.C. CURRE NT IN BULK CONVERTS THE SAME INTO LOW VOLTAGE A.C. CURRE NT IN THE COMPANY'S OWN POWER HOUSE WITHIN THE PREMISES A ND SUPPLIES THE POWER TO ITS TENANTS. IT ALSO MAINTAIN S A SEPARATE WATER PUMP-HOUSE AND A BOILER FOR THE SUPP LY OF HOT AND COLD WATER TO THE TENANTS. THE COMPANY FURT HER PROVIDED FOR THE BENEFIT OF TENANTS ELECTRIC LIFTS WORKING DAY AND NIGHT. THE FURTHER FINDING OF THE TRIBUNAL WAS THAT FOR ALL THESE PURPOSES THE ASSESSEE-COMPANY MAINTAINS A LARGE NUMBER OF PERMANENT STAFF. THE COMPANY CLAIMED THAT THE ENTIRE RECEIPTS FROM THE T ENANTS SHOULD BE TREATED AS INCOME FROM BUSINESS AS IT HAD BEEN FORMED FOR CARRYING ON THE BUSINESS OF LETTING OUT FLATS AND SHOPS. THE INCOME TAX OFFICER REJECTED ITS CLAIM BUT SPLIT THE RECEIPTS INTO TWO PARTS ONE PART BEING TREATED AS RENT AND THE OTHER AS INCOME FROM OTHER SOURCES TAXABLE UNDER SECTION 12 OF THE INCOME TAX ACT 1922 . THE APPELLATE TRIBUNAL HELD THAT THE SECOND PART WAS ASSESSABLE AS INCOME FROM BUSINESS UNDER SECTION 10. NEITHER THE DEPARTMENT NOR THE ASSESSEE CONTENDED THAT THE PART WAS ASSESSABLE UNDER SECTIO N 9. ON A REFERENCE THE HIGH COURT HELD THAT THE LATTER PART OF 22 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. THE RECEIPTS WAS ALSO ASSESSABLE AS INCOME FROM PRO PERTY UNDER SECTION 9. ON APPEAL TO THE SUPREME COURT : HELD REVERSING THE DECISION OF THE HIGH COURT (I) THAT THE DEPARTMENT HAVING ALL ALONG PROCEEDED ON THE BASIS THAT THE INCOME OF THE ASSESSEE WAS FROM TWO DIFFERENT SOURCES IT SHOULD NOT HAVE BEEN ALLOWED BY THE HIG H COURT TO CHANGE ITS CASE ; (II) THAT ON THE FACTS THE SERVICES RENDERED BY T HE ASSESSEE TO ITS TENANTS WERE THE RESULT OF ITS ACTI VITIES CARRIED ON CONTINUOUSLY IN AN ORGANIZED MANNER WIT H A SET PURPOSE AND WITH A VIEW TO EARN PROFITS; THOSE ACTIVITIES WERE BUSINESS ACTIVITIES AND THE INCOME ARISING THEREFROM WAS ASSESSABLE UNDER SECTION 10. WHEN THE QUESTION TO THE HIGH COURT SPEAKS OF ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: IT MEA NS ON THE FACTS AND CIRCUMSTANCES FOUND BY THE TRIBUNAL A ND NOT FACTS AND CIRCUMSTANCES THAT MAY BE FOUND BY TH E HIGH COURT ON A REAPPRAISAL OF THE EVIDENCE. IN THE ABSENCE OF A QUESTION WHETHER THE FINDINGS WERE VIT IATED FOR ANY REASON BEING BEFORE THE HIGH COURT THE HIG H COURT HAS NO JURISDICTION TO GO BEHIND OR QUESTION THE ST ATEMENT OF FACT MADE BY THE TRIBUNAL. 