M/s. R.P. Rajarajan Enterprises, CHENNAI V. ITO, CHENNAI

ITA 2699/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7886 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 19-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !.. # $%, ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.2699/MDS/2016 + ,+ / ASSESSMENT YEAR : 2012-13 M/S R.P. RAJARAJAN ENTERPRISES, NO.578, ANNA SALAI, TEYNAMPET, CHENNAI - 600 018. PAN : AAHFR 3613 H V. THE INCOME TAX OFFICER, NON-CORPORATE WARD 3(2), CHENNAI - 600 034. (.// APPELLANT) (01.// RESPONDENT) ./ 2 3 / APPELLANT BY : SHRI V.S. JAYAKUMAR, ADVOCATE 01./ 2 3 / RESPONDENT BY : SMT. SUMATHY VENKATRAMAN, JCIT # 2 4' / DATE OF HEARING : 20.12.2016 56, 2 4' / DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -4, CHENNA I, DATED 23.08.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO ASSESSMENT OF RENTAL INCOME. 2 I.T.A. NO.2699/MDS/16 3. SHRI V.S. JAYAKUMAR, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE ASSESSEE CLAIMED THE RENTAL INCO ME UNDER THE HEAD INCOME FROM BUSINESS. HOWEVER, THE ASSESSIN G OFFICER ASSESSED THE SAME AS INCOME FROM HOUSE PROPERTY. T HE LD.COUNSEL VERY FAIRLY CONCEDED THAT FOR THE ASSESS MENT YEARS 2006-07 AND 2007-08, THE VERY SAME ISSUE TRAVELLED UPTO HIGH COURT AND THE HIGH COURT BY PLACING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. IDEAL GARDEN COMPLEX PV T. LTD. (2012) 340 ITR 609, FOUND THAT THE INCOME HAS TO BE ASSESS ED AS INCOME FROM HOUSE PROPERTY AND NOT FROM BUSINESS INCOME. SUBSEQUENT TO THIS JUDGMENT OF MADRAS HIGH COURT, THE APEX COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD. V. CIT (2015) 373 ITR 673, FOUND THAT ON IDENTICAL CIRCUMSTANCES, THE INCOME H AS TO BE ASSESSED AS INCOME FROM BUSINESS. THE LD.COUNSEL F URTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FILED A REVIEW PETITION BEFORE THE HIGH COURT FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 AND THE SAME IS PENDING. 4. ON THE CONTRARY, SMT. SUMATHY VENKATRAMAN, THE L D. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT IN THE ASSESSEE'S OWN CASE, ON THE SAME SET OF FACTS, THE MADRAS HIGH COU RT FOR 3 I.T.A. NO.2699/MDS/16 ASSESSMENT YEARS 2006-07 AND 2007-08, FOUND THAT TH E INCOME HAS TO BE ASSESSED ONLY AS INCOME FROM HOUSE PROPERTY A ND NOT FROM INCOME FROM BUSINESS. THE TRIBUNAL HAS ALSO FOUND THAT THE INTEREST PAID HAS TO BE ALLOWED AS DEDUCTION EITHER UNDER TH E HEAD INCOME FROM HOUSE PROPERTY OR UNDER THE HEAD INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES. IN VIEW OF THIS DECIS ION OF THE MADRAS HIGH COURT, WHICH IS BINDING ON THIS TRIBUNAL, ACCO RDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY FOLLOWED THE ORD ER OF THIS TRIBUNAL AND THE JUDGMENT OF THE MADRAS HIGH COURT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THIS TRIBUNAL FOR ASSESSMENT YEARS 2006-07 AND 2007-08, AFTER EXAMINI NG THE RENTAL AGREEMENT AND OTHER MATERIAL DOCUMENTS, FOUND THAT THE INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AN D THE INTEREST PAID BY THE ASSESSEE HAS TO BE ALLOWED IRRESPECTIVE OF THE HEAD OF INCOME, THE RENTAL INCOME WAS ASSESSED. THE ASSESS EE NOW CLAIMS THAT THE APEX COURT IN CHENNAI PROPERTIES & INVESTMENTS LTD. (SUPRA) FOUND THAT THE INCOME FROM RENT HAS TO BE A SSESSED AS INCOME FROM BUSINESS. THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT FOR CLASSIFYING THE INCOME OF THE ASSESSEE EIT HER UNDER THE 4 I.T.A. NO.2699/MDS/16 HEAD INCOME FROM BUSINESS OR INCOME FROM HOUSE P ROPERTY, THE RENTAL AGREEMENT NEEDS TO BE EXAMINED. AFTER EXAMI NING THE RENTAL AGREEMENT, THIS TRIBUNAL FOUND THAT IT IS ONLY A CA SE OF LETTING OUT THE PROPERTY AND NOT EXPLOITATION OF BUSINESS ASSET. T HE HIGH COURT HAS ALSO CONFIRMED THE ORDER OF THIS TRIBUNAL FOR ASSES SMENT YEARS 2006-07 AND 2007-08. OF COURSE, BY PLACING ITS REL IANCE ON THE EARLIER JUDGMENT IN IDEAL GARDEN COMPLEX PVT. LTD. (SUPRA), WHEN THE HIGH COURT CONFIRMED THE ORDER OF THIS TRIBUNAL ON THE FACTS OF THE CASE, THIS TRIBUNAL HAS NO REASON TO TAKE A DIF FERENT VIEW. MOREOVER, THE ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEARS 2006-07 AND 2007-08 MERGED WITH THE ORDER OF THE HIGH COURT . THEREFORE, MERE PENDING OF REVIEW PETITION CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. AS RIGHTLY SUBMITTED BY THE LD. DE PARTMENTAL REPRESENTATIVE, THE JUDGMENT OF MADRAS HIGH COURT I N THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2006-07 AN D 2007-08 IS BINDING ON THIS TRIBUNAL. THEREFORE, THE CIT(APPEA LS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 5 I.T.A. NO.2699/MDS/16 ORDER PRONOUNCED ON 31 ST JANUARY, 2017 AT CHENNAI. SD/- SD/- ( ! . . # $% ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 31 ST JANUARY, 2017. KRI. 2 04$9 :9,4 /COPY TO: 1. ./ /APPELLANT 2. 01./ /RESPONDENT 3. # ;4 () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 9< 04 /DR 6. !+ = /GF.