PRAKASH DATTA SAMANT, MUMBAI V. ACIT CEN CIR 20, MUMBAI

ITA 2886/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8782 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN LD
• Assessee Lawyers: HARI RAHEJA LD
• Section: 143(3)

Judgement Text

ITA.NO.2886/MUM/2016 PRAKASH DATTA SAMANT ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2886/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) PRAKASH DATTA S AMANT 1, SUNDARA NARAYAN NIWAS PADMAVATI ROAD IIT GATE,POWAI MUMBAI-400 076 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 20 ROOM NO.401, 4 TH FLOOR AAYKAR BHAVAN, M.K.ROAD MUMBAI - 40 0 020 !' ./ ./PAN/GIR NO. AAEPS-0065-P ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : HARI RAHEJA, LD. AR RE VENUE BY : T.A.KHAN, LD. DR / DATE OF HEARING : 10/08/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 ITA.NO.2886/MUM/2016 PRAKASH DATTA SAMANT ASSESSMENT YEAR-2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-51 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-51/IT-83/14-15 DATED 07/01/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E-20 U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 30/03/2014. THE EFFECTIVE GROUNDS RAISED IN THE APPEAL READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ENHANCEMENT TO THE TAXABLE INCOME BY RS.1,99,256/- MERELY ON TH E BASIS OF AGREEMENTS MENTIONING 5% INCREASE EVERY YEAR TO THE CONSIDERAT ION RECEIVABLE FOR RENTING OUT OF PROPERTY WITHOUT APPRECIATING THE FACT THAT SUCH INCREMENT WAS NEVER REALIZED BY THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN TREAT ING THE COMPENSATION OF RS.1,40,000/- PER MONTH RECEIVED BY THE APPELLANT F OR PROVIDING AMENITIES TO THE OCCUPANT OF HIS PROPERTY AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT TWO DIFFERENT AGREEMENTS I.E. LEAVE AND LICENSE AGREEME NT AND AMENITIES AGREEMENT EXECUTED BY THE APPELLANT FOR THE PURPOSE OF LETTING OUT OF HIS PROPERTY WERE HAVING COMMON INTENTION OF EARNING IN COME OUT OF PROPERTY OWNED BY THE APPELLANT. 2.1 FACTS LEADING TO THE DISPUTE ARE THAT THE ASSES SEE BEING RESIDENT INDIVIDUAL DERIVING INCOME UNDER VARIOUS HEADS WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 30/03/2014 AT RS.57,10,65 0/- AS AGAINST RETURNED INCOME OF RS.50,25,320/- FILED BY THE ASSESSEE ON 30/09/2011. THE MAIN DISPUTE OF THE PRESENT APPEAL IS HEAD UNDE R WHICH AMENITIES CHARGES RECEIVED BY THE ASSESSEE FROM CERTAIN PROPE RTY WOULD BE ASSESSABLE TO TAX. ITA.NO.2886/MUM/2016 PRAKASH DATTA SAMANT ASSESSMENT YEAR-2011-12 3 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE DERIVED RENTAL INCOME AGGREGATING TO RS.36.60 LACS FROM TWO PROPERTIES. THE RENTAL INCOME OF RS.24 LACS RECEIVED AGAINST PR OPERTY NO. 1 COMPRISED OF RENTAL INCOME OF RS.60,000/- PER MONTH AND AMENITIES CHARGES OF RS.1,40,000/- PER MONTH. HOWEVER, UPON PERUSAL O F RESPECTIVE AGREEMENTS, LD. AO NOTED THAT THE ASSESS EE WAS ENTITLED FOR ENHANCED RENTAL AS WELL AS ENHANCED AMENITIES CHARG ES AS PER CONTRACTUAL TERMS. ACCORDINGLY, RENTAL INCOME & AME NITY CHARGES WERE RE-WORKED AS RS.7,79,776/- & RS.18,19,480/- RESPECT IVELY AS AGAINST RS.7.20 LACS & RS.16.80 LACS REFLECTED BY THE ASSES SEE. FURTHER, THE AMENITY CHARGES, IN THE OPINION OF LD. AO, WERE ASSESSABLE UNDER TH E HEAD INCOME FROM OTHER SOURCES AS AGAINST INCOME FROM HOUSE PROPERTY AS CLAIMED BY THE ASSESSEE AND THEREFORE, STATUTORY DEDUCTION OF 30% WAS NOT AVAILABLE AGAINST THE SAME. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 07/01/2 016 WHERE THE ASSESSEE CONTENDED THAT INCREASED RENT WAS NEVER RE CEIVED BY THE ASSESSEE AND BOTH INCOME, BEING DERIVED OUT OF HOUS E PROPERTY, WERE ASSESSABLE AS INCOME FROM HOUSE PROPERTY. HOWEVER, NOT CONVINCED, LD. CIT(A) WHILE UPHOLDING ENHANCEMENT OF INCOME CO NCLUDED THAT THE AMENITY CHARGES WERE RIGHTLY TAXED AS INCOME FROM OTHER SOURCES AGAINST WHICH THE ASSESSEE WAS ENTITLED TO CLAIM SE CURITY CHARGES OF RS.1.20 LACS PROVIDED THE NEXUS THEREOF WITH AMENIT Y CHARGES COULD BE ESTABLISHED BY THE ASSESSEE BEFORE LD. AO. AGGRIEVE D, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA.NO.2886/MUM/2016 PRAKASH DATTA SAMANT ASSESSMENT YEAR-2011-12 4 4. THE LD. COUNSEL FOR ASSESSEE [AR] WHILE DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER BOOK, CONTENDED THAT THE RENT AND AMENITY CHARGES COULD NOT BE INCREASED AS PER CONTRACTUAL TERMS AN D THE ASSESSEE HAS RECEIVED ONLY AN AMOUNT OF RS.36.60 LA CS FROM THE TENANTS TOWARDS RENTAL CHARGES / AMENITY CHARGES . TO SUPPORT THE SAID CONTENTION, OUR ATTENTION IS DRAWN TO FORM 26AS-ANNUAL TAX STATEMENT UNDER SECTION 203AA OF THE INCOME TAX ACT, 1961 FOR THE IMPUGNED AY WHICH IS PLACED ON RECORD. FURTHER, THE LD. AR PLAC ED RELIANCE ON THE DECISION OF THIS TRIBUNAL RENDERED IN ACIT VS. H&M HOUSING FINANCE & LEASING PVT. LTD. [ITA NO. 821 & 822/MUM/2010 ORDER DATED 15/06/2011] FOR THE CONTENTION THAT AMENITY CHARGES, BEING PART AND PARCEL OF THE HOUSE PROPERTY, WERE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTENDED THAT THE ONUS WAS ON ASSESSEE TO ESTABLISH THAT RENTAL INCOME / AMENITY CHARGES COULD NOT BE INCREASED AS PER CONTRACTUAL TERMS. T HE LD. DR FURTHER CONTENDED THAT AMENITY CHARGES RECEIVED BY THE ASSESSEE DOES NOT PARTAKE THE CHARACTER OF RENTAL INCOME SO AS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 6. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. THE PERUSAL OF CONTRACTUAL TERM S OF RESPECTIVE AGREEMENTS PLACED ON RECORD REVEALS THAT THE ASSESS EE WAS ENTITLED FOR CERTAIN INCREASE IN THE CHARGES EVERY YEAR. AT THE SAME TIME, IT IS ALSO NOTED THAT THE RECEIPTS OF THE ASSESSEE WERE SUBJEC TED TO TAX DEDUCTION AT SOURCE, THE DETAILS OF WHICH ARE REFLECTED IN FORM 26AS. THE PERUSAL OF FORM 26AS REVEALS THAT THE ASSESSEE HAS RECEIVED TOTAL RENTA L INCOME ITA.NO.2886/MUM/2016 PRAKASH DATTA SAMANT ASSESSMENT YEAR-2011-12 5 OF RS.36.60 LACS FROM TWO ENTITIES AGAINST WHICH TA X HAS BEEN DEDUCTED AT SOURCE U/S 194-I FOR RS.3.66 LACS. PRIMA FACIE, THE ASSESSEE HAS NOT RECEIVED ANY OTHER RENTAL INCOME DURING IMPUGNED AY. THE REVENUE HAS NOWHERE CONTROVERTED THE ENTRIES OF FORM 26AS . THEREFORE, WE FIND STRENGTH IN THE ARGUMENTS OF LD. AR THAT THE ASSESS EE HAS RECEIVED ONLY AN AMOUNT OF RS.36.60 LACS TOWARDS RENTAL INCOME & AMENITY CHARGES AS AGAINST RS.38.59 LACS AS COMPUTED BY LD. AO. THE REFORE, WE DELETE THE ADDITIONAL INCOME BEING COMPUTED BY THE LD. AO SINCE NO ADDITION COULD BE MADE MERELY ON THE BASIS OF DOUBTS, CONJEC TURES OR SURMISES WITHOUT BRINGING ON RECORD ANY COGENT MATERIAL TO S UBSTANTIATE THE SAME. RESULTANTLY, GROUND NO. 1 OF THE ASSESSEES APPEAL STANDS ALLOWED. 7. GROUND NO. 2 & 3 IS RELATED WITH HEAD UNDER WHIC H AMENITY CHARGES RECEIVED BY THE ASSESSEE WOULD BE ASSESSABLE TO TA X. A PERUSAL OF CLAUSE-1 OF AMENITIES AGREEMENT DATED 21/08/2008 REVEALS THAT THIS AGREEMENT WAS TO RUN CONCURRENTLY AND WAS TO BE CO-TERMINUS WITH THE LEAVE & LICENSE AGREEMENT OF SAME DATE. AS PER CLAUSE-3, THE ASSESSEE WAS REQUIRED TO PROVIDE SERVICES OF MAINTENANCE, UPKEEP, CLEANLINESS, SECURITY SERVICES AND OTHER GENERAL SERVICES THAT MAY BE REQUIRED BY THE USER. AS PER CLAUSE-4(C), THE ASSESSEE COULD TERMINATE THE AGREEMENT IN THE EVENT OF NON-PAYMENT OF AMENIT Y FEES FOR TWO CONSECUTIVE MONTHS AND IN THAT EVENT, LEASE AND LICENSE AGREEMENT WAS ALSO LIABLE AND CONSIDERED TO BE TERMINATED. UPON P ERUSAL OF THESE CLAUSES, WE FIND THAT THE TWO AGREEMENTS WERE LINKE D TOGETHER AND PART AND PARCEL OF THE SAME TRANSACTIONS. THE PRESCRIBED AMENITIES COULD NOT BE PROVIDED BY THE ASSESSEE INDEPENDENTLY TO THE TE NANTS AND WAS CO- TERMINUS WITH LEASE AND LICENSE AGREEMENT. FURTHER, A BARE PERUSAL OF ITA.NO.2886/MUM/2016 PRAKASH DATTA SAMANT ASSESSMENT YEAR-2011-12 6 NATURE OF SERVICES, PRIMA FACIE, REVEALS THAT THE SAID SERVICES WERE OF GENERAL IN NATURE WHICH IS USUALLY PROVIDED BY THE LANDLORD TO THE TENANT. THEREFORE, AMENITY CHARGES , IN OUR OPINION, BEING PART AND PARCEL OF SAME TRANSACTION, WERE ASSESSABLE AS INCOME FROM HOUSE PROPERTY. OUR VIEW IS FURTHER FORTIFIED BY THE CITED ORDER OF THE TRIBUNAL WHERE SIMILAR VIEW HAS BEEN TAKEN AND WHICH HAS NOWHERE BEEN CONT ROVERTED BY THE LD. DR BEFORE US. THEREFORE, WE HOLD THAT THE AMENITY CHARGES EARNED BY THE ASSESSEE WERE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AGAINST WHICH THE ASSESSEE WAS ENTITLED FOR STATUTO RY DEDUCTION OF 30%. RESULTANTLY, THIS GROUND OF ASSESSEES APPE AL ALSO SUCCEEDS. 8. IN NUTSHELL, THE ASSESSEES APPEAL STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11 .2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. %(. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI