IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR.

BEFORE SH. MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER (Physical Hearing)

I.T.A. No. 103 & 104/Asr/2024 Assessment Years: 2014-15 and 2017-18 Assessment Years: 2014-15 and 2017-18 Assessment Years: 2014-15 and 2017-18 Assessment Years: 2014-15 and 2017-18 Assessment Years: 2014-15 and 2017-18 Appellant by Sh. Ashray Sarna, CA Respondent by Sh. Sunil Gautam, CIT. DR Date of Hearing 16.12.2025 Date of Pronouncement 15.01.2026

ORDER

Per: Udayan Dasgupta, J.M.:

Both these appeals are filed by the revenue against the orders of ld. CIT (A), NFAC, Delhi, passed u/s 250 of the Income Tax Act, 1961,( henceforth the Act ) both dated 29.01.2024 , which has emanated from the orders of AO, Circle Ferozepur, dated 30.12.2019 passed u/s 143(3) r.w.s. 147 of the Act (for A.Y. 2014-

15) and order dated 28.12.2019 passed u/s 143(3) of the Act ( for AY 2017-18 ).

2. The facts and issues contained in both the years being identical, are taken up for disposal together for the sake of convenience and we take up ITA No.

103/Asr/2024, first.

3. ITA No.103/Asr/2024:

The grounds taken by the revenue in Form no. 36 are as follows:

“1. That on the facts and circumstances of the case, the CIT(A) has erred on facts and law in holding that the income of the assessee from letting out its godown is chargeable under the head 'income from Business' and not under the head 'Income from House Property".

2. That on the facts and circumstances of the case, the CIT(A) has erred on facts and in law as apart from letting out of its godowns, no other services, were extended by the assessee to the lessees. Merely because one of the objectives was to let out the godown would not mean that the assessee had undertaken the activity of setting up and operating a warehousing facility for storage of agricultural produce construction of godowns and letting them out as business activity.

3. That on the facts and circumstances of the case, the CIT(A) has erred on facts and in law as the income derived from letting out the property would not amount to profits or gains from the business. From the facts of the present case, it is clear that the assessee could let out their godowns only because those were not in use at the relevant time. Therefore, the rent received by the assessee would have to be computed as income from property.”

4. Brief facts emerging from records are that the assessee is an Association of Person (AOP) and is claimed to be engaged in “specified business” within the meaning of section 35AD(8)(c) (ii) of the Act, and has made substantial investment in setting up and operating a warehousing facility for storage of agricultural produce. 4.1 Regular return declaring NIL income filed, claiming set off of current year net profit of Rs.3,93,37,459/- as deduction u/s 35AD(8)(c)(ii) of the Act, has been accepted in scrutiny proceedings u/s 143(3), vide order dated 23/12/2016.

4.2 Subsequently, the case has been reopened u/s 148 vide notice dated 29.03.2019 (after necessary approval from higher authorities), mainly on the issue regarding availability of deduction claimed u/s 35AD(8)(c)(ii) of the Act.

The relevant portion of the recorded reasons are reproduced below for ready reference:

“2. The assessee has constructed a godown during the year under consideration and rented out the same to PUNGRAIN on fixed monthly rental charges. The assessee has claimed deduction u/s 35AD(8)(c) (ii) of the Act @150% of capital expenditure incurred on construction of godowns during the year. Deduction u/s 35AD(8)(c)(ii) of the Act is available in respect of specified business of setting up and operating a warehousing facility for storage of agricultural produce. The assessee has set up a warehousing facility but has rented it out to PUNGRAIN on monthly fixed rental income. No activity has been undertaken by the assessee to operate the warehousing facility. In such types of arrangements, intention of the less