BHANDARY HOTELS, MUMBAI V. ITO 19(3)(1), MUMBAI

ITA 2425/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2247 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 16-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA; HARIGOVIND SINGH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI D. MANMOHAN, HONBLE VICE PRESIDENT AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA. NO. 2423/MUM/2009 - ASSESSMENT YEAR 2002-2003 ITA. NO. 2424/MUM/2009 - ASSESSMENT YEAR 2003-2004 ITA. NO. 2425/MUM/2009 - ASSESSMENT YEAR 2004-2005 BHANDARY HOTELS MUMBAI 50. PAN AAFBI-9499-H VS. ITO 19 (3) (1) PIRAMAL CHAMBERS MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI SUBHASH S. SHETTY FOR RESPONDENT : S/SHRI HARI GOVIND SINGH & SS. RANA ORDER PER D. MANMOHAN, V.P. 1. THESE APPEALS FILED BY THE ASSESSEE PERTAIN TO THE ASSESSMENT YEARS 2002-2003 TO 2004-2005 AND THEY AR ISE OUT OF THE ORDERS PASSED BY THE CIT(A)-XIX, MUMBAI. ISSUE INVO LVED IN ALL THESE APPEALS BEING COMMON, WE PROCEED TO DISPOSE OF ALL THESE APPEALS BY A COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. ASSESSEE RECEIVED RS. 6 LAKHS P.A. (ASSESSMENT YEARS 2002- 2003 AND 2003-2004) AND RS. 4.20 LAKHS (ASSESSMENT YEAR 2004-2005) FROM M/S. BHANDARI HOLIDAY RESORTS (I) PVT. LTD. IN LIEU OF LETTING OUT OF HOTEL PREMISES ALONG WITH FURNITURE, FIXTURES, KITC HEN EQUIPMENTS ETC., ACCORDING TO THE ASSESSEE, THE AMOUNT RECEIVED FROM LETTING OUT OF ITS PREMISES IS ASSESSABLE TO TAX UNDER THE HEAD PROFI TS AND GAINS OF BUSINESS WHEREAS THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAS NOT CARRIED ON ANY ACTIVITY OTHER THAN MERELY LEASING OUT THE PREMISES AND HENCE IT IS ASSESSABLE TO TAX UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. AFTER CONSIDERING THE ISSUE I N GREAT DETAIL THE 2 ASSESSING OFFICER COMPLETED THE ASSESSMENTS BY BRIN GING TO TAX THE LEASE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON AN APPEAL FILED BY THE ASSESSEE, THE LEARNED CIT(A) REJECTED THE PL EA OF THE ASSESSEE BY OBSERVING AS UNDER : 2.6. THE HONBLE SUPREME COURTS JUDGMENT IN M/S. SHAMBHU INVESTMENTS (129 TAXMAN 203) IS DIRECTLY APPLICABLE IN THIS CASE. IN A RECENT JUDGMENT OF AM RITSAR TRIBUNAL IN ITO VS. SHEETAL KHURANA FOOD PRIVATE LIMITED (208) 115 ITD 47), THE SAME VIEW WAS HELD. IN THIS CASE, THE ASSESSEE COMPANY HAD TAKEN A LAND ON LEASE, RAISED CONSTRUCTION THEREON AND LET OUT THE SAID BUILDING AS OWNER OF THE SAID BUILDING. THE HONBLE TRIBUNAL HELD THAT IT WAS EVIDENT THAT THE ASSESSEE DID NOT CARRY ON BUSINESS OF RUNNING OF HOTEL/RESTAURAN T DURING THE YEAR, WHICH WAS ONE OF ITS OWN BUSINESS, SO LEASE INCOME FROM BUSINESS SO ASSESSABLE AS PROPERT Y INCOME AND NOT HIS BUSINESS INCOME AS CLAIMED BY TH E ASSESSEE. THUS, TAKING A OVERALL VIEW, THE ACTION O F THE ASSESSING OFFICER IN TREATING THE RECEIPT OF RS.6,00,000/- AND RS.4,20,000/- AS HOUSE PROPERTY INCOME IS, THEREFORE, UPHELD. 3. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD THE LEARNED COUNSEL AS WELL AS LEARNED DR IN THIS REGARD AND CAREFULLY PERUSED THE RECORD. 4. IN OUR VIEW THE MAIN INTENTION OF THE ASSESSEE WAS ONLY TO EXPLOIT THE IMMOVABLE PROPERTY BY LETTING OUT AT A MONTHLY RENT ALONG WITH OTHER AMENITIES INCIDENTAL TO IT AND THUS IT C ANNOT BE SAID THAT PRIMARY INTENTION WAS TO EARN BUSINESS INCOME. IN T HE LIGHT OF DECISION OF THE APEX COURT IN THE CASE OF M/S. SAMBHU INVESTMEN TS (SUPRA) WE ARE 3 OF THE VIEW THAT THE TAX AUTHORITIES HAVE CORRECTLY COME TO THE CONCLUSION THAT THE LEASE RENT RECEIVED BY THE ASSESSEE IS ASS ESSABLE TO TAX UNDER THE HEAD PROPERTY INCOME. 4. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, APPEALS FILED BY THE ASSESSEE ARE DISMISSED. SD/- SD/- (J.SUDHAKAR REDDY) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED 11 TH MAY, 2010 VBP/- COPY TO 1. BHANDARY HOTELS, 2 ND FLOOR, SURU PALACE, HILL ROAD, BANDRA (W) MUMBAI 50. PAN AAFBI-9499-H 2. ITO 19 (3) (1), PIRAMAL CHAMBERS, MUMBAI. 3. CIT(A)-XIX,C-10/703,PRATYAKSHKAR BHAVAN, BANDRA- KURLA COMPLEX, MUMBAI 4. CIT-XIX, MUMBAI 5. D.R. 'B' BENCH, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHE S MUMBAI. SL. NO. PARTICULARS DATE INITIAL 1. DRAFT DICTATED ON 11-05-2010 SR. P.S. 2. DRAFT PLACED BEFORE THE MEMBER 11-05-2010 SR. P.S. 3 DRAFT APPROVED AND SENT TO SECOND MEMBER 11-05-20 10 V.P. 4. DRAFT APPROVED BY SECOND MEMBER -05-2010 A .M. 5. DRAFT RECEIVED BY SR. P.S. -05-2010 SR. P.S. 6. KEPT FOR PRONOUNCEMENT ----- SR. P.S. 7. SENT TO BENCH CLERK -05-2010 SR. P.S. 8. DATE OF DISPATCH OF THE ORDER