Tamilnadu Real Estates Private Limited, CHENNAI V. ACIT, CHENNAI

CO 58/CHNY/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3076 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G SITHARAMAN
• Assessee Lawyers: TIRIPURASUNDARI
• Keywords: Reopening of assessment
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.608/MDS/2017 & C.O. NO.58/MDS/2017 (IN I.T.A. NO.608MDS/2017) & '& / ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI - 600 034. V. M/S TAMIL NADU REAL ESTATES PVT. LTD ., NO.123/124, NUNGAMBAKKAM HIGH ROAD, NUNGAMBAKKAM, CHENNAI - 600 034. PAN : AABCT 5912 E ()*/ APPELLANT) ( RESPONDENT & CROSS OBJECTOR) )* + , / APPELLANT BY : SMT. TIRIPURASUNDARI, JCIT -.)* + , / RESPONDENT BY : SHRI G. SITHARAMAN, CA / + 0' / DATE OF HEARING : 25.05.2017 12' + 0' / DATE OF PRONOUNCEMENT : 29.06.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNA I, DATED 29.12.2016 AND PERTAINS TO ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS FILED CROSS-OBJECTION AGAINST THE VERY SAME ORDER OF 2 I.T.A. NO.608/MDS/17 C.O. NO.58/MDS/17 THE CIT(APPEALS). THEREFORE, WE HEARD BOTH THE APP EAL AND THE CROSS-OBJECTION TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SMT. TIRUPURASUNDARI, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE ASSESSEE DERIVED RENTAL INCOME F ROM THREE BUILDINGS AND OFFERED THE SAME UNDER THE HEAD INCO ME FROM HOUSE PROPERTY. HOWEVER, IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS DEBITED AN AMOUNT OF ` 1,07,02,526/- AND ` 12,82,606/- TOWARDS REPAIRS AND MAINTENANCE FOR BUILDING AND ELECTRICAL EQUIPMENTS. ACCORDING TO THE LD. D.R., WHEN INCOME WAS OFFERED AS INCOME FROM HOUSE PROPERTY, THE ASSESSEE CAN CLAIM DEDUCT ION UNDER SECTION 24 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'T HE ACT'), THEREFORE, CLAIM OF REPAIRS AND MAINTENANCE CANNOT BE ALLOWED. 3. ON THE CONTRARY, SHRI G. SITHARAMAN, THE LD. REP RESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT IN RESPECT OF RENT AL INCOME RECEIVED BY THE ASSESSEE, THE SAME WAS OFFERED UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDING TO THE LD. REPRESENTATIVE, OTHER THAN RECEIVING RENTAL INCOME, THE ASSESSEE IS ALSO INCOME FROM MAINTAINING A BUILDING CALLED ISPAHANI CENTRE AT DOOR NO.123/124, NUNGAMBAKKAM HIGH ROAD, CHENNAI-34. TH IS BUILDING 3 I.T.A. NO.608/MDS/17 C.O. NO.58/MDS/17 WAS OCCUPIED BY SEVERAL BUSINESS ENTITIES. THE PRO PERTY WAS OWNED BY SEVERAL LANDLORDS AND THE ASSESSEE IS OWNI NG A PART OF PROPERTY. HOWEVER, ACCORDING TO THE LD. REPRESENTA TIVE, THE ENTIRE BUILDING WAS MAINTAINED BY THE ASSESSEE. THERE WAS AN AGREEMENT FOR MAINTAINING THE COMMON AREA, PROVIDING COMMON F ACILITIES TO ALL THE TENANTS. THE ASSESSEE WAS RECOVERING MAINTENAN CE CHARGES FOR THE PURPOSE OF PROVIDING FACILITIES LIKE SECURI TY, COMMON AREA MAINTENANCE, ETC. AN IDENTICAL ISSUE CAME BEFORE T HIS TRIBUNAL FOR ASSESSMENT YEAR 2007-08 IN THE ASSESSEE'S OWN CASE IN I.T.A. NO.1374/MDS/2014. THIS TRIBUNAL BY AN ORDER DATED 20.03.2015 REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER. THE ASSESSING OFFICER, AFTER EXAMINING THE AGREEMENT EN TERED INTO BETWEEN VARIOUS LANDLORDS / TENANTS TO MAINTAIN THE BUSINESS COMPLEX, DISALLOWED 10% OF THE EXPENDITURE. 