Income Tax Appellate Tribunal - Amritsar
Rai Bahadur Kishore Chand And Sons And ... vs The Income Tax Officer on 18 May, 2007
Equivalent citations: (2008)113TTJ(ASR)586
ORDER
Joginder Pall, Accountant Member
1. These two appeals have been filed by the assessee against two orders of CIT(A), Bhatinda, for the assessment years 2001-2002 & 2002-2003. Since the issues involved in both the appeals are identical, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
2 First, we take up appeal for the assessment year 2001-2002. In this appeal, the assessee has taken following grounds of appeal:
1. That the Asstt. order dated 26.03.2004 served by affixture on 01.04.2004 is barred by limitation as the same was never properly served in accordance with Order 5 Rule 30 of CP.Code.
2. That both worthy CIT(A), Amritsar and the learned ITO, Ward 5(3), Amritsar have grossly erred in treating the rental income of the assessee at Rs. 13,95,116/- as "Income from House Property" instead of "Income from Business" as claimed by the assessee.
3. That both worthy CIT(A) and the Ld. ITO Ward 5(3), Amritsar have grossly erred in not allowing expenditure incurred by the assessee company under various expenditure heads vide Schedule 9 of Audited Accounts on the ground that it was not incurred in furtherance of any business activity.
4. That the worthy CIT(A), Amritsar has grossly erred in not disposing off the ground in respect of addition made on account of "Misc. Income" of Rs. 28,682/-.
5. That worthy CIT (A), Amritsar has grossly erred in confirming charging of interest Under Section 234B of Income Tax Act.
3. As regards the first grievance that the assessment order for the assessment year 2001-2002 had not been passed within time allowed, the facts of the case are that although the assessment order was dated 26.03.2004, yet it was served on the assessee by affixture only on 1.4.2004. The assessee had stated before the CIT(A) that no efforts were made to serve the notice on the assessee through normal means before serving the notice by affixture. In support of this contention, the assessee also filed an affidavit of Sh. Kashmir Singh, Security Guard, who stated that he was on duty as guard till 31.03.2004 and no service by affixture was made upto the night of 31.03.2004. Nobody came from the Department to serve the notice despite the fact that entry into the address of the assessee was only through gate. It was, therefore, submitted that the AO could serve the notice by affixture, if service through normal means was not possible. It was also stated that if the order was passed on 26.03.2004, why the same was not sent for service by registered post on that date. It was also submitted that a notice Under Section 17(1) of the Wealth Tax Act, 1957 dated 29.03.2004 for the asstt. year 1997-98 issued to the assessee by the same AO was served on the assessee on 31.03.2004 at 6 PM. The service of the said notice was accepted by the assessee. If the asstt. order was also ready alongwith demand notice and challan, the same could have also been accepted by the assessee on 31.03.2004 Where was the need for the AO to effect service of the asstt. order by affixture? Thus, it was argued before the Ld. CIT(A) that the asstt. order had not been passed on 31.3.2004. These submissions did not find favour with the CIT(A), who observed that AO had also dispatched the said order by registered post on 31.03.2004 under Registration No. 14163. Therefore, the Ld. CIT(A) rejected this submission of the assessee by recording following findings in para 4.2 of the impugned order:
4.2. I have considered the appellant's contentions and have also perused the assessment records produced by the AO and after considering the facts available on record, it appears that the service of the asstt. order on the appellant on 31.3.2004 has been done by the Notice Server in the presence of Inspector who has signed the office copy of the affixture order dated 31.3.2004 as well as demand notice and penalty notice. Both the Notice Server as well as the Inspector have put their signatures on the affixture order in token of having served the assessment order by affixture on 31.3.2004 and the Assessing Officer has also put his initials on the affixture order as a token of having effected service of the order by affixture through the above officials. Further, it is also noticed that the Assessing Officer has also dispatched the said order by registered post on 31.3.2004 under registration No. 14163. In the light of the above facts and circumstances, it appears that the appellant's contention that the assessment order had not been passed till 6 PM AT 31.3.2004 is not supported by evidence on record. According to the AO, the affixture of the assessment order made at the office premises of the appellant at R.B.K.C. Towers, Mcleod Road, Amritsar, whereas the appellant's counsel has filed an affidavit from Sh. Kashmir Singh, who is a security guard posted at 3A, The Mall, Amritsar. Hence, the affidavit of Sh. Kashmir Singh does not seem to have any evidentiary value. Further, the fact that the assessment order has been dispatched on 31.3.2004 by registered post shows that this contention of the appellant is not sustained. In view of the above, the appellant's contention regarding the assessment having been barred by limitation does not appear to be justified and therefore, the same stands rejected.
The assessee is aggrieved with the order of the CIT(A). Hence, this appeal before this Bench.
4. The Ld. counsel for the assessee, Sh. Padam Bahl, reiterated the submissions which were made before the authorities below. He drew our attention to page 16 of the paper book which is a copy of the notice issued Under Section 17(1) on 29.03.2004, which was served on the assessee on 31.03.2004 at 6 PM. Acknowledgement for the same is placed at page 17 & 18 of the paper book. He further drew our attention to page 19 of the paper book which is a copy of an affidavit of Sh. Kashmir Singh, Security Guard in support of the fact that nobody from the Department came to deliver/serve any paper on 31.3.2004 from 1 PM to 9PM. The service by affixture was found only on 1.4.2004 when he came on duty at 9AM. Thus, he contended that the asstt. order was not passed on 29.03.2004. The Ld. DR, on the other hand, heavily relied on the orders of the authorities below.
5. We have heard both the parties and carefully considered the rival contentions with reference to facts, evidence and material on record. Since the assessee has taken a specific ground to challenge the findings recorded by the CIT(A), the Ld. DR was asked to produce the asstt. records before the Bench. These directions were given on 11.7.2006 and next date was fixed on 13.9.2006. These records were not produced and the Ld. DR again sought adjournment on 13.9.2006. The request was accepted and the Department was allowed time and the case was adjourned to 6.10.2006. On that date, the Ld. counsel sought an adjournment and the case was fixed on 2.11.2006. However, the asstt. records called for from the Ld. DR were not produced. On the next date also, the Ld. DR stated that the asstt. records have not been received from the AO. He requested for allowing one more opportunity. This request of the Ld. DR was accepted and final opportunity was allowed for producing the assessment records at the time of next hearing. Again on 19.2.2007, the Ld. DR could not produce the asstt. records. He requested for another opportunity which was allowed and the case was adjourned to 9.5.2007. On that date also, the Ld. DR could not produce assessment records. The Ld. DR, Sh. R.L. Chhanalia stated that the DR has written several letters to the AO requesting for the assessment records. Despite this fact, the AO has not sent the assessment records. Thus, he stated that the matter may be decided in the light of facts on records.
From the facts discussed above, it is obvious that this Bench has allowed repeated opportunities to the Revenue for producing assessment record so that the fact of service of the asstt. order on the assessee could be verified. However, the Department has not been able to produce these records. In fact, at the time of last hearing, the Ld. DR did not even request for adjournment on this ground. Thus, we have no option but to accept the contention of the assessee that the assessment order was not passed on 26.03.2004. No doubt, the provisions of Section 153 require that assessment order shall not be passed after the expiry of two years from the end of the assessment year in which the income was first assessable. This is applicable to this case. There is no requirement that service must be effected before the expiry date. But there must be an evidence to show that order was indeed passed before the limitation date. But in the present case, no such evidence has been adduced by the Revenue that the order was indeed passed on or before 31.3.2004 though the assessee had taken up this issue in appeal and Revenue has repeatedly been asked to produce the asstt. records. If it were so, the same could have been served on the assessee alongwith the notice Under Section 17(1) of the Wealth Tax Act, which was issued on 29.03.2004 and served on 31.3.2004 at 6 PM. There is no evidence produced before this Bench to show that the asstt. order was dispatched by registered post on 31.3.2004. It is also surprising to us that if the asstt. order alongwith demand notice and challan was ready on 26.03.2004 why the same was sent for service by registered post on 31.3.2004. Even the service by affixture was made on 1.4.2004 in the presence of Inspector alone and not in the presence of independent witnesses. Taking into account these facts, coupled with the non-production of assessment records before the Bench, we hold that the asstt. order was time barred and the Ld. CIT(A) was not justified in rejecting this ground of appeal of the assessee. Accordingly, the order of the CIT(A) is set aside and the impugned asstt. order for the A.Y. 2001-2002 is quashed being passed after the statutory time limit. This ground of appeal is allowed.
6. The next grievance of the assessee projected through its grounds of appeal is that the Ld. CIT(A) was not justified in treating rental income of the assessee at Rs. 13,95,116/- as "Income from House Property" instead of "Profit from Business". The facts of the case are that in the return of income, the assessee had shown rental income at Rs. 13,98,205/- as against Rs. 13,95,116/- declared in the last year. The rental income in the past all along was being shown under the head "Income from House Property". However, for the fist time, the assessee had declared such income under the head "Income from Business". Against the said income, the assessee had claimed deduction for various expenses. After claiming deduction for expenses, the assessee declared total income at Rs. 1,92,971/-. The AO asked the assessee to explain as to why the income from house property was being shown as business income. The assessee submitted a reply. However, the AO was not impressed with the submissions of the assessee and treated the rental income as income from house property.
7. Being aggrieved, the assessee filed an appeal before the CIT(A). It was submitted before the CIT(A) that the assessee company was running a business of transport right from inception. Due to adverse business situation, the assessee sold the trucks one by one and the transport business was closed down. The assessee was carrying on the business of real estate and had developed several properties at Amritsar and Jaipur. As per Memorandum of Association, the real estate was one ot the objects of the assessee. It was submitted that principle of res-judicata was not applicable and, therefore, the fact that such income was being shown in the past as income from house property did not mean that rental income was not a business income. Reliance was also placed on various judgments of the Hon'ble Supreme Court and the High Courts noted at page 4 & 5 of the impugned order. None of these submissions found favour with the Ld. CIT(A) who decided the matter against the assessee for the following reasons:
(i) The assessee had all along been declaring rental income from letting out the property under the head "Income from house property" and not as "Business Income". There were no justifiable reasons to change the stand.
(ii) A perusal of the balance sheet showed that the treatment given by the assessee throughout the past was that the house property was not held as business or commercial asset. The assessment record indicated that right from the asstt. year 1995-96 onwards, the assessee had not claimed depreciation on the building. Since this property was not held as commercial asset, the rental income earned therefrom was taxable under the head "Income from House Property.
(iii) The main business of the assessee was Transport. Only income earned from running transport business was being shown as "Business Income". This business has since been closed over the years and there was no income declared under this Head. The other source was nominal income from agricultural and Misc. income. The assessee has changed the stand only with a view to claim expenses against business income which was in fact taxable under the head "Income from House Property.
(iv) The various decisions relied upon by the assessee were not applicable to the facts of the case. The Ld. CIT(A) observed that the judgment of Hon'ble Punjab & Haryana High Court in the case of CIT v. Onam Rubbers Plastics 178 ITR 301 was distinguishable on facts because in that case property was part of commercial assets which was earlier used for the purpose of its own business of running a factory. Therefore, it was held that the temporary leasing of the part of the asset would not convert the user of commercial property into house property.
(v) The judgment of Hon'ble Punjab & Haryana High Court in the case of CIT v. Ishar Dass Mahajan & Sons reported in 253 ITR 284 was again found distinguishable on facts because the issue involved in that case was whether rental income earned could qualify for deduction u/s 80HHC after insertion of Clause (baa) to the Explanation to Section 80-HHC. Further, the Ld. CIT(A) noted that in that case the building let out was part of the factory land and building being used is commercial asset.
