J.K. INVESTORS (BOMBAY) LTD, MUMBAI V. DCIT CIR 2(2), MUMBAI

ITA 3104/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49115 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 07-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T T JACOB
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI D. K. AGARWAL, J.M. AND SHRI T.R. SOOD, A.M. I.T.A. NO.: 2731/MUM/2010 ASSESSMENT YEAR : 2006-07 THE DCIT,CENTRAL CIRCLE 2(2), AAYAKAR BHAVAN, ROOM NO. 545, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 020 VS. M/S. J. K. INVESTORS (BOM) LTD. NEW HIND HOUSE, N.M. MARG, BALLARD ESTATE, MUMBAI-400 001 PAN NO: AAACJ2089D (APPELLANT) (RESPONDENT) & I.T.A. NO.: 3104/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. J. K. INVESTORS (BOM) LTD. NEW HIND HOUSE, N.M. MARG, BALLARD ESTATE, MUMBAI-400 001 PAN NO: AAACJ2089D VS. THE DCIT,CENTRAL CIRCLE 2(2), AAYAKAR BHAVAN, ROOM NO. 545, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T. T. JACOB RESPONDENT BY : SHRI HARSH SHAH ORDER PER T.R. SOOD (AM) : THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE R EVENUE AGAINST THE ORDER DATED 12.02.2010 OF COMMISSIONER OF INCOM E TAX (APPEALS)-5, MUMBAI AND RELATES TO THE ASSESSMENT YEAR 2006-07. 2 I.T.A. NO.: 2731/MUM/2010 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS :- 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FA CTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN HOLDING THAT COMPENSATION R ECEIVED BY THE ASSESSEE FOR USE OF AMENITIES AND FACILITIES AT MAHINDRA TOWERS IS ASSESSABLE UNDER THE HEAD INCOME FROM H OUSE PROPERTY AS AGAINST INCOME FROM OTHER SOURCES, AS FOUND BY THE ASSESSING OFFICER. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAD RECEIV ED LEASE RENT AMOUNTING TO RS.41,06,080/- PER MONTH AND SERVICE C HARGES AMOUNTING TO RS.10,26,520/- PER MONTH INRESPECT OF ITS PREMIS ES AT MAHINDRA TOWER, WORLI, MUMBAI. THE RECEIPT OF SERVICE CHARGE WAS ALSO CLAIMED TO BE TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY. IT WAS FURTHER NOTED THAT SERVICE CHARGES WERE FOR PROVIDING COMMO N AMENITIES AND FACILITIES SUCH AS, COMMON ENTRANCE FROM MAIN ROAD LEADING TO THE BUILDING THROUGH THE COMPOUND, STAIRCASES AND LANDI NGS, LIFTS, AIR- CONDITIONING, SUPPLY OF WATER AND ELECTRICITY, DRAI NAGE, SANITATION, HYGIENE, OPEN SPACES IN AND AROUND THE BUILDING, GA RDENS AND SECURITY SERVICES. HE ALSO NOTED THAT IN EARLIER YEARS SUCH CHARGES WERE HELD TO BE TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND ACCORDINGLY, HE SUBJECTED THE INCOME FROM SERVICE CHARGES AS INC OME FROM OTHER SOURCES 4. ON APPEAL, THE LD. CIT(A) DECIDED THE ISSUE VID E PARA 3 WHICH IS AS UNDER :- 3. IT MAY BE STATED HERE THAT SIMILAR ISSUE HAS CO ME FOR ADJUDICATION BEFORE VARIOUS APPELLATE AUTHORITIES I N PAST YEARS IN WHICH BOTH THE CIT(A) AND HON'BLE ITAT HAV E HELD THE ISSUE IN FAVROU OF THE APPELLANT, A FACT WHICH IS ALSO ADMITTED IN THE BODY OF ASSESSMENT ORDER. THE HON'B LE ITAT VIDE ORDER IN ITA NO.6967 & 6623/M/03 FOR ASSESSMEN T YEAR 2000-01 DATED 5.1.2007 AND ITA NO.9545/MUM/200 4 3 FOR ASSESSMENT YEAR 2001-02 DATED 10.12.2007 AND AL SO ITA NO.822/MUM/07 FOR ASSESSMENT YEAR 2002-03 DATED 11.12.2008 HAS HELD THAT THE CIT(A) WAS JUSTIFIED I N TAXING SUCH SERVICE CHARGES AS ASSESSABLE U/S. 22 OF THE A CT. RESPECTFULLY FOLLOWING THE SAID ORDER, ADDITION MAD E BY THE AO IS DELETED. 4. BEFORE US THE LD. DR RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT IN THE EARLIER YEARS THIS ISSUE HAS BEEN DECID ED IN FAVOUR OF THE ASSESSEE. HE FILED COPIES OF THE ORDER OF THE TRIBU NAL FOR A.Y.S 2000-01, 2001-02, 2002-03, 2004-05 AND 2005-06. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT FOR LAST MANY YEARS THE TRIBUNAL HAS BEEN HOLDING THAT SUCH SERVI CE CHARGES ARE ALSO TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPE RTY. IN A.Y. 2005- 06 IN ITA NO.392/M/2010 IT WAS OBSERVED VIDE PARA 5 WHICH IS AS UNDER:- 5. WE FIND THAT, AS THE CIT(A) HIMSELF HAS NOTED IN THE IMPUGNED ORDER, THE ISSUE IN THIS APPEAL IS SQUAREL Y COVERED BY TRIBUNALS DECISION IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEARS 2000-2001, 2001-02 AND 2002-03. TH E CO- ORDINATE BENCHES HAVE CONSISTENTLY HELD THAT THE SE RVICE CHARGES RECEIVED BY THE ASSESSEE ARE TO BE BROUGHT TO TAX AS INCOME FROM HOUSE PROPERTY AND NOT INCOME FROM O THER SOURCES, AND THAT THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN MODEL MANUFACTURING CO. (SUPRA) DOES NOT APPLY T O THIS FACT SITUATION. WE SEE NO REASONS TO TAKE ANY VIEW OF TH E MATTER THAT THE VIEW TAKEN BY THE CO-ORDINATE BENCHES. THE MERE FACT THAT THE VIEWS OF THE TRIBUNAL HAVE BEEN CHALLENGED IN THE APPEAL BEFORE THE HON'BLE HIGH COURT DOES NOT AFFEC T THE BINDING NATURE OF THE JUDICIAL PRECEDENTS LAID DOWN BY THE COORDINATE BENCHES. IT IS NOT EVEN THE REVENUES CA SE THAT THE ESTEEMED VIEWS OF CO-ORDINATE BENCHES HAVE NOT BEEN APPROVED BY THE HON'BLE HIGH COURT. RESPECTFULLY FO LLOWING THE COORDINATE BENCHES, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERED IN THE M ATTER. FOLLOWING THE ABOVE ORDER, WE FIND NOTHING WRONG WI TH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 4 I.T.A. NO.: 3104/MUM/2010 7. IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN TAKEN B Y THE ASSESSEE BUT AT THE TIME OF HEARING THE LD. COUNSEL OF THE A SSESSEE SUBMITTED THAT THE ONLY DISPUTE WAS REGARDING DISALLOWANCE MA DE U/S.14A. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND FIND THAT DISALLOWANCE HAS BEEN MADE BY THE AO U/S.14A BY FOLLOWING THE RULE 8D. THE ADDITIONS HAS BEEN CONFI RMED BY THE LD. CIT(A) BY RELYING ON THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. DAGA CAPITAL INVESTMENTS LTD. 26 SO T 603. WE FURTHER FIND THAT THIS DECISION HAS BEEN PARTIALLY REVERSED BY THE HON'BLE HIGH COURT IN CASE OF GODREJ & BOYCE MANUFACTURING COMPA NY LTD. VS. DCIT REPORTED IN 328 ITR 81 BY OBSERVING THAT THE RULE 8 D IS NOT OF RETROSPECTIVE EFFECT. HOWEVER IT HAS BEEN FURTHER O BSERVED THAT THE AO HAS POWER TO MAKE REASONABLE DISALLOWANCE. THEREFOR E, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK T O THE FILE OF AO WITH THE DIRECTION TO RECOMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF DECISION OF HON'BLE BOMBAY HIGH COURT IN CASE OF GO DREJ & BOYCE MANUFACTURING COMPANY LTD. (SUPRA). 9. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS E. ORDER PRONOUNCED ON THIS 15 TH DAY OF JUNE, 2011. SD/- SD/- (D. K. AGARWAL) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 15/06/2011 5 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, I - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI