NARENDRA PAL GUPTA, MUMBAI V. ASST CIT CEN CIR 30, MUMBAI

ITA 3269/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4087 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM ./ I.T.A. NO . 3269 / MUM/ 201 3 ( / ASSESSMENT YEA R : 20 10 - 11 ) NARENDRAPAL G UPTA, RAJABAHADUR BLDG., 1 ST FLOOR, 28, BOMBAY SAMACHAR MARG, FORT, MUMBAI - 400023 / VS. ASSTT. COMMISSIONER OF I NCOME TAX CENTRAL CIRCLE - 30, ROOM NO.404, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAXPG2396L / ASSESSEE BY SHRI J P BAIRAGRA, / REVENUE BY SHRI NAVEEN GUPTA / DATE OF HEARING : 19 .1 . 201 6 / DATE OF PRONOUNCEMENT: 3. 2 . 201 6 / O R D E R P ER B R BASKARAN, AM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.3.2013 PASSED BY THE LD. CIT(A) - 39, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 20 10 - 11. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD.CIT( A) IN CONFIRMING THE ORDER OF THE AO IN ASSESSING THE LEASE RENT RECEIVED FOR FURNITURE AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. WE HEARD THE PARTIES AND PERUSED THE REC ORD. THE FACTS RELATING TO THE CASE ARE SET OUT IN BRIEF. THE ASSESSEE HAD LET OUT A BUILDING TO M /S I.T.A. NO. 3269 / MUM/ 201 3 2 EAST INDIA HOTELS LTD. THE ASSESSEE HAD ENT ERED I NTO TWO SEPARATE LEASE AGREEMENTS VIZ., ONE AGREEMENT FOR LEASE OF PREMISES AND ANOTHER AGREEMENT FOR L EASING OF FURNITURE. THE ASSESSEE HAD RECEIVED LEASE RENT OF RS.1,35,98,750 / - EACH UNDER TH OS E AGREEMENT S . THE ASSESSEE OFFERED BOTH THE LEASE RENTAL INCOME S UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, THE AO ASSESSED THE INCOME OF RS.1.35 CRO RES RECEIVED FOR LEASING OF FURNITURE AS INCOME FROM OTHER SOURCES AND THE SAME WAS ALSO CONFIRMED BY THE LD.CIT(A). 4. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD ACTUALLY LET OUT ENTIRE PREMISES IN BARE CONDITION AND , IN FACT, NO FURNITURE AND FIX TURE WAS ACTUALLY LET OUT. HE SUBMITTED THAT THE LIST OF FURNITURE AND FIXTURES GIVEN IN THE SECOND LEASE AGREEMENT ARE MERE AMENITIES ATTACHED WITH THE PREMISES. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO TWO SEPARATE AGREEMENTS IN ORDER T O AVOID PROBLEMS OF MUNICIPAL TAXES. ACCORDINGLY, THE LD.AR SUBMITTED THAT THE ASSESSEE HAD RECEIVED THE LEASE RENT UNDER BOTH THE AGREEMENTS TOWARDS LETTING OUT OF THE BUILDING ONLY. THE LD. AR SUBMITTED THAT THE HONBLE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V/S G RAGHURAM (2010 ) 134 TTJ (HYD) 87 HAS HELD THAT THE AMENITIES ARE NOT SEPARATE ASSETS SUCH AS PLANT AND MACHINERY AND HENCE INCOME RECEIVED TOWARDS A ME NITIES IS ALSO REQUIRED TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPER TY . HE SUBMITTED THAT AN IDENTICAL VIEW HAS ALSO BEEN TAKEN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF UNIQUE CONSTRUCTION AND DEVELOPERS V/S ACIT IN ITS ORDER DATED 24.7.2013 PASSED IN ITA NO.1397/MUM/2012 (AY - 2008 - 09). HE FURTHER SUBMITTED THAT AN IDENTICAL ISSUE WAS ALSO CONSIDERED IN THE CASE OF ASSESSEES SPOUSE NAMED MRS. MANJU GUPTA IN ITA NO.4432/MUM/2013, DATED 26.3.2015 AND IT WAS DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY THE HYDERABAD BENCH OF THE TRIBUNA L IN THE CASE OF G RAGHURAM(SUPRA). I.T.A. NO. 3269 / MUM/ 201 3 3 5 . ON THE CONTRARY , THE LD. DR SUBMITTED THAT THE DECISION RENDERED BY THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF G RAGHURAM (SUPRA) WAS RELATING TO THE AMENITIES AND NOT TO FURNITURE S AND FIXTURES. ACCORDING LY, HE SUBMITTED THAT THE SAID DECISION COULD NOT BE PLACED RELIANCE BY THE ASSESSEE. HE SUBMITTED THAT , IN THE CASE OF MRS.MANJU GUPTA (SUPRA), THE CO - ORDINATE BENCH HAS FOLLOWED THE DECISION RENDERED BY THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE O F G RAGHURAM (SUPRA) . THE LD. DR FURTHER SUBMITTED THAT THE A SSESSEE HAS ENTERED INTO AN AGREEMENT FOR LETTING OUT FURNITURE AND FIXTURE AND HENCE, THE LD.CIT(A) WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE AO. 6 . HAVING HEARD THE RIVAL CONTENTIONS, WE A RE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTION S 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 INTO TWO SEPARATE AGREEMENT S WHILE LEASING OUT THE PR EMISES, VIZ., ONE FOR LEASING OUT THE PREMISES AND ANOTHER ONE FOR LEASING OUT FURNITURE AND FIXTURES . THE LEASE AGREEMENT ENTERED FOR LEASING OUT THE FURNITURE AND FIXTURES CONTAINS A LIST OF ITEMS COVERED BY IT. A PERUSAL OF THE SAID LIST WOULD SHOW THA T 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 GEYSER IN BATHROOMS (WI TH 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. I.T.A. NO. 3269 / MUM/ 201 3 4 XII. 24 HRS SECURITY 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 HOUR S SHIFT EACH AT THE ENT RANCE OF LOBBY OF THE BUILDING. A CAREFUL PERUSAL OF THE DETAILS GIVEN ABOVE WOULD SHOW THAT THEY A RE 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 THE PRESENT CASE. IN ADDITION TO THE ABOVE, WE NOTICE TH AT THE CO - ORDINATE BENCH ES OF THE TRIBUNAL HAS ALSO TAKEN IDENTICAL VIEW S 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 ASSES SEE F OR 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 THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO ASSESS THE ENTIRE LEASE RENT AL INCOME RECEIVED UNDER BOTH THE AGREEMENTS AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. PRONOUNCED ACCORDINGLY ON 3RD FEB , 2 01 6 . 3RD FEB 2 01 6 SD SD ( PAWAN SINGH ) ( B.R. BASKARAN) JUDI CIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 3RD FEB , 2 01 6 . . . ./ SRL , SR. PS I.T.A. NO. 3269 / MUM/ 201 3 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDEN T. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI