AKRUTI SMC JOINT VENTURE, MUMBAI V. ASST CIT RG 20(1), MUMBAI

ITA 2950/MUM/2014

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5974 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Depreciation; Additional evidence
• Section: 43B; 143(3); 133A; 143(1); 143(2); 69; 27; 68

Judgement Text

M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 1 ITA NOS. 3968, 2950 & 5067/MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 2950 /MUM/2014 (ASSESSMENT YEAR: 2009 - 10 ) M/S AKRUTI SMC JOINT VENTURE 6 TH FLOOR, AKRUTI TRADE CENTRE, ROAD NO. 7, MAROL, ANDHERI (E), MUMBAI - 400 093 VS. ACIT, 20(1) - 1 ROOM NO. 603, 6 TH FLOOR PIRAMAL CHAMBER, PAREL, MUMBAI - 400 012 PAN AAAAA7862R (APPELLANT) (RESPONDENT) ITA NO. 3968 & 5067 /MUM/201 4 (ASSESSMENT YEAR: 200 9 - 10 & 2010 - 11 ) ACIT , 20(1) - 1 ROOM NO. 603 , 6 TH FLOOR PIRAMAL CHAMBER, PAREL, MUMBAI - 400 0 12 VS. M/S AKRUTI SMC JOINT VENTURE 6 TH FLOOR, AKRUTI TRADE CENTRE, ROAD NO. 7, MAROL, ANDHERI (E), MUMBAI - 400 0 93 PAN AAAAA7862R (APPELLANT) (RESPONDENT) A SSESSEE BY: SHRI PAVAN VED , A .R DEPARTMENT BY: SHRI. SATISHCHANDRA RAJORE, D.R DATE OF HEARING: 2 0 .12.2018 DA TE OF PRONOUNCEMENT: 28 .12.2018 O R D E R PER RAVISH SOOD, JM THE ASSESSEE AND THE REVENUE HAVE FILED CROSS APPEALS FOR A.Y 2009 - 10 AGAINST THE ORDER PASSED BY THE CIT(A) - 31, MUMBAI, DATED 13.03.2014, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 2 ITA NOS. 3968, 2950 & 5067/MUM/2014 SEC. 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHORT I.T ACT), DATED 30.12.2011 . FURTHER, THE REVENUE IS ALSO IN APPEAL BEFORE US FOR A.Y 2010 - 11 , AGAINST THE ORDER PASSED BY THE CIT(A) - 31, MUMBAI, DATED 27.05.2015 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), DATED 28.03.2013 . AS CERTAIN COMMON ISSUES ARE INVOLVED IN THE PRESENT APPEALS, THEREFORE, THE SAME ARE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATE ORDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE FOR THE A.Y 2009 - 10. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING EFFECTIVE GROUND OF APPEAL : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION U/S 69 OF THE INCOME TAX ACT, 1961, FOR AN A MOUNT OF RS. 50,00,000/ - , PAID TO PK, AS ALLEGED UNEXPLAINED INVESTMENT. THE ADDITION IS MADE WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE POSITION IN LAW. THE ADDITION IS FURTHER MADE ON THE BASIS OF ASSUMPTIONS AND SURMISES. 2. BRIEFLY STATED, THE ASSESSEE WHICH IS ENGAGED IN THE BUSINESS OF DEVELOPING AND MAINTENANCE OF A COMMERCIAL COMPLEX HAD FILED ITS RETURN OF INCOME FOR A.Y 2009 - 10 ON 30.09.2009, DECLARING TOTAL INCOME AT R S . 1,44,88,389/ - . THE RETURN OF INCOME WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T ACT. THE A.O ASSESSED THE INCOME OF THE ASSESSEE UNDER SEC. 143(3), VIDE ORDER DATED 30.12.2011 AT RS. 9,81,35,500/ - AFTER INTER ALIA MAKING THE FOLLOWING MODIFICATIONS AND ADDITIONS/DISALLOWANCES TO THE RETURNED INCOME OF THE ASSES SEE : SR. NO. PARTICULARS AMOUNT 1. RECHARACTERIZATION OF THE RENT RECEIVED (RS. 1,00,32,134/ - ) AND RECEIPTS TOWARDS SERVICE CHARGES (RS. 2,09,80,741/ - SHOWN BY THE ASSESSEE AS ITS BUSINESS INCOME, AS ITS INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES, RESPECTIVELY. - 2 . ADDITION ON ACCOUNT OF PAYMENT TO P.K RS. 50,00,000/ - 3 . DISALLOWANCE OF EXPENSES BOOKED BY THE ASSESSEE UNDER VARIOUS HEADS OF EXPENSES. RS. 3,54,98,028/ - 4 . DISALLOWANCE OF EXHIBITION EXPENSES RS. 4,61,243/ - 5. DISALLOWANCE OF BROKERAGE EXPENSES RS. 1,02,38,913/ - M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 3 ITA NOS. 3968, 2950 & 5067/MUM/2014 6 . TREATING THE INCOME SHOWN BY THE ASSESSEE FROM SALE OF SCRAP, AS UNEXPLAINED CASH CREDITS UNDER SEC. 68. RS. 1,05,250/ - 7 . TREATING THE INCOME SHOWN BY THE ASSESSEE FROM SALE OF STEEL , AS UNEXPLAINED CASH C REDITS UNDER SEC. 68. RS. 22,66,523/ - 3. AGGRIEVED, THE ASSESSEE ASSAILED THE ORDER OF THE A.O BEFORE THE CIT (A). THE CIT(A) DELIBERAT ED AT LENGTH ON THE CONTENTIONS ADVANCED BY THE ASSESSEE IN THE BACKDROP OF THE AGREEMENT TO DEVELOP, DATED 18.03.2002 BETWEEN MAHARASHTRA STATE ROAD TRANSPORT CORPORATION (FOR SHORT MSRTC) AND M/S SMC INFRASTRUCTURES PVT LTD. (FOR SHORT SMC) AND THE JOINT VENTURE AGREEMENT, DATED 30.04.2006 BETWEEN M/S SMC INFRASTRUCTURES PVT LTD. AND M/S ARNAV PROPERTIES PVT. LTD FOR CARRYING OUT A JOINT VENTURE FOR CONSTRUCTION OF A COMMERCIAL COMPLEX BUILDING . THE CIT(A) WAS PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE ASSESSEE THAT THE RENT RECEIVED BY THE ASSESSEE WAS LIABLE TO BE ASSESSED AS IT S BUSINESS INCOME PRIMARILY ON THREE GROUNDS VIZ. (I). THAT THE ASSESSEE JV WAS NOT THE O WNER OF THE COMMERCIAL COMPLEX AND WAS COLLECTING THE RENT IN LIEU OF THE TERMS OF THE AGREEMENT TO DEVELOP WHICH ALLOWED IT TO COMMERCIALLY EXPLOIT THE SAID PRE MISES FOR A PERIOD OF 30 YEARS TO RECOVER ITS COSTS AND DELIVER THE VACANT AND PEACEFUL POSSESSION OF THE SAID PROPERTY AFTER THE EXPIRY OF THE AFORESAID PERIOD TO MSRTC; (II). THAT MSRTC AS LESSOR CONTINUED TO BE THE OWNER OF THE PROPERTY DEVELOPED BY THE ASSESSEE JV; AND (III). THE ACTIVITY OF CONSTRUCTING AND SUBSEQUENTLY LEASING OUT THE COMMERCIAL COMPLEX WAS CARRIED OUT AS PART AND PARCEL OF THE BUSINESS FOR WHICH THE ASSESSEE JV WAS FORMED. APART THEREFROM, THE SERVICE CHARGES RECEIVED BY THE ASSESS EE FROM THE LESSEES FOR THE FACILITIES AND AMENITIES MADE AVAILABLE TO THEM WAS ALSO HELD BY THE CIT(A) TO BE ASSESS ABLE AS ITS BUSINESS INCOME. IT WAS OBSERVED BY THE CIT(A) THAT AS THE SERVICES PROVIDED BY THE ASSESSEE IN TERMS OF THE FACILITIES AND A MENITIES AGREEMENT TO THE LESSEES WERE INTEXTRICABLY LINKED WITH THE LEASING OF THE PROPERTY ITSELF, THEREFORE, THE SAME WAS ALSO TO BE BROUGHT TO TAX AS THE BUSINESS INCOME OF THE ASSESSEE. IN THE BACKDROP OF THE FACT THAT THE RENTAL INCOME AND THE SERVICE CHARGES WERE HELD TO BE ASSESSABLE AS THE BUSINESS INCOME OF THE ASSESSEE, THEREFORE, THE CIT(A) DELETED THE OTHER M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 4 ITA NOS. 3968, 2950 & 5067/MUM/2014 CONSEQUENTIAL ADDITIONS/DISALLOWANCES THAT WERE MADE BY THE A.O VIZ. (I). DISALLOWANCE OF VARIOUS EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT (RS. 3,54,98,028/ - ); (II). DISALLOWANCE OF EXHIBITION EXPENSES (RS. 4,61,243/ - ) ; (III). DISALLOWANCE OF BROKERAGE EXPENSES (RS. 1,02,38,913/ - ); AND (IV) ADDITION ON ACCOUNT OF SALE OF SCRAP (RS. 1,05,250/ - ) AND OF TRADING OF STEEL (RS. 22,66, 523/ - ) . INSOFAR, THE ADDITION OF RS. 50 LAC THAT WAS MADE BY THE A.O ON THE BASIS OF A NOTING IN A DIARY THAT WAS FOUND DURING THE COURSE OF THE SURVEY PROCEEDINGS , THE CIT(A) DID NOT FIND FAVOUR WITH THE CONTENTIONS ADVANCED BY THE ASSESSEE AND UPHELD THE SAME. ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A ) TO THE EXTENT HE HAD UPHELD THE ADDITION OF RS. 50 LAC, HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE P A RTIES IN CONTEX T OF THE ISSUE UNDER CONSIDERATION, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD TO WHICH OUR ATTENTION WAS DRAWN DURING THE COURSE OF THE HEARING OF THE APPEAL. IN THE COURSE OF THE SURVEY PROCEEDINGS CONDUCTED UNDER SEC. 133A AT THE PREMISES OF THE ASSESSE W ON 08.09.2009 A DIARY WAS FOUND CONTAIN ING A NOTING TO THE EFFECT 50L GIVEN TO P.K NOT SHOWN BY ASHISH TAKEN INTO ACCOUNT . CONSEQUENT TO THE SURVEY, STATEMENT OF SHRI BHARAT MODY, CFO OF AKRUTI GROUP WAS RECORDED ON 11.09.2009 AND 25.09.2009. INITIALLY, IT WAS STATED BY SHRI BHARAT MODY THAT THE SAID NOTING WAS MADE BY SHRI. PANKAJ GANDHI, AN EMPLOYEE WITH AKRUTI GROUP AND THE SAME WAS IN CONTEXT OF A STEEL SUPPLIER VIZ. PUSHPAK STEEL INDUSTRIES PVT. LTD WHO WAS REFERRED TO AS PK BY THE PURCHASE DEPARTMENT, USING THE FIRST AND THE LAST INI TIAL OF THE WORD PUSHPAK. IT WAS FURTHER DIVULGED BY HIM THAT PK HAD A FACTORY NEAR PUNE AND AN OFFICE IN MUMBAI. MR. BHARAT MODY EXPLAININ G THE NATURE OF THE AFORESAID NOTING STATED THAT PK HAD SUPPLIED SUBSTANTIAL QUANTITY OF STEEL FOR A SEZ PROJECT OF THE AKRUTI GROUP AT HINJAWADI, PUNE. AS PER HIM, MR. ASHISH, AN EMPLOYEE OF THE AKRUTI GROUP IN IT ITS PUNE SEZ USED TO COORDINATE WITH VARIOUS SUPPLIERS INCLUDING PK FOR SUPPLIES, PAYMENTS ETC. IT WAS FURTHER CLAIMED BY MR. BHARAT MODY T HAT A CHEQUE OF RS. 50 LAC WAS M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 5 ITA NOS. 3968, 2950 & 5067/MUM/2014 ISSUED TO PK ON 31.07.2008, WHICH WAS COLLECTED BY SOMEONE FROM PKS MUMBAI OFFICE DIRECTLY, AND THE SAID FACT WAS THROUGH OVERSIGHT NOT CONVEYED TO MR. ASHISH. MR. BHARAT MOD Y STATED THAT WHEN MR. ASHISH WAS RECONCILING TH E ACCOUNTS, THE ENTRY OF RS. 50 LAC WAS NOT REFLECTED IN HIS STATEMENTS. IT WAS THE CLAIM OF MR. BHARAT MOD Y THAT IT WAS IN THE BACKDROP OF THE SAID FACTS THAT THE NECESSARY DETAILS WERE GIVEN TO MR. ASHISH TO UPDATE HIS RECORDS AND A NOTING TO THE SAID EF FECT WAS MADE BY MR. PANKAJ GANDHI (SUPRA). IN SUM AND SUBSTANCE, IT WAS THE CLAIM OF MR. BHARAT MODY THAT THE NOTING OF RS. 50 LAC WAS PURELY IN CONTEXT OF AN INTERNAL RECONCILIATION OF THE RECORDS MAINTAINED AT THE HEAD OFFICE IN MUMBAI AND PROJECT SITE AT PUNE. IT WAS FURTHER STATED BY THE ASSESSEE THAT PK WAS NOT A CREDITOR OF THE ASSESSEE BUT WAS A CREDITOR OF THE SEZ UNIT OF THE AKRUTI GROUP AT PUNE VIZ. DLF AKRUTI INFO PARKS (PUNE) . APART THEREFROM, THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROC EEDINGS STATED BY PLACING ON THE RECORD OF THE A.O A LETTER DATED 26.12.2011 THAT THE WORD PK HAD NO RELEVANCE IN ITS OWN CASE AND THE SAME WAS A PERSONAL SCRIBBLING WHICH WAS IN NO WAY CONNECTED WITH THE BUSINESS OF THE ASSESSEE. IN THE COURSE OF THE AP PELLATE PROCEEDINGS IT WAS STATED BY THE ASSESSEE THAT THE NOTING IN THE DIARY WAS THAT OF ONE OF THE EMPLOYEE OF THE AKRUTI GROUP, AND THE STATEMENT OF SH. BHARAT MODY THAT WAS RECORDED CONSEQUENT TO THE SURVEY PROCEEDINGS WAS IN RELATION TO A SEZ PROJE CT WHICH WAS BEING CARRIED OUT NEAR PUNE BY AKRUTI GROUP. IN ORDER TO FORTIFY ITS CLAIM AND TO DISTANCE FROM THE AFORESAID NOTING, IT WAS SUBMITTED BY THE ASSESSEE THAT THE PROJECT WHICH WAS BEING CONSTRUCTED BY THE ASSESSEE WAS AT THANE. THE CIT(A) IN ORD ER TO VERIFY THE VERACITY OF THE AFORESAID CLAIM OF THE ASSESSEE CALLED FOR A REMAND REPORT FROM THE A.O. THE A.O VIDE HIS REMAND REPORT, DATED 03.09.2013 STATED THAT THE ASSESSEE IN THE COURSE OF THE REMAND PROCEEDINGS HAD PRODUCED THE COPY OF THE LEDGER ACCOUNT OF M/S PUSHPAK STEEL INDUSTRIES LTD. APPEARING IN T HE BOOKS OF ACCOUNTS OF M/S DLF AKRUTI INFO PARKS , PUNE ALONGWITH THE COPY OF THE BANK STATEMENT HIGHLIGHTING THE PAYMENT MADE BY THE LATTER GROUP CONCERN TO M/S PUSHPAK STEEL INDUSTRIES LTD. IT WAS FURTHER STATED BY THE ASSESSEE BEFORE THE A.O THAT PK W AS NOT ITS CREDITOR , BUT WAS A CREDITOR OF M/S DLF AKRUTI INFO PARKS , PUNE. APART THEREFROM, THE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 6 ITA NOS. 3968, 2950 & 5067/MUM/2014 ASSESSEE IN THE COURSE OF THE PROCEEDINGS BEFORE THE CIT(A) PLACED ON RECORD ADDITIONAL EVIDENCE VIZ. (I). COPY OF THE STATEMENT OF THE CFO OF THE AKRUTI GROUP RECORDED ON 25.09.2009; (II). BANK STATEMENT OF DLF AKRUTI INFO PARKS , PUNE; AND (III).COPY OF LEDGER ACCOUNT OF M/S PUSHPAK STEEL INDUSTRIES PVT. LTD. IN THE BOOKS OF ACCOUNT OF DLF AKRUTI INFO PARKS , PUNE, WHICH WERE FORWARDED BY THE CIT(A) TO THE A.O. O N A PERUSAL OF THE REPORT OF THE A.O IT WAS OBSERVED BY THE CIT(A) THAT IT WAS THE CLAIM OF THE ASSESSEE THAT THE ABBREVIATION PK REFERRED TO A STEEL SUPPLIER VIZ. PUSHPAK STEEL INDUSTRIES PVT. LTD. TO WHO M PAYMENT WAS MADE BY ANOTHER GROUP ENTITY VIZ. D LF AKRUTI INFO PARKS , PUNE, VIDE CHEQUE IN JULY, 2008. IT WAS THE CLAIM OF THE ASSESSEE THAT THE NOTING AT PAGE 59 OF ANNEXURE 1 VIZ. THE DIARY IMPOUNDED DURING THE COURSE OF THE SURVEY PROCEEDINGS REFLECTED THE RECONCILIATION BY THE AKRUTI GROUP WHEN TH E CONCERNED STAFF HAD VISITED THE H.O AT MUMBAI TO RECONCILE THE ACCOUNTS. HOWEVER, THE CIT(A) WAS NOT PERSUADED TO SUBSCRIBE TO THE AFORESAID CLAIM OF THE ASSESSEE. IT WAS OBSERVED BY THE CIT(A) THAT THE UNUSUAL DELAY IN THE SO CALLED RECONCILIATION DID N OT INSPIRE ANY CONFIDENCE AS REGARDS THE VERACITY OF THE SAID CLAIM OF THE ASSESSEE. APART THERE FR OM, IT WAS OBSERVED BY THE CIT(A) THAT NO AFFIDAVIT OF EITHER OF THE PARTIES WAS PLACED ON RECORD TO SUBSTANTIATE THE GENUINENESS OF THE SAID CLAIM. THE CIT (A) ON THE BASIS OF HIS OBSERVATIONS REJECTED THE EXPLANATION OF THE ASSESSEE AND UPHELD THE ADDITION OF RS. 50 LAC MADE BY THE A.O. 5. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION IN THE BACKDROP OF THE CONTENTIONS ADVANCED BY THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES. ADMITTEDLY, THE DIARY VIZ. ANNEXURE A1 CONTAINING THE IMPUGNED NOTING S AS REGARDS PAYMENT O F RS. 50 LAC TO P.K WAS IMPOUNDED DURING THE COURSE OF THE SURVEY PROCEEDINGS CONDUCED UNDER SEC. 133A FROM THE PREMISES OF THE ASSESSEE. HOWEVER, A PERUSAL OF ANNEXURE A1 PAGE 5 9 OF THE DIARY CONTAINING THE AFORESAID IMPUGNED NOTINGS NOWHERE REVEALS ANY MENTION OF THE N AME OF THE ASSESSEE . APART THEREFROM, A MENTION OF THE DATE 20.06.2009 IN THE IMPUGNED DOCUMENT CLEARLY RELATES THE NOTINGS THEREIN REFERRED TO A.Y 2010 - 11 , AND NOT THE YEAR UNDER CONSIDERATION . WE HAVE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 7 ITA NOS. 3968, 2950 & 5067/MUM/2014 PERUSED THE NOTINGS IN THE IMPUGNED DOCUMENT VIZ. ANNEXURE A1 - PAGE 59 , AND ARE OF THE CONSIDERED VIEW THAT NOTHING CAN BE SAFELY GATHERED AS REGARDS THE NATURE OF THE TRANSACTIONS THEREIN REFERRED. FURTHER, THERE IS NO SUCH MATERIAL WHICH COULD ESTABLISH A NEXUS OF THE SAID NOTING S WITH THE ASSESSEE . I N OUR CONSIDERED VIEW , NO ADVERSE INFERENCES ON THE BASIS OF THE VAGUE NOTINGS AS REGARDS SOME PAYMENT OF RS. 50 LAC TO PK CAN SAFELY BE DRAWN IN THE HANDS OF THE ASSESSEE. WE WOULD NOT HESITATE TO OBSERVE THAT THE AFORESAID DOCUMEN T VIZ. ANNEXURE A1 - PAGE 59 CAN SAFELY BE HELD AS A DUMB DOCUMENT, WHICH IN OUR CONSIDERED VIEW COULD NOT HAVE BEEN ACTED UPON BY THE A.O FOR DRAWING OF ADVERSE INFERENCES IN THE HANDS OF THE ASSESSEE. ALTERNATIVELY, WE ARE FURTHER OF THE VIEW THAT AS TH E DATE 20.06.2009 AS IS FOUND MENTIONED IN THE AFORESAID IMPUGNED DOCUMENT ALSO CLEARLY RELATES THE NOTINGS THEREIN REFERRED TO THE IMMEDIATELY SUCCEEDING YEAR VIZ. A.Y 2010 - 11 AND NOT THE YEAR UNDER CONSIDERATION, THUS ON THE SAID BASIS ALSO NO ADVERSE INF E RENCE S COULD HAVE BEEN DRAWN IN THE HANDS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. BEFORE PARTING, WE MAY HERE IN OBSERVE THAT THE EXPLANATION OF THE ASSESSEE THAT THE MENTION OF THE PAYMENT OF RS. 50 LAC TO PK IN THE IMPUGNED DOCUMENT VIZ. ANNEXURE A1 PAGE 59 WAS IN CONTEXT OF A RECONCILIATION OF THE PAYMENT OF RS. 50 LAC THAT WAS EARLIER MADE TO THE SAID PART Y VIZ. M/S PUSHPAK STEEL INDUSTRIES PVT. LTD. BY ANOTHER GROUP ENTITY VIZ. DLF AKRUTI INFO PARKS (PUNE) IN JULY, 2008, DOES NOT FIND FAVOUR WITH US ON ACCOUNT OF SUBSTANTIAL TIME GAP OF 11 MONTHS (AP P ROX) BETWEEN THE DATE OF THE TRANSACTION AND THE SO CALL ED RECONCILIATION. BE THAT AS IT MAY, AS THE NOTINGS IN THE IMPUGNED DOCUMENT VIZ. ANNEXURE A1 PAGE 59 IMPOUNDED IN THE COURSE OF THE SURVEY PROCEEDINGS DOES NEITHER MAKE ANY MENTION OF THE ASSESSEE, NOR ANY CLINCHING EVIDENCE HAD BEEN BROUGHT ON RECORD BY THE LOWER AUTHORITIES OR BY THE LD. D.R IN THE COURSE OF THE HEARING OF THE APPEAL BEFORE US WHICH WOULD IRREFUTABLY EVIDENCE THE PAYMENT OF RS. 50 LAC BY THE ASSES SEE TO THE AFOREMENTIONED PK, THEREFORE, THE ADVERSE INFERENCES DRAWN BY THE LOWER AUTHORITIES IN RESPECT OF THE SAID NOTING IN THE HANDS OF THE ASSESSEE CANNOT BE SUSTAINED AND ARE LIABLE TO BE VACATED. APART THEREFROM, AS THE DATE MENTIONED IN THE IMPU GNED DOCUMENT I.E 20.06.2009 CLEARLY RELATES THE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 8 ITA NOS. 3968, 2950 & 5067/MUM/2014 NOTINGS TO THE SUCCEEDING YEAR I.E A.Y 2010 - 11, THUS ON THE SAID COUNT ALSO NO ADVERSE INFERENCES COULD HAVE BEEN DRAWN IN THE HANDS OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. WE THUS IN TERMS OF OUR A FORESAID OBSERVATIONS DELETE THE ADDITION OF RS. 50 LAC MADE BY THE A.O IN THE HANDS OF THE ASSESSEE. T H E GROUND OF APPEAL NO. 1 IS ALLOWED. 6. THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 3968/MUM/2014 A.Y 2009 - 10 (REVENUE APPEAL) 7. WE SHALL NOW ADVERT TO THE APPEAL FILED BY THE REVENUE FOR A.Y 2009 - 10 . T H E REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THE LD. CIT(A) ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN TREATING THE LEASE RENT RECEIVED AND SERVICE CHARGES AS BUSINESS INCOME. 2. THE LD. CIT(A) ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MAD ON ACCOUNT OF STAMP DUTY AND R EGISTRATION CHARGES OF RS. 2,56,38,317/ - U/S 43B OF THE INCOME - TAX ACT, 1961. 3. THE LD. CIT(A) ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MADE ON ACCOUNT OF VARIOUS EXPENSES AMOUNTING TO RS. 3,54,98,028/ - . 4. THE LD. CIT(A) ER RED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MADE ON ACCOUNT OF EXHIBITION EXPENSES OF RS. 4,61,243/ - . 5 THE LD. CIT(A) ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MADE ON ACCOUNT OF BROKERAGE EXPENSES OF R S. 1,02,38,913/ - . 6. THE LD. CIT(A) ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MADE ON ACCOUNT OF SALE SCRAP OF RS. 1,05,250/ - AND TRADING SALE OF STEEL OF RS. 22,66,523/ - U/S 68 AS UNEXPLAINED CASH CREDITS. 7. THE LD. CIT(A) ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION MAD ON ACCOUNT OF GROSS RECEIPT FROM THE TRADING ACTIVITY FROM SALE OF STEEL AMOUNTING TO RS. 22,66,523/ - 8. BRIEFLY STATED, THE CORE ISSUE INVOLVED IN THE PRESENT APPEAL PERTAINS TO RECHARACTERI Z ATION OF THE RENTAL INCOME AND SERVICE CHARGES RECEIVED BY THE ASSESSEE JV AND SHOWN BY IT UNDER THE HEAD BUSINESS INCOME, AS INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES , RESPECTIVELY, BY THE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 9 ITA NOS. 3968, 2950 & 5067/MUM/2014 A.O . THE GENESIS OF THE ISSU E UNDER CONSIDERATION IS THAT A N AGREEMENT TO DEVELOP, D ATED 18.03.2012 WAS ENTERED INTO BETWEEN MAHARASHTRA STATE ROAD TRANSPORT CORPORATION (FOR SHORT MSRTC ) AND M/S SMC INFRASTRUCTURE PVT. LTD., WHEREIN THE LATTER WAS GRANTED DEVELOPMENT RIGHTS FO R THE CONSTRUCTION OF A BUS STATION AND A COMMERCIAL COMPLEX ALONG WITH NECESSARY INFRASTRUCTURE ON A PORTION OF LAND SITUATED AT THE JUNCTION OF LBS MARG AND POKHRAN ROAD NO. 1, THANE. AS PER THE SAID AGREEMENT M/S SMC INFRASTRUCTURE PVT. LTD. WAS TO DEVELOP THIS LAND BY CONSTRUCTING AT ITS OWN COST AND EXPENSE THE BUS STATION BUILDING AS WELL AS INFRASTRUCTURE FOR MSRTC , AND IN CONSIDERATION WAS TO BE AWARDED THE RIGHT TO CONSTRUCT A CO MMERCIAL COMPLEX BUILDING AND TO LEASE OUT THE SAME TO THE PROSPECTIVE LESSEES FOR A PERIOD OF 30 YEARS . M/S SMC INFRASTRUCTURE PVT. LTD. IN TERMS OF THE AGREEMENT CONSTRUCTED THE BUS STATION BUILDING. SUBSEQUENTLY, M/S SMC INFRASTRUCTURE PVT. LTD. ENTERED INTO A JOINT VENTURE A GREEMENT (FOR SHORT J.V AGREEMENT) , DATED 30.04.2006 WITH M/S ARNAV PROPERTIES PVT. LTD , WHICH SPECIFIED THAT THE PROJECT OF CONSTRUCTION AND DEVELOPMENT OF THE COMMERCIAL COMPLEX BUILDING WOULD BE EXECUTED AND CARRIED OUT BY THE SAID JOINT VENTURE UNDER THE NAME OF AKRUTI SMC , J.V I.E THE ASSESSEE . THE SAID J.V AGREEMENT BETWEEN THE ASSESSEE AND M/S ARNAV PROPERTIES PVT. LTD. WAS RATIFIED BY MSRTC . IN SUM AND SUBSTANCE, THE ASSESSEE I.E AKRUTI SMC , J.V CAME INTO BEING FOR THE EXP RESS PURPOSE OF CONSTRUCTION AND COMMERCIAL EXPLOITATION OF THE COMMERCIAL COMPLEX THAT WAS TO BE BUILT BY IT. AS PER THE TERMS OF THE A GREEMENT TO DEVELOP , DATED 18.03.2012 BETWEEN MSRTC AND M/S SMC INFRASTRUCTURE PVT. LTD. , THE DEVELOPER AFTER CONSTRUC TING THE BUS STATION BUILDING AND THE COMMERCIAL COMPLEX ALONGWITH THE REQUIRED INFRASTRUCTURE WAS TO HAND OVER THE SAME TO MSRTC FREE OF COST WITHIN 30 MONTHS OF THE DATE OF THE NOTIFICATION OF AWARD. AS PER THE A GREEMENT TO DEVELOP THE OWNERSHIP OF THE PROPERTY DEVELOPED BY SMC/AKRUTI WOULD CONTINUE TO REMAIN VESTED WITH MSRTC, AS LESSOR, AND THE DEVELOPER, WHO THOUGH WAS ENTITLED TO LEASE THE COMMERCIAL SPACE DEVELOPED FOR A PERIOD OF 30 YEARS , WAS HOWEVER IN NO WAY TO BE CONSTRUED AS THE OWNER OF EITHER THE LAND OR THE BUILDING. APART THEREFROM, THE EXPLOITATION OF THE COMMERCIAL COMPLEX DEVELOPED BY THE DEVELOPER BY LEASING THE SAME AND ENJOYING THE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 10 ITA NOS. 3968, 2950 & 5067/MUM/2014 LEASE INCOME WAS FOR A PERIOD OF 30 YEARS , AFTER WHICH THE LES SEE/SUB - LESSEE WERE TO HAND OVER THE PEACEFUL AND VACANT POSSESSION OF THE PREMISES IN GOOD WORKING CONDITION TO THE LESSOR VIZ. MSRTC. IN ESSENCE, WHILE FOR THE OWNER SHIP OF THE LAND AS WELL AS THE COMMERCIAL SPACE DEVELOPED ON THE SAME REMAINED VESTED WI TH THE LESSOR VIZ. MSRTC, WHILE FOR THE DEVELOPER VIZ. AKRUTI SMC J.V WHICH HAD CAME INTO BEING FOR THE EXPRESS PURPOSE OF CONSTRUCTION AND COMMERCIAL EXPLOITATION OF THE COMMERCIAL COMPLEX BUILT BY IT WAS VESTED WITH THE LIMITED RIGHTS OF LEASING THE COMM ERCIAL SPACE DEVELOPED BY IT FOR A PERIOD OF 30 YEARS, AFTER EXPIRY OF WHICH PERIOD THE PEACEFUL AND VACANT POSSESSION OF THE PREMISES WAS TO BE DELIVERED TO THE LESSOR VIZ. MSRTC. 9. WE HAVE PERUSED THE RELEVANT CLAUSES OF THE A GREEMENT TO DEVELOP, DAT ED 18.03.2012 THAT WAS ENTERED INTO BETWEEN MSRTC AND M/S SMC INFRASTRUCTURE PVT. LTD. AS OBSERVED BY US HEREINABOVE, IT IS DISCERNIBLE FROM THE AGREEMENT THAT THE LESSOR VIZ. MSRTC WOULD CONTINUE TO BE THE OWNER OF BOTH THE LAND AND THE COMMERCIAL SPACE D EVELOPED ON IT BY THE DEVELOPER, WHILE FOR THE DEVELOPER WOULD REMAIN VESTED WITH THE LIMITED RIGHT TO LEASE THE COMMERCIAL SPACE DEVELOPED FOR A LIMITED PERIOD OF 30 YEARS. AFTER THE EXPIRY OF THE PERIOD OF 30 YEARS THE LESSEE/SUB - LESSEE WERE TO DELIVER T HE PEACEFUL AND VACANT POSSESSION OF THE PREMISES IN GOOD CONDITION TO THE LESSOR VIZ. MSRTC. WE HAVE DELIBERATED AT LENGTH ON THE OBSERVATIONS OF THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION AND ARE PERSUADED TO SUBSCRIBE TO HIS VIEW THAT THE LE ASE INCOME ENJOYED BY THE ASSESSEE J.V BY COMMERCIALLY EXPLOITING THE COMMERCIAL SPACE DEVELOPED BY IT FOR A PERIOD OF 30 YEARS WAS RIGHTLY SHOWN BY IT AS ITS BUSINESS INCOME. ON A PERUSAL OF THE FACTS , WE FIND THAT THE ASSESSEE VIZ. AKRUTI SMC , J.V WAS NOT THE OWNER OF THE COMMERCIAL COMPLEX BUT AFTER CONSTRUCTING THE MSRTC PROJECT AT ITS OWN COST WAS COLLECTING THE RENT /LEASE IN LIEU OF THE TERMS OF THE AGREEMENT TO DEVELOP , WHICH ALLOWED IT TO COMMERCIALLY EXPLOIT THE SAID PREMISES FOR A PERIOD OF 30 YEARS . THE AFORESAID FACTS ARE CLEARLY DISCERNIBLE FROM A PERUSAL OF CLAUSE 28.1 OF THE A GREEMENT TO DEVELOP, DATED 18.03.2012. AS PER THE SAID CLAUSE THE DEVELOPER WAS TO COMPLETE THE PROJECT AT ITS OWN COST, AND IN M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 11 ITA NOS. 3968, 2950 & 5067/MUM/2014 LIEU THEREOF IT WAS ENTITLED T O LEASE THE COMMERCIAL SPACE SO DEVELOPED BY IT , SUBJECT TO THE PROVISION THAT T HE TITLE OF THE LAND AND THE BUILDING THEREON SHALL ALWAYS REMAIN WITH THE LESSOR VIZ. MSRTC. WE ARE OF A STRONG CONVICTION THAT MERE ENJOYMENT OF THE RENT/LEASE BY THE DEVELOP ER SAN THE OWNERSHIP OF THE PROPERTY VIZ. COMMERCIAL COMPLEX DEVELOPED BY IT COULD NOT HAVE BEEN BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY . AS PER SEC. 22 OF THE I.T ACT, IT IS ONLY WHERE THE ASSESSEE IS THE OWNER OF THE PROPERTY THAT TH E ANNUAL LETTABLE VALUE OF THE SAME CAN BE BROUGHT TO TAX IN HIS HANDS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE FIND THAT THE ASSESSEE DEVELOPER VIZ. AKRUTI SMC J.V WHO IS ONLY IN RECEIPT OF THE RENT/LEASE IN TERMS OF THE A GREEMENT TO DEVELOP , D ATED 18.03.2012 IN LIEU OF CONSIDERATION FOR CONSTRUCTING THE PROJECT FOR MSRTC AT ITS OWN COST DOES NOT FIT IN THE DEFINITION OF THE OWNER AS CONTEMPLATED IN SEC. 27 OF THE I.T ACT. W E THUS ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE WAS NOT THE OWN ER OF THE PROPERTY UNDER CONSIDERATION, THEREFORE, THE RENT/LEASE RECEIVED THEREFROM COULD NOT HAVE BEEN ASSESSED IN ITS HANDS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE SHALL NOW ADVERT TO THE ASPECT AS TO WHETHER THE ASSESSEE WAS RIGHT IN LAW AND THE FACTS OF THE CASE IN SUBJECTING THE RENT/LEASE INCOME TO TAX AS ITS BUSINESS INCOME. A S OBSERVED BY US HEREINABOVE, THE ASSESSEE VIZ. AKRUTI SMC, J.V HAD CAME INTO BEING AS PER THE JOINT VENTURE AGREEMENT , DATED 30.04.2006 FOR THE EXPRESS PURPOSE OF CONSTRUCTION AND COMMERCIAL EXPLOITATION OF THE COMMERCIAL COMPLEX BUILT BY IT FOR MSRTC. WE ARE OF THE CONSIDERED VIEW THAT AS THE A GREEMENT TO DEVELOP, DATED 18.03.2012 WHICH FORMED THE FOUNDATION FOR THE CONSTRUCTION AND SUBSEQUENT LEASING OUT OF THE COMMERCIAL COMPLEX CLEARLY DEMONSTRATES THAT THE SAID ACTIVITY WAS ENTERED INTO BY THE ASSESSEE AS A PART AND PARCEL OF THE BUSINESS FOR WHICH THE JOINT VENTURE VIZ. AKRUTI SMC, J.V WAS FORMED , THUS THE RENT/LEASE RECEIVED BY THE ASSESSEE PURSUANT TO EXPLO ITATION OF THE COMMERCIAL COMPLEX CONSTRUCTED BY IT FOR MSRTC WAS RIGHTLY SHOWN BY IT AS ITS BUSINESS INCOME. 10. WE SHALL NOW ADVERT TO THE ASPECT THAT AS TO WHETHER THE CIT(A) WAS RIGHT IN LAW AND FACTS OF THE CASE IN SUBSCRIBING TO THE CLAIM OF THE A SSESSEE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 12 ITA NOS. 3968, 2950 & 5067/MUM/2014 THAT S ERVICE CHARGES RECEIVED FOR THE FACILITIES AND AMENITIES PROVIDED TO THE LESSEES OF THE COMMERCIAL COMPLEX WERE LIABLE TO BE ASSESSED AS ITS BUSINESS INCOME , AND HAD WRONGLY BEEN BROUGHT TO TAX BY THE A.O UNDER THE HEAD INCOME FROM OTHER SOURCES. ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES IT EMERGES THAT THE ASSESSEE HAD ENTERED INTO TWO SEPARATE AGREEMENTS WITH THE LESSEES VIZ. (I). LEAVE AND LICENSE AGREEMENT; AND (II). FACILITIES AND AMENITIES AGREEMENT. AS PER THE FACILITIES AND AMENITIES AGREEMENT, THE ASSESSEE WAS TO PROVIDE MULTIPLE SERVICES/AMENITIES VIZ. (I) CONNECTIVITY; (II). D IESEL GENERATOR BACK - UP; (III). INSURANCE; (IV). GENERAL MAINTENANCE AND MAINTENANCE FOR FIRE DETECTION SYSTEM; (V). SECURITY AND HOUSE KEEPING; AND (VI) MAINTENANCE OF LIFTS IN THE COMPLEX. APART THEREFROM, THE ASSESSEE HAD ALSO UNDERTAKEN THE RESPONSIBILITY FOR PUTTING UP SIGNAGE, MAINTAINING THE ELECTRICAL, PLUMBING, SEWAGE TREATMENT AND PUMPING SYSTEMS ETC. WE FIND THAT TWO ISSUES HAD WEIGHED IN THE MIND OF THE A.O WHILE DISLODGING THE AFORESAID CLAIM OF THE ASSESSEE AND BRINGING THE RECEIPTS TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES VIZ. (I). THAT THOUGH THE ASSESSEE IN THE FACILITIES AND AMENITIES AGREEMENT WITH THE LESSEES HAD INTER ALIA AGREED TO PROVIDE DIESEL GENERATOR BACKUP, HOWEVER A PERUSAL OF THE FIXED ASSET SCHEDULE OF THE ASSESSEE DID NOT REVEAL ANY DIESEL GENERATOR SET; AND (II). THOUGH THE ASSESSEE IN THE FACILITIES AND AMENITIES AGREEMENT WITH THE LESSEES HAD INTER ALIA AGREED TO PROVIDE SECURITY SERVICES, HOWEVER NO SECURITY SERVICE CHARGES PAID BY THE ASSESSEE WERE DISCERNIBLE FROM ITS FINAL ACCOUNTS. IN SUM AND SUBSTANCE, THE A.O HAD AS A MATTER OF FACT DOUBTED THE VERY AUTHENTICITY OF THE FACILITIES AND AMENITIES AGRE EMENT. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O HAD ASSESSED THE SERVICE CHARGES TO TAX AS THE INCOME OF THE ASSESSEE FROM OTHER SOURCES. 11. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVE S TO SUBSCRIBE TO THE VIEW TAKEN BY THE A.O. ADMITTEDLY, THE SERVICES WHICH THE ASSESSEE HAD AGREED TO PROVIDE TO THE LESSEES WERE INEXTRICABLY INTERWOVEN OR RATHER INTERLINKED WITH THE LEASING OF THE COMMERCIAL SPACE AND WERE CLEARLY INSEPARABLE FROM THE LEASING OF THE PROPERTY ITSELF. RATHER, IT WAS THE CLAIM OF THE ASSESSEE THAT THE SERVICE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 13 ITA NOS. 3968, 2950 & 5067/MUM/2014 CHARGES WERE RECEIVABLE ONLY AS A CONSEQUENCE OF THE COMMERCIAL EXPLOITATION OF THE COMPLEX. IN OTHER WORDS, THE COMPOSITE SERVICES PROVIDED BY THE ASSESSEE COULD NOT HAVE BEEN ENJOYED IN ISOLATION AND WERE RATHER INEXTRICABLY LINKED WITH THE LEASING OF THE PROPERTY. INSOFAR , THE ADVERSE INFERENCES THAT HAD BEEN DRAWN BY THE A.O AS REGARDS THE AUTHENTICITY OF THE FACILITIES AND AMENITIES AGREEMENT, THE SAME DOES NOT FI ND FAVOUR WITH US. IN OUR CONSIDERED VIEW THE A.O MERELY ON THE BASIS THAT THE ASSESSEE DID NOT OWN A DIESEL GENERATOR SET AND NO SERVICE CHARGES STOOD DEBITED IN ITS PROFIT & LOSS ACCOUNT, HAD HUSHED THROUGH THE MATTER AND WITHOUT MAKING ANY FURTHER VERIF ICATIONS AS REGARDS THE SERVICES THAT WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN RENDERED TO THE LESSE E S HAD DRAW N ADVERSE INFERENCES AS REGARDS THE SAME ON THE BASIS OF PREMATURE OBSERVATIONS. IN FACT, THE ASSESSEE HAD SUBMITTED BEFORE THE CIT(A) THAT IN O RDER TO PROVIDE THE FACILITY OF DIESEL GENERATOR BACK UP, IT HAD HIRED A DIESEL GENERATOR SET DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE IN ORDER TO FORTIFY ITS AFORESAID CLAIM HAD PLACED ON HIS RECORD THE COPY OF THE LEDGER ACCOUNT FOR THE EXPENSES INCURRED UNDER THE HEAD HIRING OF DG SET, WHEREIN EXPENSES OF RS. 5,49,895/ - ON THE SAID COUNT STOOD DEBITED. BE THAT AS IT MAY, WE ARE OF THE CONSIDERED VIEW THAT THE SERVICE CHARGES OF RS. 2,09,80,741/ - RECEIVED BY THE ASSESSEE FOR PROVIDING FACILIT IES AND AMENITIES TO THE LESSEES ARE INEXTRICABLY INTERWOVEN WITH THE LEASING OF THE COMMERCIAL PROPERTY ITSELF. AS OBSERVED BY US HEREINABOVE, THE ASSESSEE HAD CAME INTO BEING FOR THE EXPRESS PURPOSE OF CONSTRUCTION AND COMMERCIAL EXPLOITATION OF THE COMM ERCIAL COMPLEX BUILT BY IT . WE HAVE HEREINABOVE CONCLUDED THAT THE LEASE INCOME RECEIVED BY THE ASSESSEE, KEEPING IN VIEW THE NATURE OF RECEIPT S AND THE BUSINESS OF THE ASSESSEE WAS LIABLE TO BE ASSESSED AS ITS BUSINESS INCOME. IN OUR CONSIDERED VIEW, AS THE SERVICE CHARGES RECEIVED BY THE ASSESSEE IN LIEU OF PROVIDING FACILITIES AND AMENITIES TO THE LESSEES ARE INEXTRICABLY INTERWOVEN AND RATHER INSEPARABLE FROM THE COMMERCIAL EXPLOITATION OF THE PROPERTY BY THE LESSEES, THUS THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX UNDER THE RESIDUAL HEAD OF INCOME VIZ. OTHER SOURCES, AND HAD RIGHTLY BEEN SHOWN BY THE ASSESSEE AS ITS BUSINESS INCOME . BEFORE PARTING, WE MAY HEREIN OBSERVE THAT THE JUDGMENT OF THE HONBLE SUPREME M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 14 ITA NOS. 3968, 2950 & 5067/MUM/2014 COURT IN THE CASE OF RAJ DADARKAR & ASSOCIATES VS. ACIT (2017) 81 TAXMANN.COM 193 (SC) AS HAD BEEN RELIED UPON THE LD. D.R, BEING DISTINGUISHABLE ON FACTS WOULD THUS NOT ASSIST THE CASE OF THE REVENUE. IN THE CASE BEFORE THE HONBLE A PEX COURT THE ASSESSEE HAD ACQ UIRED LEASEHOLD RIGHTS IN THE LAND FROM THE MUNICIPAL CORPORATION OF GREATER MUMBAI FOR A PERIOD OF MORE THAN 12 YEARS. SUBSEQUENTLY, THE ASSESSEE HAD CONSTRUCTED VARIOUS SHOPS AND STALLS ON THE SAID LAND AND SUB - LICENSED THE SAME TO VARIOUS PERSONS. THE A SSESSEE HAD CLAIMED THE INCOME GENERATED FROM SUB - LICENSING AS ITS BUSINESS INCOME , WHICH HOWEVER DID NOT FIND FAVOUR WITH THE HONBLE APEX COURT ON TWO GROUNDS VIZ. (I). THE ASSESSEE WHO HAD TAKEN THE LAND ON LEASE FOR A PERIOD IN EXCESS OF 12 YEARS WAS THUS A DEEMED OWNER OF THE PROPERTY UNDER SEC. 27(IIIB) OF THE I.T ACT.; AND (II). THAT THE LETTING OUT OF THE PROPERTY WAS NOT THE BUSINESS OF THE ASSESSEE. IT WAS OBSERVED BY THE HONBLE APEX COURT THAT WHEREVER THER E IS AN INCOME FROM LEASING OUT OF PREMISES AND COLLECTING RENT, NORMALLY SUCH AN INCOME IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY, IN CASE PROVISIONS OF SEC. 22 OF THE I.T ACT ARE SATISFIED WITH THE PRIMARY INGREDIENT THAT THE ASSESSEE IS THE OWNER OF THE SAID BUILDING OR LAND APPURTE NANT THERETO . WE SHALL NOW DELIBERATE ON THE FACTS OF THE CASE BEFORE US IN THE BACKDROP OF THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF RAJ DADARKAR (SUPRA). ADMITTEDLY, IN THE CASE BEFORE US THE ASSESSEE WAS NEITHER THE OWNER OF THE LAND OR THE COMMERCIAL SPACE DEVELOPED ON IT. RATHER, AS OBSERVED BY US AT LENGTH HEREINABOVE, THE ASSESSEE VIZ. AKRUTI SMC, J.V HAVING CONSTRUCTED THE PROJECT FOR MSRTC AT ITS OWN COST WAS AS PER THE TERMS OF THE AGREEMENT TO DEVELOP, DATED 18.03.2012 ONLY VESTED WITH THE RIGHT TO LEASE THE COMMERCIAL SPACE DEVELOPED BY IT FOR A PERIOD OF 30 YEARS, AFTER EXPIRY OF WHICH PERIOD THE LESSEES/SUB - LESSEES WERE TO DELIVER VACANT AND PEACEFUL POSSESSION OF THE PROPERTY TO MSRTC. APART THEREFROM, THOUGH THE ASS ESSEE WAS ENTITLED TO LEASE THE COMMERCIAL SPACE SO DEVELOPED BY IT, HOWEVER THE TITLE OF THE LAND AND THE BUILDING WAS ALWAYS TO REMAIN VESTED WITH THE LESSOR VIZ. MSRTC. IN OUR CONSIDERED VIEW, AS THE ASSESSEE WAS NEITHER THE OWNER OR THE DEEMED OWNER OF THE PROPERTY UNDER CONSIDERATION, HENCE THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT BEING CLEARLY DISTINGUISHABLE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 15 ITA NOS. 3968, 2950 & 5067/MUM/2014 ON FACTS WOULD NOT ASSIST THE CASE OF THE REVENUE. APART THEREFROM, THE ASSESSEE IN THE CASE BEFORE US VIZ. AKRUTI SMC, J.V HAD CAME INTO BEING FOR THE EXPRESS PURPOSE OF CONSTRUCTION AND COMMERCIAL EXPLOITATION OF THE COMMERCIAL COMPLEX BUILT BY IT. IT CAN THUS SAFELY BE CONCLUDED THAT THE ASSESSEE HAD VENTURED INTO CONSTRUCTION OF A COMMERCIAL COMPLEX AND SYSTEMATIC COMMERCIAL EXPLOI TATION OF THE SAME BY LEASING IT ALONGWITH PROVISION OF COMPOSITE SERVICES TO THE LESSEES. WE THUS ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE WAS NOT INTO SIMPLICITER RENTING OF THE PROPERTY, BUT RATHER IN THE BUSINESS OF COMMERCIALLY EXPLOITING THE S AME IN FURTHERANCE OF THE PURPOSE FOR WHICH IT HAD CAME INTO BEING, THUS THE SAME ON THE SAID COUNT ALSO SATISFIE D THE TEST LAID DOWN BY THE HONBLE APEX COURT IN THE AFORESAID CASE OF RAJ DADARKAR (SUPRA) FOR BEING ASSESSED TO TAX AS ITS BUSINESS INCOME . W E THUS IN TERMS OF OUR AFORESAID OBSERVATIONS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT THE INCOME FROM LEASING OF THE PROPERTY AND THE SERVICE CHARGES WERE RIGHTLY CLAIMED BY THE ASSESSEE AS ASSESSABLE TO TAX UNDER THE HEAD BUSINESS IN COME, UPHOLD HIS ORDER TO THE SAID EXTENT. T H E GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE IS DISMISSED. 12. THE LD. D.R IN THE COURSE OF HEARING OF THE APPEAL SUBMITTED THAT THE GROUND OF APPEAL NO. 2 WAS NOT BEING PRESSED. IN THE BACKDROP OF THE AFOR ESAID CONCESSION OF THE LD. D.R THE GROUND OF APPEAL NO. 2 IS DISMISSED AS NOT PRESSED. 13. WE SHALL NOW TAKE UP THE DISALLOWANCE OF VARIOUS EXPENSES OF RS. 3,54,98,28/ - BY THE A.O, WHICH THEREAFTER HAD BEEN DELETED BY THE CIT(A). WE FIND THAT THE SAID EXPENSES VIZ. (I). TEA & COFFEE EXPENSES (RS. 740/ - ); (II). HOUSE KEEPING EXPENSES (RS. 1,95,656/ - ); (III). OFFICE EXPENSES (RS. 112/ - ); (IV) ADVERTISEMENT EXPENSES (RS. 1,59,647/ - ); (V). INSURANC E BUILDING (RS. 81,641/ - ); (VI). REPAIRS & MAINTENANCE (RS. 20,750/ - ) ; (VII). BROKERAGE (RS. 1,02,38,317/ - ) ; (VIII). INTEREST PAID (RS. 18,164/ - ); (IX). PURCHASES (RS. 22,55,910/ - ); AND (X). DEPRECIATION (RS. 2,25,27,271), THEREIN AGGREGATING TO RS. 3,54,98,028/ - WERE DISALLOWED BY THE A.O FOR THE REASON THAT AS T HE ASSESSEE WAS NOT CARRYING OUT ANY BUSINESS ACTIVITIES, THUS THE SAID EXPENSES DEBITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT WERE LIABLE TO M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 16 ITA NOS. 3968, 2950 & 5067/MUM/2014 BE DISALLOWED. ON APPEAL, THE CIT(A) OBSERVED THAT AS THE LEASE INCOME AND SERVICE CHARGES WERE HELD BY HIM AS ASSESSABLE AS THE BUSINESS INCOME OF THE ASSESSEE, THEREFORE, THE SAID DISALLOWANCE MADE BY THE A.O WAS LIABLE TO BE VACATED. WE HAVE DELIBERATED ON THE ISSUE AND ARE PERSUADED TO SUBSCRIBE TO THE VIEW OF THE CIT(A) THAT NOW WHEN THE LEASE INCOME AND SERVICE CHARGES WERE HELD TO BE THE BUSINESS INCOME RECEIVED BY THE ASSESSEE FROM THE COMMERCIAL EXPLOITATION OF THE OF THE COMMERCIAL COMPLEX FOR WHICH JOINT VENTURE VIZ. AKRUTI SMC, J.V WAS FORMED , THUS THE AFORESAID EXPENSES INCURRED BY THE ASSES SEE IN THE COURSE OF ITS SAID BUSINESS WERE TO BE ALLOWED. WE THUS UPHOLD THE OBSERVATIONS OF THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. THE GROUND OF APPEAL NO. 3 RAISED BY THE REVENUE IS DISMISSED. 1 4 . WE SHALL NOW ADVERT TO THE DISALLOWANCE OF EXHIBITION EXPENSES OF RS. 4,61,243/ - BY THE A.O, WHICH THEREAFTER HAD BEEN DELETED BY THE CIT(A). WE FIND THAT THE SAID EXPENSE WAS DISALLOWED BY THE A.O WITHOUT ASSIGNING ANY SPECIFIC REASON, BUT ON THE COUNT TH AT THE ASSESSEE HAD FAILED TO ESTABLISH NECESSARY CORRELATION OR NEXUS OF THE SAME WITH THE EXPENSES WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN INCURRED. ON APPEAL, THE CIT(A) OBSERVED THAT THE EXHIBITION EXPENSES WERE INCURRED (AS PER THE DETAILS FUR NISHED BY THE ASSESSEE) FOR PARTICIPATION IN THE PROPERTY EXHIBITIONS THAT WERE ORGANISED BY THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY, JAIN INTERNATIONAL TRADE ORGANISATION (JITO) ETC. THE CIT(A) OBSERVED THAT AS THE AFORESAID EXPENSES INCURRED BY THE A SSESSEE HAD A CLEAR NEXUS WITH THE BUSINESS OF THE ASSESSEE, THUS THE SAME WERE NOT LIABLE TO BE DISALLOWED. WE HAVE PERUSED THE FACTS IN CONTEXT OF THE ISSUE UNDER CONSIDERATION AND FIND OURSELVES TO BE IN AGREEMENT WITH THE OBSERVATION OF THE CIT(A) THAT AS THE EXPENSES INCURRED BY THE ASSESSEE FOR PARTICIPATION IN THE PROPERTY EXHIBITIONS BEAR A CLEAR NEXUS WITH THE BUSINESS OF THE ASSESSEE , THUS THE SAME WERE ALLOWABLE IN ITS HANDS. WE THUS UPHOLD THE ORDER OF THE CIT(A) IN RESPECT OF THE ISSUE UNDER C ONSIDERATION. THE GROUND OF APPEAL NO. 4 RAISED BY THE REVENUE IS DISMISSED. M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 17 ITA NOS. 3968, 2950 & 5067/MUM/2014 1 5 . WE SHALL NOW DELIBERATE ON THE CLAIM OF THE REVENUE THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF BROKERAGE EXPENSES OF RS. 1,02,38,913/ - MADE BY THE A.O. ON A PERUSAL OF THE ORDER OF THE A.O , IT EMERGES THAT THE SAID EXPENSE WAS DISALLOWED ON TWO GROUNDS VIZ. (I). THAT THE DETAILS PROVIDED BY THE ASSESSEE WERE NOT MATCHING WITH THE EXPENSES CLAIMED IN THE RETURN OF INCOME; AND (II). THAT SINCE THE ASSESSEE HAD N O BUSINESS INCOME, THUS THE SAID EXPENSE WAS LIABLE TO BE DISALLOWED. WE FIND THAT THE OBSERVATION OF THE A.O THAT THE DETAILS PROVIDED BY THE ASSESSEE WERE NOT MATCHING WITH THE EXPENSES CLAIMED IN ITS RETURN OF INCOME HAD RIGHTLY BEEN DISLODGED BY THE CI T(A) BY REFERRING TO THE RECONCILIATION AND THE BIFURCATED DETAILS FILED BY THE ASSESSEE. INSOFAR, THE OBSERVATION OF THE A.O THAT IN THE ABSENCE OF ANY BUSINESS ACTIVITY THE SAID EXPENSE COULD NOT BE ALLOWED, WE ARE OF THE CONSIDERED VIEW THAT THE SAME WO ULD NO LONG HOLD THE GROUND AFTER IT HAS BEEN CONCLUDED THAT THE LEASE INCOME AND THE SERVICE CHARGES RECEIVED BY THE ASSESSEE WERE LIABLE TO BE ASSESSED AS ITS BUSINESS INCOME. WE THUS FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT( A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION, UPHOLD HIS ORDER TO THE SAID EXTENT. THE GROUND OF APPEAL NO. 5 RAISED BY THE REVENUE IS DISMISSED. 