J V CONSTRUCTION & DEVELOPERS, MUMBAI V. ASST CIT 25(2), MUMBAI

ITA 3282/MUM/2013

• Counselvise Citation: 328219914 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 07-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I. T.A. NO. 3282 / MUM/20 13 ( / ASSESSMENT YEAR : 2008 - 09) M/S J V CONSTRUCTIONS AND DEVELOPERS, AKHIL TOWER, GROUND FLOOR, RATAN NAGAR, DAHISAR (E), MUMBAI - 400068 / VS. ASSTT. COMMISSIONER OF INCOME TAX 25(2), IT OFFICES, BAN DRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AACFJ8189R / APPELLANT BY SHRI YEGNESH DESAI / RSPONDENT BY SHRI SATYAPAL KUMAR / DATE OF HEARING : 0 1. 7 . 201 5 / DATE OF PRONOUNCEMENT : 01. 7. 201 5 / O R D E R PER B.R. BASKARAN (AM) THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER D ATED 1.3.2013 PASSED BY LD CIT(A) - 35 , MUMBAI AND IT RELATES TO ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN HOLDING THAT THE REN T RECEIVED FROM THE LETTING OF BUILDING , WHICH FORM S PART OF STOCK - IN - TRADE , IS ASSESSABLE AS BUSINESS INCOME OF THE ASSESSEE. ITA NO. 3282 / MUM/20 13 2 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS IN THE BUSINESS OF BUILDING CONSTRUCTION. THE AO NOTICED THAT THE ASSESSEE HAS DECLARED RENTAL INCOME OF RS.5 LAKHS AND CLAIMED DEDUCTION O F 30% UNDER THE PROVISIONS OF SECTION 24 OF THE INCOME TAX ACT, 1961 (THE ACT). THE AO NOTICED THAT THE ASSESSEE HAS LET OUT THE PROPERTIES HELD AS STOCK - IN - TRADE , FOR A PERIOD OF TWO MONTHS . THE AO TOOK THE VIEW THAT THE RENTAL INCOME RECEIVED FROM THE PROPERTIES AS HELD BY THE ASSESSEE AS STOCK - IN - TRADE IS ASSESSABLE AS BUSINESS INCOME. ACCORDINGLY, HE ASSESSED THE RENTAL INCOME OF RS.5 LAKHS AS BUSINESS INCOME OF THE ASSESSEE . ACCORDINGLY, THE CLAIM FOR DEDUCTION OF 30% OF RENTAL INCOME CLAIMED U/S 24 OF THE ACT CAME TO BE DISALLOWED . THE LD. CIT( A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4 . THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING CASE LAWS TO SUBMIT THAT THE RENTAL INCOME DERIVED FROM UNSOLD FLATS HELD AS STOCK - IN - TRADE IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY : A) CIT V/S ANSAL HOUSING AND CONSTRUCTION LTD (2013) 40 TAXMANN.COM 305(DELHI) B) M/S J B ESTATES, V/S ITO IN ITA NO.1974/HYD/2011 (AY - 2008 - 09) DAT ED 12.10.2012 (HYDERABAD BENCH) C) AZIMGANJ ESTATES PVT. LTD V/S DCIT IN ITA NO.1675/KOL/2008 (AY - 2005 - 06) DATED 7.6.2012 (KOLKATA BENCH) D) CIT V/S DISCOVERY ESTATES PVT LTD IN ITA NO.1089/2011 AND 1090/2011 AND 1097 OF 2011, DELHI HIGH COURT DA TED 18.2.2013. 4 . ON THE CONTRARY, THE LD. DR PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT RENDER E D IN THE CASE OF M/S CHENNAI PROPERTIES AND INVESTMENT LTD V/S CIT IN CIVIL APPEAL NO. 4494 OF 2004 DATED 9.4.2015 AND CONTENDED THAT REN TAL INCOME EARNED BY THE ASSESSEE DURING THE COURSE OF CARRYING ON BUSINESS IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS . ITA NO. 3282 / MUM/20 13 3 5 . WE HAVE CAREFULLY GONE THROUGH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S CHENNAI PROPERTIES AND INVESTMENT L TD (SUPRA) AND NOTICE THAT THE MAIN OBJECT OF THE ASSESSEE COMPANY THEREIN WAS TO ACQUIRE AND HOLD THE PROPERTIES AND TO LET OUT THEM. CONSIDERING THE OBJECT OF THE ASSESSEE THEREIN , THE HONBLE SUPREME COURT HAS HELD THAT THE RENTAL INCOME EARNED BY THE ASSESSEE WAS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. IN THE INSTANT CASE, IT IS NOT SHOWN TO US THAT THE OBJECT OF THE ASSESSEE COMPANY IS TO ACQUIRE AND LET OUT THE PROPERTY. ON THE CONTRARY, THE AO HIMSELF HAS POINTED OUT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION. FURTHER, THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING AND CONSTRUCTION LTD (SUPRA) HAS HELD ON CLEAR TERM THAT ANNUAL LETTING VALUE OF UNSOLD FLAT S OWNED BY A CONSTRUCTION COMPANY IS ASSESSAB LE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THE INSTANT CASE, THE ASSESSEE HAS ACTUALLY LET OUT THE PROPERTY. THE LD A.R FURTHER SUBMITTED THAT THE AO HAS ASSESSED RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN THE SUCCEEDING YEAR. UNDE R THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE TAX AUTHORITIES WE RE NOT JUSTIFIED IN ASSESSING THE RENTAL INCOME UNDER THE HEAD INCOME FROM BUSINESS . 6. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ASSESS THE RENTAL IN COME EARNED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ITA NO. 3282 / MUM/20 13 4 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . PRONOUNCED ACCORDINGLY ON 01 ST JULY , 2015. 01 ST JULY , 20 15 SD SD ( . . / I.P. BANSAL ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 01 ST JUL ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CI T CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI