Appeal Details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 1695 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-08-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2011-2012
Appeal Filed On
24-03-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 210 2 /MUM/2017 & ITA NO. 21 1 1/MUM/2017 ASSESSMENT YEAR: 2012 - 13 & 2011 - 12 DCIT - CENTRAL CIRCLE - 7 (3) (2), ROOM NO. 669A, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 20 . VS. M/S. PRISTINE DEVELOPERS PVT. LTD. 3, NARAYAN BUILDING, 23 L.N. ROAD, DADAR (E) MUMBAI - 1 4 . PAN NO. AA DCP 5436 F APPELLANT RESPONDENT REVENUE BY : MR. ABI RAMA KARTIKIYEN , DR ASSESSEE BY : MR. MALAV P. SHETH, AR DATE OF HEARING : 2 0 /08/2018 DATE OF PRONOUNCEMENT: 31/08/2018 31/08/2018 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE REV ENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 13 [IN SHORT CIT(A)], MUMBAI AND ARISE OUT OF THE ASSESSMENT ORDER S U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO D ISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER. 2. THE GROUNDS OF APPEAL IN BOTH THE APPEALS ARE SAME AND THEY READ AS UNDER: - 1. THAT LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO TREAT RENTAL INCOME AND SERVICE CHARGES REC EIVED AS 'INCOME F ROM HOUSE PROPERTY' INSTEAD OF 'BUSINESS INCOME' AS TREATED BY ASSESSING OFFICER WITHOUT APPRECIATING THE LEGAL AND FACTUAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER . ITA NO. 2102/MUM/2017 & 2111/MUM/2017 M/S. PRISTINE DEVELOPERS PVT.LTD. 2 2 . THAT LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS DEVELOPER AND IT HAS DEVELOPED THE SAID PROPERTY FOR SALE OF COMMERCIAL UNITS. THEREFORE, THE RENTAL INCOME EARNED AND SERVICE CHARGES RECEIVED ARE REQUIRED TO BE TREATED AS BUSINESS INCOME. 3 . THAT LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT THE BASIC I NTENTION OF THE ASSESSEE TO OFFER THE INCOME UNDER THE HEAD INCOME F ROM HOUSE PROPERTY' IS TO REDUCE TAX LIABILITY ON SALE OF COMMERCIAL UNIT BY OFFERING THE SAME UNDER THE HEAD 'C APITAL GAINS. 3. WE BEGIN WITH THE AY 2011 - 12. BRIEFLY STATED, FACTS OF THE CASE ARE THAT , THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. SOME OF THE UNITS IN ITS CORPORATE PARK WERE LEASED OUT DURING THE RELEVANT PREVIOUS YEAR AND RENTAL INCOME AND SERVICE CHARGES WERE RECEIVED IN LIEU THEREOF. THE ASSESSEE HAD TREATED THE ENTIRE RECEIPT AS I NCOME FROM HOUSE PROPERTY AND CLAIMED STATUTORY DEDUCTION U/S. 24 OF THE ACT. WHILE THE RENTAL RECEIPT WAS RS.2.44 CRORE, THE AMOUNT OF S ERVICE CHARGES RECEIVED WAS RS.16.38 CRORE. THE ASSESSING OFFICER (AO) PROCEEDED TO TREAT THE ENTIRE RECEIPT AS BUSINESS RECEIPT TAXABLE UNDER THE HEAD I NCOME FROM BUSINESS OR PROFESSION. THE AO HAS CLARIFIED THE ISSUE AT PARAGRAPH 6 ON PAGE - 3 OF THE AS SESSMENT ORDER DATED 17/12/2013 THAT THIS IS A RECURRING ISSUE WHEREIN SIMILAR ADDITIONS WERE MADE IN AYS 2009 - 10 AND 2010 - 11. AT PARAGRAPH 6.2.1 ON PAGE - 10 AND 11, THE AO HAS STATED THAT HE HAD FOLLOWED THE STAND TAKEN BY THE REVENUE IN THE TWO PRECEDING AYS AND ACCORDINGLY SUBJECTED TO TAX THE ENTIRE RECEIPTS OF THE ASSESSEE ON ACCOUNT OF RENTING OUT OF THE CORPORATE PARK UNITS UNDER THE HEAD I NCOME FROM BUSINESS OR PROFESSION. 4. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). IT IS OBSERVED BY THE LD. CIT(A) THAT THE SAME ISSUE HAS BEEN DECIDED BY THE ITAT IN ASSESSEE S OWN CASE FOR AY 2010 - 11, BY FOLLOWING THE EARLIER ORDER OF THE CO - ORDINATE BENCH OF THE TRIBUNAL FOR AY 2009 - 10. ITA NO. 2102/MUM/2017 & 2111/MUM/2017 M/S. PRISTINE DEVELOPERS PVT.LTD. 3 FOLLOWING THE RATIO LAID DOWN B Y THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009 - 10 AND 2010 - 11, THE LD. CIT(A) HELD THAT THE ASSESSEE WAS JUSTIFIED IN RETURNING THE ENTIRE INCOME FROM RENTING OUT OF THE UNITS IN THE CORPORATE PARK UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. 5. BEFOR E US, THE LD. DR SUBMITS THAT THE AO HAS RIGHTLY TREATED THE BUSINESS ACTIVITY OF THE ASSESSEE AS COMMERCIAL ACTIVITY AND ACCORDINGLY BROUGHT TO TAX THE ENTIRE RECEIPTS TAXABLE UNDER THE HEAD I NCOME FROM BUSINESS. 6. ON THE OTHER HAND THE LD. COUNSEL O F THE ASSESSEE RELIE S ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY S 2009 - 10 AND 2010 - 11 AND THEREFORE SUPPORTS THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE SAME ISSUE AROSE BEFORE THE ITAT C BENCH, MUMBAI IN ASSESSEES OWN CASE FOR AY 2009 - 10 (ITA NO.3379/M/2013 DTD. 27/08/2014) AND AY 2010 - 11 (ITA NO.4417/M/2014 DTD. 25/02/2016). IT WOULD BE RELEVANT TO MENTION HERE THAT THE TRIBUNAL AGREED WITH THE ORDER OF THE LD. CIT(A) DIRECTING THE AO TO ASSESS THE RENTAL INCOME AS WELL AS SERVICE CHARGES RECEIPTS UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND CONFIRM THE ORDER OF THE LD. CI T(A). 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 31/08/2018 . SD/ - SD/ - ( MAHAVIR SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO. 2102/MUM/2017 & 2111/MUM/2017 M/S. PRISTINE DEVELOPERS PVT.LTD. 4 MUMBAI: DATED: 31/08/2018 JV . , SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI
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