ACIT, CHENNAI V. M/s. Eskay Designs, CHENNAI

ITA 269/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57941 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N PRAKASH
• Assessee Lawyers: K RAVI

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 269/MDS/2011 ASSESSMENT YEAR: 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE XV, CHENNAI 600 034. VS. M/S. ESKAY DESIGNS, NO.25/26, 1 ST STREET, CENOTOPH ROAD, TEYNAMPET, CHENNAI 18. [PAN: AAAFE1480C] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T.N. PRAKASH, JCIT ASSESSEE BY : SHRI K. RAVI, ADVOCATE DATE OF HEARING : 01.02.2012 DATE OF PRONOUNCEMENT : 01.02.2012 ORDER PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) XII, CHENNAI DATED 29.11.2010 PASSED IN ITA NO.199/09-10 IN ASSESSMENT YEAR 2007-08. SHRI T.N. PRAKASH, JCIT RE PRESENTED ON BEHALF OF THE REVENUE AND SHRI K. RAVI, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEA L IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE INCOME FROM SUBLETTING UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF AS INCOME FROM OTHER SOURCES. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.269 269269 269/ // /M/ M/M/ M/11 1111 11 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE ASSESSEE HAD TAKEN A LONG TERM LEASE OF THREE PROPE RTIES VIZ., (1) AT IIND FLOOR, NO. 426, ANNA SALAI, NANDANAM, CHENNAI 35, (2) OLD NO. 121/NEW NO. 46, DR. RADHAKRISHNAN SALARI, MYLAPORE, CHENNAI 4 AND (3) NO.10 & 11, DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI 4. 4. THE ASSESSEE HAS ADMITTED INCOME FROM HOUSE PRO PERTY IN THE RETURN OF INCOME AT ` .40,12,903/- FROM SUCH THREE PROPERTIES. THE RENTAL INCOME HAS BEEN EARNED FROM ALL THE THREE PROPERTIES BY THE AS SESSEE BY SUBLETTING THE PROPERTIES, WHICH WERE ACQUIRED BY THE ASSESSEE ON LEASE. THE ASSESSING OFFICER ACCEPTED THE INCOME FROM HOUSE PROPERTY AT ` .27,99,837/- FROM FIRST TWO PROPERTIES AS INCOME FROM THE SAID TWO PROPERTI ES WAS ALSO ACCEPTED UNDER THE HEAD HOUSE PROPERTY INCOME IN THE IMMED IATELY PRECEDING ASSESSMENT YEAR 2006-07. THE ASSESSEE ACQUIRED ANOT HER PROPERTY ON LEASE AND SUBLET THE SAME DURING THE YEAR UNDER CON SIDERATION AND HAD SHOWN HOUSE PROPERTY INCOME AT ` .12,13,066/-, WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS HOUSE PROPERTY INCOME BUT AS INCOME FROM OTHER SOURCES ON THE GROUND THAT THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY. 5. ON APPEAL, THE LD. CIT(A) HELD THAT THE INCOME FROM THIRD PROPERTY AT ` . 12,13,066/- WAS TO BE ASSESSED UNDER THE HEAD INCOM E FROM HOUSE PROPERTY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. PODDAR CEMENT PRIVATE LTD. 226 ITR 625 (SC), WHEREI N IT WAS HELD THAT THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.269 269269 269/ // /M/ M/M/ M/11 1111 11 3 OWNER IS A PERSON, WHO IS ENTITLED TO RECEIVE THE I NCOME FROM PROPERTY IN HIS OWN RIGHT AND THAT THE INCOME EARNED FROM A COMMERC IAL PROPERTY BUILT BY AN ASSESSEE ON LEASE HOLD LAND ALSO FALL WITHIN THE AM BIT OF HOUSE PROPERTY INCOME. 6. THE LD. DR VEHEMENTLY ARGUED IN SUPPORT OF THE O RDER OF THE ASSESSING OFFICER AND SUBMITTED THAT SECTION 22 PRO VIDES INCOME BY OWNER OF THE HOUSE PROPERTY BY LETTING OUT THE HOUSE PROP ERTY IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SINCE THE ASSESSEE IS ONLY A LESSEE OF THE PROPERTY, THE ASSESSING OFFICER WAS F ULLY JUSTIFIED IN ASSESSING THE INCOME FROM SUBLETTING THE PROPERTY UNDER THE H EAD INCOME FROM OTHER SOURCES. 7. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE R ELIED ON SECTION 27(IIIB) OF THE INCOME TAX ACT AND SUBMITTED THAT THE SAID S ECTION PROVIDES THAT A PERSON, WHO ACQUIRE ANY RIGHTS [EXCLUDING ANY RIGHT S BY WAY OF A LEASE FROM MONTH TO MONTH OR FOR A PERIOD NOT EXCEEDING ONE YE AR] BY VIRTUE OF ANY SUCH TRANSACTION AS IS REFERRED TO IN CLAUSE (F) OF SECT ION 269UA SHALL BE DEEMED TO BE A OWNER OF THAT BUILDING. HE, THEREFORE, SUBM ITTED THAT AS THE ASSESSEE HAS ACQUIRED THE PROPERTY IN QUESTION ON LEASE FOR A PERIOD OF NOT LESS THAN 12 YEARS WITHIN THE MEANING OF EXPLANATION TO SECTI ON 269UA(F)(I), THE ASSESSEE IS TO BE DEEMED AS OWNER OF THE PROPERTY A ND THEREFORE, THE INCOME EARNED BY LETTING OUT THE PROPERTY IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.269 269269 269/ // /M/ M/M/ M/11 1111 11 4 8. WE FIND THAT IN THE INSTANT CASE IT IS NOT IN D ISPUTE THAT THE PROPERTY IN QUESTION HAS BEEN ACQUIRED BY THE ASSESSEE ON LEASE FOR PERIOD OF THREE YEARS EXTENDABLE FOR A FURTHER PERIOD AND THERE IS NO RESTRICTION THAT IT CANNOT BE SO EXTENDED FOR MORE THAN 12 YEARS AS EVIDENCED BY THE LEASE DEED FILED BY THE ASSESSEE AT PAGE 94 TO 98 OF THE PAPER BOOK. THUS, THE ASSESSEE, BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTI ON 27(IIIB) DEEMED AS OWNER OF THE HOUSE PROPERTY FOR THE PURPOSE OF SECT IONS 22 TO 26 OF THE ACT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE I NCOME FROM SUCH HOUSE PROPERTY IS ASSESSABLE UNDER THE ACT INCOME FROM H OUSE PROPERTY. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) THOU GH FOR DIFFERENT REASONS. 9. NO OTHER POINT HAS BEEN URGED BY THE REVENUE EX CEPT THE ABOVE POINT. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED AT THE CLOSE OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 01.02.2012. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 01.02.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.