DCIT CIR 23(3), MUMBAI V. PRAFUL M SHAH, MUMBAI

ITA 2412/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2874 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: DEVENDRA H JAIN
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI [BEFORE S/SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER] / I .T.A. NO.2412/MUM/2014 ( / ASSESSMENT YEAR: 2008-09 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 23(3), MUMBAI, ROOM NO.402, 4 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 / VS. SHRI PRAFUL M. SHAH, 502, ABHINANDAN, SARVODAY NAGAR, MULUND (WEST), MUMBAI 400 080 ./ ./ PAN/GIR NO. : AAGPS5150H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI B. S. BIST (DR) / RESPONDENT BY: SHRI DEVENDRA H. JAIN (AR) / DATE OF HEARING:05.10.2015 ! / DATE OF PRONOUNCEMENT: 28.10.2015 '# / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-33, MU MBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 29- 01-2014 PASSED IN ITA. NO.2412/MUM/2014 ASSESSMENT YEAR: 2008-09 2 APPEAL NO.33/IT/237/12-13 PERTAINING TO ASSESSMENT YEAR 2008-09. THE REVENUE HAS IN THIS APPEAL RAISED THE FOLLOWING THREE GROUNDS: 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN TREATING THE LEASE RENT AL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WITHOUT APPRE CIATING THAT THE A. O. HAS BROUGHT OUT THE FACTS, WHICH ARE DISC USSED AT LENGTH. ON THE BASIS OF THE TERMS OF THE AGREEMENT WHICH VERY CLEARLY SHOW THAT THE LEASE WERE GIVEN FOR THE USE OF THE LAND AND LE ASE HAS NO USE OF EXISTING STRUCTURE WHICH WOULD HAVE TO BE DEMOLISHE D AND ACCORDINGLY, TREATED THE LEASE AS INCOME FROM OTHER SOURCES. 2) THE LEARNED CIT(A) OUGHT TO HAVE NOTED THAT THE AFORESAID BUILDING OCCUPIED ONLY A FRACTION OF THE LAND AND THEREFORE, THIS LEASE RENT COULD NOT BE CONSIDERED AS HOUSE PROPERTY. 3) THE LEARNED CIT(A) OUGHT TO HAVE NOTED THAT THE LEASE RENT WAS THE VALUE OF THE ADJACENT LAND AND NOT THE LAND ON WHIC H THIS STRUCTURE WAS SITUATED. 2. IN FACT, THESE GROUNDS RELATE TO TREATING THE LE ASE RENT RECEIVED BY THE ASSESSEE FOR A SUM OF RS.60,84,000/- BY THE ASSESSING OFFICER [HEREINAFTER REFERRED TO AS THE AO] AS INCOME FRO M HOUSE PROPERTY ON ACCOUNT OF LEASING/RENTING OUT A PROPERTY TO M/S . SANVO RESORTS PVT. LTD., MUMBAI. THE ASSESSEE CLAIMED STANDARD DE DUCTION U/S 24(A) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFE RRED TO AS THE ACT] FOR A SUM OF RS.18,25,200/- AND OFFERED A SU M OF RS.42,58,800/- AS NET HOUSE PROPERTY. THE AO IN HIS ORDER PASSED U/S 143(3) OF THE ACT TREATED THE AFORESAID INCOME AS INCOME FROM OT HER SOURCES FOR THE REASON THAT FROM THE LEASE AGREEMENT IT WAS REV EALED THAT THE ASSESSEE WAS NOT INTERESTED IN ANY OF THE EXISTING STRUCTURE ON THE LAND AND THE