JATOYAH INVESTMENTS & HOLDINGS LTD, MUMBAI V. ITO 12(3)(1), MUMBAI

ITA 3792/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9398 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 3792 / MUM/20 17 ( ASSESSMENT YEAR : 2013 - 14 ) M/S. JATOYAH INVESTMENTS & HOLDINGS LTD., 207/08, A WING, ALLIED BUNGLOWS, ST. JOHNS ROAD BANDRA WEST MUMBAI 400 050 VS. ITO 12(3)(1) R.NO.147A, AAYAKAR BHAVAN M.K. ROAD, NEW MARINE LINES MUMBAI 400 020 PAN/GIR NO. AAACJ9683R APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI VISHWAS MEHENDALE REVENUE BY SHRI RAM TIWARI DATE OF HEARING 28 / 09 /201 7 DATE OF PRONOUNCEME NT 05 / 10 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 20, MUMBAI DATED 02/03/2017 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT A CT. 2. IN THE APPEAL MEMO, ASSESSEE HAS TAKEN FOUR GROUNDS FOR TAXING THE ENTIRE RENTAL INCOME IN THE HANDS OF THE ASSESSEE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS AN INVESTMENT COMPANY. IT WAS OWIN G THE PROPERTY JOINTLY WITH M/S. ARYADEEP INVESTMENTS AND HOLDINGS PVT. LTD., THIS PROPERTY WAS GIVEN ON RENT, RENTAL INCOME WAS GIVEN BY THE ITA NO. 3792/MUM/2017 M/S. JATOYAH INVESTMENTS & HOLDINGS PVT. LTD., 2 LESSEE BY ACCOUNT PAYEE CHEQUE TO THE ASSESSEE IN THE JOINT OWNERSHIP. CONTENTION OF ASSESSEE WAS THAT ONLY THAT P ORTION OF RENTAL INCOME SHOULD BE ASSESSED IN THE HANDS OF ASSESSEE OF WHICH ASSESSEE IS OWNER. HOWEVER, THE AO TAXED THE ENTIRE RENTAL INCOME, TAKING THE SAME AS SHOWN BY THE ASSESSEE IN THE EARLIER YEAR. AO OBSERVED THAT IN THE PRECEDING YEAR ENTIRE RENT AL INCOME W AS OFFERED BY THE ASSESSEE IN IT S RETURN OF INCOME, THEREFORE, IN THE YEAR UNDER CONSIDERATION ALSO ASSESSEE SHOULD HAVE OFFERED THE ENTIRE RENTAL INCOME IN HIS RETURN OF INCOME. 5. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AG AINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 7. FROM THE RECORD I FOUND THAT IN THE PRESENT CASE A STILT PORTION OF AROUND 1000 SQ.FT. OF ALLIED BUNGLOW, 207/208 ST. JOHN ROAD, BANDRA(W), MUMBAI - 400050, THE PROPERTY IS JOINTLY OWNED BY ASSESSEE WITH M/S.ARYADEEP INVESTMENTS AND HOLDINGS PVT. LTD . THE ASSESSEE HAD ENTERED INTO A RENTAL AGREEMENT WITH M/S. K BLACK FASHIONS FOR T HE BOTH THE PROPERTIES I.E. PLOT NO.207 AND 208, PLOT NO.207 IS OWNED BY ASSESSEE AND PLOT 208 OWNED BY M/S.ARYADEEP INVESTMENTS PVT. LTD. ASSESSEE ENTERED INTO RENT AGREEMENT FOR BOTH THE PROPERTIES, BUT THE SUB - REGISTRAR REFUSED TO REGISTER SINGLE AGREE MENT IN RESPECT OF BOTH THE PROPERTIES AND FINALLY IT WAS REGISTERED IN THE NAME OF ASSESSEE ITSELF. I FOUND THAT THE RENT WAS RECEIVED BY BOTH THE COMPANIES IN THE RATIO 50:50 IN THEIR BANK ACCOUNT SEPARATELY AND U/S.1941 OF THE INCOME TAX ACT, ITA NO. 3792/MUM/2017 M/S. JATOYAH INVESTMENTS & HOLDINGS PVT. LTD., 3 1961, TAX AT SOURCE WAS ALSO DEDUCTED FROM THEIR RENTAL PAYMENT AND RETURN OF INCOME WAS ALSO FILED WITH INCOME TAX DEPARTMENT . HOWEVER, AO ADDED ENTIRE RENTAL OF RS.27,00,000/ - WITHOUT DEDUCTION OF SERVICE TAX INCLUDED IN THE SAID RE N T, WHEREAS 50% OF RENT BELONGS TO OTHER OWNER OF THE PROPERTY I.E. M/S.ARYADEEP INVESTMENTS AND HOLDINGS PVT. LTD. I.E. RS.13,50,000/ - , THE RENT WAS RECEIVED SEPARATELY BY BOTH THE COMPANIES, SERVICES TAX WAS PAID SEPARATELY , INCOME TAX AND SERVICES RETURNS WAS ALSO FILED SEPARATELY BY BOTH THE COMPANIES ON THEIR RENT RECEIVED . 8. IT WAS ALSO CONTENDED BY LEARNED AR THAT INVESTMENT IN BOTH THE PLOTS WERE SEPARATELY REFLECTED IN THE RESPECTIVE BALANCE SHEET OF ASSESSEE AND M/S.ARYADEEP INVESTMENTS AND HOLDINGS PVT. LTD , THEREFORE, THERE IS NO JUSTIFICATION FOR BRINGING TO TAX NET THE ENTIRE RENT IN THE HANDS OF THE ASSESSEE. IT APPEARS THAT AO HAS NOT PROPERLY APPRECIATED THE FACTUAL POSITION OF THE CASE IN SO FAR AS THE LESSEE HAS GIVEN SEPARATE CHEQUE OF RENT TO DIFFERENT OWNERS . T HERE IS NO JUSTIFICATION FOR TAXING THE ENTIRE RENTAL INCOME IN THE HANDS OF THE ASSESSEE M ERELY BECAUSE IN PRECEDING YEAR, ENTIRE RENTAL INCOME WAS OFFERED BY ASSESSEE IN ITS HAND. EACH YEAR IS INDEPENDENT AND IF THE ASSESSEE HAS WRONGLY OFFERED INCOME WHICH D OES NOT BELONG TO IT IN ITS RETURN OF INCOME IN EARLIER YEAR, THE ASSESSEE CANNOT BE FORCED TO CONTINUE THE SAME MISTAKE. IN THE INTEREST OF JUSTICE AND FAIR PLAY, I RESTORE THE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE FACTUAL PO SITI ION OF THE OWNER SHIP OF THE TWO PLOTS BY TWO DIFFERENT OWNERS. THE LEASE RENT INCOME SHOULD BE TAXED IN THE HANDS OF THE CORRECT PERSON I.E., THE PERSON WHO IS THE OWNER OF THE PLOT / PROPERTY. IN THE SUBSTANTIAL ITA NO. 3792/MUM/2017 M/S. JATOYAH INVESTMENTS & HOLDINGS PVT. LTD., 4 INTEREST OF JUSTICE, I DIRECT THE AO TO MAKE FULL ENQUIRY W ITH REGARD TO THE PARTICULAR PORTION OF PROPERTY OWNED AND LEASED OUT TO EARN RENTAL INCOME AND FOR DECIDING THE ISSUE AFRESH. 8. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 05 / 10 /201 7 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 05 / 10 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//