ITO, New Delhi V. M/s Neminath Industries Pvt. Ltd., New Delhi

ITA 2952/DEL/2011

• Counselvise Citation: 295220114 RSA 2011
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE G.D. AGRAWAL, HON'BLE VICE-PRESIDENT AND SHR I RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO.2952/DEL/2011 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, VS. NEMINATH INDUSTRIES PVT.L TD., WARD 13(2), I-G, FIRST FLOOR, BHARAT NGR. NEW DELHI NEW FRIENDS COLONY, NEW DELHI. (PAN: AAACR3132K) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RS NEGI, SR.DR ASSESSEE BY: SHRI RAKESH GUPTA, FCA DATE OF HEARING : 10.01.2012 DATE OF PRONOUNCEMENT : 10.01.2012 ORDER PER RAJPAL YADAV:JUDICIAL MEMBE R THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 24.01.2011 PASSED FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEALS TAKEN BY THE REVENUE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUM ENTATIVE IN NATURE. IN BRIEF, THE GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN ACCEPTING THE CLAIM OF ASSESSEE THAT RENTAL INCOME RECEIVED BY IT IN RESPECT OF SPACE ON THE 8 TH FLOOR OF A COMMERCIAL TOWER (WEST TOWER) ADJACENT TO HOTEL MERIDIAN BELONGING C.J. INTERNATIONAL HOTELS LTD. I S TO BE ASSESSED AS AN 2 INCOME FROM HOUSE PROPERTY AND ASSESSEE IS ENTITLED TO STANDARD DEDUCTION UNDER SEC. 24(A) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED ITS RETURN OF INCOME ELECTRONICALLY ON 14.11.2007 DECLARING A LOS S OF RS.10,69,396. ON SCRUTINY OF THE ACCOUNTS, ASSESSING OFFICER FOUND T HAT THE ASSESSEE HAD ACQUIRED RIGHTS UNDER A SUB-LICENSE AGREEMENT IN TH E SPACE ON THE 8 TH FLOOR OF A COMMERCIAL TOWER (WEST TOWER) ADJACENT TO HOTEL M ERIDIAN BELONGING TO M/S. C.J. INTERNATIONAL HOTELS LTD. IT HAS CLAIMED A DEDUCTION OF RS.12,42,540 BEING 30% OF THE RENTAL INCOME UNDER S EC. 24(A) OF THE ACT. ASSESSING OFFICER HAS HELD THAT THE INCOME EARNED B Y THE ASSESSEE FROM THE ACTIVITY OF SUB-LICENSING, ITS RIGHTS RELATING TO T HE COMMERCIAL SPACE HELD BY IT IS TO BE ASSESSED AS INCOME FROM BUSINESS AND DEDUCTION OF RS.12,42,540 CLAIMED UNDER SEC. 24(A) OF THE ACT IS NOT ADMISSIB LE. 3. ON APPEAL, LEARNED FIRST APPELLATE AUTHORITY HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT HIS PREDECESSOR HAS ACCEPTED THE CLAIM IN ASSESSMENT YEARS 2005-06 AND 2006-07. THE ITAT HAS UPHELD THE ORDER OF THE LEARNED CIT(APPEALS) IN THOSE TWO ASSESSMENT YE ARS. 3 4. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED ON R ECORD COPY OF THE ITATS ORDERS IN ITA NOS.2795/DEL/2009 AND 864/DEL /2010 IN ASSESSMENT YEARS 2005-06 AND 2006-07. IN THESE TWO YEARS, THE ITAT HAS UPHELD THE ORDER OF THE LEARNED CIT(APPEALS) WHEREBY THE CLAIM OF THE ASSESSEE WITH REGARD TO ASSESSMENT OF RENTAL INCOME UNDER THE HEA D INCOME FROM HOSUE- PROPERTY HAS BEEN ACCEPTED. THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE TWO ORDERS OF THE ITAT. ON THE OTHER HAND, LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF THE LEARNED COUNSEL F OR THE ASSESSEE. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPARITY ON FACTS. T HE OBSERVATIONS OF THE ITAT IN ASSESSMENT YEAR 2006-07 READ AS UNDER: 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. BOTH THE COUNSELS FAIRLY AGREED THAT THE ISSUE IS COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESS EES OWN CASE IN ITA NO. 2795 FOR PRECEDING ASSESSMENT YEAR. VIDE O RDER DATED 4.9.2009 THE TRIBUNAL HAD ADJUDICATED THE ISSUE AS UNDER:- 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT IT IS AN ADMITTED FACT OF THE CASE THAT THE ASSESSEE HAS OBTAINED OFFICE PREMISES ON LEASE AND SUB-LET THE SAME AND DERIVED INCOME THEREFROM. IN THE VIEW OF THE 4 AUTHORITIES BELOW, IN ORDER TO DERIVE INCOME FROM H OUSE PROPERTY, THE ASSESSEE HAS TO BE REGISTERED OWNER T HEREOF. IN OUR OPINION THIS VIEW IS NOT SUSTAINABLE ON THE ANV IL OF APEX COURT DECISION DELIVERED IN THE CASE OF C.I.T. VS. PODDAR CEMENT PVT. LTDE. IN 226 ITR 625. FURTHER THE CO NTENTION THAT LETTING OUT OF OFFICE SPACE WHEN NOT REQUIRED CAN B E THE BUSINESS INCOME IS NOT SUSTAINABLE ON THE ANVIL OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SM ARTS (P) LTD. VS. C.I.T (2008) 166 TAXMAN 53 (DELHI). IN TH IS CASE IT WAS HELD THAT WHERE THE ASSESSEE IN OCCUPATION OF RENT ED PREMISES SUB-LET A PORTION THEREOF AND CLAIMED THAT INCOME FROM SUCH SUB-LETTING WAS ASSESSABLE AS BUSINESS INCOME, THE DEPARTMENT WAS JUSTIFIED IN ASSESSING THE SAID INCOME UNDER I NCOME FROM HOUSE PROPERTY, IN VIEW OF THE FACT THAT THE ASSES SEE WAS IN FULL CONTROL IN HIS CAPACITY AS A TENANT, AND HAD EARNED INCOME BY SUB-LETTING OF THE PROPERTY. IN SITUATIONS OF THIS TYPE, THERE IS NOTHING TO SUGGEST THAT OWNERSHIP OF THE PREMISES I S ESSENTIAL FOR LEVYING TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 6.1. ADHERING TO THE DOCTRINE OF THE STARE DECISES, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD. 6. LEARNED CIT(APPEALS) HAS FOLLOWED THE ORDER OF T HE ITAT IN ASSESSMENT YEAR 2005-06. LEARNED DR WAS UNABLE TO P OINT OUT ANY DISTINGUISHING FEATURE IN THIS ASSESSMENT YEAR WHIC H CAN PURSUED US TO TAKE A 5 DIFFERENT OPINION, THEREFORE, RESPECTFULLY FOLLOWIN G THE ORDERS OF THE ITAT IN EARLIER YEARS, WE DO NOT FIND ANY MERIT IN THIS APP EAL. IT IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. SD/- SD/- ( G.D. AGRAWAL ) ( RAJPAL YADAV ) VICE- PRESIDENT JUDICIAL MEMBER DATED: 10/01/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR