Calcutta High Court
Commissioner Of Income-Tax vs Anamika Builders Pvt. Ltd. on 7 May, 2001
Equivalent citations: [2001]251ITR585(CAL), [2001]117TAXMAN356(CAL)
JUDGMENT
1. Heard learned counsel for the Revenue. None appears for the assessee.
2. On an application under Section 256(2) of the Income-tax Act, 1961, the Tribunal was directed to refer the following questions for the opinion of this court.
"1. Whether, on the facts and in the circumstances of the case, there was any mistake apparent from the records within the meaning of Section 254(2) of the Income-tax Act, 1961, and whether the Tribunal was justified in holding that the income arising out of the unsold flats should be assessed as business income and not as income from house property ?
2. Whether, on the facts and in the circumstances of the case, the order passed by the Tribunal under Section 254(2) of the Income-tax Act, 1961, is sustainable in law ?"
3. The aforesaid questions have been referred for the opinion of this court.
4. The assessee-company received rental income of Rs. 36,000 from unsold flats. The Assessing Officer taxed the same as income from house property, though the assessee claimed this income as income from business. In the original order, the Tribunal after hearing both the sides took the view that this income should be treated as income from house property. The Tribunal has noted the following conclusion in its order in appeal.
"4. The learned representative for the assessee, Shri N. Nayar, has contended that the income arising out of the business flat should be assessed as business income. He has filed the paper book and pointed out several facts.
5. The learned Departmental Representative, Shri K. Pal, has relied on the judgment of the Karnataka High Court in the case of D. R. Puttanna Sons Pvt. Ltd. v. CIT [1986] 162 ITR 468. The Karnataka High Court has held that in that case that so long as the title and ownership of a structure built by an assessee remained vested in the lessee, i.e., the assessee, the income derived from the property has to be assessed as income from property and not as income from business. It has further held that (head-note) : "therefore, where the assessee took on lease a site for a period of 30 years and constructed a building on it at its own cost and let out the building, the assessee had to be treated as the owner of the building during the period of the lease and the income derived by way of rent from the building had to be assessed under the head 'Income from property' and not under the head 'Income from business'." This judgment of the Karnataka High Court fully supports the view taken by the Income-tax Officer as well as the Commissioner of Income-tax (Appeals). Therefore, it is immaterial how the income from the business asset is assessed in the assessment year 1980-81. Every year's assessment is an independent assessment and every year's cause of action is a separate cause of action. Therefore, it would be incorrect to say that income from the flats should be assessed as business income in this year also as done in the assessment year 1980-81.
6. I have examined the facts and considered the arguments. I have gone through the legal aspect of the claim. There is no substance in the appellant's contention that the rental income derived from the business flats should be assessed as a business income and not as income from house property".
5. After that the assessee filed the miscellaneous application and the Tribunal has just taken the reverse view and the rental income has been treated by the Tribunal as income from the business. Whether there was a scope for the Tribunal on the given material to reverse its earlier view, in our opinion, the Tribunal has committed error.
6. Once the possible view has been taken on the basis of the material on record it cannot be said that there is apparent mistake, which can be corrected under Section 254(2) of the Income-tax Act, 1961. The Tribunal has considered in detail in its original order dated September 7, 1989, that after taking lease of the site the assessee has constructed the building and given the flats on rent so long as the building was with the assessee and that has been given on rent, that income has to be treated as income from the property, it cannot be said that the earlier view of the Tribunal was absolutely wrong. Once the possible view has been taken in the appeal order that cannot be changed on a miscellaneous application.
7. In the result, we answer question No. 2 in the negative, that is, in favour of the Revenue and against the assessee.
8. As we have answered question No. 2 in favour of the Revenue, the answer to question No. 1 will be of academic interest.
9. The reference so made stands disposed of accordingly.
10. All parties concerned are to act on a xerox signed copy of this dictated order on the usual undertaking.