, `'
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "B" MUMBAI
[^ .., Û. / ^ Û], ..
BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER /AND
SHRI RAJENDRA, ACCOUNTANT MEMBER
. / ITA No. 2259/Mum/2012
[ [ /Assessment Year 2007-08
A.C.I.T. 7(2), M/s. Multimodel Storage
MUMBAI. Solution P. Ltd.,
Vs. (Formerly known as M/s. Steel
Suppliers Ltd)
1st Quary Road,
Darukhana, Raey Road,
MUMBAI-10.
PAN: AABCS 1088 A
( /Appellant) (× / Respondent)
Revenue by : Shri Mohit Jain
Assessee by : Shri S.L. Jain
/ Date of Hearing : 17-04-2013
/ Date of Pronouncement : 17-04-2013
/ O R D E R
PER RAJENDRA, A.M.
The present appeal is directed against the order dt. 27-12-2011 passed by the
CIT(A)-13, Mumbai. Following Grounds of Appeal have been raised by the
Assessing Officer (AO):
1. On the facts and in the circumstances of the case and in law, the ld. CIT(A)
erred in treating the warehousing receipts as income from business and profession
as against income from house property ignoring the fact that the warehousing
premise is given on rent to the clients of the assessee against which it has received
the above income.
2. On the facts and in the circumstances of the case and in law, the ld. CIT(A)
erred in treating the warehousing receipts as income from business and profession
as against income from house property ignoring the fact that the TDS certificates
issued by various parties u/s. 194I is applicable to rent.
3. The appellant prays that the order of the CIT(A) on the above grounds be set
aside and that of the AO restored. The appellant craves leave to amend or alter
any ground or add a new ground that may be necessary.
2 ITA No. 2259/Mum/2012
M/s. Multimodel Storage Solution P. Ltd.,
2. Assessee-company, engaged in the business of ware-housing, filed its return of
income on 31-10-2007 declaring total income of Rs. 98.28 Lakhs. Initially, the return
was processed u/s. 143(1) of the Income Tax Act, 1961 (Act). Later on case was
selected for scrutiny and assessment was finalised by the Assessing Officer (AO) u/s.
143(3) of the Act on 30-10-2009 determining total income of the assessee at Rs.
1,17,86,254/-.
3. During the assessment proceedings, AO found that assessee had received
warehousing charges of Rs. 1.20 Crores and had offered the same as Business
Income. AO was of the opinion that warehousing charges received by the assessee-
company had to be assessed under the head `Rental Income' and not as `Business
Income'. He issued a Show Cause Notice to the assessee-company as to why the
warehousing charges should not be treated as `Business Income'. After considering
the submissions of the assessee he held that same were not acceptable, that perusal of
TDS Certificates issued by various parties revealed that tax was deducted by them u/s.
194(I) of the Act, that said section was applicable to rental income only. Relying
upon the order for the AY. 2005-06, he held that income from warehousing charges
had to be assessed as Income from House Property.
4. Assessee preferred an appeal before the First Appellate Authority (FAA). After
considering the submission of the assessee and the order of the AO, FAA held that
ITAT had decided the issue in favour of the assessee, while adjudicating the appeal
filed by the AO for the AY. 2005-06. Following the said order of the Tribunal, he
held that warehousing income had to be assessed as `Business Income'.
5. Before us, Departmental Representative (DR) relied upon the order of the AO.
Authorised Representative (AR) submitted that `I' Bench of the Mumbai Tribunal
vide its order dt. 31-03-2010 (ITA No. 6846/Mum/2008 AY. 2005-06) had held that
warehousing charges were to be assessed as `Business Income'.
6. We have heard the rival submissions and perused the material put before us.
We find that Tribunal vide its order dt. 31-03-2010 (supra) has held as under:
"2.3.We have perused the record and considered the matter carefully. The dispute is as to
whether the income from warehousing charges should be assessed as business income or
house property income. The AO has treated the income as house property income on the
ground that there is a specific head to assess rental income. He has also referred to judgment
of Hon'ble Calcutta High Court in the case of Shambhu Investments Pvt. Ltd.(249 ITR247).
The CIT(A) has accepted the claim of the assessee to assess income as business income as the
assessee was in the business of warehousing activity and the said income had been assessed
by the department as business income in the earlier years. On careful consideration of all the
aspects of the matter we see no infirmity in the order of CIT(A) in holding that the
warehousing income should be assessed as business income. We find from records that the
assessee had used the premises for warehousing activities. It had complete control over the
property and the lock and key remained with the assessee who received merchandise from the
clients and placed them in the godown .The goods were stacked and properly recorded by the
assessee. The customers are charged on the basis of quantify weight and Space utilized for
storing. The assessee has incurred sufficient expenditure on salary, security, electricity, sales
promotions, brokerage etc. for carrying out the various activities relating to the warehouse.
Moreover, the income has already been assessed by the department in the earlier years as
business income There is no change in the factual or legal position. The assessee has made
commercial exploitation of the property and it is not a case of letting out the property as a
owner on rent. The judgment in the case of Shambhu Investment (supra) is distinguishable. In
3 ITA No. 2259/Mum/2012
M/s. Multimodel Storage Solution P. Ltd.,
that case the Hon'ble Calcutta High Court noted that the assessee had recovered almost
entire cost of the property by way of security fee advance and therefore, it could not be said
that the assessee was exploiting the property for commercial purpose. In the present case the
position is different .As mentioned earlier the assessee has organized activity for
commercially exploiting the property for warehousing purposes. We are, therefore, of the,
view that the income has been rightly assessed as business income. The order of CIT(A) is
accordingly upheld."
Respectfully following the order of the co-ordinating bench, we decide the
issue in favour of the assessee and reject the Grounds of Appeal filed by the AO.
As a result, appeal filed by the AO stands dismissed.
[- .
Order pronounced in the open court 17th April, 2013
Û 17 , 2013
Sd/- Sd/-
(.. / B.R. MITTAL) (Û] / RAJENDRA)
Û / JUDICIAL MEMBER / ACCOUNTANT MEMBER
/Mumbai, /Date: 17th April, 2013
TNMM
/Copy of the Order forwarded to :
1. Appellant /
2. Respondent /×
3. The concerned CIT (A) /
4. The concerned CIT /
5. DR "B" Bench, ITAT, Mumbai / `' ,..Û.
6. Guard File/[
× //True Copy//
/ BY ORDER,
Registrar
/ Dy./Asst.
, / ITAT, Mumbai
|
