Tribunal bound to follow Orders in Sister Concern’s Case unless Set-aside or Stayed: Bombay HC [Read Judgment]

In the case of Procter & Gamble Home Products Pvt. Ltd v. Income Tax Appellate Tribunal, the Bombay High Court held that the orders of the Tribunal in the case of sister concern of the Assessee since the same are binding on the Tribunal unless set-aside or stayed.

The assessee in the instant case is a private limited company duly filed its return of income for the relevant assessment year.

During the assessment period, it has found that the Assessee has received the amount of rent or compensation from its sister concern for utilization of a part of its premises and the same has treated under the head business income. The Assessing Officer (AO) was opinioned that the rent received from the sister concern should be termed as income from house property.

On appeal, the Income Tax Appellate Tribunal (ITAT) has allowed the appeal of the Assessee by holding that the amount received by it as rent or compensation from its sister concern for utilization of a part of its premises is to be classified as ‘income from other sources’.

Thereafter, the Revenue filed a miscellaneous application for seeking to rectify the order on the ground that the Tribunal passed the order without considering the written submission of the Revenue and it did not consider the claim of the Revenue that rent or compensation is chargeable to tax under the head ‘income from the house property’ while holding it taxable as ‘income from other sources’.

After considering the facts and circumstances, the bench comprising Sandeep K. Shinde and Justice M.S.Sanklecha observed that while allowing the appeal of the Assessee, the Tribunal relied upon the sister concern’s order passed by the Tribunal in the previous assessment years had an issue with regard to the classification of rent or compensation being received on letting of property under the head ‘income from the house property’ or ‘income from other sources’. Therefore, it followed the same in the present issue.

The Court further observed that the Revenue filed appeals in the sister concern’s case regarding the same issue and these appeals have been admitted and are awaiting consideration for final disposal till such time as the orders of the Tribunal of its co-ordinate bench in respect of the assessment years are set-aside or are stayed pending the final disposal its ratio would, prima facie, continue to be binding.