WEST PIONEER PROPERTIES (INDIA) P.LTD, MUMBAI V. DCIT CIR 5(3)(1), MUMBAI

ITA 3105/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8787 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHACHAN RAM
• Assessee Lawyers: SHREE KUMAR KABRA
• Keywords: Business income; Depreciation; Earning of tax free income; Revised return
• Section: 143(3); 14A; 37(1); 32; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NOS. 3104 & 3105/MUM/2015 (ASSESSMENT YEARS: 2010-11 & 2011-12) M/S. WEST PIONEER PROPERTIES VS. DCIT, CIRCLE - 5(3)(1) (INDIA) PVT. LTD. 1002, 10 TH FLOOR, TOWER-3 INDIABULLS FINANCE CENTRE SENAPATI BAPAT MARG, ELPHINSTONE ROAD, MUMBAI 400020 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN AAACW5756A APPELLANT RESPONDENT APPELLANT BY: SHRI SHREE KUMAR KABRA RESPONDENT BY: SHRI SUBHACHAN RAM DATE OF HEARING: 19.01.2017 DATE OF PRONOUNCEMENT: 20.01.2017 O R D E R PER JASON P. BOAZ, A.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-10, MUMBAI BOTH DATED 23.03.2015 FOR ASSESSM ENT YEARS 2010-11 & 2011-12. THESE APPEALS HAVING CERTAIN COMMON ISSU ES WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS OF THE CASE, BRIEFLY STATED, ARE AS UNDER : - 2.1 THE ASSESSEE COMPANY IS ENGAGED IN BUSINESS AS BUILDER AND PROPERTY DEVELOPER. FOR A.Y. 2010-11 , THE ORIGINAL RETURN OF INCOME WAS FILED ON 15.10. 2010 DECLARING LOSS OF ` 14,24,57861/-. A REVISED RETURN WAS FILED ON 21.09. 2011 DECLARING LOSS OF ` 14,30,60,659/-. SUBSEQUENTLY ANOTHER REVISED RETURN OF INCOME WAS FILED ON 30.03.2012 DECLARING LOSS OF ` 15,01,82,084/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT W AS COMPLETED UNDER ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 2 SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T 'THE ACT') VIDE ORDER DATED 14.03.2013, WHEREIN THE ASSESSEES LOSS WAS D ETERMINED AT ` 9,10,06,577/-. ON APPEAL, THE LEARNED CIT(A)-10, MU MBAI DISPOSED OFF THE APPEAL VIDE THE IMPUGNED ORDER DATED 23.03.2015, AL LOWING THE ASSESSEE PARTIAL RELIEF. FOR A.Y. 2011-12 , THE ASSESSEE FILED THE ORIGINAL RETURN OF INCOME ON 30.09.2011 DECLARING LOSS OF ` 5,33,98,520/-. A REVISED RETURN OF INCOME WAS FILED ON 28.09.2012 DECLARING LOSS OF ` 5,89,10,449/-. SUBSEQUENTLY ANOTHER REVISED RETURN OF INCOME WAS FILED ON 30.03 .2013 DECLARING LOSS OF ` 7,71,31,825/-. THE CASE WAS SELECTED FOR SCRUTINY A ND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 18.02.2014, WHEREIN THE ASSESSEES LOSS WAS DETERMI NED AT ` 2,30,03,570/- . ON APPEAL, THE LEARNED CIT(A) DISPOSED OFF THE AP PEAL VIDE THE IMPUGNED ORDER DATED 23.03.2015 ALLOWING THE ASSESSEE PARTIA L RELIEF. 3. AGGRIEVED BY THE ORDER OF THE CIT(A)-10, MUMBAI DA TED 23.03.2015 FOR BOTH ASSESSMENT YEARS 2010-11 AND 2011-12, THE ASSESSEE HAS PREFERRED THESE APPEALS. THESE TWO APPEALS WILL BE DISPOSED OFF IN SERIATUM AS UNDER: - 4. ASSESSEES APPEAL IN ITA NO. 310-4/MUM/2015 FOR A.Y . 2010-11 4.1 IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS: - 1.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN TREATING PROPERTY LEASE INCOME OF RS.7,37,68,263/- AS INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSION' AS DECLARED BY THE APPELLANT. 1.(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THAT: (A) THE APPELLANT DOES NOT SIMPLY LET OUT PART OF ITS P REMISES BUT ALSO PROVIDES A HOST OF OTHER COMPLEX SERVICES; (B) THE REVENUE RECEIVED BY THE APPELLANT IS DERIVED FR OM COMMERCIAL EXPLOITATION OF THE PREMISES AND NOT MER ELY FROM EXERCISE OF PROPERTY RIGHTS; AND (C) THE ENTIRE REVENUE RECEIVED BY THE APPELLANT IS A SINGLE LINE OF ACTIVITY AND FORMS A COMPOSITE WHOLE. ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 3 2.(A) WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 ABOVE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE LEARNED ASSESSING OFF ICER OF BRINGING TO TAX THE NOTIONAL LEASE RENTAL INCOME OF RS.8,17,089/- BEING LEASE RENTAL COMPUTED ON STRAIGHT LINE BASIS (PURSUANT TO ACCOUNTING STANDARD 19 - LEASES) AND INCLUDED IN TH E TOTAL LEASE RENTAL OF RS.7,37,68,263/- CREDITED TO THE PR OFIT AND LOSS ACCOUNT. 2.(B) WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 ABOVE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE LEASE RENTAL COMPUTED (PURSUANT TO ACCOUNTING STANDARD 19) WAS NEITHER ACTUALLY RECEIV ED NOR RECEIVABLE BUT IS ONLY COMPUTED ON NOTIONAL BASIS T O COMPLY WITH MANDATORY ACCOUNTING STANDARDS AND IS THEREFOR E OUTSIDE THE SCOPE OF TAXABILITY UNDER THE INCOME TAX ACT, 1 961 (THE 'ACT'). 2.(C) WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 A BOVE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ENTRIES PASSED IN THE BOOKS OF ACCOUNTS ARE NOT ALWAYS RELEVANT FOR THE PURPOSES OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE ALLOWED THE ENTIRE DEPRECIATION OF RS.7,88,20, 827/- CLAIMED ON THE MAIL BUILDING U/S. 32 OF THE ACT AS THE SAME FORMS PART OF COMMERCIAL ASSET OF THE APPELLANT AND THEREFORE DEPRECIATION ON THE SAID MALI BUILDING IS ALLOWABLE U/S. 32 OF THE ACT. 4.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OF FICER OF BROKERAGE EXPENSES AMOUNTING TO RS.18,69,387/- INCU RRED BY THE APPELLANT FOR GRANT OF LICENSES TO VARIOUS USER S. 4.(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE BROKERAGE EXPENSES WERE INCURRED FOR THE PURPOSE OF GRANT OF LICENSE OF THE MALL PREMISES TO VARIOUS USERS WHICH ACTIVITY IS IN THE NATURE OF COMMERCIAL EXPLOITATION OF THE SAID MALL PREMISES A ND THEREFORE THE BROKERAGE EXPENSES ARE ALLOWABLE AS DEDUCTION U /S. 37(1) OF THE ACT HAVING BEEN INCURRED FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. 5.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 4 UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OF FICER U/S. 14A OF THE INCOME TAX ACT, 1961 R.W.R. 8D OF THE IN COME TAX RULES, 1962 TO THE EXTENT OF RS.6,15,771/- AS AGAIN ST THE DISALLOWANCE OF RS.1,22,932/- MADE BY THE APPELLANT SUO MOTTO IN ITS RETURN OF INCOME. 5.(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATED THA T THE TERM LOAN WAS OBTAINED BY THE APPELLANT FOR THE PURPOSE OF CONSTRUCTION OF MALL AND THEREFORE INTEREST EXPENDI TURE AMOUNTING TO RS.4,92.839/- BEING PROPORTIONATE INTE REST ON TERM LOANS OUGHT NOT TO HAVE BEEN DISALLOWED UNDER RULE 8D BY THE ASSESSING OFFICER. 4.2 ASSESSEES APPEAL IN ITA NO. 3105/MUM/2015 FOR A.Y. 2011-12 IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN TREATING PROPERTY LEASE INCOME OF RS.9,36,99,661/- AS INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSION' AS DECLARED BY THE APPELLANT. 1.(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THAT: (A) THE APPELLANT DOES NOT SIMPLY LET OUT PART OF ITS P REMISES BUT ALSO PROVIDES A HOST OF OTHER COMPLEX SERVICES; (B) THE REVENUE RECEIVED BY THE APPELLANT IS DERIVED FR OM COMMERCIAL EXPLOITATION OF THE PREMISES AND NOT MER ELY FROM EXERCISE OF PROPERTY RIGHTS; AND (C) THE ENTIRE REVENUE RECEIVED BY THE APPELLANT IS A SINGLE LINE OF ACTIVITY AND FORMS A COMPOSITE WHOLE. 2.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AUTHORITIES BELOW FAILED TO APPRECIATE THAT TOTAL RECOVERY OF COMMON AREA MAINTENANCE AND UTILITY EX PENSES CREDITED TO THE PROFIT AND LOSS ACCOUNT AND TAXED A S BUSINESS INCOME INTER ALIA INCLUDED A SUM OF RS.46,16,454/- , BEING MUNICIPAL TAXES RECOVERED FROM THE LESSEES AND ACCO RDINGLY THE WHOLE OF THE MUNICIPAL TAXES OF RS.63,44,478/- IS A LLOWABLE AS DEDUCTION FROM BUSINESS INCOME BEING DIRECTLY CON NECTED TO THE SAID RECEIPT. 2.(B) WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE ASSESSING OFFICER OUGHT TO HAVE FIRST ADDED THE REVENUE EARNED FROM RECOVERY OF MUNICIPAL TAXES OF RS.46,16 ,454/- ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 5 FROM THE LICENSEES (AS PART OF COMMON AREA MAINTENA NCE CHARGES) TO THE PROPERTY LEASE INCOME OF RS.9,36,99 ,661/- AS THE SAME DOES NOT FORM PART OF THE SAID PROPERTY LE ASE INCOME OF RS.9,36,99,661/- BUT FORM PART OF RECOVERY OF C OMMON AREA MAINTENANCE AND UTILITY EXPENSES CREDITED TO THE P ROFIT AND LOSS ACCOUNT WHICH HAS BEEN TAXED AS BUSINESS INCOM E. 2.(C) CORRESPONDINGLY, THE RESIDUAL BUSINESS INCOME WOULD GET REDUCED BY AFORESAID AMOUNT OF RS.46,16,454/- (REPR ESENTING RECOVERY OF MUNICIPAL TAXES). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE ALLOWED THE ENTIRE DEPRECIATION OF RS.7.96,67, 391/- CLAIMED ON THE MALL BUILDING U/S. 32 OF THE ACT AS THE SAME FORMS PART OF COMMERCIAL ASSET OF THE APPELLANT AND THEREFORE DEPRECIATION ON THE SAID MALI BUILDING IS ALLOWABLE U/S. 32 OF THE ACT. 4.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OF FICER OF BROKERAGE EXPENSES AMOUNTING TO RS.5,88,860/- INCUR RED BY THE APPELLANT FOR GRANT OF LICENSES TO VARIOUS USER S. 4.(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE BROKERAGE EXPENSES WERE INCURRED FOR THE PURPOSE OF GRANT OF LICENSE OF THE MALL PREMISES TO VARIOUS USERS WHICH ACTIVITY IS IN THE NATURE OF COMMERCIAL EXPLOITATION OF THE SAID MALL PREMISES A ND THEREFORE THE BROKERAGE EXPENSES ARE ALLOWABLE AS DEDUCTION U /S. 37(1) OF THE ACT HAVING BEEN INCURRED FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. 5. GROUNDS NO. 1(A) & 1(B) FOR BOTH ASSESSMENT YEARS 2 010-11 & 2011-12 5.1 IN THESE IDENTICAL GROUNDS, THE ASSESSEE ASSAIL S THE ORDER OF THE LEARNED CIT(A) AS BEING ERRONEOUS IN TREATING PROP ERTY LEASE INCOME OF ` 7,37,68,263/- FOR A.Y. 2010-11 AND ` 9,36,99,661/- FOR A.Y. 2011-12 AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS. I T IS FURTHER CONTENDED THAT THE ASSESSEE HAS NOT MERELY LET OUT PART OF IT S PREMISES, BUT ALSO PROVIDES A HOST OF OTHER COMPLEX SERVICES AND THE R EVENUE RECEIVED BY THE ASSESSEE THEREFROM IS DERIVED FROM COMMERCIAL EXPLO ITATION OF ITS PREMISES AND THEREFORE CONSTITUTES BUSINESS INCOME AS DECLAR ED BY THE ASSESSEE. THE LEARNED A.R. OF THE ASSESSEE CONTENDS THAT THIS ISSUE HAS BEEN ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 6 CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009- 10 IN ITA NO. 3789/MUM/2014 DATED 05.01.2016. 5.2 PER CONTRA, THE LEARNED D.R. PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. WE FIND THAT THE ISSUE OF WHETHER OR NOT THE INCOME EARNED BY THE ASSESSEE FROM LEASING OUT OF ITS PROPERTY AND FOR O FFERING A HOST OF OTHER COMPLEX SERVICES IS TO BE CONSTRUED AS COMMERCIAL E XPLOITATION OF ITS PROPERTIES AS STATED IN ITS OBJECTS AND THEREFORE T O BE HELD TO BE EXIGIBLE TO TAX AS BUSINESS INCOME AS DECLARED BY THE ASSESSE E OR AS INCOME FROM HOUSE PROPERTY AS HELD BY REVENUE, HAS BEEN CONSID ERED AND ADJUDICATED BY A COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESS EES OWN CASE FOR A.Y. 2009-10. IN ITS ORDER IN ITA NO. 3879/MUM/2014 DATE D 05.01.2016, THE COORDINATE BENCH HAS DECIDED THIS ISSUE IN FAVOUR O F THE ASSESSEE HOLDING AS UNDER AT PARAS 8 AND 8.1 THEREOF: - 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE J UDICIAL DECISIONS RELIED UPON BY THE LD. COUNSEL. THE ENTIRE DISPUTE HAS TO BE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD VS CIT 373 ITR 673 WHEREIN THE HONBLE APEX COURT HAS HELD THAT LETTIN G OUT OF THE PROPERTIES BEING THE BUSINESS OF THE ASSESSEE, THE INCOME FROM WHICH HAS TO BE TREATED AS INCOME FROM BUSINESS. THE HO NBLE SUPREME COURT HAS FURTHER OBSERVED THAT THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY CLEARLY MENTIONS THAT MAIN OB JECTS IS TO ACQUIRE AND HOLD THE PROPERTIES AND HOLDING THE AFO RESAID PROPERTIES AND EARNING INCOME BY LETTING OUT THOSE PROPERTIES IS THE MAIN OBJECTIVE OF THE COMPANY. THEREFORE, ANY INCOME EA RNED HAS TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS. 8.1. IN THE PRESENT CASE ALSO WE FIND THAT IN A.Y. 2008-09, THE AO HIMSELF HAS ACCEPTED THE NATURE OF BUSINESS OF THE ASSESSEE AS OPERATION OF MALL THEREFORE ANY INCOME EARNED BY THE ASSESSEE BY THE OPERATION OF MALL HAS TO BE TAXED UNDER THE HEA D PROFITS & GAINS OF BUSINESS OR PROFESSION. THE MAIN OBJECT OF THE COMPANY AS PER THE MEMORANDUM OF ASSOCIATION ALSO REFERS TO SUCH ACTIV ITIES AS THE MAIN OBJECT FOR WHICH THE COMPANY IS INCORPORATED. AS T HE MAIN OBJECT ITSELF SHOWS THAT THE ASSESSEE-COMPANY HAS BEEN INC ORPORATED FOR ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 7 RUNNING SHOPPING MALLS /DEPARTMENTAL STORES, SUPER MARKETS, SHOPPING ARCADES, SHOPPING OUTLETS, ENTERTAINMENT, RECREATION AND AMUSEMENT CENTRE THEREFORE ANY INCOME EARNED FROM S UCH ACTIVITIES HAS TO BE TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS. THIS WILL BE IN LINE WITH THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD (SUPRA). WE, ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A ) AND DIRECT THE AO TO TREAT THE INCOME UNDER THE HEAD PROFITS & GAINS OF BUSINESS. 5.3.2 RESPECTFULLY FOLLOWING THE RATIO OF THE DECIS ION OF THE HON'BLE APEX COURT IN CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT 373 ITR 673 (SC) AND THE FINDING RENDERED BY THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR A.Y. 2009-10 (SUPRA), WE SET ASIDE THE FIN DINGS OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO TREAT TH E INCOME EARNED BY THE ASSESSEE FROM RUNNING AND OPERATION OF A MALL AND S ERVICE CHARGES AS INCOME FROM PROFITS AND GAINS OF BUSINESS. CONSEQUE NTLY GROUNDS 1(A) AND (B) OF THE ASSESSEES APPEALS FOR A.Y. 2010-11 AND 2011-12 ARE ALLOWED. 6. GROUNDS NO. 2(A), 2(B) AND 2(C) FOR A.Y. 2010-11 6.1 THESE GROUNDS (SUPRA) ARE RAISED AS ALTERNATE GROUNDS WITHOUT PREJUDICE TO GROUND NO. 1, IN RESPECT OF THE ADDITI ON ON ACCOUNT OF NOTIONAL LEASE RENTAL INCOME AMOUNTING TO ` 7,37,68,263/- FOR A.Y. 2010-11. IN VIEW OF THE FINDING RENDERED BY US IN RESPECT OF GROUNDS NO. 1(A) AND 1(B) AT PARAS 5.3.1 AND 5.3.2 OF THE ORDER (SUPRA) THAT THE INCOME EARNED BY THE ASSESSEE FROM RUNNING AND OPERATION OF A MALL AND S ERVICE CHARGES RECOVERED IS TO BE TREATED AND ASSESSED AS INCOME FROM PROFITS AND GAINS OF BUSINESS AND THEREBY ADDRESSING THE ASSESSEES GRIEVANCE, WE DO NOT DEEM IT NECESSARY TO ADJUDICATE THESE ALTERNATE GRO UNDS. 7. GROUNDS NO. 2(A) TO 2(C) FOR A.Y. 2011-12 7.1 IN THESE GROUNDS, THE ASSESSEE CONTENDS THAT SI NCE THE TOTAL RECOVERY OF COMMON AREA MAINTENANCE AND UTILITY EX PENSES CONSTITUTES BUSINESS INCOME; FROM WHICH MUNICIPAL TAXES PAID AM OUNTING TO ` 46,16,454/-, THE SAME IS ALLOWABLE AS A DEDUCTION F ROM BUSINESS INCOME. IT IS SUBMITTED THAT THIS CLAIM OF THE ASSESSEE HAS BEEN WRONGLY DECIDED BY THE AUTHORITIES BELOW. IN VIEW OF OUR HOLDING THAT THE INCOME EARNED BY THE ASSESSEE FROM RUNNING AND OPERATION OF MALL AND A P ROVISION OF HOST OF OTHER SERVICES AND UTILITIES IS TO BE CONSTRUED AS COMMERCIAL EXPLANATION OF ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 8 ITS PROPERTIES AND IS EXIGIBLE TO TAX AS BUSINESS INCOME AS DECLARED BY THE ASSESSEE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO BE ALLOWED DEDUCTION OF MUNICIPAL TAXES OF ` 46,16,454/- FROM ITS BUSINESS INCOME. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, ASSESSEES GROUND S NO. 2(A) TO 2(C) ARE ALLOWED. 8. GROUNDS NO. 3, 4(A) & 4(B) FOR BOTH ASSESSMENT YEAR S 2010-11 & 2011-12 8.1 IN THESE IDENTICAL GROUNDS, THE ASSESSEE CONTEN DS THAT THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED; (I) THE DEPRECIATION CLAIMED ON THE MALL BUILDING IN THESE ASSESSMENT YEARS UNDER SECTION 32 OF THE ACT AS THE SAME FORMS PART OF COMMERCIAL ASSETS OF THE ASSESSE E, AND (II) BROKERAGE EXPENSES INCURRED FOR GRANT OF LICENCE TO VARIOUS U SERS. 8.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN ITS ORDER IN THE ASSESSEES OWN CAS E FOR A.Y. 2009-10 DATED 05.01.2016 (SUPRA) AT PARA 8.2 THEREOF HAS HELD THA T THE ASSESSEE IS ENTITLED FOR CLAIM OF DEPRECIATION ON THE MALL BUIL DING AND BROKERAGE EXPENSES. FOLLOWING THE ORDER OF THE COORDINATE BEN CH FOR A.Y. 2009-10 (SUPRA), AND HAVING HELD THAT THE ASSESSEES INCOME EARNED FROM RUNNING AND OPERATION OF MALL AND SERVICE CHARGES ETC. IS T O BE TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS, WE HOLD THAT IN THIS REGARD THE ASSESSEE IS ENTITLED FOR CLAIM OF DEPRECIATION ON MALL BUILD ING AND ALSO BROKERAGE EXPENSES INCURRED FOR GRANT OF LICENCE TO VARIOUS U SERS. CONSEQUENTLY, GROUNDS 3 AND 4(A) AND 4(B) RAISED BY THE ASSESSEE FOR ASSESSMENT YEARS 2010-11 AND 2011-12 ARE ALLOWED. 9. GROUNDS NO. 5(A) & 5(B) FOR A.Y. 2010-11 9.1 IN THESE GROUNDS, THE ASSESSEE CONTENDS THAT TH E LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE AO UNDER SECTION 14A OF THE ACT R.W. RULE 8D OF THE I.T. RULES TO THE EXTEN T OF ` 6,15,771/- AS AGAINST THE SUO MOTO DISALLOWANCE OF ` 1,22,932/- MADE BY THE ASSESSEE IN THE RETURN OF INCOME; WITHOUT APPRECIATING THAT SIN CE THE TERM LOAN WAS OBTAINED BY THE ASSESSEE FOR THE PURPOSE OF CONSTRU CTION OF THE MALL, SUCH ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 9 A DISALLOWANCE OUGHT NOT TO HAVE BEEN MADE. IT WAS CONTENDED BY THE LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE WAS CO NSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009- 10 AND IN ITS ORDER IN ITA NO. 3879/MUM/2014 DATED 05.01.2016, THE COORDINATE BENCH HELD IN FAVOUR OF THE ASSESSEE AND DELETED THE DISALLOWANCE, FOLLOWING THE DECISIONS OF THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LT D. (313 ITR 340) AND CIT VS. HDFC BANK LTD. (366 ITR 505). 9.2.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. WE FIND FROM THE MATERIAL ON RECORD THAT THE ASSESSEE EARNED EXEMPT INCOME OF ` 8,06,800/- (I.E. DIVIDENDS FROM MUTUAL FUNDS) AND H AD MADE A SUO MOTO DISALLOWANCE OF ` 1,22,932/-. THE LEARNED CIT(A) AT PARA 5.3 OF THE IMPUGNED ORDER AFTER EXAMINING THE DETAILS ON R ECORD HAS RENDERED THE FINDING THAT THE FACTS DURING THE YEAR UNDER CONSID ERATION ARE IDENTICAL TO THE A.Y. 2009-10 AS SUBMITTED BY THE LEARNED A.R. O F THE ASSESSEE. IN THIS FACTUAL MATRIX OF THE CASE, WE FIND THAT ON THE ISS UE OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D THE COORDINATE BENCH OF TH E TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009-10 IN ITS ORDER I N ITA NO. 3879/MUM/ 2014 DATED 05.01.2016 DELETED THE DISALLOWANCE UNDE R SECTION 14A R.W. RULE 8D, FOLLOWING THE DECISIONS OF THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. (313 ITR 40) AND HDFC BANK LTD. (366 ITR 505), HOLDING AS UNDER AT PARA 11.2 THEREO F: - 11.2. WE FIND FORCE IN THE CONTENTION OF THE LD. C OUNSEL. A PERUSAL OF THE FACTUAL MATRIX ELSEWHERE SHOWS THAT THE ASSESSEE WAS HAVING SUFFICIENT OWN FUNDS FOR MAKING THE INVESTME NTS AND FOR GIVING INTEREST FREE ADVANCES. THE FACTS OF THE CA SE ARE SQUARELY COVERED BY THE DECISION OF THE HONBLE HIGH COURT O F BOMBAY IN THE CASE OF RELIANCE UTILITIES AND POWER LTD(SUPRA) FOL LOWED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS HDFC BANK LTD. 366 ITR 505. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO DELETE THE IMPUGNED DISALLOWANCES MADE ON ACCOUN T OF INTEREST EXPENDITURE. GROUND NO. 5 & 6 ARE ACCORDINGLY ALLO WED. 9.2.2 FOLLOWING THE DECISION OF THE COORDINATE BENC H OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009-10 (SUPRA), WHICH FOLLOWED THE DECISIONS ITA NOS. 3104&3105/MUM/2015 WEST PIONEER PROPERTIES (INDIA) PVT. LTD. 10 OF THE HON'BLE BOMBAY HIGH COURT IN RELIANCE UTILIT IES AND POWER LTD. (SUPRA) AND HDFC BANK LTD. (SUPRA), WE DIRECT THE A O TO DELETE THE IMPUGNED DISALLOWANCE MADE UNDER SECTION 14A R.W. R ULE 8D ON ACCOUNT OF INTEREST EXPENDITURE. CONSEQUENTLY, GROUNDS 5(A) AND 5(B) OF THE ASSESSEES APPEAL FOR A.Y. 2010-11 ARE ALLOWED. 10. IN THE RESULT, THE ASSESSEES APPEALS FOR ASSESSMEN T YEARS 2010-11 AND 2011-12 ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2017. SD/ - SD/ - (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 20 TH JANUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -9, MUMBAI 4. THE CIT - 4, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.