Ambience Developers & Infrastructure (P) Ltd., New Delhi V. CIT, New Delhi

ITA 3129/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3513 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Section: 263; 63

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3129 & 3130 /DEL/2014 (ASSESSMENT YEAR: 2009 - 10 ) AMBIENCE DEVELOPERS & INFRASTRUCTURE (P) LTD, C/O. RAJ KUMAR & ASSOCIATES, CA, 4435/7, ANSARI ROAD, DARYAGANJ, NEW DELHI PAN:AAECA6894P VS. CIT, CENTRAL - II, NEW DELHI (APPELLANT) (RESPONDENT) AMBIENCE HOTELS & RESORTS (P) LTD, C/O. RAJ KUMAR & ASSOCIATES, CA, 4435/7, ANSARI ROAD, DARYAGANJ, NEW DELHI PAN:AAECA6894P VS. CIT, CENTRAL - II, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJ KUMAR, CA REVENUE BY: SMT APARNA KARAN, CIT DR DATE OF HEARING 23/11/ 2017 DATE OF PRONOUNCEMENT 1 6 / 0 2 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. ITA NO 3129/DEL/2014 IS AN APPEAL FILED BY THE AMBIENCE DEVELOPERS & INFRASTRUCTURE PRIVATE LIMITED [ THE ASSESSEE ] AGAINST THE ORDER OF THE LD CIT - CENTRAL II, NEW DELHI [ HEREINAFTER REFERRED TO AS THE LD CIT] DATED 21.03.2014 FOR THE ASSESSMENT YEAR 2009 - 10 PASSED U/S 263 OF THE ACT [ THE ACT] HOLDING THAT ORDER PASSED U/S 143 (3) OF THE ACT ON PAGE | 2 30 - 12 - 2011 BY THE ASSISTANT COMMISSIONER OF INCOME TAX , CEN TRAL CIRCLE - 16, NEW DELHI [ THE LD AO ] IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE RAISING FOLLOWING GROUNDS OF APPEALS : - 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT EXCEEDED HIS JURISDICTION IN INVOKING PROVISIONS OF SEC. 263 OF THE I.T. ACT AS THE ORDER OF LD. AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE APART FROM THAT THERE EXIST NO SUCH CIRCU MSTANCE WHICH MAY JUSTIFY INVOKING OF SEC. 263 OF I.T. ACT. 2A. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. AO AFTER PROPER APPLICATION OF MIND HAS ACCEPTED THE CLAIM OF THE ASSESSEE THAT INCOME OF LEASE RENTALS OF RS. 10,88,44,182/ - FROM LEASING OF RETAIL SPACE EXISTING IN AMBIENCE HOTELS & RESORTS (P) LTD. IS ASSESSABLE IN THE HANDS OF THE ASSESSEE AND UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THUS, TOOK, A PROPER AND REASONABLE VIEW AND IN ANY CASE ONE OF THE POSSIBLE VIEWS, THEREFORE, THE IMPUGNED OR DER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, SETTING ASIDE OF THIS ISSUE TO THE AO FOR FRAMING AFRESH ASSTT. ON THIS ISSUE IS NOT SUSTAINABLE. B. THAT WITHOUT PREJUDICE, AFTER RECORDING A FINDING IN ORDER U/S. 263 DTD. 14.03. 2014 IN THE CASE OF AMBIENCE HOTELS AND RESORTS LTD. THAT THE SAID LEASE RENTAL INCOME SHOULD BE ASSESSED IN THE HANDS OF AMBIENCE HOTELS AND RESORTS LTD, FEE FURTHER FINDINGS OF CIT IN THE CASE OF ASSESSEE THAT THE SAME LEASE RENTAL INCOME SHOULD HAVE BEE N TREATED AS SUB - LETTING INCOME IN THE HANDS OF ASSESSEE AND SHOULD NOT HAVE BEEN TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THAT SHOULD NOT HAVE BEEN ALLOWED STATUTORY REBATE U/S. 24 @30% OF LEASE RENTAL INCOME IS ABSOLUTELY WITHOUT JURISDICT ION, UN - WARRANTED AND UN - SUSTAINABLE. C. THAT WITHOUT PREJUDICE, AFTER RECORDING A FINDING IN ORDER U/S. 263 DTD. 14.03.2014 IN THE CASE OF AMBIENCE HOTELS AND RESORTS LTD. THAT THE SAID LEASE RENTAL INCOME SHOULD BE ASSESSED IN THE HANDS OF AMBIENCE H OTELS AND RESORTS LTD., THE FURTHER FINDINGS OF CIT IN THE CASE OF ASSESSEE THAT THE AO SHALL BE AT A LIBERTY TO TAX THE SAID LEASE'RENTAL INCOME IN ONE CASE ON SUBSTANTIVE BASIS AND IN ANOTHER CASE ON PROTECTIVE BASIS IS ABSOLUTELY WITHOUT JURISDICTION, U N - WARRANTED AND UN - SUSTAINABLE. D. THAT WITHOUT PREJUDICE, THE LD. CIT ERRED IN GIVING DIRECTIONS TO THE AO TO WITHDRAW 30% REBATE ALLOWED BY THE AO U/S. 24 OF THE I.T. ACT OUT OF THE SAID INCOME ASSESSED BY THE AO AS INCOME FROM HOUSE PROPERTY. E. T HAT THE ACT OF SET - ASIDE OF THE ABOVE ISSUE TO THE AO AND DIRECTIONS TO FRAME FRESH ASSTT. ON THIS ISSUE AS PER THE PAGE | 3 PROVISIONS OF I.T. ACT AND TO ALLOW PERMISSIBLE DEDUCTIONS AS PER LAW ARE UN - SUSTAINABLE AND ALSO AS MUCH AS SELF CONTRADICTORY IN VIEW OF THE FINDINGS GIVEN IN ORDER U/S. 263 DTD/. 14.03.2014 IN THE CASE OF AMBIENCE HOTELS & RESORTS (P) LTD. AND ALSO IN VIEW OF THE FINDINGS GIVEN IN THE IMPUGNED ORDER U/S. 263 DATED 14.03.2014 IN THE CASE OF AMBIENCE HOTELS & RESORTS (P) LTD, AND ALSO IN VIEW OF THE FINDINGS GIVEN IN THE IMPUGNED ORDER U/S 263. 2. ITA NO 31 30 /DEL/2014 IS AN APPEAL FILED BY THE AMBIENCE HOTESL & RESORTS PRIVATE LIMITED [ THE ASSESSEE ] AGAINST THE ORDER OF THE LD CIT - CENTRAL II, NEW DELHI [ HEREINAFTER REFERRED TO AS THE LD CIT] DATED 14 .03.2014 FOR THE ASSESSMENT YEAR 2009 - 10 PASSED U/S 263 OF THE ACT [ THE ACT] HOLDING THAT ORDER PASSED U/S 143 (3) OF THE ACT ON 30 - 12 - 2011 BY THE A SSISTANT COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE - 16, NEW DELHI [ THE LD AO ] IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE RASINING FOLLOWING GROUNDS OF APPEAL : - 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT EXCEEDED HIS JURISDICTI ON IN INVOKING PROVISIONS OF SEC. 263 OF THE I.T. ACT AS THE ORDER OF LD. AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE APART FROM THAT THERE EXISTS NO SUCH CIRCUMSTANCES WHICH MAY JUSTIFY INVOKING OF SEC. 263 OF L.T. ACT. 2. THAT WITH OUT PREJUDICE. LD. AO DULY APPLIED HIS MIND LAWFULLY AND LEGALLY ON THE ISSUE OF ASSESS - ABILITY OF LEASE INCOME OF RS. 10,88,44,182/ - NOT IN THE HANDS OF THE ASSESSEE BUT CORRECTLY IN THE HANDS OF AMBIENCE DEVELOPERS & INFRASTRUCTURES (P) LTD. ON WHICH INC OME, TDS HAS BEEN DEDUCTED BY THE PAYERS OF LEASE AMOUNT, THEREFORE, THIS ISSUE IS OUTSIDE THE SCOPE OF SEC. 263 AS WELL AS OUTSIDE THE JURISDICTION. 3. THAT WITHOUT PREJUDICE, THE DIRECTIONS AND FINDINGS OF LD. CIT ARE UN - SUSTAINABLE AND CONTRADICTORY S O MUCH SO THAT ON ONE HAND HE HAS DIRECTED THE AO TO DECIDE THE ISSUE OF ASSESS - ABILITY OF LEASE INCOME OF RS. 10,88,44,182/ - IN THE HANDS OF THE ASSESSEE, AFRESH ON THE BASIS OF PROVISIONS OF I.T. ACT AND ALLOW PERMISSIBLE DEDUCTIONS WHILE ON THE OTHER HA ND, IN THE ORDER U/S. 263 DTD. 21.03.2014 IN THE CASE OF AMBIENCE DEVELOPERS & INFRASTRUCTURE (P) LTD. FOR A.Y. 2009 - 2010, HE HAS GIVEN A FINDING THAT THE SAID INCOME SHOULD HAVE BEEN ASSESSED IN THE HANDS OF ASSESSEE (HOTEL) AND FURTHER IN VIEW OF FINDI NGS IN THE CASE AMBIENCE DEVELOPERS & INFRASTRUCTURES (P) LTD., THAT THE SAID INCOME SHOULD HAVE .BEEN ASSESSED AS IN THE HANDS OF AMBIENCE DEVELOPERS & INFRASTRUCTURES (P) LTD. AS SUB LETTING AS WELL AS THE SAME INCOME SHOULD HAVE BEEN ASSESSED IN THE PAGE | 4 C ASE OF ONE ASSESSEE ON SUBSTANTIVE BASIS AND IN THE CASE OF ANOTHE R ASSESSEE ON PROTECTIVE BASIS. 3. FIRST WE STATE THE FACTS IN CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTURES PRIVATE LIMITED FOR ASSESSMENT YEAR 2009 10. THE ASSESSEE HAS EARNED LEASE AND LICENSE CHARGES PARKING CHARGES, ELECTRICITY CHARGES AND GAS CHARGES. IT IS ALSO EARNS INTEREST AND MI SCELLANEOUS INCOME. THE ABOVE INCOME HAS BEEN OFFERED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30/9/2009 SHOWING NIL INCOME. THE LD. ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER UNDER SEC TION 143 (3) OF THE ACT ON 30/12/2011 HAS STATED THAT ASSESSEE IS IN THE BUSINESS OF REAL ESTATE AND HAS SHOWN INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND INCOME FROM BUSINESS AND PROFESSIONS. THE CORRECTNESS OF THE CLAIM IS STATED BY THE AO HAS B EEN EXAMINED AND WERE VERIFIED. AFTER THIS HE ACCEPTED THE RETURN INCOME FILED BY THE ASSESSEE. 4. ON EXAMINATION OF THE RECORDS BY THE LD. CIT IT WAS NOTED THAT FOR ASSESSMENT YEAR 2008 09 IT WAS FOUND THAT WHILE ANOTHER COMPANY NAMELY AMBIENCE HOTELS AND RESORTS PRIVATE LIMITED HAS GIVEN THE RIGHT TO LEASE THE SHOPS AND RETAIL SHOPS AND ALSO GIVEN SECURITY DEPOSIT TO THE ASSESSEE COMPANY IN VIEW OF ADVANCE OF RS. 75 CRORES. ON THE INCOME FROM HOUSE PROPERTY ASSESSEE IS IN DEDUCTION AT THE RATE OF 30% OF TH E ACT. IT WAS FURTHER NOTED THAT ASSESSEE HAS CLAIMED INTEREST IN FINANCE CHARGES OF RS. 87.29 CRORES MADE AS THE ADDITION IN THE COMPUTATION OF INCOME WAS ONLY 76.81 CRORES. THEREFORE THERE IS A DIFFERENCE OF RS. 10.47 CRORES IN THE AMOUNTS. IT WAS FURTHE R NOTED THAT INTEREST EXPENDITURE CAN BE ALLOWED UNDER THE HEAD INCOME FROM HOUSE PROPERTY ONLY IF THE ASSESSEE HAS BORROWED CAPITAL AND USED IT TO ACQUIRE, CONSTRUCT, REPAIR, RENEW OR RECONSTRUCT THE PROPERTY INCOME FROM WHICH IS CHARGEABLE UNDER SECTION 22 OF THE INCOME TAX ACT. THEREFORE IT WAS NOTED THAT THERE WAS NO EVIDENCE SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO SHOW THAT THE INTEREST EXPENSES CLAIMED WERE INCURRED FOR SPECIFIC PURPOSES. IT WAS FURTHER STATED THAT CLA IM MADE BY THE ASSESSEE UNDER SECTION 24 OF THE INCOME TAX IS BEEN MADE IN PAGE | 5 RESPECT OF RENTAL INCOME OF THE PROPERTIES WHICH ARE OWNED NOT BY THE ASSESSEE BUT BY AMBIENCE HOTELS AND RESORTS PRIVATE LIMITED. THEREFORE ACCORDING TO THE CIT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 24 OF THE ACT. HENCE THE LD. CIT ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE THAT LD. ASSESSING OFFICER HAS FAILED TO EXAMINE AND EVEN VERIFY THE TRUE NATURE OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WHILE EARNING T HE LEASE INCOME HENCE THE ORDER PASSED BY HIM IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BY ISSUING SHOW CAUSE NOTICE UNDER SECTION 263 ON 3/3/2014. 5. ASSESSEE SUBMITTED HIS REPLY ON 7/3/2014 AS WELL AS ON 14/3/2014 STATING THAT ASSESSEE IS EARN ING LEASE RENTAL FROM LEASING OF RETAIL SPACE IN AMBIENCE MALL WHICH IS PROPERTY OWNED BY THE ASSESSEE AND LEASE RENTAL FROM LEASING OF RETAIL SPACE IN AMBIENCE HOTELS WHICH IS OWNED BY THE AMBIENCE HOTELS LTD. IT WAS STATED THAT THE ASSESSEE HAS CORRECTL Y DECLARED THIS INCOME AS INCOME FROM HOUSE PROPERTY AS THE ASSESSEE IS OWNER OF THE SAID RETAIL SPACE, WHICH HAS BEEN LEASED OUT TO VARIOUS RETAILERS AGAINST THE MONTHLY LEASE RENTS. IT WAS FURTHER STATED THAT PROPER AGREEMENTS HAVE BEEN EXECUTED BETWEEN THE ASSESSEE AND THE RETAILERS. IT WAS FURTHER STATED THAT THE MAIN OBJECT OF THE COMPANY IS LEASING OR RENTING OF COMMERCIAL COMPLEXES. IT WAS FURTHER STATED THAT THE LD. ASSESSING OFFICER DURING THE COURSE OF A ASSESSMENT PROCEEDINGS HAS EXAMINED THE ABO VE ISSUE AND HAS TAKEN ONE OF THE PLAUSIBLE VIEWS AND THEREFORE NOW IT IS BEYOND PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT. WITH RESPECT TO THE LEASE RENTAL FROM LEASING OF RETAIL SPACE IN AMBIENCE HOTEL ASSESSEE SUBMITTED THAT A SUM OF RS. 75 CRORES HAS BEEN GIVEN BY THE ASSESSEE IS INTEREST - FREE THE FUNDABLE DEPOSIT TO AMBIENCE HOTEL AND IN TURN AMBIENCE HOTEL HAVE RIGHTS TO ASSESSEE TO LEASE OUT CERTAIN WRITTEN SPACE AND 2 ON AND RETAIN INCOME THEREFROM. THEREFORE IT WAS SUBMITTED THAT THE ABOVE IN COME HAS BEEN DECLARED UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH IS PROPER. IT WAS FURTHER SUBMITTED THAT THE SAID INCOME SHOULD BE ASSESSED IN THE HANDS OF THE HOTEL AND NOT THE ASSESSEE AS THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY FROM WHICH LE ASE RENTAL HAS BEEN EARNED HAS ALSO BEEN COVERED IN NOTICE UNDER PAGE | 6 SECTION 263 OF THE ACT. IT WAS SUBMITTED THAT AMBIENCE HOTEL IS NOT TRANSFERRED THE ASSETS TO THE ASSESSEE AND IT HAS BEEN CONTINUED TO BELONGING ONLY TO AMBIENCE HOTEL. IT WAS SUBMITTED THAT AS ASSESSEE HAS GIVEN RS. 75 CRORES IS REFUNDABLE SECURITY DEPOSIT THE ASSESSEE HAS GOT THE RIGHT FOR RENTING OF THOSE RETAIL SPACES. IN VIEW OF THIS THE ABOVE INCOME IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY ONLY. WITH RESPECT TO THE DEDUCTIBILITY OF INTEREST IN FINANCE CHARGES CLAIMED UNDER SECTION 24 OF THE INCOME TAX ACT IT WAS SUBMITTED THAT THE DIFFERENCE OF RS. 10.47 CRORES IS ON ACCOUNT OF INTEREST ACCRUED ON LOAN USED FOR CONSTRUCTION TILL THE DATE OF CONSTRUCTION OUT OF WHICH 1/5 OF THE CLAIM IS MADE DURING THE YEAR. THEREFORE THERE IS NO DIFFERENCE. IT WAS FURTHER STATED THAT THE TERM LOAN WAS TAKEN FOR CONSTRUCTION OF THE PROPERTY AND THEREFORE THE INTEREST IS CORRECTLY ALLOWED AS DEDUCTION IN THE AND IT WAS SUBMITTED THAT T HE ASSESSMENT IS FRAMED AFTER EXAMINATION OF BOOKS AND SUPPORTING IS PRODUCED BEFORE THE LD. ASSESSING OFFICER. 6. THE LD. CIT CAREFULLY CONSIDERED THE CONTENTIONS RAISED BY THE ASSESSEE AND IN THE AND HELD THAT ASSESSEE IS OWNER OF AMBIENCE SMALL, AND HAS SHOWN LEASE RENTAL RECEIPT FROM THE SHOPS IN THE MALL OF RS. 7 5189 2545/ WHICH HAS BEEN TREATED AS INCOME FROM HOUSE PROPERTY. IT WAS NOTED THAT AMBIENCE HOTELS AND RE SOURCE LTD A SISTER CONCERN OF THE ASSESSEE HAD GIVEN CERTAIN SHOPS OWNED BY IT ON GROUND FLOOR AND 1 ST FLOOR OF A 5 STAR DELUXE HOTEL ON RENT TO VARIOUS PARTIES. THE TENANTS WERE PAYING RENT TO THAT COMPANY ON WHICH TEDIOUS WAS DEDUCTED. WIDE AGREEMENT DA TED 31/3/2008 AMBIENCE HOTEL TRANSFERRED RETROSPECTIVELY THE RIGHT TO RECEIVE RENT TO AMBIENCE DEVELOPERS, ASSESSEE AGAINST AND INTEREST FREE DEPOSIT OF RS. 75 CRORES. THEREFORE THE INCOME ALREADY OWNED BY THE AMBIENCE HOTEL WAS TRANSFERRED TO THE ASSESSEE THROUGH THE SAID AGREEMENT AND ASSESSEE OFFERED THIS INCOME AS INCOME FROM HOUSE PROPERTY AND CLAIMED 30% REBATE UNDER SECTION 24 OF THE ACT. SIMILARLY THE LD. CIT HAS ALSO TAKEN ACTION AGAINST THE AMBIENCE HOTELS AND RESORTS LTD WHEREIN IT HAS BEEN HELD THAT LEASE RENTAL FROM THE RETAIL SPACE IN THE HOTEL TO OWNED BY AMBIENCE HOTELS SHOULD HAVE BEEN TAXED IN THE HANDS OF THAT COMPANY AND NOT THE PRESENT ASSESSEE THEREFORE IN PAGE | 7 THE CASE OF AMBIENCE DEVELOPER THE LD. CIT HELD THAT INCOME FROM LEES OF RETAIL SPACE IN AMBIENCE HOTEL WAS TAXED IN THE HANDS OF THE ASSESSEE BUT SAME SHOULD HAVE BEEN TREATED AS SUBLETTING INCOME AND ACCORDINGLY SHOULD NOT HAVE BEEN TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND SHOULD NOT HAVE BEEN ALLOWED DEDUCTION AT THE RAT E OF 30% UNDER SECTION 24 OF THE ACT. CONSEQUENTLY THE ORDER HELD THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 7. ON APPEAL THE ASSESSEE SUBMITTED THAT BY ORDER UNDER SECTION 263 THE CIT DIRECTED I N THE CASE OF AMBIENCE HOTEL TO FRAME ASSESSMENT AFRESH ON THIS ISSUE IS THE PERSON THE PROVISIONS OF THE ACT AFTER ALLOWING PERMISSIBLE DEDUCTION AND IN CASE OF AMBIENCE DEVELOPER THE CIT WAS OF THE VIEW THAT RENTAL INCOME IN THE HANDS OF THE ASSESSEE SHO ULD BE ASSESSED AS SUBLETTING INCOME AND THEREFORE DEDUCTION UNDER SECTION 24 AT THE RATE OF 30% SHOULD NOT HAVE BEEN GRANTED . IT WAS STATED THAT IN BOTH CASES THE RETURNED INCOME OF THE AMBIENCE HOTEL AND AMBIENCE DEVELOPER IS LOSS THEREFORE WHETHER THIS INCOME IS ASSESSED IN THE HANDS OF EITHER OF THE ASSESSEE THE TOTAL TAX IMPLICATIONS SHALL BE NIL SINCE AFTER THE ADDITION THE ASSESSED INCOME BECAUSE IN THE CASES. THEREFORE IT WAS SUBMITTED THAT IT DOES NOT HAVE ANY REVENUE IMPACT AT ALL. HE THEREFORE S UBMITTED THAT THE ORDERS ARE NOT PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS FURTHER STATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER IS AMEND THE INCOME DECLARED UNDER 20 IN THE EYES OF AMBIENCE DEVELOPER THEREFORE SUCH ORDER CANNOT BE HELD TO BE ERRONEOUS. IT WAS FURTHER STATED THAT THE ARRANGEMENT OF ADVANCE OF RS. 75 CRORES GIVEN BY AMBIENCE DEVELOPER AS INTEREST - FREE LOAN TO AMBIENCE HOTEL IS BONA FIDES AGREEMENT. IN THE END HE SUBMITTED THAT IF THE 2 VIEWS ARE POSSI BLE OUT OF WHICH ONE VIEW IS TAKEN PROVISIONS OF SECTION 263 CANNOT BE INVOKED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT AND STATED THAT THE ASSESSEE HAS WRONGLY CLAIMED DEDUCTION UNDER SECTION 24 OF THE INCOME TAX ACT EVEN IF THERE IS NO INCOME UNDER INCOME FROM HOUSE PROPERTY.. IT WAS FURTHER STATED MERELY BECAUSE BOTH THE ASSESSEE ARE HAVING LOSS IT CANNOT BE SAID ORDER IS NOT PREJUDICIAL TO PAGE | 8 THE INTEREST OF REVENUE. HE SUBMITTED THAT INCOME FROM HOUSE PROPERTY CLA IM MADE BY THE AMBIENCE DEVELOPER IS THE IMPACT OF PRODUCTION OF 30% REDUCTION CLAIMED UNDER SECTION 24 AND FOR IT CANNOT BE SAID THAT IT IS REVENUE NEUTRAL. EVEN OTHERWISE HE STATED THAT THERE IS NO EVIDENCE SHOWN BY THE ASSESSEE THAT THESE ISSUE HAS BEEN EXAMINED BY THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE THEREFORE SUPPORTED THE ORDER OF THE LD. CIT AND SUBMITTED PROVISIONS OF SECTION 263 OF THE INCOME TAX HAS CORRECTLY BEEN INVOKED THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN BOTH THE CASES. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND ALSO PER USED THE ORDER OF THE ASSESSING OFFICER WHICH WAS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE THE LD. CIT BY PASSING AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT. THE SIMPLE ISSUE INVOLVED IN THIS CASE IS THE AMBIENCE DEVELOPERS LTD IS NOT AN OWNER OF THE PROPERTY AT STAKE I TO LEASE CERTAIN PROPERTY AMBIENCE HOTEL AND RESORTS LTD BY PAYING A SUM OF 75 CRORES AS INTEREST - FREE SECURITY IS AN I NTERNAL OR RIGHT TO RENT OUT THE RETAIL SPACE IN THE AMBIENCE MALL. THE INCOME OF THIS RENT WAS SHOWN AS INCOME FROM HOUSE PROPERTY BY THE ASSESSEE WITHOUT OWNING THE SAME. THEREFORE THE LD. CIT HAS HELD THAT THIS INCOME IS SUBJECT TO TAXATION AS SUBLETTIN G INCOME AND NOT UNDER THE INCOME FROM HOUSE PROPERTY. THE LD. ASSESSING OFFICER IS NOT AT ALL EXAMINED ANY FACT RELATING TO THE ABOVE ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO COULD NOT SHOW THAT HOW THE ABOVE ISSUE WAS DEALT WI TH BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON READING OF THE ASSESSMENT ORDER IT IS APPARENT THAT THE LD. ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE AT ALL WITH THE THE ABOVE INCOME IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR SHOULD BE CHARGED UNDER THE HEAD INCOME FROM OTHER SOURCES AS SUBLETTING INCOME. THEREFORE WE ARE OF THE VIEW THAT THE ORDER OF THE LD. ASSESSING OFFICER IS ERRONEOUS AS IT HAS BEEN PASSED WITHOUT EXAMINING THE ASPECTS AS STATED BY THE LD. CIT IN HIS ORDER UNDER SECTION 263 OF THE ACT. FURTHER MORE AS THE ASSESSEE HAS CLAIMED 30% DEDUCTION UNDER SECTION 24 OF THE ACT THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT CANNOT BE SAID THAT PAGE | 9 EVEN IF THE INCOME IS CHARGEABLE TO TA X IN THE HANDS OF THE SOME OTHER PERSON THE ORDER IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDING TO US EACH ASSESSMENT YEAR AS WELL AS THE EACH ASSESSEE IS REQUIRED TO BE SEEN INDEPENDENTLY TO EXAMINE WHETHER THE ORDER IS PREJUDICIAL TO THE I NTEREST OF THE REVENUE. IN THE PRESENT CASE THE ASSESSEE HAS CLAIMED HIGHER DEDUCTION AND THEREFORE THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE ALSO. IN THE PRESENT CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTURE LTD THE ORDER PASSED BY LD. CIT CORRECTLY DEMONSTRATES THAT THE ORDER PASSED BY THE LD. ASSESSING OFFICER UNDER SECTION 143 (3) ON 30/12/2011 IS CLEARLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THIS WE BE UPHELD THE ORDER PASSED BY THE LD. CIT UNDER SECTION 26 3 OF THE INCOME TAX ACT DATED 21/3/2014 IN CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTURES PRIVATE LIMITED. IN THE RESULT APPEAL NO. 3129/DEL/2014 FILED BY THE ASSESSEE M/S AMBIENCE DEVELOPERS AND INFRASTRUCTURE PRIVATE LIMITED FOR ASSESSMENT YEAR 2009 1 0 IS DISMISSED. 10. COMING TO THE APPEAL OF THE AMBIENCE HOTELS AND RESORTS LTD IN ITA NO. 3130/DEL/2014 FOR ASSESSMENT YEAR 2009 10 WHEREIN THERE IS CLAIM OF TEDIOUS CREDIT OF RS. 1 020 6299/ CAME IN THE RETURN OF INCOME AGAINST RENTAL INCOME WITHOUT OFFER ING ANY CORRESPONDING INCOME FOR TAXATION. THE LD. C INVOKED IN SUBSECTION 60 OF THE INCOME TAX ACT SIMILARLY NOTICE UNDER SECTION 63 INCOME TAX ACT WAS ISSUED TO THE ASSESSEE ON 20/2/2014 ON THE ABOVE ISSUE HOLDING THAT ASSESSMENT ORDER PASSED BY THE LD. AO 30/12/2011 UNDER SECTION 143 (3) ON THE RETURN OF INCOME FILED ON 30/9/2009 DECLARING NIL INCOME ACCEPTING IT AS IT IS IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ASSESSEE SUBMITTED REPLY ON 7/3/2014 AGAINST THE ABOVE NOTICE EXPLAINING THE DETAILED WHEREIN IT HAS BEEN STATED THAT ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH AMBIENCE TO PASS AN INFRASTRUCTURE PRIVATE LIMITED WHERE IN A SUM OF RS. 75 CRORES WAS RECEIVED AS INTEREST - FREE DEPOSIT BY THE ASSESSEE AND INTERNED AT THE AMBIENCE DEVEL OPERS TO ENJOY THE INCOME FROM CERTAIN SPECIFIED RETAIL SPACES. AS THE RETAIL SPACES HAS ALREADY BEEN DISALLOWED ON VARIOUS EVENTS TO THE RETAILERS WHICH AGREEMENT WAS ENTERED INTO BY THE PAGE | 10 AMBIENCE HOTEL ASSESSEE AND SUCH RETAILERS AND THEREFORE CERTAIN PAY MENTS HAVE ALREADY BEEN MADE BY THE TENANTS AFTER DEDUCTION OF TAX AT SOURCE TO THE ASSESSEE. HENCE THERE IS A CLAIM OF TAX DEDUCTION AT SOURCE AS CREDIT BY THE ASSESSEE WITHOUT GIVING ANY INCOME AGAINST THAT. IT WAS FURTHER STATED THAT THE PROVISIONS OF S ECTION 60 DOES NOT APPLY TO THE FACTS OF THE CASE. 11. THE LD. CIT AFTER CONSIDERING THE ISSUE IS HELD THAT PROVISIONS OF SECTION 60 ARE CLEARLY APPLICABLE TO THE ASSESSEE AND THE ASSESSEE HAS TRANSFERRED INCOME WITHOUT TRANSFERRING ITS ASSETS AS IT HAS ALLOWE D LEASE RENTALS IN THE HANDS OF THE AMBIENCE DEVELOPERS PRIVATE LIMITED. THE ABOVE ISSUE WAS NOT AT ALL EXAMINED BY THE ASSESSING OFFICER AND THEREFORE IT WAS HELD THAT THE ABOVE ORDER OF ASSESSMENT PASSED BY THE LD. AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 12. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THE SAME ARGUMENTS AS WAS SUBMITTED BY HIM IN THE CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTURES PRIVATE LIMITED. IN THE NUTSHELL IT IS ARGUED THAT THE ORDER IS NOT PREJUDICIAL TO THE IN TEREST OF THE REVENUE. 13. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO REITERATED THE SAME ARGUMENTS AS WERE ADVANCED IN THE CASE OF AMBIENCE DEVELOPERS PRIVATE LIMITED. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND ALSO PER USED THE ORDERS OF THE LD. ASS ESSING OFFICER AS WELL AS THE ORDER OF THE LD. CIT WHEREIN IT HAS BEEN HELD THAT THE ORDER PASSED BY THE LD. AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE SIMPLE ISSUE IS THAT THE ASSESSEE HAS SHOWN A CREDIT OF TAX DED UCTION AT SOURCE OF RS. 1 020 6299/ WITHOUT HAVING ANY INCOME CORRESPONDING TO THAT TAX DEDUCTION AT SOURCE. IT IS THE FACT THAT ASSESSEE HAS GIVEN RIGHT TO RECEIVE AND THE SISTER CONCERN OF THE ASSESSEE ON RECEIVING INTEREST - FREE DEPOSIT OF RS. 75 CRORES FROM THE COMPANY. ASSESSEE HAS NOT SHOWN INCOME FROM HOUSE PROPERTY OF THE ABOVE SUM OF INCOME FROM PROPERTY OWNED BY THE SISTER CONCERN IN ITS HANDS. THEREFORE IT IS APPARENT THAT SUM IS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AND ASSESSEE HAS DIV ERTED THE ABOVE INCOME IN THE HANDS OF THE SISTER CONCERN WITHOUT TRANSFERRING PROPERTY. THEREFORE IT IS A CUT CASE OF TRANSFER OF INCOME WITHOUT TRANSFER PAGE | 11 OF ASSETS. EVEN OTHERWISE THE LD. ASSESSING OFFICER HAS NOT EXAMINED THIS ASPECT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AS THE LD. A ARE NOT PRODUCED BEFORE US ANY EVIDENCE THAT LD. AO HAS APPLIED HIS MIND TO THIS ASPECT OF THE TAXATION IN THE HANDS OF THE ASSESSEE. IN VIEW OF THIS IT IS APPARENT THAT IT IS AN ORDER WHICH HAS NOT BEEN PASSED BY APPLI CATION OF MIND BY THE LD. ASSESSING OFFICER HANS IT IS ERRONEOUS. AS SUBSTANTIAL INCOME HAS NOT BEEN TAXED IN THE HANDS OF THE ASSESSEE DEFINITELY THE ORDER PASSED BY THE LD. ASSESSING OFFICER ON THE ASSESSEE IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT HOLDING THAT THE ORDER PASSED BY THE LD. AO IS IN LAW AND IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE RESULT ITA NO. 3130/DEL/2014 FOR ASSESSMENT YEAR 2009 10 FILED BY THE HOTELS AND RESORTS LTD IS DISMISSED. 15. IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT UNDER SECTION 263 OF THE INCOME TAX ACT FOR ASSESSMENT YEAR 2009 10 IN BOTH THE RESPECTIVE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 / 0 2 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 02 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI