MAHANT MADHAVDAS MAHATYAGI, MUMBAI V. ACIT RG 24(2), MUMBAI

ITA 2529/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3180 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 28-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHANWAR SINGH RATNOO
• Keywords: Capital asset; Business income; Cost of acquisition; Fair market value; Valuation report
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER ITA NO. 2529/MUM/2010 : (A.Y : 20 06 - 07 ) SHRI MAHANT MAHATYAGI SANKAT MOCHAN, VIJAY HUMAN TEKRI, TAPOVAN, PATHANWADI, MALAD (E), MUMBAI 400 097. PAN : AANPM 8 738M VS. A SST. C OMMISSIONER OF I NCOME T AX - 24(2), MUMBAI. ITA NO. 3022/MUM/2010 : (A.Y : 20 06 - 07 ) D Y. C OMMISSIONER OF I NCOME T AX - 24(2), MUMBAI. VS. SHRI MAHANT MAHATYAGI SANKAT MOCHAN, VIJAY HUMAN TEKRI, TAPOVAN, PATHANWADI, MALAD (E), MUMBAI 400 097. PAN : AANPM8738M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIPUL JOSHI REVENUE BY : SHRI BHANWA R SINGH RATNOO (DR) DATE OF HEARING : 17 / 03 /201 6 DATE OF PRONOUNCEMENT : 15 / 06 /201 6 O R D E R PER R.C. SHARMA, AM : THESE ARE CROSS - APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST ORDER OF CIT(A) FOR A.Y 2006 - 07, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN ITS APPEAL NO. 3022/MUM/2010 : 2 ITA NO.2529&3022/10 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO TAKE THE COST OF ACQUISITION OF FLAT @RS.300/ - PER SQ.FT IGNORING THE FACTS OF THE CASE THAT THE ASSESSEE HAS NOT INCURRED ANY COST OF ACQUISITION OF THE SAID FLAT AND RECEIVED THE F L ATS FREE OF COST AS COMPENSATION IN LIEU OF RENT RECEIVABLE FROM THE DEVELOPER AND WAS OF THE NATURE OF REVENUE RECEIPT AS HELD BY THE ITAT , MUMBAI, IN ASSESSEE'S OWN CASE IN A.Y.2000 - 01 VIDE ORDER ITA.NO.3198/MUM/06 DATED 09.10.2009. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO ASSESS THE RENTAL INCOME, AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME, AS RENT WAS RECEIVED ON EXPLOITATION OF BUSINESS ASSET I.E, CLOSING STOCK. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN REDUCING THE FAIR MARKET VALUE OF THE CONSTRUCTED AREA @RS.21,000/ - PER SQ.MT FOR SHOPS AND @RS. 19500/ - PER SQ.MT FOR FLATS, TAKEN AS PER THE VALUATION RATE PUBLISHED BY THE REGISTRAR OF PROPERTIES, TO RS.1000/ - PER SQ.FT FOR BOTH TYPE OF PREMISES ON ESTIMATE BASIS WITHOUT ANY BASIS & JUSTIFICATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO ALLOW THE URBAN LAND CEILING ACT CHARGES OF RS.30,87,386/ - ON PAYMENT BASIS AS PER PROVISION OF SECTION 43B IGNORING THE FACTS THAT THE EXPENSES RELATING TO ONGOING PROJECTS CANNOT BE ALLOWED U / S.43 B BUT HAS TO BE INCLUD ED IN WORK IN PROGRESS A/C. IN CASE, THE PROJECT IS PARTLY SOLD, IT HAS TO BE ALLOCATED P ROPORTIONATELY TO THE SALES AND TO THE PROJECT CLOSING STOCK. 