1 6 . WE SHALL NOW TAKE UP THE CLAIM OF THE REVENUE THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF SA LE OF SCRAP OF RS. 1,05,250/ - AND SALE OF STEEL OF RS. 22,66,523/ - THAT WAS MADE BY THE A.O. BY TREATING THE SAME AS UNEXPLAINED CASH CREDITS UNDER SEC. 68 OF THE I.T ACT. ON A PERUSAL OF THE ASSESSMENT ORDER , IT EMERGES THAT THE A.O BEING OF THE VIEW THAT AS THE ASSESSEE HAD NO CONSTRUCTION BUSINESS DURING THE YEAR, THEREFORE, THERE WAS NO OCCASION FOR IT TO HAVE RECEIVED AMOUNT FROM SALE OF SCRAP. APART THEREFROM, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE DESPITE SPECIFIC DIR ECTIONS HAD FAILED TO PRODUCE THE DELIVERY DETAILS VIZ. TRANSPORTATION DETAILS , HAMA D I CHARGES PAID ETC . WHICH WOULD HAD SUBSTANTIATE D THAT IT HAD CARRIED OUT TRADING IN STEEL DURING THE YEAR . ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O HELD THE AM OUNT CLAIMED BY THE ASSESSEE FROM SALE OF SCRAP (RS. 1,05,250/ - ) AND INCOME FROM SALE OF STEEL (RS. M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 18 ITA NOS. 3968, 2950 & 5067/MUM/2014 22,66,523/ - ) AS UNEXPLAINED CASH CREDITS UNDER SEC. 68 OF THE I.T ACT. ON APPEAL, IT WAS STATED BY THE ASSESSEE THAT IT HAD EARNED RS. 1,05,250/ - FROM SALE OF SCRAP GENERATED IN THE COURSE OF THE CONSTRUCTION AND DEVELOPMENT WORK , AND AN INCOME OF R S . 22,66,523/ - FROM SALE OF EXCESS UNUSED BUILDING MATERIAL , AND THE SAID AMOUNTS WERE CREDITED AS ANCILLARY INCOME IN ITS PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. IT WAS STATED BY THE ASSESSEE THAT THE COMPL E TE DETAILS OF THE PURCHASE AND SALE OF THE AFORESAID MATERIAL WERE PRODUCED DURING THE COURSE OF THE SCRUTINY PROCEEDINGS BEFORE THE A.O. WE FIND THAT THE CIT(A) HAD OBSERVED THAT AS THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND COMMERCIAL EXPLOITATION OF A COMMERCIAL COMPLEX, THEREFORE, THE ADVERSE INFERENCES DRAWN BY THE A.O FOR DISLODGING THE AFORESAID CLAIM OF THE ASSESSEE COULD NOT BE SUSTAIN ED AND WERE LIABLE TO BE VACATED. WE HAVE DELIBERATED ON THE FACTS OF THE CASE AND ARE PERSUADED TO SUBSCRIBE TO THE OBSERVATIONS OF THE CIT(A) THAT AS IT WAS AN ADMITTED FACT THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN THE BUSINE SS OF CONSTRUCTION, THUS ITS CLAIM OF HAVING GENERATED INCOME FROM SALE OF SCRAP AND INCOME FROM SALE OF EXCESS UNUSED STEEL LYING WITH IT COULD NOT HAVE BEEN SUMMARILY REJECTED BY THE A.O. WE THUS FINDING OURSELVES TO BE IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A), UPHOLD HIS ORDER IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. THE GROUND OF APPEAL NO. 6 & 7 RAISED BY THE REVENUE IS DISMISSED. 1 7 . THE APPEAL OF THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 5067 /MUM/2014 A.Y 20 10 - 1 1 (REVENUE APPEAL) 18. WE SHALL NOW ADVERT TO THE APPEAL FILED BY THE REVENUE FOR A.Y 2010 - 11. THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING EFFECTIVE GROUNDS OF APPEA L : M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 19 ITA NOS. 3968, 2950 & 5067/MUM/2014 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN ALLOWING ASSESSES CLAIM THAT THE INCOME ACCRUED TO THE ASSESSEE FROM THE LETTING OUT THE PROPERTY WAS INCOME FROM BUSINESS OR PROFESSION, IGNORING THE FACT THAT THE DI RECT AND IMMEDIATE NEXUS OF RECEIPTS OF THE ASSESSEE WAS THE IMMOVABLE PROPERTY AND NOT ANY SYSTEMIC BUSINESS ACTIVITY. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN IGNORING THE RATIO LAID DOWN BY THE HONBLE APEX CO URT IN THE CASE OF SHAMBHU INVESTMENT (263 ITR 143)(SC). 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN RELYING UPON THE DECISION OF THE CIT(A) IN THE CASE OF THE ASSESSEE FOR THE A.Y 2009 - 10 IGNORING THE SETTLED LAW THAT THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX CASES. 19. BRIEFLY STATED, THE ASSESSEE WHICH IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND MAINTENANCE OF COMMERCIAL COMPLEX HAD FILED ITS RETURN OF INCOME FOR A.Y 2010 - 11 ON 15.10.2010, DECLARING TOTAL LOSS AT ( - ) RS. 2,02,79,502/ - . THE RETURN OF INCOME WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE I.T ACT. THE A.O WHILE FRAMING THE ASSESS MENT RECHARACTERIZED THE RENTAL INCOME SHOWN BY THE ASSESSEE AS ITS BUSINESS INCOME , AND BROUGHT THE SAME TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O WORKED OUT THE LOSS IN THE HANDS OF THE ASSE SSEE AT ( - ) RS. 1,48,84,214/ - . 20. AGGRIEVED, THE ASSESSEE ASSAILED THE RECHARACTERISATION OF ITS INCOME BY THE A.O BEFORE THE CIT(A). THE CIT(A) FINDING FAVOUR WITH THE CLAIM OF THE ASSESSEE THAT THE RENTAL INCOME RECEIVED BY IT WAS RIGHTLY SHOWN AS ITS BUSINESS INCOME, THEREIN ALLOWED THE APPEAL. 21. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT AS THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL REMAIN THE SAME AS WERE THERE BEFORE US WHILE DISPOSING OFF THE GROUND OF APPEAL NO. 1 OF THE APPEAL FILED BY THE REVENUE FOR THE IMMEDIATELY PRECEDING YEAR VIZ. A.Y 2009 - 10 IN ITA NO. 3968/MUM/2014, THEREFORE, OUR ORDER PASSED WHILE DISPOSING OFF THE GROUND OF APPEAL NO. 1 OF THE REVENUES APPEAL FOR A.Y 2009 - 10 IN ITA NO. 3968/MUM/2014 SHALL APPLY MUTATIS MUTA NDIS FOR ADJUDICATION OF THE M/S AKRUTI SMC JOINT VENTURE VS. ACIT 20(1), MUMBAI A.Y 2009 - 10 AND A.Y 2010 - 11 ACIT 20(1), MUMBAI VS M/S AKRUTI SMC JOINT VENTURE, MUMBAI A.Y 2009 - 10 20 ITA NOS. 3968, 2950 & 5067/MUM/2014 GROUNDS OF APPEAL NOS. 1 TO 3 OF THE PRESENT APPEAL. RESULTANTLY, THE GROUNDS OF APPEAL NOS. 1 TO 3 RAISED BY THE REVENUE ARE DISMISSED. 22. THE APPEAL FILED BY THE REVENUE IS DISMISSED. 23. RESULTANTLY, THE APPEAL FILED BY TH E ASSESSEE FOR A.Y 2009 - 10 VIZ. ITA NO. 2950/MUM/2014 IS ALLOWED, WHILE FOR THE APPEALS OF THE REVENUE FOR A.YS 2009 - 10 AND 2010 - 11 VIZ. ITA NO. 3968/MUM/2014 AND ITA NO. 5067/MUM/2014 ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN COURT ON 28 . 12.2018 SD/ - SD/ - ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 28.12.2018 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI