Smt. Anita Gupta, Hyderabad V. I.T.O. Ward-5(3), Hyderabad

ITA 1423/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69925 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 14-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1423/HYD/2012 ASSESSMENT YEAR : 2006-07 SMT. ANITA GUPTA HYDERABAD. PAN: ACSPG1888Q VS. INCOME-TAX OFFICER, WARD - 5(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SHRI B. YADAGIRI DATE OF HEARING : 06-11-2013 DATE OF PRONOUNCEMENT : 13-11-2013 O R D E R PER B. RAMAKOTAIAH, A.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER OF CIT(A)-V, DATED 10-07-2012 ON THE ISSUE OF WHETHER THE RENTAL INCOME RECEIVED IS TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR INCOME FROM OTHER SOURCES 2. BRIEFLY STATED, ASSESSEE IS 1/5 TH CO-OWNER OF PREMISES BEARING NO. 5-8-555/, ABID ROAD, HYDERABAD. THE PREMISES IS USED FOR THE PURPOSE OF BUSINESS OF A FIRM. ASSESSEE ALONG WITH CO-OWNERS HAS LET THE TERRACE AND ROOF OF THE FIRST FLOOR TO M/S IMPR ESSIONS OUTDOOR ADVERTISING AGENCY ON MONTHLY LICENSE TO HAVE THEIR HOARDINGS. SAID CONCERN PAID TOTAL AMOUNT OF RS. 2,90,000/- IN THE YEAR UNDER CONSIDERATION. AFTER CLAIMING STANDARD DEDUCTION AT 30%, ASSESSEE OFFERED 1/5 TH SHARE AT RS. 40,600/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ORIGINALLY, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, ON 26-09-2007 ACCEPTING THE INCOME RETURNED. H OWEVER, A NOTICE U/S 148 DATED 01-09-2009 WAS ISSUED AND IN THE REAS SESSMENT 2 ITA NO. 1423/HYD/2012 SMT. ANITA GUPTA PROCEEDINGS, THE AO TREATED THE SAID RECEIPT AS INC OME UNDER THE HEAD OTHER SOURCES, THEREBY DENYING THE STANDARD DEDUCTION TO THE EXTENT OF RS. 17,400/- TO ASSESSEE. ASSESSEE CHALL ENGED THE ACTION OF THE AO FOR REOPENING AS WELL AS TREATING THE LEA SE INCOME RECEIVED AS INCOME FROM OTHER SOURCES. THE LEARNED CIT(A) FOLLOWING THE DECISION IN THE CASE OF NIZAM CLUB IN ITA NO. 1335 /HYD/2010 DATED 17-06-2011 CONFIRMED THE ORDER OF THE AO BY HOARDIN G THAT INCOME IS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. 3. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US RAISI NG TWO GROUNDS ON THE ISSUE OF REOPENING AS WELL AS TREATING THE R ENTAL INCOME UNDER HEAD OTHER SOURCES. 4. IN THE COURSE OF ARGUMENTS, LEARNED COUNSEL DID NOT PRESS THE FIRST GROUND ON REOPENING, EVEN THOUGH, IT IS ARGUE D THAT REOPENING WAS BAD IN LAW AS THE ASSESSMENT WAS COMPLETED U/S 143(3) AND THERE IS NO REASON TO TAKE A DIFFERENT VIEW IN THE REASSESSMENT PROCEEDINGS. ON MERITS, IT WAS SUBMITTED THAT WHAT WAS LEASED OUT WAS ONLY TERRACE AND BOTH THE AO AND CIT(A) ERRED I N CONSIDERING THAT ASSESSEE HAS LET OUT HOARDINGS. FURTHER, IT WAS SUB MITTED THAT REVENUE HAS ACCEPTED SIMILAR ISSUE IN THE CASE OF HINDUSTAN BUILDERS FOR THE AY 2002-03 BY THE ORDER OF CIT(A), HYDERABAD DATED 08-02-2006 (COPY PLACED ON RECORD) AND SO REVENUE C ANNOT TAKE A DIFFERENT STAND IN THE CASE UNDER CONSIDERATION. IT WAS FURTHER SUBMITTED THAT ASSESSEE IS ONLY OWNER OF 1/5 TH SHARE AND NO ACTION HAS BEEN TAKEN IN OTHER CASES AND RELIED ON VARIOUS PRINCIPLES TO SUBMIT THAT WHEN OTHER CO-OWNERS ASSESSMENTS HAVE N OT BEEN DISTURBED, REVENUE CANNOT MAKE ADDITIONS IN THE HAN DS OF ONE OF THE CO-OWNER. 5. THE LEARNED DR, ON THE OTHER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 3 ITA NO. 1423/HYD/2012 SMT. ANITA GUPTA 6. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FA CTS ON RECORD. AS IS EVIDENT FROM THE COPY OF THE AGREEMEN T FILED, THE OWNERS HAVE PERMITTED M/S IMPRESSIONS OUTDOOR ADVERTISING AGENCY TO ERECT A HOARDING FOR WHICH MONTHLY LICENSE FEES HAS BEEN PAID. ASSESSEE IS NOT THE OWNER OF THE HOARDING NOR IS RESPONSIBLE FOR ITS MAINTENANCE ETC. AS IT IS EVIDENT THAT THE STRUCTURE PUT UP ON THE TERRACE DOES NOT BELONG TO ASSESSEE AND OTHER CO-OWNERS. SINCE ASSES SEE IS NOT OWNER OF THE HOARDING AND LEASE RENT WAS RECEIVED O NLY WITH REFERENCE TO THE LETTING OUT OF TERRACE FOR ERECTIN G HOARDING FOR DISPLAY, WE ARE OF THE OPINION THAT REVENUE AUTHORITIES WRON GLY CONSIDERED THE FACTS AND WRONGLY REOPENED THE ASSESSMENT. THE LEAR NED CIT(A), EVEN THOUGH THERE ARE ORDERS FROM OTHER CIT(A)S O N THE SIMILAR ISSUE THAT LETTING OUT OF TERRACE IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, DID NOT CONSIDER THEM AND RELIED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF NIZAM CLUB (SU PRA). AS SEEN FROM THE COPY OF THE ORDER PLACED ON RECORD, THE IS SUE CONSIDERED BY THE ITAT, HYDERABAD BENCH IN THE CASE OF NIZAM CLUB IN ITA NO. 1335/HYD/10, IS WHETHER THE INCOME CAN BE EXEMPTED ON THE PRINCIPLE OF MUTUALITY, IF IT IS RECEIVED BY WAY OF HOARDING, RENT, FEES, DEPOSITS ETC. IN FACT, IN THAT CASE RENT WAS OFFERED AND ASS ESSED AS INCOME FROM PROPERTY BUT THE CLUB CLAIMED EXEMPTION ON TH E PRINCIPLE OF MUTUALITY. ITAT DECIDED THAT PRINCIPLE OF MUTUALITY DOES NOT APPLY TO SUCH INCOMES EARNED, WHICH HAS NO MUTUALITY. WE ARE NOT ABLE TO UNDERSTAND HOW THIS ORDER OF ITAT IS APPLICABLE TO THE ISSUE BEFORE US IN DETERMINING WHETHER THE RENT RECEIVED FOR ALLOWI NG HOARDINGS ON THE TERRACE CAN BE CONSIDERED AS INCOME FROM OTHER SOUR CES. IN OUR VIEW, THE CIT(A) HAS WRONGLY CONSIDERED THE ISSUE. BE THA T AS IT MAY, THERE IS NO DISPUTE WITH REFERENCE TO THE FACT WHAT ASSES SEE HAS RECEIVED IS ONLY LEASE RENT FOR PERMITTING THE HOARDING TO B E ERECTED ON THE TERRACE AND THAT TOO AS CO-OWNER AND IN OTHER CO-OW NERS HAND NO ACTION SEEMS TO HAVE BEEN TAKEN. THEREFORE, CONSIDE RING THE FACT THAT, ORIGINALLY, ASSESSMENT HAS BEEN COMPLETED U /S 143(3), WE ARE NOT ABLE TO AGREE WITH THE OPINION OF THE AO AND CI T(A) THAT RENTAL 4 ITA NO. 1423/HYD/2012 SMT. ANITA GUPTA INCOME RECEIVED BY ASSESSEE HAS TO BE ASSESSED UNDE R THE HEAD OTHER SOURCES. THE COORDINATE BENCH B OF ITAT, MUMBAI IN THE CASE OF MAHALAXMI SHEELA PREMISES CHS LTD.VS. ITO I N ITA NOS. 784 TO 786/MUM/2010, DATED 30-08-2011 HELD THAT INCOME RECEIVED ON LEASE A PORTION OF TERRACE OF THE BUILDING FOR THE PURPOSE OF FIXING OF HOARDING, NEON LIGHTS ETC. IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. RESPECTFULLY FOLLOWING THE SAID DE CISION, WE HOLD THAT RENTAL INCOME RECEIVED BY ASSESSEE ON LEASING OF TE RRACE FOR HOARDING IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ASSESSEES GROUND ON THIS ISSUE IS ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2013. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RA MAKOTAIAH) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED: 13 TH NOVEMBER, 2013. KV COPY TO:- 1) SMT. ANITA GUPTA, C/O M.V. PURUSHOTTAMA RAO, CA, FLAT NO. 9, 6 TH FLOOR, LINGAPUR COMPLEX, HIMAYAT NAGAR, HYDERABAD 29. 2) ITO, WARD - 5(3), HYDERABAD. 3) CIT(A)-V, HYDERABAD. 4) CIT-IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A .T., HYDERABAD. 5 ITA NO. 1423/HYD/2012 SMT. ANITA GUPTA S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER