ITO, New Delhi V. M/s Raj Syntex Pvt. Ltd., New Delhi

ITA 3009/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3858 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 21-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 26-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAREON
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.3009/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-15(2), NEW DELHI. VS. M/S RAJ SYNTEX PVT.LTD., B-308, 3 RD FLOOR, D-2, SOUTHERN PARK, DISTT.CENTRE, SAKET, NEW DELHI 110 017. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.BANITA DEVI NAREON, SR.DR. RESPONDENT BY : NONE. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 30.4.2009 FOR THE AY 2006-07. 2. THE ONLY GRIEVANCE OF THE REVENUE RELATES TO TRE ATMENT OF RENTAL INCOME AS INCOME FROM BUSINESS & PROFESSION. 3. NOBODY APPEARED ON BEHALF OF THE ASSESSEE INSPIT E OF GIVING THE OPPORTUNITY, THE BENCH THEREFORE DECIDED TO DISPOSE OF THE APPEAL AFTER HEARING THE LEARNED DR AND CONSIDERING MATERIAL PLACED ON RECOR D. 4. FROM THE RECORD, WE FOUND THAT ASSESSEE HAS RENT ED OUT ITS FACTORY BUILDING AT A MONTHLY RENT OF RS.1 LAKH. THE RENTAL INCOME WAS TREATED BY THE ASSESSEE AS INCOME FROM BUSINESS AND PROFESSION AGAINST WHICH I T CLAIMED DEPRECIATION AND ITA-3009/DEL/2009 2 INSURANCE EXPENSES. THE AO FOUND THAT AS PER THE P ROVISIONS OF SECTION 57(II), CLAIM OF DEPRECIATION AND INSURANCE CHARGES IS TO B E ALLOWED ONLY WHEN ASSESSEE LETS OUT ITS PLANT & MACHINERY, FURNITURE ALONGWITH BUILDING AND BUILDING IS NOT SEPARABLE FROM PLANT & MACHINERY, FURNITURE ETC. S INCE THE ASSESSEE HAS ONLY RENTED OUT THE BUILDING, THE PROVISIONS OF SECTION 57(II) WERE HELD TO BE NOT APPLICABLE. BY THE IMPUGNED ORDER, CIT(A) OBSERVED THAT SINCE THE ASSESSEE WAS NOT HAVING ANY INTENTION TO EARN ANY RENTAL INCOME, THEREFORE TEMPORARY LET OUT OF PLANT AND MACHINERY WILL NOT AMOUNT TO EARNING OF A NY RENTAL INCOME. HE DIRECTED THE AO TO TREAT THE RENTAL INCOME AS INCOME FROM BU SINESS AND TO ALLOW DEPRECIATION AND INSURANCE EXPENSES. 5. THE ISSUE WITH REGARD TO TREATMENT OF RENTAL INC OME WHERE THE PREMISES IS LET OUT ON MONTHLY RENT BASIS, IS NO MORE RES-INTEG RA IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVEST MENTS (P) LTD. 263 ITR 143 WHEREIN IT WAS HELD THAT INCOME DERIVED BY THE ASSESSEE BY LETTING OUT PREMISES ON MONTHLY RENT BASIS TO VARIOUS PARTIES A LONGWITH FURNITURE, FIXTURES, AIR CONDITIONERS ETC., FOR BEING USED AS TABLE SPACE AND ALSO PROVIDING COMMON SERVICES LIKE WATCH AND WARD STAFF, ELECTRICITY, WA TER ETC. WITHOUT ANY SEPARATE CHARGES, WAS ASSESSABLE AS INCOME FROM PROPERTY AND NOT AS BUSINESS INCOME. IN THE INSTANT CASE BEFORE US, THE ASSESSEE HAS GIVEN ITS BUILDING ON MONTHLY RENT OF RS.1 LAKH, WHICH IS LIABLE TO BE TAXED AS INCOME FR OM HOUSE PROPERTY AND NOT AS BUSINESS INCOME. EVEN THE CASE LAW DISCUSSED BY TH E CIT(A) IN HIS ORDER IN THE CASE OF VIKRAM COTTON MILLS LTD. 169 ITR 597 IS D ISTINGUISHABLE, INSOFAR AS IN THAT CASE, THE ASSESSEE HAS LET OUT ITS PLANT & MAC HINERY ON HIRE AND THE TRIBUNAL HAS FOUND THAT COMPANY WAS NOT FORMED OUT TO LET OU T ITS PLANT AND MACHINERY ON HIRE AND THE SAME WAS GIVEN ON HIRE DUE TO TEMPORAR Y LULL IN THE BUSINESS. HOWEVER, IN THE INSTANT CASE BEFORE US, THERE WAS N O LETTING OUT OF PLANT AND MACHINERY BUT THE RENTAL INCOME WAS IN RESPECT OF B UILDING, WHICH IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY, WE REVERS E THE ORDER OF THE CIT(A) ITA-3009/DEL/2009 3 AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENTS (P) LTD. (SUPRA), WE UPHOLD THE ACTION OF THE AO. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :31.05.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-3009/DEL/2009 4