M/s Samruddhi Swastik Trading and Investment Ltd., Nagda v. The Asstt. CIT Circle- 2(1), Ujjain

ITA 575/IND/2010 | 2004-2005
Pronouncement Date: 25-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 57522714 RSA 2010
Assessee PAN TJUNE1999I
Bench Indore
Appeal Number ITA 575/IND/2010
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant M/s Samruddhi Swastik Trading and Investment Ltd., Nagda
Respondent The Asstt. CIT Circle- 2(1), Ujjain
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 25-11-2011
Assessment Year 2004-2005
Appeal Filed On 03-09-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.575/IND/2010 A.Y. 2004-05 SAMRUDDHI SWASTIK TRADING & INVESTMENT LIMITED NAGDA PAN AACCS-4152N APPELLANT VS ASSTT. COMMR. OF INCOME TAX CIRCLE 2(1) UJJAIN RESPONDENT DATE OF HEARING 9.11 .2011 DATE OF PRONOUNCEMENT 2 5 .11.2011 ASSESSEE BY : SHRI A.L. JAIN AND SHRI YOGESH THAR DEPTT. BY : SHRI ARUN DEWAN O R D E R PER R.C. SHARMA ACCOUNTANT MEMBER THE ASSESSEE HAS DIRECTED THE PRESENT APPEAL AGAINST THE ORDER DATED 7.7.2010 OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THE FOLLOWI NG GROUNDS :- 1 REASSESSMENT PROCEEDINGS BAD IN LAW 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) UJJAIN (HEREINAFTER REFERRED TO AS CIT(A)) ERRED IN CONFIRMING THE ACTION OF THE ASSTT. COMMISSIONER OF INCOME TAX 2 CIRCLE 2(1) UJJAIN (HEREINAFTER REFERRED TO AS A.O.) IN ISSUING NOTICE U/S 148 AND PASSING ORDER U/S 147/148 OF THE ACT. 1.2 THE APPELLANT PRAYS THAT THE REASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 148 BE HELD BAD IN LAW AND THE ADDITIONS MADE IN THE ORDER PASSED U/S 147/143(3) OF THE ACT. 2. ASSESSMENT OF LEAVE AND LICENCE INCOME AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF A.O. IN CHARGING THE LEAVE AND LICENSE INCOME AS INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME FROM BUSINESS INCOME. 2.2 THE APPELLANT PRAYS THAT THE IMPUGNED INCOME BE HELD AS CHARGEABLE UNDER THE HEAD INCOME FROM BUSINESS AND NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. DISALLOWANCE OF DEPRECIATION ON PROPERTY USED FOR BUSINESS 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING THE DEPRECIATION OF RS. 48 72 651/- (WRONGLY MENTIONED AT RS. 30 47 265/- IN ORDER U/S 147/143(3) CLAIMED ON THE PROPERTY USED FOR THE PURPOSE OF THE BUSINESS OF THE APPELLANT. 3.2 THE APPELLANT PRAYS THAT DISALLOWANCE OF DEPRECIATION BE DELETED. 4. LEVY OF INTEREST U/S 234D 4.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN CHARGING INTEREST U/S 234D IN THE REASSESSMENT PROCEEDINGS. 4.2 THE APPELLANT PRAYS THAT INTEREST U/S 234D SHOULD NOT BE LEVIED. 5. LEVY OF INTEREST U/S 234B 5.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN CHARGING INTEREST U/S 234B IN THE REASSESSMENT PROCEEDINGS 3 5.2 THE APPELLANT PRAYS THAT INTEREST U/S 234B SHOULD NOT BE LEVIED. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INVESTMENT COMPANY. THE RETURN FILED FOR THE RELEV ANT ASSESSMENT YEAR UNDER CONSIDERATION WAS PROCESSED U/S 143(1)(A) OF THE ACT. THEREAFTER THE ASSESSIN G OFFICER INITIATED PROCEEDINGS U/S 147 OF THE ACT AFTER RECO RDING THE REASONS. THE ASSESSEE CHALLENGED THE REOPENING OF ASSESSMENT BEFORE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) WHO CONFIRMED THE ACTION OF THE ASSES SING OFFICER. NOW THE ASSESSEE IS IN APPEAL BEFORE US O N THE GROUNDS OF APPEAL MENTIONED HEREINABOVE. 2. WE FIND THAT IN THE ASSESSEES OWN CASE THE ISSU E WITH REGARD TO REOPENING OF ASSESSMENT U/S 147 OF T HE ACT TREATMENT OF LEAVE AND LICENCE INCOME AS INCOM E FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME AND DISALLOWANCE OF DEPRECIATION ON PROPERTY USED FOR BUSINESS HAS BEEN ELABORATELY CONSIDERED AND THE I SSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE REVENU E. THE PRECISE OBSERVATION IN THE ORDER DATED 29.10.2010 W AS AS UNDER :- 4 THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAIN ST THE ORDER OF LD. CIT(A) FOR THE ASSESSMENT YEARS 1999-2 000 2000- 01 2001-02 AND 2003-04 IN THE MATTER OF ORDER PASS ED U/S 143(3)/148 OF THE INCOME-TAX ACT 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY BELONG S TO THE BIRLA GROUP OF COMPANIES. IT IS MAINLY DERIVING INC OME FROM PROPERTIES LET OUT. INVESTMENTS ARE ALSO MADE IN CE RTAIN SHARES. THE INCOME FROM THE PROPERTIES LET OUT WAS DISCLOSE D BY THE ASSESSEE UNDER THE HEAD BUSINESS INCOME SO AS TO CLAIM DEPRECIATION AND OTHER EXPENDITURE. THE RETURN WAS SIMPLY ACCEPTED BY PROCESSING THE SAME U/S 143 (1) OF IT A CT. SUBSEQUENTLY THE CASES WERE RE-OPENED BY THE A.O IN VIEW OF THE VARIOUS SUPREME COURT JUDGMENTS WHEREIN IT WAS HELD THAT WHEN NO SERVICES ARE RENDERED INCOME FROM PROPERTY SHOULD BE DISCLOSED AND ASSESSED AS INCOME FROM HOUSE PROP ERTY AND NOT AS BUSINESS INCOME. ACCORDINGLY INCOME WAS ASSE SSED BY THE AO U/S 143(3)/147 AS INCOME FROM HOUSE PROPERT Y AND ASSESSEES CLAIM OF DEPRECIATION AS BUSINESS EXPEND ITURE WAS DECLINED. BY THE IMPUGNED ORDER THE LD. CIT(A) CONF IRMED THE ACTION OF AO AGAINST WHICH ASSESSEE IS IN FURTHER A PPEAL BEFORE US. FOLLOWING COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN ALL THE YEARS UNDER CONSIDERATION. GROUND NO.1 ISSUANCE ON NOTICE U/S 148 IS INVALID THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN THE LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE R EOPENING OF ASSESSMENT U/S 147 BY ISSUANCE OF NOTICE U/S 148 WA S VALID. GROUND NO.2 ORDER PASSED U/S 143(3)/148 IS BARRED BY LIMITATIO N: THAT THE LD. CIT(A) FURTHER ERRED IN HOLDING THAT T HE ORDER PASSED U/S 143(3)/148 WAS VALID AND WAS NOT BARRED BY LIMITATION IN VIEW OF SECTION 153(2) AND IN VIEW OF JUDGMENT OF HONBLE M.P.HIGH COURT IN THE CASE OF JIJEEBAI SHIN DE VS. CGT 46 CTR 122 IGNORING THAT : (A) THE ORDER SHOULD HAVE BEEN PASSED UP TO 31.03.2006 AND THE PASSING THEREOF SHOULD BE EVIDENCED BY ITS DISP ATCH UP TO 31.03.2006 ONLY PUTTING THE DATE ON THE ORDER 31. 03.2006 IS NOT SUFFICIENT. (B) THE ORDER WAS DELIVERED TO THE GOVERNMENT SPEED POS T CENTRE UJJAIN ONLY ON 03.04.2006 ( AS PER CERTIFIC ATE OF POSTAL DEPARTMENT). THE PLEAS TAKEN BY THE A.O THAT THE OR DER WAS 5 HANDED OVER TO THE DISPATCH SECTION WORKING UNDER THE INSTRUCTION AND DIRECTION OF THE ASSESSING OFFICER IS NOT SUFFICIENT. GROUND NO.3.ASSESSMENT OF LEAVE AND LICENSE INCOME AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCO ME IS INVALID. THAT THE LD. CIT(A) FURTHER ERRED IN HOLDING THAT T HE :LEAVE AND LICENSE INCOME IS CHARGEABLE UNDER HTHE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF THE HEAD BUSINESS INCOME. GROUND NO.4.DISALLOWANCE OF DEPRECIATION ON PROPERT Y USED FOR BUSINESS OF THE ASSESSEE: THAT THE LD. CIT(A) ALSO ERRED IN CONFIRMING THE DI SALLOWANCE OF DEPRECIATION OF CLAIMED ON THE PROPERTY USED FOR THE PURPOSE OF THE BUSINESS OF THE APPELLANT. GROUND NO.5 WRONG WITHDRAWAL OF INTEREST U/S 244A OF THE ACT THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN CONFIRMING THE WITHDRAW AL OF INTEREST GRANTED U/S 244A. GROUND NO.6 WRONG CHARGING OF INTREST U/S 234-D THAT THE LD. CIT(A) ALSO ERRED IN HOLDING THAT THE INTEREST CHARGED U/S 234-D WAS VALID. GROUND NO.7 INITIATING PENALTY PROCEEDINGS U/S 271 (1)(C): THAT THE LD. CIT (A) ALSO ERRED IN NOT HOLDING THAT THE INITIATION OF PENALTY PROCEEDINGS U/S 271 (1) (C) W AS NOT CORRECT. 3. SHRI YOGESH JAIN CA APPEARED ON BEHALF OF TH E ASSESSEE. VARIOUS GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE WIT H REGARD TO LEGALITY OF REOPENING AND CONSEQUENT ASSESSMENT MADE THEREON HOWEVER DURING THE COURSE OF HEARING LD.A UTHORIZED REPRESENTATIVE ONLY PRESSED LEGALITY OF REOPENING O F ASSESSMENT IN THE ABSENCE OF ANY NEW MATERIAL FOUND BY THE ASSESSING OFFICER. IT WAS CONTENDED BY THE LD.AUTH ORIZED REPRESENTATIVE THAT THE ASSESSEE HAS FURNISHED ALL INFORMATION WITH RESPECT OF HIS SOURCE OF INCOME AND ASSESSMENT WAS FRAMED U/S 143(1) THEREAFTER THERE WAS NO ANY ADD ITIONAL INFORMATION OR NEW MATERIAL BEFORE THE AO TO JUSTIF Y THE AOS ACTION FOR A REASON TO BELIEVE THAT THERE WAS ESCAP EMENT OF INCOME. ON THE OTHER HAND THE LD. CIT DR SUPPORTED THE 6 REOPENING OF ASSESSMENT ON THE BASIS OF DETAILED FI NDING RECORDED BY THE ASSESSING OFFICER AND JUSTIFICATION GIVEN BY THE CIT(A) BOTH ON FACTS AND LAW UPHOLDING THE VAL IDITY OF REOPENING. FROM THE RECORD WE FOUND THAT THE ASSESS EE IS AN INVESTMENT COMPANY OF GRASIM GROUP OF INDUSTRIES. R ETURN WAS FILED AT A LOSS WHICH WAS PROCESSED U/S 143(1) FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION AND TH E RETURNED INCOME WAS ACCEPTED. THEREAFTER THE AO RECORDED DE TAILED AND SPECIFIC REASONS FOR ISSUE OF NOTICE U/S 148 TO THE EFFECT THAT RENTAL INCOME DECLARED BY THE ASSESSEE WAS TO BE CHARGED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THE DEPRECIATION CLAIMED ON SUCH PROPERTY WAS NOT ALLOW ABLE AS BUSINESS EXPENDITURE AND SUCH EXCESS CLAIM HAS RESU LTED INTO UNDER ASSESSMENT OF INCOME. CONTENTION OF LD.AUTHOR IZED REPRESENTATIVE WAS THAT OFFICE PREMISES WERE BEING USED FOR THE PURPOSE OF ASSESSEES BUSINESS HENCE THE QU ESTION OF TAKING RENTALS IN RESPECT THEREOF AS INCOME FROM HO USE PROPERTY DOES NOT ARISE. HE FURTHER CONTENDED THAT THE ASSESSEE IS THE EXCLUSIVE OWNER OF THESE OFFICE PREMISES AND THE SAME HAVE BEEN GIVEN ON LEASE AND LICENCE BASIS IN THE N ORMAL COURSE OF BUSINESS OF THE ASSESSEE. THE LD.AUTHORIZ ED REPRESENTATIVE DRAWN OUR ATTENTION TO THE TERMS OF LEASE AND LICECING AGREEMENT AND SUBMITTED THAT LETTING OUT O F PROPERTY WAS NOT MERELY A TRANSACTION OF LETTING OUT BUT TH E SAME IS A COMMERCIAL EXPLOITATION OF ITS PROPERTY. AS PER LD. AUTHORIZED REPRESENTATIVE WHEN THE LETTING OUT OF PROPERTY IS FOR COMMERCIAL EXPLOITATION OF THE PROPERTY THE INCOME THEREOF IS TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS A ND NOT AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY THERE WA S CORRECT CLAIM OF DEPRECIATION ON SUCH BUILDING AS BUSINESS EXPENDITURE. WITH REGARD TO THE VALIDITY OF REOPENI NG LD.AUTHORIZED REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF I.T.A.T. MUMBAI BENCH IN AIPITA MARKETING (P) L IMITED VS. ITO 21 SOT 302 IN SUPPORT OF PROPOSITION THAT IN ABSENCE OF ANY NEW MATERIAL THE AO IS NOT EMPOWERED TO REOPEN THE ASSESSMENT WHETHER ORIGINAL ASSESSMENT WAS COMPLETE D U/S 143(1)/143(3). LD.AUTHORIZED REPRESENTATIVE FURTHER CONTENDED THAT WHILE HOLDING WHETHER IN A CASE WH ERE ASSESSMENT IS MADE U/S 143(1) AND NOT U/S 143(3) IT IS NOT POSSIBLE TO HOLD VIEW THAT INCOME ESCAPING ASSESSME NT IS ALWAYS JUSTIFIED. AS PER LD.AUTHORIZED REPRESENTATI VE THE TRIBUNAL HAS ELABORATELY DISCUSSED THE PROPOSITION OF LAW LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI 7 291 ITR 500 AND HAVE DISTINGUISHED IT WHILE COMING TO THE CONCLUSION THAT THERE WAS NO VALID REOPENING EVEN I F THE ASSESSMENT WAS MADE U/S 143(1). THE LD.AUTHORIZED REPRESENTATIVE ALSO RELIED ON THE DECISION OF HON'B LE MADRAS HIGH COURT IN THE CASE OF BAPALAL & COMPANY EXPORT 289 ITR 37 IN SUPPORT OF THE PROPOSITION THAT IN THE A BSENCE OF NEW MATERIAL THE AO IS NOT EMPOWERED TO REOPEN AN ASSESSMENT IRRESPECTIVE OF WHETHER IT IS MADE U/S 1 43(1) OR 143(3). RELIANCE WAS ALSO PLACED ON THE DECISION OF BOMBAY I.T.A.T. IN THE CASE OF S. VINOD KUMAR & COMPANY I N I.T.A.NO. 3300/MUM/2004 ORDER DT3RD JULY 2008 AN D DECISION IN CASE OF DRIZZLE MARKETING PRIVATE LIMIT ED IN I.T.A.NO. 3737/MUM/2005 ORDER DATED 22 ND JANUARY 2008 WHEREIN IT WAS HELD THAT IN THE ABSENCE OF FRESH MA TERIAL HAVING COME TO THE NOTICE OF AO NOTICE U/S 148 COU LD NOT BE ISSUED EVEN WHERE ASSESSMENT WAS ORIGINALLY COMPLET ED U/S 143(1) OF THE ACT. 4. ON THE OTHER HAND THE LD. CIT DR SHRI R.K. CH AUDHARY APPEARED ON BEHALF OF THE REVENUE AND STRONGLY SUPP ORTED THE ORDERS OF THE LOWER AUTHORITIES WITH REGARD TO THE VALIDITY OF THE REOPENING. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKERS PRIVATE LIMITED (SUPRA) WHEREIN IT WAS HELD THAT I N CASE OF INTIMATION U/S 143(1) THE AO CAN REOPEN THE ASSESS MENT IF THERE ARE REASONS TO BELIEVE THAT INCOME OF ASSESSE E HAS ESCAPED ASSESSMENT. AS PER THE LD. CIT DR THE ASSE SSEE HAS WRONGLY CLAIMED INCOME FROM HOUSE PROPERTY AS INCOM E FROM BUSINESS IN RESPECT OF THE OFFICE PREMISES GIVEN ON LEASE AND LICENCE AGREEMENT ACCORDINGLY CLAIM OF DEPRECIATI ON UNDER THE BUSINESS HEAD WAS WRONG WHICH NECESSITATED REO PENING OF ASSESSMENT U/S 147. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOL LENS MILLS LIMITED 236 ITR 34 WHREIN REOPENING OF ASSE SSMENT WAS HELD TO BE JUSTIFIED U/S 147(A). 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALS O DELIBERATED ON THE CASE LAWS CITED BY THE LD.AUTHOR IZED REPRESENTATIVE DEALT WITH BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AND ALSO CASE LAWS CITED BY LD. C IT DR IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE REC ORD WE FOUND THAT THE ASSESSEE WAS EARNING RENTAL INCOME I N RESPECT OF BUILDING GIVEN ON LEASE AND LICENCE. THE ASSESSE E WAS CLAIMING SUCH INCOME AS INCOME FROM BUSINESS AND TH EREBY 8 CLAIMED THE DEPRECIATION ON SUCH PROPERTY AS BUSINE SS EXPENDITURE. THE RETURN SO FILED WAS PROCESSED BY T HE ASSESSING OFFICER U/S 143(1) THEREAFTER WITHIN THE SPECIFIED LIMIT PRESCRIBED UNDER THE STATUTE THE AO INITIATE D PROCEEDINGS U/S 147 BY ISSUE OF NOTICE U/S 148. REA SONS FOR REOPENING WAS ALSO RECORDED. NOW THE CRUX OF THE I SSUE REVOLVES AROUND VALIDITY OF REOPENING WHEN THE AS SESSMENT HAS BEEN FRAMED U/S 143(1) AND NOT FRESH MATERIAL I S AVAILABLE BEFORE THE AO FOR FORMING A BELIEF THAT THERE WAS E SCAPEMENT OF INCOME. THE CRUX OF THE PROVISIONS OF SEC.143(1) UP TO 31 ST MARCH 1989 WAS THAT AFTER A RETURN OF INCOME WAS FILED THE ASSESSING OFFICER COULD MAKE AN ASSESSMENT UNDER SE CTION 143(1) WITHOUT REQUIRING PRESENCE OF THE ASSESSEE O R PRODUCTION BY HIM OF ANY EVIDENCE IN SUPPORT OF THE RETURN. WHERE THE ASSESSEE OBJECTED TO SUCH ASSESSMENT OR W HERE THE OFFICER WAS OF THE OPINION THAT THE ASSESSMENT WAS INCORRECT OR INCOMPLETE OR THE OFFICER DID NO COMPLETE THE ASSES SMENT UNDER SECTION 143(1) BUT WANTED TO MAKE AN INQUIRY A NO TICE UNDER SECTION 143(2) WAS REQUIRED TO BE ISSUED TO THE ASS ESSEE REQUIRING HIM TO PRODUCE EVIDENCE IN SUPPORT OF HIS RETURN. AFTER CONSIDERING THE MATERIAL AND EVIDENCE PRODUCE D AND AFTER MAKING NECESSARY INQUIRIES THE OFFICER HAD P OWER TO MAKE ASSESSMENT UNDER SECTION 143(3). 6. WITH EFFECT FROM 1 ST APRIL 1989 THE PROVISIONS UNDERWENT SUBSTANTIAL AND MATERIAL CHANGES. A NEW SCHEME WAS INTRODUCED AND THE NEW SUBSTITUTED SECTION 143(1) P RIOR TO SUBSEQUENT SUBSTITUTION WITH EFFECT FROM 1STJUNE 19 99 IN CLAUSE(A) A PROVISION WAS MADE THAT WHERE A RETURN WAS FILED UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SECTION 142(1) AND ANY TAX OR REFUND WAS FOUND DUE ON THE B ASIS OF SUCH RETURN AFTER ADJUSTMENT OF TAX DEDUCTED AT SOU RCE ANY ADVANCE TAX OR ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST AN INTIMATION WAS TO BE SENT U/S 143(1)( A) WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 143(2) TO TH E ASSESSEE SPECIFYING THE SUM SO PAYABLE AND SUCH INTIMATION W AS DEEMED TO BE A NOTICE OF DEMAND ISSUED UNDER SECTION 156. THE FIRST PROVISO TO SECTION 143(1)(A) ALLOWED THE DEPARTMENT TO MAKE CERTAIN ADJUSTMENTS IN THE INCOME OR LOSS DECLARED IN THE RETURN. THEY WERE AS FOLLOWS: A) AN ARITHMETICAL ERROR IN THE RETURN ACCOUNTS AND DOCUMENTS ACCOMPANYING IT WERE TO BE RECTIFIED. B) ANY LOSS CARRIED FORWARD DEDUCTIONS ALLOWANCE OR RELIEF WHICH ON THE BASIS OF THE INFORMATION AVAILABLE IN SUCH RETURN 9 ACCOUNTS OR DOCUMENTS WAS PRIMA FACIE ADMISSIBLE BUT WHICH WAS NOT CLAIMED IN THE RETURN WAS TO BE ALLOWED; AN D C) ANY LOSS CARRIED FORWARD RELIEF CLAIMED IN THE RET URN WHICH ON THE BASIS OF THE INFORMATION AS AVAILABLE IN SUCH RETURN ACCOUNTS OR DOCUMENTS WERE PRIMA FACIE INAD MISSIBLE WAS TO BE DISALLOWED. 7. WHAT WERE PERMISSIBLE UNDER THE FIRST PROVISO TO S ECTION 143(1)(A) TO BE ADJUSTED WERE (I) ONLY APPARENT ARI THMETICAL ERRORS IN THE RETURN ACCOUNTS OR DOCUMENTS ACCOMPA NYING THE RETURN (II) LOSS CARRIED FORWARD DEDUCTION ALLOW ANCE OR RELIEF WHICH WAS PRIMA FACIE ADMISSIBLE ON THE BAS IS OF INFORMATION AVAILABLE IN THE RETURN BUT NOT CLAIMED IN THE RETURN AND SIMILARLY (III) THOSE CLAIMS WHICH WER E ON THE BASIS OF THE INFORMATION AVAILABLE IN THE RETURN P RIMA FACIE INADMISSIBLE WERE TO BE RECTIFIED/ALLOWED/DISALLOW ED. WHAT WAS PERMISSIBLE FOR CORRECTION OF ERRORS APPARENT O N THE BASIS OF THE DOCUMENTS ACCOMPANYING THE RETURN. THE ASSE SSING OFFICER HAD NO AUTHORITY TO MAKE ADJUSTMENTS OR ADJ UDICATE UPON ANY DEBATABLE ISSUE. IN OTHER WORDS THE ASSE SSING OFFICER HAD NO POWER TO GO BEHIND THE RETURN ACCOU NTS OR DOCUMENTS EITHER IN ALLOWING OR IN DISALLOWING DEDU CTION ALLOWANCE OR RELIEF. 8. THE PROVISIONS OF SECTION 143(1)(A) ARE WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 143(2). THO UGH TECHNICALLY THE INTIMATION ISSUED WAS DEEMED TO BE A DEMAND NOTICE ISSUED UNDER SECTION 156 THAT DID NOT PER SE PRECLUDE THE RIGHT OF THE ASSESSING OFFICER TO PROCEED UNDER SECTION 143(2). THAT RIGHT IS RESERVED AND NOT TAKEN AWAY. BETWEEN THE PERIOD FROM 1 ST APRIL 1989 TO 31 ST MARCH 1998 THE SECOND PROVISO TO SECTION 143(1)(A) REQUIRED THAT WHERE A DJUSTMENTS WERE MADE UNDER FIRST PROVISO TO SECTION 143(1)(A) AN INTIMATION HAD TO BE SENT TO THE ASSESSEE NOTWITHST ANDING THAT NO TAX OR REFUND WAS DUE FROM HIM AFTER MAKING SUCH ADJUSTMENTS. WITH EFFECT FROM 1 ST APRIL 1998 SECOND PROVISO TO SECTION 143(1)(A) WAS SUBSTITUTED BY THE FINANCE A CT 1997 WHICH WAS OPERATIVE TILL 1 ST JUNE 1999. THE REQUIREMENT WAS THAT INTIMATION WAS TO BE SENT TO THE ASSESSEE WHET HER OR NOT ANY ADJUSTMENTS HAD BEEN MADE UNDER THE FIRST PROVI SO TO SECTION 143(1) AND NOTWITHSTANDING THAT NO TAX OR I NTEREST WAS FOUND DUE FROM THE ASSESSEE CONCERNED. BETWEEN 1 ST APRIL 1998 TO 31 ST MARCH 1999 SENDING OF AN INTIMATION UNDER SECTION 143(1)(A) WAS MANDATORY. THIS POSITION CO NTINUED TILL ALL THE ASSESSMENT YEARS UNDER CONSIDERATION BEFORE US. 10 9. THUS LEGISLATIVE INTENT IS VERY CLEAR FROM THE US E OF THE WORD INTIMATION AS SUBSTITUTED FOR ASSESSMENT THE ASSESSING OFFICER IS FREE TO MAKE ANY ADDITION AFTE R GRANT OF OPPORTUNITY TO THE ASSESSEE. BY MAKING ADJUSTMENTS UNDER THE FIRST PROVISO TO SECTION 143(1)(A) NO ADDITION WHI CH IS IMPERMISSIBLE BY THE INFORMATION IN THE RETURN COUL D BE MADE BY THE ASSESSING OFFICER. REASON IS THAT UNDER RSE CTION 143(1)(A) NO OPPORTUNITY IS GRANTED TO THE ASSESSE E AND THE ASSESSING OFFICER PROCEEDS ON HIS OPINION ON THE BA SIS OF THE RETURN FILED BY THE ASSESSEE. THE VERY FACT THAT N O OPPORTUNITY OF HEARING BEING GIVEN UNDER SECTION 143(1)(A) INDI CATES THAT THE ASSESSING OFFICER HAS TO PROCEED ACCEPTING THE RETURN AND MAKING THE PERMISSIBLE ADJUSTMENTS ONLY. 10. AS A RESULT OF INSERTION OF EXPLANATION TO SECTIO N 143 BY THE FINANCE ACT (NO.2) OF 1991 WITH EFFECT FROM 1-1 0-1991 AND SUBSEQUENTLY WITH EFFECT FROM 1-6-1994 BY FINANCE ACT 1994 AND ULTIMATELY OMITTED WITH EFFECT FROM 1-6-1999 BY EXPLANATION AS INTRODUCED BY THE FINANCE ACT (NO.2) OF 1999 AN INTIMATION SENT TO THE ASSESSEE UNDER SECTION 1 43(1)(A) WAS DEEMED TO BE AN ORDER FOR PURPOSES OF SECTION 246 B ETWEEN 1- 6-94 TO 31-3-95 AND UNDER SECTION 264 BETWEEN 1-10 -1991 AND 31-5-1999. THE EXPRESSIONS INTIMATION AND A SSESSMENT ORDER HAVE BEEN USED AT DIFFERENT PLACES. CONTEXT UAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS HAS TO BE UN DERSTOOD IN THE CONTEXT OF THE EXPRESSIONS USED. ASSESSMENT IS USED AS MEANING SOME TIMES THE COMPUTATION OF INCOME SOME TIMES THE DETERMINATION OF THE AMOUNT OF TAX PAYABLE AN D SOME TIMES THE WHOLE PROCEDURE LAID DOWN IN THE ACT FOR IMPOSING LIABILITY UPON THE TAX PAYER. IN THE SCHEME OF TH INGS THE INTIMATION UNDER SECTION 143(1)(A) CANNOT BE TREATE D TO BE AN ORDER OF ASSESSMENT. THE DISTINCTION IS ALSO WELL BROUGHT OUT BY THE STATUTORY PROVISIONS AS THEY STOOD AT DIFFER ENT POINTS OF TIME. UNDER SECTION 143(1)(A) AS STOOD PRIOR TO 1 ST APRIL 1989 THE ASSESSING OFFICER HAD TO PASS AN ORDER IF HE DECIDED TO ACCEPT THE RETURN BUT UNDER THE AMENDED PROVISI ONS THE REQUIREMENT OF PASSING OF AN ASSESSMENT ORDER HAS B EEN DISPENSED WITH AND INSTEAD AN INTIMATION IS REQUIRE D TO BE SENT. 11. THE CENTRAL BOARD OF DIRECT TAXES (CBDT) HAD ISSUE D VARIOUS CIRCULARS IN THIS REGARD EXPLAINING THE PUR POSE BEHIND THE PROVISIONS OF SECTION 143(1)(A) NAMELY TO MI NIMIZE THE DEPARTMENTAL WORK IN SCRUTINIZING EACH AND EVERY RE TURN AND TO CONCENTRATE ON SELECTIVE SCRUTINY OF RETURNS. 11 12. UNDER THE FIRST PROVISO TO SECTION 143(1) WITH EFF ECT FROM 1 ST JUNE 1999 EXCEPT AS PROVIDED IN THE PROVISION ITS ELF THE ACKNOWLEDGMENT OF THE RETURN SHALL BE DEEMED TO BE INTIMATION UNDER SECTION 143(1) WHERE (A) EITHER NO SUM IS PAY ABLE BY THE ASSESSEE OR (B) NO REFUND IS DUE TO HIM. IT IS SI GNIFICANT THAT THE ACKNOWLEDGEMENT IS MOSTLY DONE BY THE MINISTERI AL STAFF AND NOT BY THE ASSESSING OFFICER. THUS THE INTIMAT ION DOES NOT HAVE ALL THE CHARACTERISTICS OF AN ASSESSMENT AS UN DERSTOOD IN THE COMMON PARLANCE OR EVEN DURING TAXING STATUTES. FURTHER THE INTIMATION UNDER SECTION 143(1)(A) WAS DEEMED TO BE A NOTICE OF DEMAND UNDER SECTION 156 FOR THE PURPOSE OF MAKING MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX AP PLICABLE. BY SUCH APPLICATION ONLY TAX AMOUNT INDICATED TO BE PAYABLE BY THE INTIMATION BECAME PERMISSIBLE AND NOTHING MO RE CAN BE INFERRED FROM THE DEEMING SECTION. 13. ON A COMPARISON OF THE PROVISIONS AS IT STOOD BEF ORE THE DIRECT TAX LAWS (AMENDMENT) ACT 1987 AND THE PROVI SIONS AS SUBSTITUTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT 1987 IT WOULD BE CLEAR THAT: - THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM 1 ST APRIL 1989 AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS STOO D PRIOR TO SUCH SUBSTITUTION. 14. UNDER OLD PROVISIONS OF SECTION 147 SEPARATE CLAU SES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INC OME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS C OULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UND ER SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED : FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME-TAXABLE HAVE ESCAPED ASSESSMENT AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITH ER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSES SMENT OF THAT YEAR. BOTH THESE CONDITIONS ARE CONDITIONS PRECEDE NT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE J URISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED NEW SECTION 147 THE EXIS TENCE OF ONLY THE FIRST CONDITION WOULD SUFFICE. IN OTHER W ORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURI SDICTION TO REOPEN THE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH 12 THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF PROVISO TO SECTION 147 AS STOOD AFTER AMEN DMENT. 15. THUS AS PER THE AMENDED PROVISIONS OF SEC.147 FOR RE- OPENING OF AN ASSESSMENT THERE SHOULD BE A REASON T O BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T FOR ANY ASSESSMENT YEAR. SUCH REASON TO BELIEVE CAN BE RA ISED IN ANY MANNER AND IS NOT QUALIFIED BY A PRE-CONDITION OF F AITH AND TRUE DISCLOSURE OF MATERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTION 147(A) AND THE ASSESSING OFFICER CAN UNDER THE AMENDED PROVISIONS LEGITIMA TELY RE- OPEN THE ASSESSMENT IN RESPECT OF INCOME WHICH HAD ESCAPED ASSESSMENT. VIEWED IN THAT ANGLE POWER TO RE-ASSE SSMENT IS MUCH WIDER UNDER THE AMENDED PROVISIONS AND CAN BE EXERCISED EVEN AFTER ASSESSEE HAS DISCLOSED FULLY A ND TRULY ALL MATERIAL FACTS. REASONS WHICH MAY WEIGH WITH THE A SSESSING OFFICER MAY BE THE RESULT OF HIS OWN INVESTIGATION AND MAY ALSO COME FROM ANY SOURCE THAT HE CONSIDERS RELIABLE. F ORMING OF THIS BELIEF IS AN ADMINISTRATIVE DECISION TO BE ARR IVED AT IN JUDICIAL MANNER. THE ASSESSING OFFICER IS REQUIRED TO ACT FAIRLY AND JUDICIOUSLY. HIS BELIEF MUST HAVE SUBST ANCE AND MUST NOT BE A SHADOW. THERE IS NO DISPUTE TO THE W ELL SETTLED LEGAL PROPOSITION THAT SUCH BELIEF SHOULD BE BONA F IDE AND SHOULD NOT BE BASED ON VAGUE ARBITRARY AND NON-SPE CIFIC INFORMATION. 16. IN THE CASE OF RAJESH JHAVERI HON'BLE SUPREME COU RT CATEGORICALLY DEALT WITH REOPENING OF ASSESSMENT WI TH REGARD TO MODE UNDER WHICH ASSESSMENT HAS BEEN DONE EITHE R BY WAY OF THE INTIMATION U/S 143(1) OR BY WAY OF SCRUTINY ASSESSMENT ORDER U/S 143(3). IT WAS OBSERVED THAT THERE IS A C ONTEXTUAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS IN THE CONTE XT THE EXPRESSIONS ARE USED. THE WORD ASSESSMENT IS USED AS MEANING SOMETHING THE COMPUTATION OF INCOME SOME TIMES DETERMINATION OF AMOUNT OF TAX PAYABLE AND SOMETI MES THE WHOLE PROCEDURE LAID DOWN IN THE ACT FOR IMPOSING L IABILITY UPON THE TAX PAYERS. IT WAS FURTHER OBSERVED THAT I N THE SCHEME OF THINGS THE INTIMATION U/S 143(1)(A) CANNOT BE T REATED TO BE AN ORDER OF ASSESSMENT. THIS DISTINCTION IS ALSO WE LL BROUGHT OUT BY THE STATUTORY PROVISIONS AS THEY STOOD AT DI FFERENT POINTS OF TIME PRIOR TO 1 ST APRIL 1989 U/S 143(1)(A) THE AO HAD TO PASS AN ASSESSMENT ORDER IF HE DECIDED TO ACCEPT TH E RETURN BUT UNDER THE AMENDED PROVISIONS THE REQUIREMENT O F PASSING OF AN ASSESSMENT ORDER HAS TO BE DISPENSED WITH AND INSTEAD OF IT AN INTIMATION IS REQUIRED TO BE SENT. IT WAS FUR THER 13 ELABORATED THAT UNDER THE FIRST PROVISO TO THE NEWL Y SUBSTITUTED SECTION 143(1) W.E.F. 1 ST JUNE 1999 EXCEPT AS PROVIDED IN THE PROVISION ITSELF ACKNOWLEDGEMENT OF THE RETURN SHA LL BE DEEMED TO BE INTIMATION U/S 143(1) WHERE NO SUM IS PAYABLE BY THE ASSESSEE OR WHERE NO REFUND IS DUE TO HIM. I T WAS CATEGORICALLY OBSERVED THAT ACKNOWLEDGEMENT IS NOT DONE BY THE ASSESSING OFFICER BUT BY THE MINISTERIAL STAFF . UNDER THESE CIRCUMSTANCES IT CANNOT BE SAID THAT THE ASSESSMEN T HAS BEEN MADE BY THE MINISTERIAL STAFF. THE INTIMATION U/S 1 43(1)(A) IS DEEMED TO BE A NOTICE OF DEMAND U/S 156. FOR THE AP PARENT PURPOSE OF MAKING MACHINERY PROVISION RELATING TO R ECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY I NDICATED TO BE PAYABLE IN THE INTIMATION BECOMES PERMISSIBLE AN D NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISION. TH US THERE IS NO ASSESSMENT U/S 143(1)(A) OF THE ACT. 17. IT IS CRYSTAL CLEAR FROM THE ABOVE DECISION OF THE HON'BLE SUPREME COURT WHICH IS HAVING BINDING EFFECT ON US UNDER CONSTITUTION OF INDIA THAT THE PROCESSING OF RETURN U/S 143(1) DOES NOT AMOUNT TO ASSESSMENT ORDER. THEREFORE NEI THER ANY OPINION IS FORMED NOR THERE IS A QUESTION OF CHANGE OF OPINION. SINCE INTIMATION U/S 143(1) IS NOT AN ASSESSMENT T HERE IS NO NECESSITY OF ANY NEW MATERIAL TO EMPOWER THE AO TO REOPEN THE ASSESSMENT U/S 147 WHEN THERE IS A REASON TO B ELIEVE THAT THERE IS ESCAPEMENT OF INCOME. IN THE INSTANT CASE BEFORE US THE RETURN WAS PROCESSED U/S 143(1) AND NO ASSESSME NT WAS FRAMED BY ISSUE OF NOTICE U/S 143(2). UNDER THESE F ACTS AND CIRCUMSTANCES THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI IS CLEARLY APPLICABLE. IT IS PERTINENT TO MENTION HERE THAT SE CTION 147 AUTHORIZES THE AO TO ASSESS OR REASSESS INCOME CHAR GEABLE TO TAX WHEN HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. IN THE INST ANT CASE THE OBSERVATION OF THE AO TO THE EFFECT THAT BY CLA IMING THE RETURNED INCOME UNDER WRONG HEAD THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION WHICH IS NOT PERMISSIBLE IN CA SE OF INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. THIS IS A SUFFICIENT REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WHICH IS SUFFICIEN T TO EMPOWER THE AO TO REOPEN THE ASSESSMENT BY ISSUE OF NOTICE U/S 148. HON'BLE SUPREME COURT IN THE CASE OF RAJES H JHAVERI HAS FURTHER OBSERVED THAT UNDER THE EARLIER PROVISI ONS OF SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED FIRSTLY THE AO MUST HAVE REASON TO BELIEVE THAT IN COME PROFITS 14 OR GAINS CHARGEABLE TO TAX HAVE ESCAPED ASSESSMENT AND SECONDLY HE MUST ALSO HAVE A REASON TO BELIEVE THA T SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSIO N OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. BOTH THESE CONDITIONS WERE REQUIRED TO BE SATISFIED BEFORE THE AO COULD H AVE JUSTIFICATION TO ISSUE NOTICE U/S 148 READ WITH SEC TION 147(A) BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY FIRST CONDITION SUFFICES MEANING THEREBY IF THE AO HAS R EASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONF ERS THE VALID JURISDICTION TO REOPEN THE ASSESSMENT. IT IS PERTINENT TO MENTION HERE THAT BOTH THE CONDITIONS MUST BE FULFI LLED IF THE CASE IS WITHIN THE AMBIT OF PROVISO TO SECTION 147. THUS IF MORE THAN FOUR YEARS HAVE BEEN PASSED AFTER COMPLET ION OF ASSESSMENT U/S 143(3) - NO REOPENING CAN BE MADE U NLESS THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN THE RETURN OF INCOM E. IT WAS CONCLUDED BY THE HON'BLE SUPREME COURT THAT SO LONG AS INGREDIENTS OF SECTION 147 ARE FULFILLED THE AO IS FREE TO INITIATE PROCEEDINGS U/S 147 AND FAILURE TO TAKE ST EPS U/S 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION U/S 1 43(1) HAD BEEN ISSUED. 18. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE CIT(A) FOR CONFIRMING THE ACTION OF THE AO FOR REOPENING THE ASSESSMENT WHEN THE SAME W AS MADE WITH REFERENCE TO INTIMATION PASSED U/S 143(1). 19. NEXT GROUND TAKEN BY THE ASSESSEE RELATES TO CIT(A )S ACTION FOR HOLDING THE LEAVE AND LICENCE INCOME AS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF THE HEAD BUSINESS INCOME. 20. WITH REGARD TO CHARGING OF LEAVE AND LICENCE AS IN COME FROM HOUSE PROPERTY WE FOUND THAT THE OFFICE PREMI SES OF THE ASSESSEE WAS GIVEN ON RENT AND THE RENTAL INCOME WA S OFFERED AS INCOME FROM BUSINESS AGAINST WHICH VARIOUS EXPEN DITURE INCLUDING EXPENDITURE UNDER THE HEAD DEPRECIATION ON BUILDING WAS CLAIMED. THE ISSUE AS REGARD TAXING O F INCOME RELATABLE TO A PROPERTY HAS BEEN ELABORATELY DISCUS SED BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SHAMBHU INVESTMENT PRIVATE LIMITED 249 ITR 47 WHICH HAS B EEN SUBSEQUENTLY AFFIRMED BY THE HON'BLE SUPREME COURT AND REPORTED AT 263 ITR 143. IT WAS HELD BY HON'BLE COU RT THAT WHILE TAXING THE INCOME IN RESPECT OF IMMOVABLE PRO PERTY WHAT 15 IS TO BE SEEN IS WHAT WAS THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT IS FOUND BY AP PLYING SUCH TEST THAT MAIN INTENTION IS LETTING OUT THE PROPERT Y OR ANY PORTION THEREOF THE SAME MUST BE CONSIDERED AS REN TAL INCOME OR INCOME FROM HOUSE PROPERTY. HOWEVER IF IT IS FO UND THAT MAIN INTENTION IS TO EXPLOIT THE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITY IN THAT EVENT IT MUST BE HELD THAT IT IS ASSESSABLE AS BUSINESS INCOME. IN THE INSTANT CA SE BEFORE US AFTER GOING THROUGH THE TERMS AND CONDITIONS OF LEAVE AND LICENCE AGREEMENT WE FOUND THAT INTENTION OF THE P ARTIES TO THE SAID AGREEMENT ARE CLEAR AND UNAMBIGUOUS BY WHICH T HE ASSESSEE HAS ALLOWED SECOND PARTY TO ENJOY THE SAID PROPERTY UPON PAYMENT OF COMPREHENSIVE MONTHLY RENT. BY THE SAID AGREEMENT THE PRIME OBJECT OF THE ASSESSEE WAS TO LET OUT THE SAID PROPERTY WITH VARIOUS RIGHTS TO USE THE FACILI TY ATTACHED TO THE SAID PROPERTY. COMPOSITE RENTAL INCOME WAS CHAR GED COVERING ALL THE FACILITIES.THUS THE MAIN INTENTIO N WAS TO LET OUT THE PROPERTY ON RENT RATHER THAN EXPLOITATION O F PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITY./ THE RENTAL INC OME WAS THEREFORE ASSESSABLE AS INCOME FROM HOUSE PROPERTY . 21. IN SUPPORT OF ITS CONTENTION THAT RENTAL INCOME IS TO BE ASSESSED AS INCOME FROM BUSINESS THE LD.AUTHORIZED REPRESENTATIVE HIGHLY RELIED ON THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF KARNANI PROPERTIES LIM ITED 82 ITR 547. IN THIS CASE ON THE BASIS OF FINDING RECO RDED BY THE TRIBUNAL TO THE EFFECT THAT INCOME WAS DERIVED BY T HE ASSESSEE THE OWNER OF FLATS AND SHOPS FROM THE SERVICES REN DERED IN AN ORGANIZED AND SYSTEMATIC MANNER WITH THE HELP OF LA RGE STAFF FOR THE SAME INCOME WAS ASSESSABLE AS BUSINESS INC OME. WHEN THE DECISION OF TRIBUNAL WAS REVERSED BY THE HON'BL E HIGH COURT IN AN APPEAL FILED BY THE ASSESSEE BEFORE TH E HON'BLE SUPREME COURT IT WAS HELD THAT WHEN THE QUESTION R EFERRED TO THE HIGH COURT SPEAKS OF ON THE FACTS AND CIRCUMST ANCES OF THE CASE IT MEANS THE FACTS AND CIRCUMSTANCES FOU ND BY THE TRIBUNAL AND NOT THE FACTS AND CIRCUMSTANCES THAT M AY BE FOUND BY THE HIGH COURT. IT WAS OBSERVED THAT NEITH ER THE HIGH COURT NOR THE HON'BLE SUPREME COURT HAS JURISDICTIO N TO GO BEHIND OR TO QUESTION THE STATEMENT OF FACTS MADE B Y THE TRIBUNAL AND THAT STATEMENT OF CASE IS BINDING ON T HE PARTIES. UNDER THESE FACTS AND CIRCUMSTANCES THE HON'BLE SU PREME COURT AFFIRMED THE FINDING OF THE TRIBUNAL TO THE E FFECT THAT SINCE ACTIVITY WAS CARRIED ON SYSTEMATICALLY AND IN AN 16 ORGANIZED MANNER THE INCOME WAS ASSESSABLE AS INC OME FROM BUSINESS. 22. IN THE INSTANT CASE THE FACTS ARE QUITE DISTINGUI SHABLE WHEREIN THE TERMS AND CONDITIONS OF LEASE AND LICEN CE AGREEMENT CLEARLY INDICATE THAT INCOME WAS ATTACHED TO THE IMMOVABLE PROPERTY WHICH WAS CLEARLY ASSESSABLE UN DER THE HEAD INCOME FORM HOUSE PROPERTY. 23. THE LD.AUTHORIZED REPRESENTATIVE ALSO RELIED ON THE DECISION OF THE I.T.A.T. CALCUTTA BENCH IN THE CASE OF PFH MALL & RETAIL MANAGEMENT LIMITED 110 ITD 337 WHER EIN IT WAS HELD THAT INCOME DERIVED BY SHOPPING MALLS DEPARTMENTAL STORES AND BUSINESS CENTRES OF PROPERT IES OWNED BY IT AND LET OUT TO VARIOUS USERS WHICH WERE PROVI DING HOST OF SERVICE/FACILITIES/AMENITIES IN THE SAID MALL/BUSIN ESS CENTRES THE INCOME THEREFROM WAS ASSESSABLE AS BUSINESS IN COME. WE HAD CAREFULLY GONE THROUGH THIS DECISION OF THE TRIBUNAL WHEREIN THE FACTS WERE VERY PECULIAR AND THE ASSESS EE COMPANY HAD DEVELOPED A SHOPPING MALL/BUSINESS CENTRES ON T HE PROPERTIES OWNED BY IT THE SAME WERE LET OUT TO VA RIOUS USERS ALONGWITH LETTING OUT THE ASSESSEE HAS ALSO PROVIDE D HOST OF SERVICES/FACILITIES/AMENITIES IN THE SAID MALLS/BUS INESS CENTRES. BY GOING THROUGH PECULIAR TERMS AND CONDITIONS OF T HE AGREEMENT SO ENTERED WITH THE USE OF SHOPS MALLS E TC. THE TRIBUNAL FOUND THAT THE BASIC INTENTION OF ASSESSEE WAS COMMERCIAL EXPLOITATION OF ITS PROPERTIES BY DEVELO PING THEM AS SHOPPING MALL/THE BUSINESS CENTRES AND THEREFOR E INCOME DERIVED THEREFROM WAS ASSESSABLE AS BUSINESS INCOME . ACCORDINGLY THE ACTION OF CIT U/S 263 WAS SET-ASID E WHO HAS HELD THAT ORDER OF THE AO WAS ERRONEOUS IN SO FAR A S PREJUDICIAL TO THE INTERESTS OF REVENUE FOR TAXING SUCH RENTAL INCOME AS INCOME FROM BUSINESS. 24. HOWEVER THE FACTS IN THE INSTANT CASE ARE DISTINGUISHABLE AND THE ASSESSEE HAS NOT UNDERTAKEN ANY DEVELOPMENT OF SHOP MALLS/ BUSINESS CENTRES AND AL SO NOT PROVIDED HOST OF SERVICE AND AMENITIES AS WERE PROV IDED IN THE CASE DISCUSSED BY THE HON'BLE CALCUTTA BENCH (SUPRA ). IT IS PERTINENT TO MENTION HERE THAT THE CASE LAWS RELIED ON BY LD. AR IN CASE OF AIPTA MARKETING (SUPRA) TO SUPPORT HIS L EGAL PLEA OF REOPENING U/S 147 WITHOUT FRESH MATERIAL BEFORE THE AO SUPPORTS THE VIEW OF AO FOR TAXING THE PROPERTY INC OME AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY WE FOLLOW THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT AND CONFIRMED THE AC TION OF 17 LOWER AUTHORITIES FOR TAXING THE SAME AS INCOME FRO M HOUSE PROPERTY. 25. IN VIEW OF ABOVE DISCUSSION RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT REPORTED AT 249 I TR 47 PROPOSITION OF LAW LAID DOWN THEREIN ARE APPLICABLE TO THE FACTS OF INSTANT CASE WE CONFIRM THE ACTION OF THE LD. CIT(A) FOR TAXING THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. 3. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ISSUES ARE SQUARELY COVERED BY THE ORDER DATED 29.10.2010 OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 1999-00 2000-01 2001-02 AND 2002-03 (SUPRA). RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE GROUND NOS. 1 2 AND 3 ARE DEC IDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 4. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO CHARGING OF INTEREST U/S 234D OF THE ACT WHICH HAS BEEN DECIDED BY THE TRIBUNAL IN THE ASSESSEES FAVOUR AF TER HAVING MADE THE FOLLOWING OBSERVATIONS :- 26. THE ASSESSEE HAS ALSO TAKEN GROUND WITH REGARD TO CHARGING OF INTEREST U/S 234D ON EXCESS REFUND DETE RMINED BY REASSESSMENT ORDER U/S 147 OF THE ACT. FOR THIS PUR POSE THE LD.AUTHORIZED REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF THE I.T.A.T. SPECIAL BENCH IN THE CASE OF EKTA PROMOTERS 305 ITR 1 WHICH WAS SUBSEQUENTLY AFFIRMED BY HON' BLE DELHI HIGH COURT WHILE DECIDING THE APPEAL IN THE CASE OF M/S. MITSUBISHI CORPORATION ORDER DATED AUGUST 30 2010 WHEREIN IT WAS HELD THAT INTEREST U/S 234-D IS NOT5 CHARGE ABLE FOR THE PERIOD PRIOR TO ASSESSMENT YEAR 2004-05. BOTH THE O RDERS WERE ALSO PLACED ON RECORD. 18 27. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. THE AO HAS CHARGED INTEREST U/S 234D WHICH HAS BEEN CHALLE NGED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO HAS CONFIRME D THE SAME. THE ISSUE WITH REGARD TO CHARGING OF INTEREST U/S 234D FOR THE PERIOD FALLING PRIOR TO ASSESSMENT YEAR 200 4-05 IS NO MORE RES INTEGRA IN VIEW OF THE DECISION OF THE I.T .A.T. SPECIAL BENCH IN THE CASE OF EKTA PROMOTERS (SUPRA) WHICH WAS SUBSEQUENTLY AFFIRMED BY THE HON'BLE DELHI HIGH COU RT IN THE CASE OF MITSUBISHI CORPORATION VIDE ORDER DATED AUG UST 30 2010. NO CONTRARY DECISION WAS BROUGHT TO OUR NO TICE BY THE DEPARTMENT. ACCORDINGLY RESPECTIVELY FOLLOWING THE DECISION OF I.T.A.T. SPECIAL BENCH WE HOLD THAT NO INTEREST IS CHARGEABLE U/S 234D PRIOR TO THE ASSESSMENT YEAR 20 04-05. AS ALL THE ASSESSMENT YEARS UNDER CONSIDERATION ARE PR IOR TO ASSESSMENT YEAR 2004-05 NO INTEREST IS CHARGEABLE U/S 234D. WE DIRECT ACCORDINGLY. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED IN ALL THE YEARS UNDER CONSIDERATION. 5. FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL W E DECIDE GROUND NO. 4 IN FAVOUR OF THE ASSESSEE. 6. SO FAR AS GROUND NO. 5 REGARDING LEVY OF INTERES T U/.S 234B OF THE ACT IS CONCERNED THE SAME IS CONSEQUEN TIAL IN NATURE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. SD SD (JOGINDER SINGH) (R.C.S HARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH NOVEMBER 2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE DN/-