UNIQUE AGRONOMICAL ENTERPRISES (P) LTD. v. INCOME TAX OFFICER
[Citation -1987-LL-0326-8]

Citation 1987-LL-0326-8
Appellant Name UNIQUE AGRONOMICAL ENTERPRISES (P) LTD.
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 26/03/1987
Judgment View Judgment
Keyword Tags income from house property • opportunity of being heard • memorandum of association • income from business • deed of dissolution • organised activity • business activity • returned income • stock-in-trade • real estate
Bot Summary: In the instant assessment year 1983-84, as appears from the order of the CIT(A) the assessee returned income from the said property under the head income from house property. The ITO accordingly assessed income from the said property under the head income from house property. The ITO assessed the income under the head income from house property following the assessment order for the earlier year 1982-83. The CIT observed that the assessee itself showed the income as from house property and moreover in the earlier year, the said income was assessed under the same head against which the assessee had not appealed. 3(A) of the Memorandum of Association of the assessee company to show that to lease property was also one of the contemplated businesses of the assessee company. Even if the assessee showed income from the said property under the head income from house property , such a statement of the assessee cannot be taken conclusive particularly when the assessee is kly disputing the assessment of the income under that head. It is settled law that admission are though k evidence against a party making them but the party is at liberty to show that such admissions are mistaken and the law favours the investigation of truth by all expedient methods. Thus, simply because the income from the said property was assessed in the earlier year under the head income from house property and the assessee showed the said income in the instant assessment year under the same head, it cannot be taken conclusively that the income was under the house property.


S.K. JAIN, J.M. only point for our determination in this appeal filed by assessee M/s Unique Agronomical Enterprises (P) Ltd., resident company, against order of CIT (A) arising out of assessment order of asst. yr. 1983-84 i s whether income from house property should have been assessed under head income from business . house property at 43/3, Hazra Road, Calcutta was originally owned by Sri K.R.K. Nair who entered into partnership with assessee company which was evidence by deed of partnership dt. 13th April 1980. aim and object of said partnership was to start and carry on business of constructing and selling offices, flats, houses and other accommodation including business of real estate. It appears that said business was o start with said house property as asset of partnership since assessee had offered it services in getting said property vacated from tenants and also to arrange necessary funds for development of said property by constructing multi-storeyed flats. Sri K.R.K. Nair had, therefore, transferred his right, title and interest in said property to partnership. said partnership was in name of Jairam Enterprises. Income from said property in asst. yr. 1981-82 and 1982-83 was assessed in hands of said firm under head business . said partnership was dissolved by deed of dissolution dt. 3rd March 1981 and entire business of Jairam Enterprises including their property was taken over by assessee. Income from said property for part of asst. yr. 1982-83 was, therefore, assessed in hands of assessee. It was assessed under head income from house property . In instant assessment year 1983-84, as appears from order of CIT(A) assessee returned income from said property under head income from house property. ITO accordingly assessed income from said property under head income from house property. This was unsuccessfully objected to by assessee in appeal before CIT(A) , and therefore, has now come up in second appeal. ITO assessed income under head income from house property following assessment order for earlier year 1982-83. CIT (A) observed that assessee itself showed income as from house property and moreover in earlier year, said income was assessed under same head against which assessee had not appealed. Contention of ld. counsel for assessee is that there is no re judicata in tax matters and, therefore, assessment order for 1982-83 should not be made binding upon assessee. Further, it is also contended by him that said house property was stock-in-trade of assessee and it was held for business activity and not merely for earning rent. He in support placed reliance upon judgements of Hon ble Supreme Court in Karnani Properties Ltd. vs. CIT (1981) 82 ITR 547 (SC) and S.G. Mercantile Corporation Pvt. Ltd. vs. CIT 1972 CTR (SC) 8: (1972) 83 ITR 700 (SC). He also referred to cl. 3(A) (a) of Memorandum of Association of assessee company to show that to lease property was also one of contemplated businesses of assessee company. Learned Departmental Representative while opposing appeal refuted argument of ld. counsel for assessee. It is contended by him that there is no material on record to evince that assessee dealt in real estate and it was its organised activity like business. Even if assessee showed income from said property under head income from house property , such statement of assessee cannot be taken conclusive particularly when assessee is kly disputing assessment of income under that head. It is settled law that admission are though k evidence against party making them but party is at liberty to show that such admissions are mistaken and, therefore, law favours investigation of truth by all expedient methods. It is therefore, necessary to examine in light of material obtaining in this case as to under what head income from said property should be assessed. It is also settled law that principle of rejudicata is not applicable to decisions of IT authorities and assessment for particular year is final and conclusive between parties only in relation to assessment for that year subject to limitation that there should be finality in all litigations and earlier decision in same question cannot be reopened if that decision is not arbitrary or perverse vide H.A. Shah & Co. vs. CIT (1956) 30 ITR 618 (Bom). Thus, simply because income from said property was assessed in earlier year under head income from house property and assessee showed said income in instant assessment year under same head, it cannot be taken conclusively that income was under house property . decision of tax authorities below rests on this point only and they failed to further investigate as to under which head income should be assessed. They should have taken into consideration various circumstances under which partnership was formed and property was transferred by original owner to assessee company and then partnership was dissolved and same business of partnership was taken over by assessee company. It is necessary to investigate facts and then to apply correct law for arriving at just and proper decision. We, therefore, set aside orders of tax authorities below and refer case back to ITO for de novo assessment after proper investigation of facts giving opportunity of being heard to assessee. In result, appeal is allowed for statistical purpose. *** UNIQUE AGRONOMICAL ENTERPRISES (P) LTD. v. INCOME TAX OFFICER
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