ASSESSEE WAS INTERESTED ONLY FOR DEVEL OPMENT OF THE LAND FOR WHICH HE WAS PERMITTED AS PER THE LEASE AG REEMENT. THUS, IT IS EVIDENT THAT THE ENTIRE RENT WAS PAID FOR THE LA ND AREA ONLY. BEING AGGRIEVED BY THE ACTION OF THE AO, THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A). ITA. NO.2412/MUM/2014 ASSESSMENT YEAR: 2008-09 3 3. THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSE SSEE BY FOLLOWING THE DECISION OF THE ITAT, MUMBAI D BENC H DATED 22.05.2013 IN THE CASE OF ONE OF THE CO-OWNERS OF THE SAID PROPERTY I.E. SHRI DINESH M. SHAH ITA NO.2571/MUM/2012 FOR A SSESSMENT YEAR 2008-09. THE RELEVANT PORTION OF THE OBSERVATI ONS OF THE LEARNED CIT(A) IS REPRODUCED HEREIN BELOW: 4.1 THE APPELLANT HAS GIVEN HIS PROPERTY WITH OTHE R CO-OWNERS AT PANVEL ON MONTHLY RENT OF RS.5,07,000/-. THE A.O. BROUGHT THE RENT RECEIVED FOR THE USE OF BUILDING AND THE LANDS APPURTENANT THERETO T AXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE AO NOTED THAT THE DECISION RENDERED BY THE CIT(A), IN THE CASE OF SHRI DINESH M. SHAH, ONE OF THE CO-OWNERS OF THE IMPUGNED PROPERTY, HOLDING THE RENT RECEIVED THEREF ROM AS INCOME FROM HOUSE PROPERTY WAS CONTESTED BY THE DEPARTMENT BEF ORE THE ITAT, MUMBAI. ACCORDINGLY, HE REJECTED APPELLANTS CLAIM OF INCOM E FROM HOUSE PROPERTY. 4.2 IN APPEAL PROCEEDINGS, THE LD. COUNSEL SUBMITTE D THAT IN THE CASE OF CO-OWNERS OF THE SAID PROPERTY, RENTAL INCOME OF TH E SAME PROPERTY HAS BEEN CONFIRMED BY THE HONBLE ITAT MUMBAI IN ITA NO.2571 /2012 DATED 22.05.2013 FOR A. Y. 2008-09 AS INCOME FROM HOUSE P ROPERTY. HE ACCORDINGLY PLEADED FOR TREATING THE RENT AS INCOME FROM HOUSE PROPERTY. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE FOR THE APPELLANT. RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE JURISDICTIONAL ITAT IN THE CASE OF DINESH SHAH, (SUPRA), I DIRECT THE A. O. TO ASSESSEE THE RENT RECEIVED BY THE APPELLANT FROM M/S. SANVO RESO RT P. LTD. AS INCOME FROM HOUSE PROPERTY. THIS GROUND IS ALLOWED . AGAINST THE AFORESAID ORDER OF THE LEARNED CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, BEFORE US, THE LEARNED D R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LEARNED CIT( A) HAS ERRED IN TREATING THE IMPUGNED INCOME AS INCOME FROM HOUSE PROPERTY AND PRAYED THAT THE ORDER OF THE AO BE UPHELD BY SETTIN G ASIDE THE ORDER OF THE LEARNED CIT(A). 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED HIS CONTENTIONS RAISED BEFORE THE LEARNE D CIT(A) AND ITA. NO.2412/MUM/2014 ASSESSMENT YEAR: 2008-09 4 FURTHER RELIED ON THE DECISIONS OF ITAT, CHENNAI BE NCH IN THE CASE OF ACIT VS T & R WELDING PRODUCTS (INDIA) LTD. [2010] 129 TTJ 250 (CHENNAI), ITAT, DELHI IN THE CASE OF SANJIT SINGH RATHEE VS ACIT [2002] 122 TAXMAN 202 AND THE ORDER OF THE ITAT, M UMBAI D BENCH DATED 22.05.2013 PASSED IN ITA NO.2571/MUM/20 12 AY 2008-09 IN THE CASE OF ACIT, CIRCLE 23(2) VS SHRI D INESH M. SHAH [WHO IS ONE OF THE CO-OWNERS OF THE PROPERTY IN QUESTION ] AND FURTHER CONTENDED THAT VASTNESS OF THE LAND CANNOT BE A CRI TERIA FOR TREATING AN INCOME AS INCOME FROM OTHER SOURCES. CONSEQUEN TLY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER O F THE LEARNED CIT(A) BE UPHELD. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS ON RECORD. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY ITAT, MUMBAI D BENCH VIDE ORDER DATED 22-05-2013 ITA NO.2571 /MUM/29012 FOR AY 2008-09 IN ONE OF THE CO-OWNERS OF THE PROPE RTY IN QUESTION VIZ. SHRI DINESH M. SHAH BY OBSERVING IN PARA 2.4 A S UNDER:- 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IT IS OBSERVED THAT FROM THE COPY OF RELEVA NT RENT AGREEMENT, THAT ONLY TWO PLOT NOS. REFLECTED IN 10 TH SCHEDULE AND 11 TH SCHEDULE ARE HAVING RCC STRUCTURE. THE ASSESSEE ALONG WITH OTHERS THUS HAS BECOME CO-OWNERS OF A BIGGER PLACE OF LAND WHICH IS IN FACT BY JOINING ALL THESE PLOTS WHICH ALL ARE NEXT TO EACH OTHER. THE ASSESSEE HAS PURCHASED ALON G WITH OTHERS THE NON AGRICULTURAL PLOTS FROM VARIOUS DIFFERENT PARTIES. OUT OF THESE FEW ARE ONLY PLOTS WHEREAS TWO PLOTS ARE WITH RCC STRUCTURE ON T HE SAME. THE DETAILS OF THESE SCHEDULES I.E. 10 TH AND 11 TH FOMING PART OF THE LEASE RENT AGREEMENT ARE GIVEN AS UNDER: THE TENTH SCHEDULE HEREINABOVE REFERRED TO PLV3-05344-2006 ALL THAT PIECE OR PARCEL OF NON-AGRICULTURAL LAND OR GROUNDS SITUATED LYING AND BEING VILLAGE-KOLKHE, TAL. PANVEL, DIST. RAIGAD WITHIN THE LIMITS OF GRAMPANCHAYAT KOLKHE, PANCHAYAT SAMITI PANVEL AS FO LLOWS: ITA. NO.2412/MUM/2014 ASSESSMENT YEAR: 2008-09 5 GUT/SURVEY NO. AREA ASSESSMENT H A P RS. RS. 94/1D NA OLD SURVEY 94/1B(2) 0 94 1 188 20 INCLUDING RCC, STRUCTURE GROUND + FIST FLOOR BUNGLA W HALF CONSTRUCTED OF 200 SQ. MTS. AND BOUNDED ON FOUR SIDES AS FOLLOWS: EAST GUT NO.94/1BOUNARY WEST GUT NO.95/1 BOUNDARY SOUTH GUT NO.94/1 BOUNDARY NORTH NATIONAL HIGHWAY (N.H.48) THE ELEVENTH SCHEDULE HEREINABOVE REFERRED TO: PLV3-4600-2006 1) ALL THAT PIECE OR PARCEL OF NON-AGRICULTURAL LAND O R GROUNDS AND HEREDITAMENTS BEARING GUT/SURVEY NO.95, HISSA NO.1, TOTALLY ADMEASURING 20000 SQ. MTS. (OUT OF AREA ADMEASURING 38960 SQ. MTS.), ASSESSMENT RS.604.80 PAISE, SITUATED LYING AND BEIN G VILLAGE-KOLKHE, TAL. PANVEL, DIST. RAIGAD WITHIN THE LIMITS OF GRAMPANCH AYAT KOLKHE, PANCHAYAT SAMITI PANVE. 2) FOUR R. C. C. FRAME STRUCTURES WITH CEMENT SHEET RO OF AND ONE RESIDENTIAL PREMISES HAVING FIVE ROOMS WHICH ARE RECORDED IN TH E RECORD OF GRAMPANCHAYAT KOLKHE ASSESSMENT A UNDER: MILKAT NO. AREA (SQ. MTS.) 237 GODOWN 464.68 238 GODOWN 464.68 239 GODOWN 464.68 240 GODOWN 278.81 IN THE 11 TH SCHEDULE OF AGREEMENT THERE ARE FOUR RCC OLD STRUC TURE AND ONE EXISTING RESIDENTIAL STRUCTURE WITH 5 BEDROOMS WITH TOTAL AREA OF 1858.72 SQ. MTR. SHOWN. TOTAL AREA OF THE BIG PLOT WHICH IS 106920 SQ. MTRS. WHEN COMPARED WITH BUILT UP PART IS DISPROPOR TIONATE AS THERE IS VERY SMALL AREA IN FORM OF RCC STRUCTURE. THE LAND BEING APPURTENANT TO BUILDING, THOUGH DISP ROPORTIONATELY BIG, STILL DURING THE YEAR THE NATURE OF INCOME HAVING B EEN DERIVED FROM A BIG PLOT OF LAND WITH SOME GODOWNS ON IT WHICH IS UNDIS PUTEDLY ASSET WITH SHARE OF APPELLANT IN IT HAS TO BE ASSESSED AS IN COME FROM HOUSE PROPERTY. IT IS PERTINENT TO STATE THAT THE CHENNAI ITAT IN T HE CASE OF ACIT V T & R WELDING PRODUCTS (INDIA) LTD HAS HELD IN A SIMILAR SET OF FACTS WHEN ITA. NO.2412/MUM/2014 ASSESSMENT YEAR: 2008-09 6 MAJOR PORTION OF THE LEASED OUT PROPERTY IS A LAND AND THE LEASE AGREEMENT PERMITS THE LESSEE TO BUILD PERMANENT STR UCTURE THEREIN, THE LEASE INCOME HAS TO BE ASSESSED UNDER THE HEAD INC OME FROM HOUSE PROPERTY. ALSO, THE DELHI ITAT IN THE CASE OF SANJ IT SING RATHEE VS. ACIT HAS HELD THAT VASTNESS OF THE LAND CANNOT BE THE CR ITERION FOR ALLOWING OR DISALLOWING THE CLAIM OF DEDUCTION FOR REPAIRS UNDE R SECTIN24(1)(I) OF THE ACT. CONSIDERING THE FACTUAL MATRIX OF THE CASE OF THE ASSESSEE IN TOTO AND THE POSITION OF LAW, WE ARE OF THE CONSIDERED VIEW THE IMPUGNED LEASE RECEIPT IS INCOME FROM HOUSE PROPERTY AS THE COND ITIONS OF SECTION 22 OF THE ACT IS FULFILLED. IN VIEW OF THAT MATTER, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD. CIT(A) AND THE SAME IS UPHE LD. ACCORDINGLY GROUNDS NO.1 & 2 ARE DISMISSED. 7. THE FACTS OF THE PRESENT ASSESSEES CASE BEING E XACTLY SIMILAR TO THE FACTS OF THE CO-OWNER OF THE PROPERTY IN QUESTI ON I.E. SHRI DINESH M. SHAH AS AFORESAID, AND SINCE, NO CONTRARY DECISI ON BEING POINTED OUT BY THE LEARNED DR AT THE TIME OF HEARING BEFORE US, WE DO NOT FIND ANY REASON NOT TO FOLLOW THE AFORESAID DECISION OF THE COORDINATE BENCH. ACCORDINGLY, WE UPHOLD THE DECISION OF THE L EARNED CIT(A) AND DISMISS ALL THE GROUNDS OF APPEAL RAISED BY THE REV ENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 28 TH OCTOBER, 2015 SD/- SD/- (R. C. SHARMA) (AMARJIT SINGH) ' / ACCOUNTANT MEMBER %& ' /JUDICIAL MEMBER ' ( MUMBAI; )' DATED : 28 TH OCTOBER, 2015 . & . ./ LK DEKA LK DEKA LK DEKA LK DEKA , ,, , SR. PS SR. PS SR. PS SR. PS ITA. NO.2412/MUM/2014 ASSESSMENT YEAR: 2008-09 7 !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,- &&./ , ./! , ' ( / DR, ITAT, MUMBAI 6. -01 2 / GUARD FILE. $ / BY ORDER, + & //TRUE COPY// % / $& ' (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI