KRUPA DOSHI, MUMBAI V. ACIT 21(1), MUMBAI

ITA 2983/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3932 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 30-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2013
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ./ ITA NO. 2983 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 9 - 10 ) KRUPA D DOS HI, 402, ASHA NIKETAN, 45, BAPTISTA ROAD, VILE PARLE (W), MUMBAI - 400056 VS. ACIT - 21(1), MUMBAI ./ ./ PAN/GIR NO. : A DXPD 4725 D ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIJAY MEH TA /REVENUE BY : MS. ARJU GARODIA / DATE OF HEARING : 10 / 0 5 /201 6 / DATE OF PRONOUNCEMENT 10/05 /201 6 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAIN ST THE ORDER OF CIT(A) - MUMBAI, DATED 6 - 12 - 2012 , FOR THE ASSESSMENT YEAR 200 9 - 10, WHEREIN THE ASSESSEE IS AGGRIEVED FOR TREATING INCOME FROM HOUSE PROPERTY AS INCOME FROM OTHER SOURCES IN RESPECT OF AMENITIES PROVIDED BY THE ASSESSEE . 2. RIVAL CONTENTIONS H AVE BEEN HEARD AND RECORD PERUSED. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS LET OUT OFFICE PREMISES AT GR. FLOOR, SAARATHI BUILDING, HANUMAN ROAD, VILE PARLE (E), MUMBAI. THE ASSESSEE HAD ENTERED INTO TWO SEPARATE AGREEMENTS I.E. ONE FOR LICENSE FEE AND OTHER FOR AMENITIES, CHARGES RECEIVABLE. THE TOTAL RENT PLUS AMENITIES CHARGES RECEIVED BY THE ASSESSEE WAS RS .86,25,000/ - OUT OF WHICH RS. 36 ITA NO. 2983/13 2 LAKHS WAS RECEIVED AS PER THE AMENITIES AGREEMENT IN RESPECT OF THE AMENITIES PROVIDED AS PER ANNEXURE 'A' O F THE - A MENITIES AGREEMENT DATED 05 - 06 - 2006. AMENITIES PROVIDED AS MENTIONED I N ANNEXURE 'A' OF THE AMENITIES AGREEMENT ARE AS UNDER : - 1. TO HELP IN OBTAINING ALL THE NECESSARY LICENSES AND THE PREMISES FROM BMC AND OTHER GOVERNMENT AUTHORITIES 2. LI AISON WITH LOCAL GOVERNMENT AUTHORITIES, BMC FOR SMO OTH RUNNING OF BUSINESS OF USER. 3. LIAISON WITH - ELECTRICAL & WATER AUTHORITIES FOR UNINTERRUPTED AND. SMOOTH SUPPLY OF WATER AND ELECTRICITY 4. PERFORM AND CARRY OUT THE ALL THE ABOVE LISTED WORK I N A GOOD AND WORKMANLIKE MANNER AND TO THE BEST OF AMENITIES PROVIDER'S ABILITIES 5. SEPARATE ENTRANCE GATE 6 . OPEN PARKING PROVISI ON ' LOOKING TO THE NATURE OF THE AMENITIES MENTIONED AS PER ANNEXURE A OF THE AMENITY AGREEMENT, THE AO ASKED THE ASS ESSEE TO EXPLAIN WHY THE RECEIPTS AS PER AMENITIES AGREEMENT MAY N OT BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY. IN RESPONSE TO THE SAME THE ASSESSEE STATED THAT THE PREMISES COULD NOT BE LET OUT WITHOUT THE AME NITIES AND HENCE THE RECEIPTS AS PER AMENITY AGREEMENT CANNOT BE TREATED AS INCOME FROM OTHER SOURCES. HOWEVER, THE AO DID NOT AGREE TO THE CONTENTIONS OF THE ASSESSEE ON THE GROUNDS THAT THE RECEIPTS AS PER AMENITIES WERE SPECIFICALLY FOR PROVIDING CERTAI N SERVICES TO THE TENANT BUT NOT FROM LETTING OUT OF ANY PREMISES AND HENCE THE RECEIPTS AS PER AMENITIES AGREEMENT WAS NOT ASSESSABLE UNDER HOUSE ITA NO. 2983/13 3 PROPERTY. ACCORDINGLY HE TREATED SUM OF RS.36 LAKHS AS INCOME FROM OTHE R SOURCES . 3. BY THE IMPUGNED ORDER TH E CIT(A) CONFIRMED THE ACTION OF AO, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND THAT THE NATURE OF AMENITIES SO PROVIDED BY ASSESS EE FLOWS OUT OF THE RENT AGREEMENT ITSELF. THAT ALL AMENITIES ARE INTEGRAL PART OF THE PROPERTY RENTED. JUST BECAUSE THERE IS SEPARATE AGREEMENT, IT DOES NOT LEAD TO THE CONCLUSION THAT IT IS TO BE ASSESSEE SEPARATELY AS INCOME FROM BUSINESS. IT I S NOT UNCO MMON TO PROVIDE THESE AMENITIES ALONG WITH THE RENTED PREMISES, AND IT IS NOT THE CASE THAT TH ESE ARE PROVIDED AS PER SPECIFIC REQUIREMENTS OF THE TENANTS BUSINESS. KEEPING IN VIEW THE NATURE OF THE RENT AGREEMENT, THE AMENITIES PROVIDED BY THE ASSESSEE A RE TO EXPLOIT THE PROPERTY IN MOST PROFITABLE MANNER, AND AS THE AGREEMENT ITSELF STATES FOR THE SMOOTH RUNNING OF THE BUSI N ESS OF THE USER. FROM THE PLAIN READING IT IS VERY OBVIOUS THAT THE AMENITIES TO BE PROVIDED ARE VERY BASIC AND WITHOUT WHICH IT WOU LD BE IMPOSSIBLE TO USE THE PRE MI S ES, WHICH ARE, SUPPLY OF CONTIN U OUS WATER AND ELECTRICAL SUPPLY, PARKING, ENTRANCE AND LIAISIONING FOR THE SAME. 5. THE ITAT MUMBAI BENCH IN THE CASE OF NARENDRAPAL GUPTA, ITA NO. 3269/MUM/2013 , ORDER DATED 3 - 2 - 2016, HELD A S UNDER : - 6. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. IT IS A WELL SETTLED PROPOSITION OF LAW THAT SUBSTANCE WILL PREVAIL OVER THE FORM. WE HAVE NOTICED THAT THE ASSESSEE HAS ENTERED I NTO TWO SEPARATE AGREEMENTS WHILE LEASING OUT THE PREMISES, VIZ., ONE FOR LEASING OUT THE PREMISES AND ANOTHER ONE FOR LEASING OUT FURNITURE AND FIXTURES. ITA NO. 2983/13 4 THE LEASE AGREEMENT ENTERED FOR LEASING OUT THE FURNITURE AND FIXTURES CONTAINS A LIST OF ITEMS COVER ED BY IT. A PERUSAL OF THE SAID LIST WOULD SHOW THAT THEY ARE AMENITIES ATTACHED WITH THE BUILDING ONLY. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE LIST OF ITEMS WHICH HAVE BEEN NAMED AS FURNITURE AND FIXTURES: I. TWO LOCKABLE SINGLE WARDROBES IN EVERY ROOM; II. MODULAR KITCHEN IN KITCHEN; III. WATER PURIFIER (WITH 24 MONTHS WARRANTY); IV. SLIDING COVERING NICHE AREAS IN EACH BEDROOM; V. INTERCOM SYSTEM; VI. INSTALLATION OF SAFETY GRILLS ON ALL WINDOWS IN THE SAID BUILDING; VII. PROVISION OF ONE - LITER HOT WATER INSTANT GEYSERIN BATHROOMS (WITH 24 MONTHS WARRANTY); VIII.TUBE LIGHTS AND FANS; IX. PLASTER OF PARIS WORK DONE IN THE FLATS; X. STILT CAR PARKING SPACES : 9 (NINE )NOS.; XI. OPEN CAR PARKING SPACES: 60 (SIXTY) NOS. XII. 24 HRS S ECURITY GUARDS PRESENCE AT THE COMPOUNDS MAIN GATE, AT THE GROUND FLOOR LOBBY ENTRANCE THE BUILDING AND IN THE CAR PARKING AREAS. THERE WOULD BE 3 GUARDS OF M/S TRIGLTD WORKING 8 HOURS SHIFT EACH AT THE ENTRANCE OF LOBBY OF THE BUILDING. A CAREFUL P ERUSAL OF THE DETAILS GIVEN ABOVE WOULD SHOW THAT THEY ARE IN THE NATURE OF AMENITIES ONLY AND HENCE, IN OUR VIEW THE DECISION RENDERED BY THE HONBLE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF G RAGHURAM (SUPRA) SHALL SQUARELY APPLY TO THE FACTS OF TH E PRESENT CASE. IN ADDITION TO THE ABOVE, WE NOTICE THAT THE CO - ORDINATE BENCHES OF THE TRIBUNAL HAS ALSO TAKEN IDENTICAL VIEWS IN THE CASE OF UNIQUE CONSTRUCTION AND DEVELOPERS (SUPRA) AND ALSO IN THE CASE OF MRS. MANJU GUPTA (SUPRA). ACCORDINGLY, WE ARE OF THE VIEW THAT THE LEASE RENT RECEIVED BY THE ASSESSEE FOR THE BUILDING AS WELL AS FURNITURE AND FIXTURES, WHICH ARE IN THE FORM OF AMENITIES ONLY, SHOULD BE ASSESSED AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 7. ACCORDINGLY, WE SET ASIDE TH E ORDER OF LD. CIT(A) AND DIRECT THE AO TO ASSESS THE ENTIRE LEASE RENTAL INCOME RECEIVED UNDER BOTH THE AGREEMENTS AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6 SIMILARLY, HON BL E BOMBAY HIGH COURT IN THE CASE OF J.K.INVESTORS (BOM) LTD., 25 TAXMANN.COM 12, HELD THAT WHERE SERVICES CHARGES ARE FOUND TO BE PROFIT UNDER SERVICE AGREEMENT IN RESPECT OF STAIRCASE OF ITA NO. 2983/13 5 BUILDING, LIFT, COMMON EN TRANCE AND WHERE THESE SERVICES WERE NOT SEP ARATELY PROVIDED BUT WENT ALONG WITH OCCUPATION OF PROPERTY, THE AMOUNT RECEIVED AS SERVICE CHARGES WAS A PART OF RENT RECEIVED AND SUBJECTED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 7. AS PER THE TERMS OF THE AGREEMENT DATED 5 - 6 - 2006, PROVIDIN G SUCH AMENITIES, WE FOUND THAT SAME ARE INTEGRAL PART OF THE RENT. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH AND HONBLE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE, WE DO NOT FIND ANY MERIT FOR TAXING THE AMENITIES INCOME AS INCOME FROM O THER SOURCES IN PLACE OF INCOME OFFERED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10 /0 5 / 201 6 . SD/ - ( AMARJIT SINGH ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10 /0 5 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDE R, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPON DENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//