Revenue appealed against the Tribunal dismissing its challenge where IT income from warehouse letting was taxed as business. The Court upheld the Tribunal's view that providing storage and auxiliary services constitutes business income, dismissing the appeals.
Appeals dismissed with no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE : 01.12.2014
CORAM
THE HONOURABLE MR. JUSTICE R.SUDHAKAR AND
THE HONOURABLE MR. JUSTICE R.KARUPPIAH
T.C.A. NOS. 303 TO 305 & 812 OF 2013
Commissioner of Income Tax III Chennai. .. Appellant in all the appeals
M/s.NDR Warehousing Pvt. Ltd. Old No.5, New No., Errabalu Chetty Street Chennai 600 001. .. Respondent in all the appeals
Appeals filed under Section 260-A of the Income Tax Act against the order dated 02.05.2013 passed by the Income Tax Appellate Tribunal, Madras 'C' Bench, in ITA No.182/Mds/2013 and ITA No.1039/Mds/2011 to ITA No.1041/Mds/2011 dated 31.10.2012 against the common order of the Commissioner of Income Tax (Appeals) V 121 M.G. Road, Nungambakkam, Chennai 600 034 dated 18.2.2011 in ITA Nos.296/2006-07, 267/2007-08 & 271/2009-10 against the Assessment order of A.C.I.T Co. Circle IV(4) Chennai 34 Assessment Year 2004-05, 2005-2006 and 2007-08 (Asst. Commissioner of Income Tax) in P.A.N/G.R.N.AAACN2816J/ND-1 order dated 31.8.2006 & 20.12.2007 and 7.12.2009 respectively TCA 812/2013 against the order of the Commissioner of Income Tax (Appeals) V 121 M.G. Road Nungambakkam Chennai 600 034 in ITA No.205/2011-12 dated 30.10.2012 against the order of the Joint Commissioner of Income Tax Company Range IV Chennai and Assistant Commissioner of Income Tax Company Circle (VI (4) Chennai 600 034 Assessment order dated 24.11.2011 in PANNo.AAACN2816J/2009-10.
For Appellant (in all appeals) : Mr. T.R.Senthil Kumar For Respondent (in all the appeals : Ms. Pushya Sitaraman, SC, for Ms. Sree Vidya
COMMON JUDGMENT
Aggrieved against the order of the Income Tax Appellate Tribunal in dismissing the appeals filed by it, the Revenue is before this Court challenging the said order by filing the present appeals. This https://hcservices.ecourts.gov.in/hcservices/
Court, vide order dated 13.8.13 admitted the appeals on the following substantial question of law :-
“Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the income of the assessee from letting out its warehouse is chargeable under the head 'Income from Business' and not under the head 'Income from House Property'?
The assessee is engaged in the business of warehousing, handling and transport business. The assessee filed return of income for the assessment years, viz., 2004-2005, 2005-2006, 2007-2008 and 2009-2010 showing the income earned from letting out of building and godown as income from business. The Assessing Officer, however, rejected the view of the assessee treating the income from letting out of building and godown as business income and treated the income as income from house property. Aggrieved against the said assessment order for all the four assessment years, the assessee preferred appeals to the CIT (Appeals), who allowed all the appeals holding that income from warehousing and letting out the godown and building will be income from business and not income from house property. For better clarity, the finding of the CIT (Appeals), is extracted hereunder :-
“11. In pursuance of its objects, the appellant carried on the business of warehousing in its own godowns and rented premises. The appellant derived income also from transporting business. The basic issue for adjudication in this appeal is whether income from warehousing is assessable as income from house property or business.
“In the instant case, a perusal of the profit and loss account of the assessee company and the Object Clause of the Memorandum of Association of the company clearly sho that the assessee company was incorporated with an object of carrying on the business of warehousing and letting/renting of godowns and providing facilities for storage of articles or things and descriptions whatsoever. The profit and loss account of the assessee company shows that its main source of income is storage charges and maintenance or user charges. Even substantial part of the expenses also relate to the salaries of the employees engaged in the maintenance and upkeep of the godowns and warehouses. Therefore, in our considered opinion, the income of the assessee from letting out of warehouses and godowns is chargeable under the head “Business Income” and not “Income from House Property”. Accordingly, we uphold the findings of the CIT (A) and dismiss this ground of appeal of the Revenue.”
Sd/Assistant Registrar //True Copy// Sub Assistant Registrar GLN To 1. The Commissioner of Income Tax III, Chennai. 2. The Assistant Registrar, Income Tax Appellate Tribunal Bench 'C' Besant Nagar, Chennai. 3. The Commissioner of Income Tax (Appeal) V 121 M.G. Road, Nungambakkam, Chennai 600 034.
2 issues framed by the court
Whether income from letting out warehouse with storage and auxiliary services is chargeable under 'Income from Business' or 'Income from House Property'?
Whether the Tribunal was right in distinguishing the judgment in Keyaram Hotels
Colour shows how this judgement treated each authority
Keyaram Hotels (P) Ltd. - Vs – ACITDistinguished¶22
(173 Taxman 262 (Mad))
Nutan Warehousing Company P. Ltd. - Vs – DCITDistinguished¶25
(326 ITR 94 (Bom))
1 provisions across 1 enactments
Commissioner of Income Tax III Chennai
M/s. NDR Warehousing Pvt. Ltd.
R.Sudhakar
R.Karuppiyah
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
