Minica Services P Ltd., CHENNAI V. ACIT, CHENNAI

ITA 165/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4969 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2016
• Court: TRIBUNAL
• Department Lawyers: MRS SUPRIYA PAL
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , # $ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 165/MDS/2016 / ASSESSMENT YEAR : 2009-10 M/S. MINICA SERVICES P LTD., UNIT NO. 708, BETA WING, RATHEJA TOWERS, 177, ANNA SALAI, CHENNAI - 600 002. [PAN: AAACM 5388A] VS . THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE -IV(3), CHENNAI. ( / APPELLANT) ( /RESPONDENT) & ' / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE *+& ' / RESPONDENT BY : MRS. SUPRIYA PAL, JCIT ' /DATE OF HEARING : 04.04.2017 ' /DATE OF PRONOUNCEMENT : 13.04.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI IN ITA NO. 23/2011-12 DATED 30.11.2015 PASSED U/S. 143(3) OF THE ACT. :-2-: I.T.A. NO. 165/MDS/2016 2. THE LD. AR OF THE ASSESSEE AT THE TIME OF HEARIN G HAS NOT PRESSED THE GROUND NO. 6 & 7 AND MADE ENDORSEMENT AND ARE DISMI SSED. THE SOLE SUBSTANTIVE GROUND RAISED BY THE ASSESSEE THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. AO IN TREATING THE AMENITIES CHARGES IN COMPOSITE RENT UNDER THE INCOME FROM OTHER SOURCES AS AGAINST THE INCOME FROM HOUSE PROPERTY DISCLOSED IN THE RETURN OF INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS IN THE BUSINESS OF SUB-CONTRACT WORK AND HAS RENTAL INCOME AND FILED THE RETURN OF INCOME ON 30.09.2009 WITH TOTAL INCOME OF RS. 44,24 ,470/- AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSE QUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S. 14 3(2) OF THE ACT WAS ISSUED AND THE LD. AR OF THE ASSESSEE APPEARED FROM TIME T O TIME AND FILED THE VARIOUS DETAILS. THE ASSESSING OFFICER CONSIDERED THE FACTS AND SUBMISSIONS BUT MADE DISALLOWANCE ON THE DISPUTED ISSUE OF THE AMENITIES IN THE COMPOSITE RENT WAS TREATED AS INCOME FROM OTHER SOU RCES. THE ASSESSING OFFICER FOUND THAT THE RENTAL INCOME INCLUDES AMENI TIES AND THE ASSESSEE HAD FILED EXPLANATIONS REFERRED AT PARA 7.2 OF THE ORDE R WHICH IS READ AS UNDER: 'WHEN THE ASSESSEE WAS ASKED TO FURNISH THE EXPLANA TION AS TO WHY THE SAME SHOULD NOT BE TREATED UNDER THE HEAD I NCOME FROM OTHER SOURCES, THE ASSESSEE CAME UP WITH A REPLY DATED 09 .12.2011 WHICH IS REPRODUCED AS UNDER: :-3-: I.T.A. NO. 165/MDS/2016 '..... THAT THE COMPANY HAS NOT PROVIDED SPECIAL AMENITIES OR SEPARATE SERVICES TO THE TENANT. WHAT EVER AMENITIES PROVIDED TO THE TENANT ARE THOSE THAT ARE NORMALLY PROVIDED TO A TENANT TAKING THE BUILDING ON RENT LIKE FAN, LIGHTI NG, TOILET, AIR CONDITIONER WITH FALSE CEILING, TEMPORARY PARTITION ING, IMMOVABLE FURNITURE'S, OTHER INSTALLATIONS ETC. WE SUBMIT TH AT THESE FACILITIES PROVIDED TO TENANT ARE INSEPARABLE FROM THE POINT O F VIEW OF THE INTENTION OF THE OWNER OF THE BUILDING. IN THIS CONNECTION, WE INVITE THE KIND ATTENTION O F THE ASSESSING OFFICER TO THE DECISION OF THE SUPREME CO URT IN SHAMBHU INVESTMENT P LTD., VS COMMISSIONER OF INCOM E TAX (2003) 263 ITR 143. IT IS OUR SUBMISSION THAT THE AMENITIES PROVIDED TO THE TENANT BEING INSEPARABLE FROM THE B UILDING, THE WHOLE OF THE RENTAL RECEIPT, RENT OR AMENITIES IS T O BE ASSESSED UNDER 'INCOME FROM HOUSE PROPERTY....' THE LD. AO IS OF THE OPINION THAT THE JUDICIAL DECI SIONS RELIED ARE DISTINGUISHABLE AND NO CLARITY IN THE AGREEMENT ON THE BIFURCATION OF INCOME AND THEREFORE THE AMENITIES INCOME CANNOT BE CHARGE D AS HOUSE PROPERTY AND MADE ASSESSMENT UNDER INCOME FROM OTHER SOURCES WIT H OTHER ADDITIONS AND PASSED ORDER U/S. 143(3) DATED 22.12.2011. 4. AGGRIEVED BY THE ORDER, ASSESSEE HAS FILED AN AP PEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE CIT(A) CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND THE GROUNDS RAISED BY THE ASS ESSEE BUT CONCURRED WITH :-4-: I.T.A. NO. 165/MDS/2016 THE ACTION OF THE ASSESSING OFFICER CONFIRMING ADDI TION OF CHARGING RENT ON AMENITIES UNDER THE INCOME FROM OTHER SOURCES AND D ISMISS THE APPEAL. 5. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. AR ARGUED THE SOL E SUBSTANTIVE GROUND THAT THE COMPOSITE RENT CONSISTS OF RENT ON AMENITIES AN D THESE AMENITIES ARE INSEPARABLE AND EMBEDDED AND THE AGREEMENT ALSO SPE CIFY THE FACTS AND THE ASSESSEE HAS BEEN OFFERING THE COMPOSITE RENT FOR A SSESSMENT WITH REVENUE AUTHORITIES AND CANNOT BE CHARGED SEPARATELY AND TH E ASSESSEE WAS DENIED STATUTORY DEDUCTION U/S. 24(A) OF THE IT ACT. CONT RA, THE LD. AR RELIED ON THE ORDERS OF THE CIT(A) 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISION. THE SOLE CRUX OF THE ISSUE THAT THE ASSESSING OFFICER HAS ASSESSED RENT ON AMENITIES UNDER INCOME FROM OTHER SOURCES WHICH ARE EMBEDDED TO THE BUILDING ARE IN THE NATURE OF AIR C ONDITIONER, FANS, LIGHTING, TOILET, AIR CONDITIONER WITH FALSE CEILING, TEMPORA RY PARTITIONS AND IMMOVABLE FURNITURE AND OTHER INSTALLATIONS WHICH CANNOT BE S EPARABLE. WE ARE OF THE OPINION, THAT THE SUCH AMENITIES PROVIDED BY THE AS SESSEE CANNOT BE TREATED SEPARATELY AND PART AND PARCEL OF RENT AND CANNOT B E BIFURCATED. IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE :-5-: I.T.A. NO. 165/MDS/2016 ASSESSING OFFICER TO TREAT THE INCOME UNDER INCOME FROM HOUSE PROPERTY AND ALLOW THE GROUND OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON THURSDAY, THE 13TH DAY OF APRIL , 2017 AT CHENNAI. SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 13TH APRIL, 2017. JPV ' *#23 43 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3 *## /DR 6. 9 /GF