Commissioner of Income Tax, Raipur v. M/s C.&. Ware Housing Corporation

D.B.: Hon'ble Mr. Justice Abhay Manohar Sapre & Hon'ble Mr. Justice G. Minhaiuddin Tax Case No.16 of 2012 APPELLANT Commissioner of Income Tax, Raipur / ^- RESPONDENT M/s. C.G. Ware Housing Corporation Versus F/ Tax Case No.13 of 2012 APPELLANT Commissioner of Income Tax, Raipur RESPONDENT M/s. C.G. Ware Housing Corporation, Versus Tax Case No.14 of 2012 \ APPELLANT Commissioner of Income Tax, Raipur RESPONDENT M/s. C.G. Ware Housing Corporation Versus Tax Case No.15 of 2012 APPELLANT Commissioner of Income Tax, Raipur RESPONDENT M/s. C.G. Ware Housing Corporation Versus Tax Case No.I7 of 2012 APPELLANT Commissioner of Income Tax, Raipur RESPONDENT M/s. C.G. Ware Housing Corporation Versus 1 v^ ^ APPEALS UNDER SECTION 260-A OF THE INCOME TAX Appearance : ACT,1961 Mr. Anand Dadariya, Counsel for the appellants in all the appeals. Mr. S. Rajeshwar Rao and Mr. M.K. Sinha, Counsel for the respondents in all the appeals. ORDER (14.08.2012) The following order of the Court was passed by ^ Abhay Manohar Sapre, J. Heard. The decision rendered in Tax Case No.16 of 2012 shall (2) also govern the disposal of other appeals being Tax Case Nos.13/2012, 14/2012, 15/2012, & 17/2012, because, firstly they arise out of common order of the Tribunal and secondly relate to same assessee (respondent herein ) . This is an appeal filed by the Revenue (Commissioner of (3) Income Tax) under Section 260-A of the Income Tax Act against the order dated 14.10.2011 passed by the Income Tax Appellate Tribunal, Bilaspur Bench, Camp at Raipur (for short called The in' ITA Nos.18 85 19/BLLPR/2010 and 27 to Tribunal) 30/BLPR/2011. By the impugned order, the Tribunal allowed the appeals (4) filed by the assessee and in consequence, decided the issue involved in the appeals in their favour. So the question involved in this appeal is whether (5) Tribunal was justified in allowing the assessee's appeal? ^^^ .'":i^ 's.- This appeal was admitted for final hearing on following (6) two questions: (1) (2) Whether in law and on the facts and circumstances of the case, the ITAT was right in law in holding that the income from warehousing should be assessed under the head 'income from business' and not 'income froni house property' when total receipts of ware house is from rent on which the persons paying the rent have duly deducted tax under Section 194-1 of theAct, 1961? Whether circumstances of the case, the ITAT was justified in law in directing the AQ to warehousing 'income from business' relevant property' assessment year? instead of receipt 'income Having heard the learned counsel for parties and on (7) examining the controversy in its proper perspective and further keeping in view the provisions of section 260-A of the Act, which enables this Court to frame additional questions pf law at the time of hearing of the appeal provided they arise out of the case, We are of the view that following additional questions of law in addition to aforementioned two questions also need to be framed because they do arise for consideration in this appeal. In any event, this Court would be able to examine the issues involved in the appeal only when the questions arising out of such findings are framed. . The following additional questions are accordingly framed (8) by taking recourse to powers conferred by Section 100 (5 ) ibid for proper decision of this appeal. (3) In the absence of any discussion and further in the absence of any appreciation of nature of working of the assessee, in carrying their business activity object -A. ^:,^-.'-.<^ /' -^' Ml'^ for earning and simply by placing reliance on one decision of Tribunal case, passed finding recorded by the whether Tribunal on the issue is legally and factually sustainable ? (4) If answer to question No. 3 is in i.e in favour of affirniative then, what orders are appellant, called for in the appeal? The respondent is a State Government undertaking (9) established under of The Warehousing provisions Corporation Act 1962 (for short called "the Actw ) for carrying out the object of the Act in State of Chhattisgarh. In their assessment years under consideration, (10) question arose before assessing officer (A.O.) as to what is the true nature of the income received by the respondent ( assessee) ,could it be termed as from their warehousing activities viz- an income derived <<business incomew. from "house propertyw or as their *- (11) The contention of the assessee was that it was an income derived by them from their business activity and hence, such income should be taxed as their "business income", whereas, the contention of the Revenue was that since it was essentially an income derived from their "house taxed as an income from "house property?? and hence, it be property?\ It is this question which was answered by the authorities (12) below. So far as A.O and CIT (appeals) were concerned, both held that the true nature of assessee's income is income from ahouse property??, whereas, the Tribunal disagreeing with their reasoning and accepting the contention of the assessee held that it is their "business incomew. It is against this view of the Tribunal; the Commissioner of Income Tax has felt aggrieved and flled this appeal. (13) Having heard the learned counsel for the parties and on perusal of the record of the case, we have formed an opinion that this appeal deser^es to be allowed for remanding the case to the Tribunal for fresh hearing of the appeal and hence, while setting aside of the impugned order, remand the case to the Tribunal for deciding the appeal afresh on merits. Since we have formed an opinion to remand the case to the Tribunal and hence, we refrain from expressing any opihion on the merits of the case. It will be now for the Tribunal to give its finding in the light of what we have observed infra. In our considered opinion, the need to remand is called (14) for because the Tribunal while deciding the appeal ^. l»i<l< respondent's favour based their conclusion on one decision of the Tribunal. In fact, while deciding the appeal, the Tribunal, did not take note of any factual scenario- of assessee's business for determining its true nature such as, what is the true nature of their business activities for earning income, how they are carried out, their sources, if there are more than one business carried on by the assessee then which are those business activity, what type of properties are owned, controlled or /and used by the assessee for cariying their business activities, whether the Act has made any provision for carrying on the business activities and if so, to what extent, etc. (15) These issues and may be some more depending upon the evidence adduced are material for deciding the true nature of the business of the assessee. They are required to be examined by the Tribunal in the first instance in the light of law laid down by the Supreme Court in three leading decisions reported in 42 ITR 49 fSC) - Edst India Housina and Land Develoom.ent Trust Ltd vs C.J.T.. 51 ZTR 353 fSC) - Sultan Brothers Private Ltd. vs C.J.T. and 66 ITR 596 [SC)- CJ.T. vs National ^r^ Storacie Pvt. Ltd which have a material bearing over the issue involved to decide the true nature of income earned by the assessee from their various sources (16) We have noticed that it was not done by the Tribunal and instead without even adverting to any facts of the case simply referred to one decision of the Tribunal (Karnataka Bench) and allowed the appeal filed by the assessee. (17) One can understand if the issue is already finally decided by the Supreme Court decision or by jurisdictional High Court. In such situation, no more discussion on such issue is called for except to follow the decision of the Supreme Court and High Court for passing the final orders in conformity with the law laid down therein to maintain judicial discipline and their binding effect on the Courts (18) We however do not decision of Tribunal should be followed while deciding the issue thereby wish to suggest that no by the Tribunal. All that we wish to say is that while deciding the appeal, the Tribunal is first required to examine the factual issues arising in the case keeping in view the law laid down by the Supreme Court as a guiding principle. The primacy should always be to decide the issue in the light of law laid down by the Supreme Court and in the absence of any decision of the Supreme Court on the issue, one must try to find out decision of the jurisdictional High Court and in its absence of other High Courts and lastly by the Tribunal. (19) Since in this case, there are as many as three leading decisions of the Supreme Court wherein the law is explained as to how one should determine the true nature of the income of the assessee i.e. whether it is from house property or business income, it was the duty of the Tribunal to have examined the .-^T'<^\"- '\^ .-'\,^ m) \ ^^¥ v'. ^'"..•y' issue keeping in view the law laid down by the Supreme Court in aforementioned three decisions. It is for this reason, we consider it proper to remand the (20) case to enable the Tribunal to decide the factual issue in the light of the guiding principles. (21) As a consequence of the foregoing discussion, the appeal succeeds and is allowed in part. The impugned order is set aside. The additional question of law Nos.3 & 4 are accordingly answered in appellant's favour. In this view of the matter, it is not necessary to answer (22) questions 1 examined by the Tribunal as directed above. 85 2 on their merits because it will now be re- (23) Parties would now be at liberty to file any additional documents before the Tribunal in addition to what has already been filed, in case, iftheywish to do so. (24) The Tribunal will decide the appeal finally within sbc months. (25) Parties September2012. to appear before the Tribunal on 24th of (26) No Cost. (27) The original order shall be kept in the records of Tax Case No. 16/2012 and the photocopies ofthe same shall be kept in the records of other cases. Sd/- Abhay Manohar Sapre Judge Sd/- G. Minhajuddin Judge