18.3. THUS THE ISSUE DECIDED BY THE HONBLE SUPREM E COURT IN THE ABOVE CASE WAS THAT SERVICES INCOME WA S ASSESSABLE AS INCOME FROM BUSINESS BUT THERE IS NO DISPUTE WITH REFERENCE TO RENT BEING ASSESSED UNDER THE H EAD INCOME FROM HOUSE PROPERTY. THE HONBLE SUPREME CO URT IN THE CASE OF S.G. MERCANTILE CORPORATION PVT. LTD. VS. CIT 83 ITR 700 (SC) ON THE FOLLOWING FACTS HELD AS UNDER : THE ASSESSEE COMPANY WAS INCORPORATED IN JANUARY 1955. ONE OF THE OBJECTS SPECIFIED IN ITS MEMORANDU M OF ASSOCIATION WAS TO TAKE ON LEASE OR OTHERWISE ACQUI RE AND TO HOLD IMPROVE LEASE OR OTHERWISE DISPOSE OF LAN D HOUSES AND OTHER REAL AND PERSONAL PROPERTY AND TO DEAL WITH THE SAME COMMERCIALLY. WITHIN LESS THAN TWO WE EKS OF ITS INCORPORATION THE COMPANY TOOK ON LEASE A MA RKET PLACE FOR AN INITIAL TERM OF 50 YEARS UNDERTAKING TO SPEND 23 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. RS. 5 LAKHS FOR THE PURPOSE OF REMODELING AND REPAI RING THE STRUCTURE ON THE SITE. IT WAS ALSO GIVEN THE RI GHT TO SUBLET THE DIFFERENT PORTIONS. THE APPELLANTS ACTI VITY DURING THE PERIOD COVERED BY THE ASSESSMENT YEARS 1 956- 57 TO 1958-59 CONSISTED OF DEVELOPING THE PROPERTY AND LETTING OUT PORTIONS THEREOF AS SHOPS STALLS AND G ROUND SPACES TO SHOPKEEPERS STALLHOLDERS AND DAILY CASUA L MARKET VENDORS. THE QUESTION WAS WHETHER THE APPELLANTS INCOME FROM SUBLETTING THE STALLS WAS ASSESSABLE AS BUSINESS INCOME UNDER SECTION 10 OF T HE INCOME TAX ACT 1922 OR AS INCOME FROM OTHE SOURCE S UNDER SECTION 12 : HELD : (I) THAT SINCE THE APPELLANT-COMPANY WAS NOT THE OWNER OF THE PROPERTY OR ANY PART THEREOF NO QUEST ION OF MAKING THE ASSESSMENT UNDER SECTION 9 AROSE ; (II) THAT THE DEFINITION OF BUSINESS IN SECTION 2 (4) WAS OF WIDE AMPLITUDE AND IT COULD EMBRACE WITHIN ITSELF D EALING IN REAL PROPERTY AS ALSO THE ACTIVITY OF TAKING A P ROPERTY ON LEASE SETTING UP A MARKET THEREON AND LETTING OUT SHOPS AND STALLS IN THE MARKET; (III) THAT ON THE FACTS THE TAKING OF THE PROPERT Y ON LEASE AND SUBLETTING PORTIONS THEREOF WAS PART OF THE BUS INESS AND TRADING ACTIVITY OF THE APPELLANT AND THE INCOM E OF THE APPELLANT FELL UNDER SECTION 10 OF THE ACT ; AND (IV) THAT WHERE AS IN THIS CASE THE INCOME COULD APPROPRIATELY FALL UNDER SECTION 10 AS BEING BUSINE SS INCOME NO RESORT COULD BE MADE TO SECTION 12. THE LIABILITY TO TAX UNDER SECTION 9 OF THE INCOME TAX ACT 1922 IS OF THE OWNER OF THE BUILDINGS OR LAND APPU RTENANT THERETO. IN CASE THE ASSESSEE IS THE OWNER OF THE B UILDINGS OR LANDS APPURTENANT THERETO HE WOULD BE LIABLE TO PAY TAX UNDER SECTION 9 EVEN IF THE OBJECT OF THE ASSES SEE IN PURCHASING THE LANDED PROPERTY WAS TO PROMOTE AND DEVELOP A MARKET THEREON. IT WOULD ALSO MAKE NO DIFFERENCE IF THE ASSESSEE WAS A COMPANY WHICH HAD BEEN INCORPORATED WITH THE OBJECT OF BUYING AND DEVELOPI NG LANDED PROPERTIES AND PROMOTING AND SETTING UP MARK ET THEREON. THE RESIDUARY HEAD OF INCOME CAN BE RESORTED TO ONL Y IF NONE OF THE SPECIFIC HEADS IS APPLICABLE TO THE INC OME IN 24 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. QUESTION; IT COMES INTO OPERATION ONLY AFTER THE PR ECEDING HEADS ARE EXCLUDED. 18.4. THEREAFTER THE HONBLE SUPREME COURT IN THE CASE OF SAMBHU INVESTMENTS PVT. LTD. VS. CIT 263 ITR 14 3 ALSO HELD THAT THE PRIME OBJECT OF THE ASSESSEE SHALL TO LET OUT PORTION OF THE SAID PROPERTY TO VARIOUS OCCUPANTS B Y GIVING THEM ADDITIONAL RIGHT FOR USING FURNITURES AND FIXT URES AND OTHER COMMON FACILITIES AND HENCE INCOME DERIVED F ROM THE SAID PROPERTY WAS AN INCOME TAXABLE UNDER THE HEAD INCOME FROM PROPERTY. THE PRINCIPLES LAID DOWN IN VARIOUS DECISIONS OF HONBLE SUPREME COURT WERE FOLLOWED IN VARIOUS OTHE R DECISIONS. HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI PROPERTIES AND INVESTMENTS LTD. 274 ITR 11 7 HONBLE BOMBAY HIGH COURT IN THE CASE OF MANGALA HO MES P. LTD. VS. ITO 325 ITR 281 REITERATED THE SAME PRINC IPLES. EVEN THE JURISDICTIONAL HIGH COURT IN THE CASE OF PVG RA JU VS CIT 66 ITR 122 FOLLOWING THE JUDGMENT OF APEX COURT IN THE CASE OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. (SUPRA) HELD THAT A MERE FACT THAT THE BUILDING OR SHOPS BU ILT WITH THE SPECIFIC OBJECT OF FORMING DEVELOPING OR SETTING-U P A MARKET DID NOT CHANGE THE CHARACTER OF INCOME DERIVED AS O WNER OF THE PROPERTY AND BY LEASING THE SAME. IT WAS HELD THAT THE INCOME DERIVED WAS TO BE HELD AS INCOME FROM HOUSE PROPERT Y AND NOT INCOME DERIVED FROM BUSINESS OR PROFESSION. 19. IN VIEW OF THE PREVAILING JUDICIAL PRINCIPLES/ PRECEDENTS ON THE ISSUE A.O. MIGHT HAVE ACCEPTED T HE BIFURCATION OF ASSESSEE RECEIPTS AND OFFERING THE I NCOMES UNDER RESPECTIVE HEADS IN THE SCRUTINY ORDERS PASSED. THE REFORE IT IS TO BE CONSIDERED THAT HE HAS FORMED AN OPINION OF A CCEPTING ASSESSEES RENTAL INCOME UNDER THE HEAD INCOME FRO M HOUSE 25 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. PROPERTY AND ALLOWING THE CLAIMS AS PER THAT HEAD RATHER THAN ALLOWING DEPRECIATION ON ASSETS IF IT IS CONVERTE D TO INCOME FROM BUSINESS. SINCE THE A.O. FORMED AN OPINION NOT ONLY IN THE IMPUGNED ASSESSMENT YEARS BUT ALSO IN EARLIER Y EARS WE ARE OF THE OPINION THAT THE LD. CIT OPINION THAT TH E SAME IS TO BE ASSESSED AS BUSINESS INCOME WILL FALL UNDER THE CATEGORY OF DIFFERENCE OF OPINION. IF A.O. HAS TAKEN ONE OF THE OPINION AVAILABLE OUT OF THE TWO THE LD. CIT CANNOT INVOKE JURISDICTION UNDER SECTION 263. PROVISIONS OF SECTION 263 DOES N OT PERMIT SUBSTITUTING ONE OPINION BY ANOTHER OPINION. THEREF ORE THE ORDER OF LD. CIT CANNOT BE SUSTAINED ON THE PRINCIP LES OF ERRONEOUS NATURE OF A.O. ORDER AS IT IS NOT ERRO NEOUS. 20. COMING TO THE ISSUE OF PREJUDICIAL TO THE IN TERESTS OF REVENUE AS RIGHTLY POINTED OUT BY LD. COUNSEL AS PER THE WORKINGS PLACED IN THE PAPER BOOKS THE RE-COMPUTAT ION UNDER THE HEAD BUSINESS WOULD RESULT IN GRANTING MORE DEPRECIATION AND AS RIGHTLY DEMONSTRATED BY ASSESSE E IN RESPECTIVE YEARS THE COMPUTATION WILL RESULT IN CA RRYING FORWARD MORE UNABSORBED DEPRECIATION TO THE ASSESSE E NOT ONLY IN THE IMPUGNED YEARS BUT ALSO IN LATER YEARS UPTO A.Y. 2012- 2013. IT IS ALSO FURTHER NOTICED THAT THE INCOMES I N THE A.YS. 2007-2008 AND 2009-2010 WERE ULTIMATELY ASSESSED UN DER SECTION 115JB ON BOOK PROFITS AS THE NORMAL COMPUTA TION RESULTED IN LOSSES OR NIL INCOME. THEREFORE LOOKIN G AT ANY WAY THE ORDERS ARE NOT PREJUDICIAL TO THE INTERESTS OF REVENUE IN ANY OF THE IMPUGNED ASSESSMENT YEARS. WHEN THIS WAS POI NTED OUT BY ASSESSEE IN THE COURSE OF PROCEEDINGS UNDER SECT ION 263 BY GIVING A DETAILED WORKINGS LD. CIT NOT ONLY IGNORE D THEM BUT EVEN REJECTED THEM ON THE REASON THAT ASSESSEE WAS ENTITLED FOR 10% DEPRECIATION WHEREAS 30% WAS CLAIMED UNDER TH E HEAD 26 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. HOUSE PROPERTY TOWARDS REPAIRS ON WRONG PRESUMPTIO N THAT THE BASIS FOR THOSE TWO CLAIMS PER SE ARE SAME. AS RIGHTLY POINTED OUT BY LD. COUNSEL DEPRECIATION WAS CLAIME D ON ASSETS WHICH ARE VALUED MORE THAN RS.300 CRORES WHE REAS 30% ON RENTALS IS ONLY A SMALL PERCENTAGE WHEN COMPARED TO DEPRECIATION. THIS ASPECT ITSELF IF ANALYSED PROPE RLY BY LD. CIT WOULD HAVE ESTABLISHED THAT ORDERS BEING REVISED AR E NOT PREJUDICIAL TO THE INTERESTS OF REVENUE. 21. WE ALSO NOTICE THAT LD. CIT GOT CARRIED AWAY BY ADDITIONAL DEPRECIATION AND REJECTED THE SAME HOL DING THAT ASSESSEE HAS NOT PRODUCED ANY ARTICLE OR THING NOR IS ENGAGED IN GENERATION OR DISTRIBUTION IN POWER SO AS TO FIT INTO THE AMBIT OF SECTION 32(IIA). THE WORD USED ADDITIONAL IS N OT ABOUT ADDITIONAL DEPRECIATION BUT ALTERNATE CLAIM OF DEPR ECIATION WHICH WAS NOT CLAIMED UNDER THE HEAD HOUSE PROPERT Y INCOME. LD. CIT SHOULD HAVE BEEN CAREFUL IN NOTICI NG THAT NO DEPRECIATION SHOULD BE ALLOWED WHILE CALCULATING TH E INCOMES UNDER HOUSE PROPERTY ON THE ASSETS USED WHEREAS WHILE CALCULATING THE INCOME FROM BUSINESS ASSESSEE WO ULD BE ELIGIBLE FOR DEPRECIATION UNDER SECTION 32. WHAT AS SESSEE HAS INTENDED TO INDICATE TO THE LD. CIT WAS ABOUT ADDIT IONAL CLAIM OF DEPRECIATION WHEN THE CLAIM OF REPAIRS WAS WITHD RAWN. IN THAT CONTEXT THE WORD ADDITIONAL WAS USED. SINCE THE WORD IS USED ALONG WITH THE WORD DEPRECIATION WE ARE OF THE OPINION THAT LD. CIT WRONGLY CONSIDERED IT AS A CLAIM OF ADDITIONAL DEPRECIATION IGNORING THAT ASSESSEES CLAIM OF DE PRECIATION IS UNDER SECTION 32(I) AND NOT UNDER SECTION 32(IIA) EVEN AS CAN BE SEEN FROM THE WORKINGS FURNISHED. BE THAT AS IT MAY WE HAVE ALREADY HELD THAT THE CLAIM OF DEPRECIATION UN DER THE HEAD BUSINESS IS MUCH MORE THAN THE CLAIMS MADE U NDER 27 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. INCOME FROM HOUSE PROPERTY WHICH RESULTS IN NOT O NLY WORKING OUT HIGHER LOSSES / DEPRECIATION IN THE IMP UGNED YEARS BUT ALSO IN LATER YEARS AS DEMONSTRATED BEFOR E LD. CIT BY WAY OF DETAILED WORKING BY ASSESSEE. IN VIEW OF THI S WE CERTAINLY HOLD THAT THE ORDERS OF A.O. ARE NOT PREJ UDICIAL TO THE INTERESTS OF REVENUE. 22. AS BRIEFLY STATED ABOVE WE ARE UNABLE TO GIVE ANY FINDING WHETHER THE INCOMES ARE TO BE ASSESSED UNDE R THE HEAD BUSINESS OR UNDER THE HEAD HOUSE PROPERTY IN TH E IMPUGNED ASSESSMENT YEARS IN THE ABSENCE OF COMPLET E DETAILS. SUFFICE TO SAY THAT FOR ANALYZING THE ISSUE IN RESP ECT OF JURISDICTION UNDER SECTION 263 BY LD. CIT WE ARE C ONVINCED THAT THE ORDERS OF A.O. ARE NOT EITHER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE. IN A.YS. 2006-07 AND 2 007-08 SINCE THE ISSUES WERE CONCLUDED IN EARLIER ORDERS A ND NOT IN THE ORDERS SOUGHT TO BE REVISED THEY ARE ALSO TIME BARRED. IN VIEW OF THIS IN ALL THE IMPUGNED ASSESSMENT YEARS ASSESSEES CONTENTIONS ARE ACCEPTED AND THE ORDERS OF LD. CIT UNDER SECTION 263 ARE SET ASIDE. WE RESTORE THE ORDERS OF ASSESSING OFFICER IN RESPECTIVE YEARS. ACCORDINGLY IN ALL TH E THREE APPEALS GROUNDS RAISED BY ASSESSEE ARE ALLOWED. 23. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.11.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD DATED 07 TH NOVEMBER 2014. VBP/- 28 ITA.NO.1038 1039 & 1040/HYD/2014 M/S. K. RAHEJA IT PARK (HYDERABAD) P. LTD. HYDERABAD. COPY TO 1. M/S. K. RAHEJA IT PARK (HYDERABAD) PRIVATE LIMIT ED MINDSPACE CYBERABAD SURVEY NO.64 (PART) APIIC SOFTWARE LAYOUT 1 ST FLOOR TITUS TOWERS BUILDING-10 MADHAPUR HYDERABAD. 2. COMMISSIONER OF INCOME TAX-II HYDERABAD 3. ADDL. COMMISSIONER OF INCOME TAX RANGE-II HYDE RABAD 4. D.R. ITAT A BENCH HYDERABAD