(vi) The Ld. CIT(A) observed that in the present case, the assessee had not let out part of the commercial asset in the form of factory, land and building/workshop etc. earlier used for the purpose of business temporarily for earning rent. He observed in the present case, there was no evidence that the property from which the assessee earned rental income was at any point of time being used for the Transport business.
(vii) The Ld. CIT(A) also observed that the judgment of Hon'ble Supreme Court in the case of S.G. Mercantile Corporation Pvt. Ltd v. CIT 83 ITR 700 relied upon by the assessee was rather in favour of the Revenue because in that case the Hon'ble Apex Court had held that annual value of property consisting of land and building pertains thereto of which the assessee is the owner, other than such portions of property occupied for the purpose of business, profession or vocation would be taxable under the head "Income from House Property". The Hon'ble Supreme Court has also observed that the fact that the assessee was a company incorporated with the object of buying and developing the landed property and promoting and setting up of market thereon would not make any difference. He further noted that in that case, the Hon'ble Supreme Court held that income was assessable under Section 10 of the old Income-tax Act, 1922 because the assessee was not co-owner. However, in the present case the assessee was owner of the property from which rental income was being earned. He also observed that the judgment of Hon'ble Supreme Court in the case of Karnani Properties v. CIT reported in 82 ITR 547 relied upon by the assessee was also distinguishable on facts because in that case, the assessee had let out various flats, shops alongwith other facilities like charges for electric currents for the use of lifts, supply of hot and cold water, scavenging, providing watch & ward facilities and other amenities on payment of monthly charges. In order to provide these facilities, the assessee had employed a large number of permanent staff and, therefore, it was held that such activity was a regular business activity and, therefore, the income was taxable under the head "Profit from business".
(viii) The Ld. CIT(A) also referred to the judgment of Hon'ble Gujarat High Court in the case of CIT v. New India Industries Ltd; 201 ITR 208, where it was held that in order to decide whether income from letting out was a income from house property or business it is to be seen whether the asset was being exploited commercially or whether it was let out for the purpose of enjoying rent. He observed that in the present case conduct of the assessee was all along to earn rental income and the same was not being exploited as a commercial asset. Thus, he held that income earned by the assessee by way of rent was liable to tax under the head "Income from House Property". Accordingly, the Ld. CIT(A) dismissed the appeal of the assessee.
Aggrieved with the order of the CIT(A), the assessee has filed the present appeal.
8. The Ld. counsel for the assessee, Sh. Padam Bahl, contended that the principle of res-judicata is not applicable to the Income-tax proceedings. Therefore, the very fact that all throughout in the past, the rental income was being shown under the head "Income from house property" does not mean such income was not a "Business Income". He further submitted that as per memorandum of association of the company, real estate was one of the main objects of the company. Thus, he submitted that rental income which was being shown as income from house property was now shown under the head "business income". Relying on the judgment of Hon'ble Supreme Court in the case of Barendra Pd. Ray v. ITO 129 ITR 295, the Ld. counsel submitted that the expression "Business" does not necessarily mean trade or manufacture only. The word 'Business' was of wide import and it means an activity carried on continuously and systematically by a person by the application of his labour and skill with a view to earn income. He only gave a list of the following judgments without explaining as to how these were applicable to the facts of the present case. In fact, most of these judgments are the same which were relied upon before the CIT(A). The Ld. CIT(A) has distinguished the facts of the present case from the judgments relied upon by the Ld. counsel. Still, however, the Ld. counsel did not make any effort to argue before the Bench as to why and how the distinction drawn by the Ld. CIT(A) was wrong or incorrect:
1. S.G. Mercantile Corporation Pvt. Ltd v. CIT 83 ITR 700(SC)
2. CIT v. Anand Rubber & Plastics Pvt. Ltd; 178 ITR 301 (Pun).
3. Lakshmi Narayan Board Mills P. Ltd. v. CIT 205 ITR 88 (Cal.)
4. CIT v. Mod Industries Ltd. 210 ITR 1 (Del.)
5. Balaji Enterprises v. CIT 225 ITR 471 (Kar.)
6. CIT v. V.S.T, Motors Pvt. Ltd. 226 ITR 155 (Mad.)
7. CIT v. Pateshwari Elec. & Ass. Ind. Pvt. Ltd. 282 ITR 61 (All).
8. CIT v. B. Nagi Reddy 147 ITR 337 (Mad)
9. CIT v. A.P. small Scale Inds. Dev. Corporation 175 ITR 352 (AP)
10. CIT v. Amora Chemicals Pvt. Ltd 125 Taxman 255 (Guj.)
11. CIT v. Kongarar Spinners Pvt. Ltd. 208 ITR 645 (Mad.)
12. CIT v. Malabar & Pioneer Hos., Pvt. Ltd 221 ITR 47 (Ker.)
13. CIT v. Associated Bldg. Co. Ltd 137 ITR 339 (Bom.)
14. CIT v. National Newsprint & Paper Mills Ltd. 114 ITR 388 (MP)
9. The Ld. DR, on the other hand, heavily relied on the orders of the authorities below. He submitted that all along the assessee has been showing rental income under the head "Income from house property". The facts of the case remain the same. Therefore, there was no justification for the assessee to change his stand for showing such income under the head "Income from business".
10. We have heard both the parties and carefully considered the rival submissions, gone through the material and evidence placed on record as well as the orders of the authorities below. Since the assessment order has been quashed, these grounds need not be decided on merits. However, these grounds are also common to the subsequent assessment year 2002-2003. Therefore, we record our findings on the merits of the ground also. Now there is no dispute about the fact that all along in the past, the property income was being shown under the head "Income form house property". It is also accepted position that the assessee was carrying on transport business which has since been closed. It is no doubt true that the assessee has to incur such expenses even for earning the rental income and compliance with the various requirements under the company law. But now question that remains to be decided is whether the rental income from house property could be considered as income from business because under the provisions of the Act, the assessee is not entitled to claim deduction of the expenses incurred against the income from house property. The Ld. counsel for the assessee has referred to the object of the company detailed in the Memorandum of Association. Referring to page 13 of the paper book, the ld. counsel for the assessee submitted that one of the main object of assessee was to carry on the business of builders and contractors and to acquire by purchase, lease, exchange, hire or otherwise develop or operate land, buildings etc. Thus, he submitted that this was the main object of the company. Therefore, the rental income earned by the assessee was liable to tax under the head "Income from House Property".The Ld. counsel has himself relied on the judgment of Hon'ble Supreme Court in the case of Barendra Pd. Ray v. ITO 129 ITR 295, where it is held that the expression "Business" is of wide import and it means an activity carried out continuously and systematically.. In the present case, the admitted facts are that the assessee was carrying on business of transport which has since been closed. The rental income of the property was being shown under the head "Income from house property". This clearly shows that the intention of the assessee was to enjoy rental income as income from house property and the same was not a regular business activity carried on by the assessee. This is also supported by the fact that in the balance sheet for the earlier asstt. year, the assessee had never claimed any depreciation on the building. This shows that the buildings were not exploited commercially and were not part of commercial assets. A reference to the Memorandum of Association is also of no help to the assessee for the reasons that the same Memorandum existed for the earlier asstt. years when income from letting out was shown as income from house property. There is no evidence or material placed on record either before the authorities below or before this Bench hat after the closure of the transport business, the assessee actively started the business of real estate. Carrying on business of real estate implies that such activity was undertaken regularly and systematically. However, in the present case, apart from the building already constructed, which were never shown as commercial assets or were being used for the purpose of business, the assessee only added some shops for the purpose of earning rental income. But the same could not be said to be a regular and systematic activity of development of real estate. Therefore, such income could not be considered as income from business. The Ld. counsel has relied on plethora of judgments which were also relied upon before the CIT(A).The Ld. CIT(A) has drawn distinction between the facts of the present case and the facts of cases relied upon by the assessee. The Ld. counsel did not advance any arguments before the bench as to how the distinction drawn by the CIT(A) was not correct and those decisions, in fact were applicable to the facts of the present case. Further, the Ld. counsel was given time to give a summary of the judgments to explain as to how those were applicable to the facts of the present case. Apart from giving full citations of the various judgments relied upon and enclosing therewith head Notes of the judgments extracted from CTR Library of tax cases, the Ld. counsel has not made any effort in explaining how those judgments were applicable to the facts of the present case. Now the question whether rental income is to be taxed under the head "Income from House property" or business income depends on the facts of each case. The ratio of each decision has to be considered in the light of facts of each case. Therefore, we feel that the Ld. AR ought to have made an effort in explaining as to which judgment was applicable to the facts of the present case and why. Be that as it may, the Ld. CIT(A) has already given detailed reasons in respect of judgments relied upon before him as to how the same were not applicable to the facts of the present case. We have referred to those judgments and the reasons given by the CIT(A) as to how those are distinguishable on facts. There is no rebuttal by the assessee. Thus, we agree with the Ld. CIT(A) that those judgments are distinguishable and are not applicable to the facts of the present case.
10.1 Even otherwise, we have referred the facts of the present case to some other judgments relied on by the Ld. counsel. In the case of CIT v. V.S.T. Motors Pvt. Ltd; 226 ITR 155, the Facts before the Hon'ble Madras High Court were that the building constructed by the assessee was for use as business premises. The same was held as commercial asset. Part of business was shifted to outside city. As a result, surplus area was let out to Govt. Department. On these facts, the Hon'ble Madras High Court held that since the building was a commercial asset, rental receipts were taxable as "Business Income". These are not the facts of the present case. The building was not held as a commercial asset. The same was also not used for the purpose of transport business which the assessee was carrying on in the past. Therefore, the rationale of this decision is not applicable to the facts of the present case.
10.2 In the case of CIT v. Pateshwari Electrical & Associated Industries (P) Ltd; 282 ITR 61 relied upon by the Ld. AR, the facts before the Hon'ble Allahabad High Court were that the assessee apart from letting out of property at Nanital had lease rent from letting out workshop, cold-storage, motor garage, Raj Oil. The assessee claimed income from letting out of Nainital lodge to SBI as business income. It was found that the property was being used as guest house up to the year 1984-85 and it was accepted by the Department as a business property for those years. But due to commercial reasons, the assessee decided to convert the property into a lodge and to give it on rent to SBI alongwith furniture and fittings to be used as their training centre. On these facts, it was held that income from letting out Nainital property to SBI was a business income. Admittedly, these are not the facts of the present case. The above properties in question were never held as part of the business asset. Therefore, the ratio of this decision is not applicable to the facts of the present case.
10.3 As regards the judgment of Hon'ble Karnataka High Court in the case of Sri Balaji Enterprises v. CIT reported in 225 ITR 471 relied upon by the Ld. AR, the facts were that the firm was constituted for carrying on business of real estate. Its business was to take property on lease, building structures thereon and leasing them out to tenants. All these activities were being carried out regularly and systematically. In fact, this was the main business of the assessee. Firm was not even owner of the property. On these facts, it was held that letting out was a part of the business of the assessee and, therefore, rental income was taxable under the head "Income from Business".
10.4. The other judgment relied upon by the Ld. AR is of Hon'ble Madras High Court in the case of CIT v. Kongarar Spinners Pvt. Ltd; 208 ITR 645. The facts before the Hon'ble Madras High Court were that the assessee earned rental income from letting out commercial assets. The assessee was running a factory. Another building and factory was also constructed and the same was let out to its subsidiaries. On these facts, the Hon'ble High Court held that rental income derived from letting out commercial assets was a business income. These are not the facts of the present case. Therefore, the ratio of this decision is again not applicable to the facts of the present case. As regards the contention of the Ld. AR that principle of res-judicata is not applicable to income tax proceedings. We have no quarrel with such proposition. But there must be change in facts, circumstances or the legal position so as to deviate from the earlier stand. In this case, there is none. Therefore, this submission is also of no help to the assessee.
11. Thus, in the light of these facts and circumstances of the case and the legal position discussed above and also the ratio of various decisions referred to above, we are of the considered opinion that the Ld. CIT(A) was justified in treating the rental income from letting out of properties as income from house property. Therefore, we uphold the order of the CIT(A) and reject this ground of appeal of the assessee.
12. The other grievance of the assessee is that the Ld. CIT(A) was not justified in not allowing deduction for the various expenses claimed. This ground is related to ground No. 2. Briefly stated, the facts are that the AO did not allow deduction for the various expenses claimed because the rental income was held to be taxable under the head "Income from House Property." Therefore, the AO disallowed the expenses. On appeal, the Ld. CIT(A) upheld the disallowance of expenses because the order of the AO for treating the rental income as income from house property was upheld. Though this ground has been taken before us, no arguments have been advanced by the Ld. AR. Presumably for the reason that this was dependent on the outcome of the first ground. Be that as it may, since no arguments have been advanced before this Bench. The same is dismissed on this ground itself. Even otherwise, we have already upheld the findings of Ld. CIT(A) on the issue of treating rental income as income from house property. The same is to be computed as per provisions of the Act. Only those items of expenses mentioned in the Sections can be allowed. There is no grievance of the assessee that expenses which were admissible under the head "Income from House Property" have not been allowed. Thus, we do not find any merit in this ground of appeal of the assessee. The same is dismissed.
13. The next ground relates to an addition of Rs. 28,682/- made on account of misc. income. The last ground relates to interest charged under Section 234B of the Act. Here also, no arguments were advanced by the Ld. counsel for the assessee. Therefore, it appears that the assessee is not interested in prosecuting these two grounds of appeal. Accordingly, these are dismissed as such.
14. Before parting with the appeal for the assessment year 2001-2002, we wish to mention that we have already quashed the assessment order on the ground that the same was time barred. Therefore, findings recorded by this Bench in respect of remaining grounds are only of academic interest. Even if the grounds have been decided in favour of the Revenue and against the assessee, the same would not have any effect on the outcome of the appeal because the assessment order has already been quashed.
15. Now, we take up appeal for the assessment year 2002-2003. The first grievance of the assessee in this appeal relates to treating the rental income of Rs. 15,68,649/- as "Income from House Property" as against the claim of the assessee that the same was "Income from Business".
The facts of the case, the submissions of the party and our findings in respect of this ground are the same as for the assessment year 2001-2002. Therefore, for parity of reasons, we hold that the order of the CIT(A) does not merit any interference. The same is upheld and this ground of appeal is dismissed.
16. The second ground relates to sustaining the action of the AO for disallowing deduction of expenses claimed against rental income. Briefly stated, the facts of the case are that the AO disallowed the expenses for the reason that the rental income tax taxable under the head "Income from House Property" which was to be computed as per provisions of the Act. The Ld. CIT(A) upheld the findings of the AO. Like the asstt. year 2001-2002, the Ld. AR has not advanced any arguments in support of this ground of appeal. Since we have already upheld the order of the CIT(A) for treating the rental income as income from house property, the assessee would not be entitled to deduction of the expenses which were inadmissible against the business income. Here also the findings for the assessment year 2001-2002 would be applicable. In this view of the matter, we uphold the order of the CIT(A) and reject the ground of appeal of the assessee.
In the result, the appeal of the assessee for the asstt. year 2001 -2002 is allowed to the extent indicated above and the appeal for the assessment year 2002-2003 is dismissed.
This decision was pronounced in the open court on 18th, May, 2007.