2. IN THE APPEAL FILED BY THE ASSESSEE, ASSESSEE IS AGGRIEVED FOR AN ADDITION OF RS. 20 LACS BEING AMOU NT RECEIVED BY ASSESSEE ON SIGNING OF DEED OF ASSIGNMENT OF BUILDING ON LEASE AND LAND . THE ASSESSEE IS ALSO AGGRIEVED FOR ADDITION TO THE EXTENT OF RS.67.06 LACS ASSESSED BY THE AO 3 ITA NO.2529&3022/10 AT RS.1,24,31,865/ - , AS AGAINST CLAIM OF ASSESSEE THAT NO INCOME IS ASSESS ABLE FOR THIS ASSESSMENT YEAR. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A DEVELOPER, DOING BUSINESS IN THE NAME OF SHREE HANUMANT DEVELOPMENTS AND IS IN THE BUSINESS SINCE ASSESSMENT YEAR 1999 - 2000 . THE ASSESSEE CONSTRUCTED A BUILDING KNOWN AS JANKI NIWAS ON A LAND BEARING C.T.S NO. 819/820. HE HAD APPOINTED RUSHABH DEVELOPERS AS CONTRACTORS FOR THE PURPOSE OF CONSTRUCTION OF THE SAID BUILDING. FOR THE PURPOSE OF THE SAME, THEY HAD EARLIER ENTE RED INTO AN AGREEMENT ON 17.10.1998. THE SAID BUILDING WAS COMPLETED IN 2001 AND BUSINESS INCOME WAS OFFERED ACCORDINGLY. DURING THE COURSE OF SCRUTINY ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION , THE AO MADE ADDITION BY TAKING VALUE OF BUILT - UP AREA AT RS.1,24,31,865/ - . 4. IN THE COURSE OF ASSESSMENT, THE AO ALSO MADE AN ADDITION OF RS.20 LACS RECEIVED BY THE ASSESSEE. THE AO HAS DISCUSSED THIS ISSUE IN PAGES 6 TO 12 OF THE ASSESSMENT ORDER. HE HAS OBSERVED THAT THE ASSESSEE HAS NOT DISCLO SED RS. 20 LACS REFERRED IN CLAUSE 12(E) OF THE AGREEMENT ON ACCRUAL BASIS. ASSESSEE HAS ALSO NOT OFFERED 2,000 SQ.FT. SHOPS ON GROUND FLOOR OF BUILDING A&B AND FLATS 4706 SQ. FT. BUILT UP AREA FREE OF COST, AS PER PARA 11 OF PAGE 8 OF THE AGREEMENT. AFT ER DETAILED DISCUSSION IN THE ASSESSMENT ORDER, HE HAS ADDED RS.20 LACS AND RS.1,24,31,865/ - AS VALUE OF BUILT UP AREA WHICH WAS TO BE RECEIVED FREE OF COST. 5. BY THE IMPUGNED ORDER, CIT(A) DIRECTED THE AO TO RESTRICT THE ADDITION BY TAKING VALUATION RAT E PUBLISHED BY THE REGISTRAR OF PROPERTIES AT RS.1000/ - PER SQ.FT. 4 ITA NO.2529&3022/10 6. THE REVENUE IS ALSO AGGRIEVED BY THE ACTION OF THE CIT(A) FOR REDUCING THE FAIR MARKET VALUE OF CONSTRUCTED AREA @ RS.21,000/SQ.MTR. FOR SHOPS AND RS.19,500/SQ. MTR. FOR FLATS, TAKEN AS PER THE VALUATION REPORT PUBLISHED BY REGISTRAR OF PROPERTIES TO RS. 1,000/SQ. FT. FOR BOTH TYPES OF PREMISES. 7 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. WE FOUND THAT THE CIT(A) HAS GIVEN PARTIAL RELIEF TO ASSESSEE AFTER HAVING FOLLOWING OBSERVATIONS : 8. SO FAR THE ASSESSMENT OF THE VALUE OF AREA OF SHOPS AND RESIDENTIAL FLATS TO BE RECEIVED, THE PER SQ. FT, RATE TAKEN BY ASSESSING OFFICER APPEARS TO HE HIGHLY EXCESSIVE AND UNREASONABLE. IN VIEW OF THE FACT THAT LAND WAS BELONGING TO APP ELLANT HIMSELF AND AFTER CONSIDERING THE ENTIRE FACTS AND SUBMISSIONS OF THE APPELLANT AND PREVAILING MARKET RATES OF COST OF CONSTRUCTION, I CONSIDER IT FAIR AND REASONABLE TO APPLY R A TE OF RS.1,000/ - PER SQ FT ON THE TOTAL AREA BECAUSE THE PREMISES WERE NOT READY AT THAT TIME AND THOSE WERE LIKELY TO BE CONSTRUCTED IN FUTURE. HOWEVER, THE ASSESSING OFFICER HAS ADOPTED SALE PRICE AS PER READY RECKONER AND HE HAS NOT CONSIDERED THE FACT THAT THE LAND WAS BELONGING TO THE APPELLANT HIMSELF. THIS ARGUMENT OF THE APPELLANT IS SUPPORTED BY THREE DECISIONS OF ITAT REFERRED ABOVE. HENCE THE ASSESSING OFFICER IS DIRECTED TO ALLOW RELIEF APPLYING AFORESAID RATES ON CORRECT AREA WHICH IS TO BE RECEIVED BY THE APPELLANT AS PER AGREEMENT. THUS THIS GRO UND OF APPEAL IS PARTLY ALLOWED. AGAINST THE ABOVE ORDER OF CIT(A), THE ASSESSEE AND REVENUE ARE IN APPEALS BEFORE US. 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM RECORD THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE ENTERED INTO AGREEMENT FOR SALE OF SOME OF ITS CONSTRUCTED AREA IN JANK I NIWAS TO M/S RU SHA BH DEVELOPERS. THE SALE AGREEMENT WAS DETERMINED AT RS. 2,59,55,437/ - . IT WAS ALSO PROVIDED IN THE AGREEMENT THAT THE SAID DEVELOPER WOULD TRANSFER CERTAIN SHOPS, ADMEASURING UPTO 2000 SQ.FT. OF BUILT UP A REA 5 ITA NO.2529&3022/10 AND FLATS OF 4706 SQ.FT. OF BUILT UP AREA, IN THE BUILDING TO BE CONSTRUCTED BY THE DEVELOPER. AS FAR AS THE CONSIDERATION IS CONCERNED, AS EXCEPT FOR RS.20 LAKHS, THE ENTIRE CASH CONSIDERATION ACCRUED AND WAS RECEIVED BY THE ASSESSEE DURING THE YEAR I TSELF, RS.2,59,55,437/ - WAS SHOWN BY THE ASSESSEE AS SALE CONSIDERATION IN HIS BOOKS OF ACCOUNTS. AS RS.20 LAKHS WAS TO BE ACCRUED AND RECEIVED ONLY UPON FULFILLMENT OF SOME CONDITIONS, LIKE EXECUTION OF DEED OF ASSIGNMENT OF THE BUILDING AND LEASE OF THE LAND IN FAVOUR OF THE SOCIETY TO BE FORMED BY THE PROSPECTIVE CUSTOMERS, THE SAID AMOUNT WAS NOT OFFERED FOR TAXATION. HOWEVER, THE AO MADE ADDITION BY TAKING THE REGISTRARS VALUE IN RESPECT OF AREA OF SHOPS AND FLATS TO BE TRANSFERRED TO THE BUILDERS AN D A N ADDITION OF RS. 1,24,31,865/ - WAS MADE. THE AO WAS OF THE VIEW THAT ASSESSEE WAS IN RECEIPT OF CASH CONSIDERATION AS WELL AS CONSIDERATION IN THE FORM OF BUILT UP AREA OF FLATS AND SHOPS. FROM THE RECORD WE FOUND THAT SO FAR AS THE SHOPS AND FLATS ARE CONCERNED, THESE WERE NOT EVEN CONSTRUCTED DURING THE YEAR. IN FACT, THE SAID DEVELOPER IS TO EXECUTE APPROPRIATE AGREEMENT FOR SALE OF THE SAID SHOP AND FLATS IN FAVOUR OF THE ASSESSEE AT THE TIME OF HANDLING OVER POSSESS ION OF THE SHOPS/FLATS AS MENTIONED IN PARA 15 ON PAGE 9 OF THE SAID AGREEMENT. AS SUCH, A SEPARATE AND INDEPENDENT AGREEMENT IS ENVISAGED TO BE EXECUTED AS AND WHEN THE FLATS ARE CONSTRUCTED AND THE POSSESSION IS HANDED OVER TO THE ASSESSEE. TILL THIS EVE NTUALITY HAPPENS, IT CANNOT BE SAID THAT ANY FLATS OR SHOPS ARE TRANSFERRED TO ASSESSEE. THERE CANNOT BE TRANSFER OF ANY NO EXISTING ASSET. WE ALSO FOUND THAT AS PER THE AGREEMENT THE ASSESSEE MERELY GRANTED LICENSE TO THE CONTRACTOR I.E. RISHUB DEVELOPER TO ENTER THE SAID LAND AND COMPLETE CONSTRUCTION THEREON. FURTHER, THE WHOLE SCHEME FOR DEVELOPMENT OF THE PROJECT STAND IN THE NAME OF THE 6 ITA NO.2529&3022/10 ASSESSEE AND IT IS TO REMAIN SO TILL THE ENTIRE PROJECT IS COMPLETED. IN VIEW OF THE ABOVE FACTUAL POSITION, THERE IS NO MERIT IN THE ORDER OF AO FOR BRINGING TO TAX NET THE SALE CONSIDERATION OF FLATS AND SHOPS WHICH WAS NOT CONSTRUCTED AT ALL NOR TRANSFERRED IN FAVOUR OF RISHUB DEVELOPER . ACCORDINGLY, WE DELETE THE ADDITION SO MADE BY THE AO. WE ALSO DIRECT THE AO TO KEEP TRACK WITH THE RECORD AND BRING TO TAX NET THE SALE PROCEEDS OF THESE FLATS AND SHOPS IN THE YEAR WHEN THESE ARE COMPLETED AND HANDED OVER BY THE ASSESSEE TO CONTRACTOR/BUYER. THE INSTANT PROJECT WAS STATED TO BE STARTED IN THE FINANCIAL YEAR 2005 - 06 . EVEN THOUGH IT IS NOT MENTIONED IN THE AGREEMENT SO EXECUTED WITH THE CONTRACTOR AS TO WHEN THE SAME IS TO BE COMPLETED, HOWEVER, WE PRESUME THAT IN 10 YEARS PROJECT MUST HAVE BEEN COMPLETED. WE, THEREFORE, DIRECT THE A.O. TO MAKE DETAILED ENQUIRY WITH R EGARD TO THE COMPLETION/SALE OF THE ALLEGED SHOPS AND FLATS, AND TO BRING THE SAME TO THE TAX NET ACCORDINGLY. WE DIRECT ACCORDINGLY. 9 . NOW COMING TO THE ADDITION OF RS.20 LAKHS MADE BY THE AO WHICH WAS NOT RECEIVED BY THE ASSESSEE BUT WAS TO BE RECEIVED ON OR BEFORE THE EXECUTION OF THE DEED OF AN ASSIGNMENT OF LEASE IN FAVOUR OF THE SOCIETY . THE CIT(A) HAS CONFIRMED THE ADDITION. WE DO NOT FIND ANY MERIT IN THE ACTION OF CIT(A) FOR CONFIRMING THE ADDITION. FROM THE AGREEMENT DATED 23 RD DECEMBER 2005, W E FOUND THAT IT IS MENTIONED IN CLAUSE 12 THAT THE ASSESSEE HANUMANT DEVELOPMENT SHALL RECEIVE RS.20 LAKHS ON EXECUTI ON OF A DEED OF ASSIGNMENT IN FAVOUR OF THE SOCIETY, AS MAY BE FORMED BY THE BUYERS OF TENEMENTS IN THE BUILDING RAM NIWAS - CONSTRUCTION OF WHICH WAS STARTED BY ASSESSEE & TO BE COMPLETED BY M/S RUSHABH DEVELOPERS. THIS ACCRUAL OF INCOME IS CONTINGENT ON FOLLOWING THINGS : 7 ITA NO.2529&3022/10 I) SAID RUSHABH DEVELOPERS COMPLETING THE PROJECT & SELLING THE TENEMENTS/FLATS AND; II) SUCH TENEMENT/FLAT BUYERS FORMING A SOCIETY GETTING IT REGISTERED AND; III) THEREAFTER EXECUTING A DEED OF ASSIGNMENT IN FAVOUR OF THE SAID SOCIETY BY ASSESSEE . IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ACTION OF AO FOR BRINGING TAX NET OF RS.20 LAKHS WHICH WAS CONTINGENT UPON THE HAPPENING OF EVENTS MENTIONED ABOVE. WE ACCORDINGLY DIRECT THE AO TO DELETE THE SAME, AT THE VERY SAME TIME THE AO SHOULD B E REMAINED CAUTIOUS AND BRING THIS AMOUNT TO THE TAX NET IN THE YEAR IN WHICH ASSESSEE EXECUTE A DEED OF ASSIGNMENT IN FAVOUR OF FLAT BUYER FORMING SOCIETY. WE DIRECT ACCORDINGLY. 10 . THE REVENUE IS ALSO AGGRIEVED FOR REDUCING THE LONG TERM CAPITAL GAIN CO MPUTED BY THE AO, WHICH HAS BEEN REDUCED BY THE C IT(A) BY TAKING COST OF ACQUISITION AT RS.300/ - PER SQ.FT.. THE PRECISE OBSERVATION OF THE CIT(A) IS AS UNDER : - 3. IN GROUND NO. 2 THE APPELLANT HAS CHALLENGED THE ACTION OF ASSESSIN G OFFICER IN ADOPTING THE FLAT OF COST AT NIL AS AGAINST RS.10,04,400/ - @ 300 PER SQ. FT ADOPTED BY THE APPELLANT WHILE CALCULATING THE CAPITAL GAIN AND SALE OF FLATS OWNED BY THE APPELLANT. IT IS ARGUED THAT THE DEPARTMENT ITSELF HAS ADOPTED THIS VALUE OF F LATS WHILE COMPUTING CAPITAL GAIN TAX IN A.Y. 2000 - 01 WHEN THE SAID FLATS WERE ACQUIRED BY THE APPELLANT. IT IS ALSO ARGUED THAT THE APPELLANT HAD ALREADY UNDERTAKEN TO REVISE HIS CAPITAL GAIN LIABILITY IN TERMS OF FINAL OUTCOME OF HIS APPEAL FOR A.Y. 2000 - 01. THE ASSESSING OFFICER HAS DISCUSSED THE FACTS OF THIS ISSUE IN PARA 3.1 OF ASSESSMENT ORDER AND HE HAS COMPUTED THE CAPITAL GAIN BY TAKING COST OF ACQUISITION AT NIL. THIS MATTER HAS BEEN SET ASIDE BY THE HON'BLE ITAT IN A.Y. 2000 - 01 VIDE ORDER DATED 09/10/2009 AS UNDER: 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS WITH REGARD TO THE FIRST PROPOSITION ARGUED BY THE ID. COUNSEL FOR THE ASSESSEE. WE FIND THAT THE RECEIPTS OF THE ASSESSEE ON ACCOUNT OF DAMAGES AND COMPENSATION FROM THE 'DEVELOPER' WERE REVE NUE IN NATURE. WE FIND THAT THESE RECEIPTS WERE IN LIEU OF THE RENT RECEIVABLE BY 8 ITA NO.2529&3022/10 THE ASSESSEE. THE DEVELOPER PARTY HAS FAILED TO HONOUR ITS OBLIGATION OF CONSTRUCTING FLATS WITHIN THE STIPULATED TIME ACCORDANCE WITH THE RULES AND REGULATIONS OF THE GOVERN MENT AND THEREFORE, IT PAID THE COMPENSATION / DAMAGES TO THE ASSESSEE. THE LEASE RENT RECEIVABLE BY THE ASSESSEE WAS UNDISPUTEDLY A REVENUE RECEIPT. THE CIT(A) HAS RIGHTLY OBSERVED THAT SINCE THE COMPENSATION/ DAMAGES WERE RECEIVED BY THE ASSESSEE IN LIEU OF THE LEASE RENT THESE ARE ALSO REVENUE RECEIPTS. THE OWNERSHIP OF THE LAND CONTINUES TO BE WITH THE ASSESSEE. IN THESE FACTS OF THE CASE WE ARE UNABLE TO ACCEPT THE PROPOSITION ARGUED BY THE ID. COUNSEL FOR THE ASSESSEE AND HOLD THAT THE RECEIPTS IN QUE STION WERE REVENUE IN NATURE.' SO IT CAN BE OBSERVED FOR THE ABOVE SAID ORDER OF THE ITAT THAT THE ITAT HAS TREATED THE RECEIPTS IN QUESTION AS REVENUE RECEIPTS. HOWEVER, THE ITAT HAS SET ASIDE THE ISSUE OF CORRECT VALUATION OF FLATS AND DECISION REGARDIN G YEAR OF ASSESSABILITY TO THE FILE OF ASSESSING OFFICER. SO IN VIEW OF AFORESAID FACTS, IT WILL BE PROPER FOR THE TIME BEING TO ACCEPT THE CONTENTION OF THE APPELLANT AND ORDER SHOULD BE REVISED AS PER THE OUTCOME OF THE REASSESSMENT AS PER THE DIRECTIONS OF THE ITAT . 11 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND THAT THE TRIBUNAL HAVE ALREADY DISMISSED ASSESSEES APPEAL IN THE ASSESSMENT YEAR 2000 - 2001 VIDE ORDER DATED 9 - 10 - 2009. AS THE TRIBUNAL HAVE ALREADY DISMISSED ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2000 - 2001, THERE IS NO JUSTIFICATION IN THE ORDER OF CIT(A) FOR ADOPTING THE COST OF ACQUISITION AT RS.300 SQ.FT., THEREBY REDUCING THE LONG TERM CAPITAL GAIN SO COMPUTED BY THE AO BY TAKING THE VALUE AT NIL. IT IS ALSO NOT CLEAR AS TO HOW THE ASSESSEE HAS OFFERED PROFIT EARNED ON SALE OF 7 FLATS AS LONG TERM CAPITAL GAINS, IN SO FAR AS ASSESSEE IS A DEVELOPER, WHO IS DEVELOPING BUILDING AND THE FLATS SO SOLD WERE HELD BY IT AS STOCK - IN - TRADE RATHER THAN CAPITAL ASSETS. IN THE INTEREST OF JUSTICE, WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR DECIDING AFRESH AFTER CONSIDERING ASSESSEES SUBMISSION IN ENTIRETY. WE DIRECT ACCORDINGLY. 9 ITA NO.2529&3022/10 12 . THE AO HAS ALSO TREATED THE RENTAL INCO ME SO OFFERED BY THE ASSESSEE AS BUSINESS INCOME IN PLACE OF INCOME FROM HOUSE PROPERTY . A FTER HAVING THE FOLLOWING OBSERVATIONS , THE CIT(A) DIRECTED THE AO TO TREAT THE SAME AS INCOME FROM HOUSE PROPERTY. 5. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT. THE FACTS OF THE CASE IS COVERED BY DECISIONS OF SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. VS C IT 263 I TR 143, WHEREIN IT WAS HELD THAT IF THE PROPERTY IS LET OUT WITH AN INTENTION TO HAVE RENTAL INCOME THEN IT WOULD BE ASSESSABLE AS INCOME FROM HOUSE PROPERTY. THE OTHER DECISIONS OF BOMBAY HIGH COURT AND ITAT DISCUSSED ABOVE ARE ALSO SUPPORTING THE CONTENTION OF THE APPELLANT. THE APPELLANT HAS LET OUT THE PREMISES WITH AN INTENTIO N TO EARN RENTAL INCOME. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ASSESS THE SAME AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME. 13 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE CIT(A) AFTER APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. (SUPRA) TO THE FACTS OF THE CASE AND TREATED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A), AS SAME IS BASED ON THE DECISION OF THE HON'BLE SUPREME COURT. 1 4 . REVENUE IS ALSO AGGRIEVED FOR ALLOWING DEDUCTION OF RS.30,87,386/ - U/S 43B OF THE INCOME TAX ACT, 1961. 1 5 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT T HE ASSESSEE HAS DEBITED AMOUNT OF RS.30,87,386/ - UNDER THE HEAD ULC PAYMENTS. THE AO HAS DISALLOWED PART OF THIS BECAUSE SOME STOCKS WERE ALREADY SOLD AND SOME WERE LIKELY TO BE SOLD IN FUTUR E. 1 6 . BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION AFTER HAVING THE F OLLOWING OBSERVATIONS : 10 ITA NO.2529&3022/10 10. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT. THE LIABILITY OF PAYMENT UNDER ULC ACT HAVE ACCRUED AND ARISED DURING THIS YEAR AND THE SAME IS TO BE ALLOWED IN THE YEAR OF PAYMENT AS MENTIONED IN PROVISIONS OF SECTION 43B OF THE I.T. ACT. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT ON PAYMENT BASIS. THIS GROUND OF APPEAL IS ALLOWED . WE HAVE CONSIDERED RIVAL CONTENTIONS AND DO NOT FIND A NY INFIRMITY IN THE DIRECTION GIVEN BY CIT(A) FOR ALLOWING DEDUCTION IN THE YEAR OF ACTUAL PAYMENT, WHICH IS AS PER MANDATE OF SECTION 43B OF THE I.T.ACT. 18 . IN THE RESULT, BOTH APPEALS OF ASSESSEE AND REVENUE ARE ALLOWED IN PART, IN TERMS INDICATED HERE INABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 5 / 0 6 /2016 . S D / - S D / - ( PAWAN SINGH ) (R.C.SHARMA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 1 5 / 0 6 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - X, MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//