4. REFERRING TO THE AGREEMENT OF THE ASSESSEE, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE TENANTS AGREED TO PAY MAINTENANCE CHARGES ON PRO RATA BASIS OF THE PORTION WHICH IS UNDER THE OCCUPATION, FOR PROVIDING COMMON FACIL ITIES SUCH AS SECURITY, MAINTAINING COMMON AREA, PROVIDING COMMON FACILITIES SUCH AS SECURITY SERVICES, LIFT MAINTENANCE, FIREFI GHTING EQUIPMENTS 4 I.T.A. NO.608/MDS/17 C.O. NO.58/MDS/17 AND OTHER UTILITIES. THE LD. REPRESENTATIVE FURTHE R SUBMITTED THAT THE MAINTENANCE AGREEMENT WAS ALSO EXECUTED, A COPY OF WHICH IS ALREADY AVAILABLE ON RECORD. AS PER THE MAINTENANC E AGREEMENT, THE LANDLORDS OF MULTISTORY COMMERCIAL COMPLEX KNOW N AS ISPAHANI CENTRE APPOINTED THE ASSESSEE-COMPANY AS A CONTRACT OR FOR MAINTAINING AND UPKEEPING THE COMMON FACILITIES. T HEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE MAINTENANC E CHARGES RECEIVED BY THE ASSESSEE IS IN THE NATURE OF BUSINE SS, HENCE, THE EXPENDITURE CLAIMED BY THE ASSESSEE FOR MAINTAINING BUILDING AS CONTRACTOR HAS TO BE ALLOWED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ONE OF THE CO-OWNERS O F THE BUILDING KNOWN AS ISPAHANI CENTRE AT DOOR NO.123-124, NUNGAM BAKKAM HIGH ROAD, CHENNAI-34. ALL THE LANDLORDS EXECUTED MAINTENANCE AGREEMENT INDEPENDENTLY WITH THE ASSESSEE FOR MAINT AINING THE BUILDING AND TO PROVIDE COMMON FACILITIES. THE ASS ESSEE BEING OWNER OF A PART OF THE BUILDING, HAS UNDERTAKEN TO MAINTAIN THE BUILDING ON BEHALF OF THE OWNERS. THEREFORE, AS RI GHTLY SUBMITTED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE, THE SEPARA TE CONTRACT 5 I.T.A. NO.608/MDS/17 C.O. NO.58/MDS/17 ENTERED INTO BY THE ASSESSEE WITH OTHER OWNERS OF T HE BUILDING IS BUSINESS IN NATURE, THEREFORE, THE EXPENDITURE CLAI MED BY THE ASSESSEE FOR MAINTAINING THE BUILDING IN RESPECT OF COMMON FACILITIES AND PROVIDING SECURITIES, ETC. HAS TO BE ALLOWED. AFTER CONSIDERING THE AGREEMENT, THIS TRIBUNAL FOR THE ASSESSMENT YEA R 2007-08, REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER. THE ASSESSING OFFICER DISALLOWED 10% OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THEREFORE, FOR THE SAKE OF CONSISTENCY, THE EXPENDITURE OF THE ASSESSEE TO THE EXTENT OF 10% CAN BE DISALLO WED FOR THIS YEAR ALSO. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REA SON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 6. NOW COMING TO THE CROSS-OBJECTION FILED BY THE A SSESSEE, THE ONLY ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO REOPENING OF ASSESSMENT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSMENT WAS REOPENED WITHIN A PERIOD OF FOUR YEARS, THEREFO RE, AS RIGHTLY FOUND BY THE CIT(APPEALS), THE ASSESSING OFFICER IS SUED NOTICE UNDER SECTION 148 OF THE ACT FOR CONSIDERING THE CL AIM OF THE 6 I.T.A. NO.608/MDS/17 C.O. NO.58/MDS/17 ASSESSEE. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY UPHELD THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE AC T. IN VIEW OF THE ABOVE, THE ORDER OF THE CIT(APPEALS) IS CONFIRM ED. 8. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AN D THE CROSS- OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 29 TH JUNE, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 29 TH JUNE, 2017. KRI. + -056 76'0 /COPY TO: 1. )* /APPELLANT 2. -.)* /RESPONDENT 3. / 80 () /CIT(A)-11, CHENNAI-34 4. PRINCIPAL CIT-3, CHENNAI 5. 69 -0 /DR 6. :& ; /GF.