Commissioner Of Income Tax, Raipur v. M/S. C.g. Ware Housing Corporation

w Oivision BendlIN THE HIGH COURT OF JUbICATURE AT BILASPUR^N^O^E-TTW-APWAL N0. l^/2012^Yq%(^o-s^ABPELLANT^ommissionerofIncomez~Tax, RaipurvsR.ESPONbENTl/sC.G.WareHousingCorporation,22Anand.o.u.....'-lLI^;^Nagar, Raipur (C6)..y^ffs^-o»^..---" APPEAL UNbER SECTION260-A OF THE INCOME TAX F/ / ^- HIGH COURT OF CHHATTISGARHAT BILASPUR 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 Versus RESPONDENT M/s. C.G. Ware Housing Corporation Tax Case No.13 of 2012 APPELLANT Commissioner of Income Tax, Raipur Versus RESPONDENT M/s. C.G. Ware Housing Corporation, Tax Case No.14 of 2012 \ APPELLANT Commissioner of Income Tax, Raipur Versus RESPONDENT M/s. C.G. Ware Housing Corporation Tax Case No.15 of 2012 APPELLANT Commissioner of Income Tax, Raipur Versus RESPONDENT M/s. C.G. Ware Housing Corporation Tax Case No.I7 of 2012 APPELLANT Commissioner of Income Tax, Raipur Versus RESPONDENT M/s. C.G. Ware Housing Corporation ^ ^ APPEALS UNDER SECTION 260-A OF THE INCOME TAX ACT,1961 Appearance : Mr. Anand Dadariya, Counsel for the appellants in all theappeals. Mr. S. Rajeshwar Rao and Mr. M.K. Sinha, Counsel forthe respondents in all the appeals. ORDER(14.08.2012) Thefollowingorder of the Court waspassedbyAbhay Manohar Sapre, J. Heard. (2)The decision rendered in Tax Case No.16 of 2012 shallalso govern the disposal of other appeals being Tax CaseNos.13/2012, 14/2012, 15/2012, &17/2012, because, firstlythey arise out of common order of the Tribunal and secondlyrelate to same assessee (respondent herein ) . (3)This is an appeal filed by the Revenue (Commissioner ofIncome Tax) under Section 260-A of the Income Tax Act againstthe order dated 14.10.2011 passed by the Income Tax AppellateTribunal, Bilaspur Bench, Camp at Raipur (for short called TheTribunal)in' ITANos.188519/BLLPR/2010and27to30/BLPR/2011. (4)By the impugned order, the Tribunal allowed the appealsfiled by the assessee and in consequence, decided the issueinvolved in the appeals in their favour. (5)So the question involved in this appeal is whethertheTribunal was justified in allowing the assessee's appeal? ^^^ ^^^.'":i^ 's.- (6)This appeal was admitted for final hearing on followingtwo questions: (7)Having heard the learned counsel for parties and onexamining the controversy in its proper perspective and furtherkeeping in view the provisions of section 260-A of the Act, whichenables this Court to frame additional questions pf law at thetime of hearing of the appeal provided they arise out of the case,We are of the view that following additional questions of law inaddition to aforementioned two questions also need to beframed because they do arise for consideration in this appeal.In any event, this Court would be able to examine the issuesinvolved in the appeal only when the questions arising out ofsuch findings are framed.. (8)The following additional questions are accordingly framedby taking recourse to powers conferred by Section 100 (5 ) ibidfor proper decision of this appeal. (3)In the absence of any discussionand further in the absence of anyappreciationoftheobjectandnature of working of theassessee,in carrying their business activityand further in the absence of anyappreciationoftheobjectandnature of working of theassessee,in carrying their business activity -A. for earning and simply by placingrelianceononedecisionof theTribunalpassedinonecase,whether finding recorded by theTribunal on the issue is legally andfactually sustainable ?If answer to question No. 3 is inaffirniativei.einfavourof theappellant, then, what orders arecalled for in the appeal? (4) (8)The following additional questions are accordingly framedby taking recourse to powers conferred by Section 100 (5 ) ibidfor proper decision of this appeal. (3)In the absence of any discussionand further in the absence of anyappreciationoftheobjectandnature of working of theassessee,in carrying their business activityand further in the absence of anyappreciationoftheobjectandnature of working of theassessee,in carrying their business activity -A. for earning and simply by placingrelianceononedecisionof theTribunalpassedinonecase,whether finding recorded by theTribunal on the issue is legally andfactually sustainable ?If answer to question No. 3 is inaffirniativei.einfavourof theappellant, then, what orders arecalled for in the appeal? (4) (9)The respondentisaStateGovernment undertakingestablishedundertheprovisionsofTheWarehousingCorporation Act 1962 (for short called "the Actw ) for carryingout the object of the Act in State of Chhattisgarh. (10)Intheir assessment yearsunderconsideration,thequestion arose before assessing officer(A.O.) as to what is thetrue nature of the income received by the respondent ( assessee)from their warehousing activitiesviz-,could it be termed asan income derivedfrom "housepropertyw oras their<<business incomew.*- (11)The contention of the assessee was that it was an incomederived by them from their business activity and hence, suchincome should be taxed as their "business income", whereas,the contention of the Revenue was that since it was essentiallyan income derived from their "house property?? and hence, it betaxed as an income from "house property?\ (12)It is this question which was answered by the authoritiesbelow. So far as A.O and CIT (appeals) were concerned, bothheld that the true nature of assessee's income is income fromahouse property??, whereas, the Tribunal disagreeing with theirreasoning and accepting the contention of the assessee heldthat it is their["business]incomew. It is against this view of theTribunal; the Commissioner of Income Tax has felt aggrievedand flled this appeal. l»i<l< ^. (13)Having heard the learned counsel for the parties and onperusal of the record of the case, we have formed an opinionthat this appeal deser^es to be allowed for remanding the caseto the Tribunal for fresh hearing of the appeal and hence, whilesetting aside of the impugned order, remand the case to theTribunal for deciding the appeal afresh on merits. Since we haveformed an opinion to remand the case to the Tribunal andhence, we refrain from expressing any opihion on the merits ofthe case. It will be now for the Tribunal to give its finding in thelight of what we have observed infra. (14)In our considered opinion, the need to remand is calledforbecausetheTribunalwhiledecidingtheappealinrespondent's favour based their conclusion on one decision ofthe Tribunal.In fact, while deciding the appeal, the Tribunal,did not take note of any factual scenario- of assessee's businessfor determining itstrue nature such as, what is the truenature of their business activities for earning income, how theyare carried out, their sources, if there are more than onebusiness carried on by the assessee then which are thosebusiness activity, what type of properties are owned, controlledor /and used by the assessee for cariying theirbusinessactivities, whether the Act has made any provision for carryingon the business activities and if so, to what extent, etc. (15)These issues and may be some more depending upon theevidence adduced are material for deciding the true nature ofthe business of the assessee. They are required to be examinedby the Tribunal in the first instance in the light of law laid downby the Supreme Court in three leading decisions reported in 42ITR 49 fSC) - Edst India Housina and Land Develoom.entTrust Ltd vs C.J.T.. 51ZTR 353 fSC) - Sultan BrothersPrivate 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 issueinvolved to decide the true nature of income earned by theassessee from their various sources (15)These issues and may be some more depending upon theevidence adduced are material for deciding the true nature ofthe business of the assessee. They are required to be examinedby the Tribunal in the first instance in the light of law laid downby the Supreme Court in three leading decisions reported in 42ITR 49 fSC) - Edst India Housina and Land Develoom.entTrust Ltd vs C.J.T.. 51ZTR 353 fSC) - Sultan BrothersPrivate 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 issueinvolved to decide the true nature of income earned by theassessee from their various sources (16)We have noticed that it was not done by the Tribunal andinstead without even adverting to any facts of the case simplyreferred to one decision of the Tribunal (Karnataka Bench) andallowed the appeal filed by the assessee. (17)One can understand if the issue is already finally decidedby the Supreme Court decision or by jurisdictional High Court.In such situation, no more discussion on such issue is calledfor except to follow the decision of the Supreme Court and HighCourt for passing the final orders in conformity with the lawlaid down therein to maintain judicial discipline and theirbinding effect on the Courts (18)We however do not thereby wish to suggest that nodecision of Tribunal should be followed while deciding the issueby the Tribunal.All that we wish to say is that while decidingthe appeal, the Tribunal is first required to examine the factualissues arising in the case keeping in view the law laid down bythe Supreme Court as a guiding principle. The primacy shouldalways be to decide the issue in the light of law laid down by theSupreme Court and in the absence of anydecisionof theSupreme Court on the issue, one must try to find outthedecision of the jurisdictional High Court and in its absence ofother High Courts and lastly by the Tribunal. (19)Since in this case, there are as many as three leadingdecisions of the Supreme Court wherein the law is explained asto how one should determine the true nature of the income ofthe assessee i.e. whether it is from house property or businessincome, it was the duty of the Tribunal to have examined the .-'\,^.-^T'<^['^]\"-\v'.m)^^¥^'"..•y' shyna issue keeping in view the law laid down by the Supreme Courtin aforementioned three decisions. (20)It is for this reason, we consider it proper to remand thecase to enable the Tribunal to decide the factual issue in thelight of the guiding principles. (21)As a consequence of the foregoing discussion, the appealsucceeds and is allowed in part. The impugned order is setaside. The additional question of law Nos.3 & 4 are accordinglyanswered in appellant's favour. (22)In this view of the matter, it is not necessary to answerquestions185 2 on their merits because it will now be re-examined by the Tribunal as directed above. (23)Parties would now be at liberty to file any additionaldocuments before the Tribunal in addition to what has alreadybeen filed, in case, iftheywish to do so. (24) The Tribunal will decide the appeal finally within sbcmonths. (25)PartiestoappearbeforetheTribunalon24thofSeptember2012. (26)No Cost. (27)The original order shall be kept in the records of TaxCase No. 16/2012 and the photocopies ofthe same shall be keptin the records of other cases.