Shri Kartik Kapoor, Kanpur V. Income Tax Officer, Kanpur

ITA 103/LKW/2014

• Counselvise Citation: 10323714 RSA 2014
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: VIKAS GARG
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 103/LKW/2014 ASSESSMENT YEAR: 2009 - 10 SHRI KARTIK KAPOOR KANPUR V. INCOME TAX OFFICER RANGE 2(2) KANPUR PAN: AXOPK7199P (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. VIKAS GARG, FCA RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 22.04.2014 DATE OF PRONOUNCEMENT: 29 .04.2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN TREATING THE RENTAL INCOME AS BUSINESS INCOME OF THE ASSESSEE AND THEREAFTER DISALLOW ED THE STANDARD DEDUCTION CLAIMED BY THE ASSESSEE UN DER SECTION 24(A) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 2 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUS ED THE ORDERS OF THE AUTHORITIES BELOW AND WE FIND THAT THE ASSESSEE HAS CLAIMED RENTAL INCOME FROM ITS PROPERTIES LET OUT TO VARIOUS TENANTS AND CLAIMED STANDARD DEDUCTION UNDER SECTION 24(A) OF THE ACT. THE ASSESSING OFFICER TREATED THE INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSINESS OF LETTING OUT THE PROPERTY TO THE PERSON WHO CARRY ON THE BUSINESS ACTIVITY ON LY AND DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : 3 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM. 4 . NOW THE ASSESSEE IS BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSEE HAS OWNED THE PROPERTIES WHICH WERE LET OUT TO VARIOUS TENANTS AND THE RENTAL INCOME WAS RIGHTLY TREATED TO BE THE INCOME FROM HOUSE PROPERTY. HE HAS PLACED RELIANCE UPON THE JUDGMENTS OF THE HONBLE APEX COURT IN THE CASE S OF CIT VS. SHAMBHU INVESTMENTS PVT. LTD., 263 ITR 143; CIT VS. NATIONAL STORAGE PVT. LTD, 66 ITR 596 AND SULTAN BROTHERS PVT. LTD. VS. CIT, 51 ITR 353; THE JUDGMENTS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARABHAI PVT. LTD., 263 ITR 197 AND THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. IDEAL GARDEN COMPLEX (P) LTD., 340 ITR 609. IT WAS FURTHER CONTENDED THAT IN ALL THESE CASES IT HAS BEEN REPEATEDLY HELD THAT EVEN IF ASSESSEE - COMPANY WAS FORMED WITH AN OBJECT OF DEVELOPING REAL ESTATE AND IT CONSTRUCTED COMMERCIAL COMPLEX WHICH WERE LET OUT A ND THE RENT RECEIVED WOULD BE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 6 . HAVING GIVEN A THOUGHTFUL CONSIDERATION OF THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE AFORESAID JUDGMENTS, WE FIND THAT THIS ISSUE WAS EXAMINED BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. SHAMBHU INVESTMENTS PVT. LTD. (SUPRA) AND LAID DOWN CERTAIN TESTS AND CATEGORICALLY HELD THAT IF IT IS FOUND APPLYING SUCH TEST THAT THE MAIN INTENTION IS FOR LETTING OUT THE PROPERTY OR ANY PORTION THEREOF, THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY. IN CASE IT IS FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVEABLE PROPERTY BY WAY OF COMMERCIAL ACTIVIT IES, IN THAT EVEN T IT MUST BE HELD AS BUSINESS INCOME. IN THE INSTANT CASE UNDISPUTEDLY THE ASSESSEE OWNED CERTAIN PROPERTIES WHICH WERE LET OUT TO DIFFERENT TENANTS AND THE ASSESSEE HAS NO INTENTION TO PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : EXPLOIT HIS PROPERTY FOR COMMERCIAL ACTIVITIES. THE REFORE, THE RENTAL INCOME FROM THIS PROPERTY CAN ONLY BE T REATED AS INCOME FROM HOUSE PROPERTY AND THE ASSESSEE HAS RIGHTLY SHOWN THE SAME. WE, THEREFORE, DO NOT AGREE WITH THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO TREAT THIS RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND TO ALLOW THE STANDARD DEDUCTION AS PER LAW. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.4.201 4. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH APRIL, 2014 JJ: 2204 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )