M/s. Nizam Club, Hyderabad V. The ACIT Range-5, Hyderabad

ITA 38/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59110 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: K A SUBBA RAOJI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER. ITA NO.38/HYD/2011 (ASSESSMENT YEAR 2006-07) M/S. NIZAM CLUB, HYDERABAD (PAN AAAAN 0366 G) V/S. ASSTT. COMMISSIONER OF INCOME-TAX RANGE 5, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.A.SUBBARAOJI RESPONDENT BY : SHRI T.DIWAKAR PRASAD DATE OF HEARING 12. 1.2012 DATE OF PRONOUNCEMENT 12.01.2012 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-V. HYDERABAD DA TED 5.8.2010, FOR THE ASSESSMENT YEAR 2006-07. 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPEA L READ AS FOLLOWS- 1. THE ASSESSING OFFICER AND THE COMMISSIONER OF I NCOME-TAX(APPEALS) V, ERRED IN TREATING THE HOARDING RENT RECEIVED BY THE CLUB, AS INCOME FROM OTHER SOURCES, AS AGAINST, THE INCOME RETURN ED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE SAID TREATM ENT IS DISPUTED IN THE PRESENT APPEAL. 2. THE HOARDING RENT RECEIVED, CLEARLY FALLS UNDER SEC TION 22 OF THE INCOME TAX ACT 1961, ESPECIALLY BECAUSE, THE VACANT LAND SITUATED IN THE LEASE AGREEMENTS, ARE, ONE OTHER THAN THE ONE O CCUPIED AND USED BY THE CLUB, FOR ITS ACTIVITIES. ITA NO.38/HYD/2011 M/S. NIZAM CLUB HYDERABAD. 2 3. THEREFORE, A DIRECTION MAY BE GIVEN TO ASSESS THE H OARDING RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 4. .. THUS, THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATE S TO THE HEAD UNDER WHICH THE RENTAL INCOME RECEIVED BY THE ASSESSEE FROM THE HOARDINGS ERECTED IN ITS PREMISES, VIZ. WHETHER UNDER THE HEAD HOUSE PROPER TY OR UNDER THE HEAD OTHER SOURCES. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 30.10.200 6 DECLARING NIL INCOME AFTER CLAIMING EXEMPTION OF INCOME OF RS.27, 51,587 ON THE PRINCIPLE OF MUTUALITY. THE ABOVE INCOME CONSISTS INCOME FRO M HOUSE PROPERTY OF RS.11,96,387, WHICH INCLUDES INCOME FROM HOARDING R ENT OF RS.10,30,375 AND INCOME FROM BANK ON FIXED DEPOSITS OF RS.15,55, 200. THE ASSESSING OFFICER INTER-ALIA TREATED THE HOARDING RENTAL INCO ME OF RS.10,30,375 AS INCOME FROM OTHER SOURCES, AND PROCEEDED TO COMPUTE THE HOUSE PROPERTY INCOME OF THE ASSESSEE EXCLUDING THAT AMOUNT AT RS. 4,75,124 AS AGAINST RS.11,96,387 COMPUTED BY THE ASSESSEE, AND BRINGING TO TAX THE HOARDING RENTAL INCOME OF RS.10,30,375 UNDER THE HEAD OTHER SOURCES, ULTIMATELY COMPLETED THE ASSESSMENT UNDER S.143(3) OF THE ACT , DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.37,39,448. 4. ON APPEAL, THE CIT(A) TOOK NOTE OF THE REASONS DISCUSSED BY THE ASSESSING OFFICER, AND ALSO THE ORDER OF HIS PREDEC ESSOR IN HOIS ORDER ITA NO.198/ACIT-5(1)/CIT(A)-V/2007-08 DATED 26.12.2008, HELD THAT THE ENTIRE INCOME RECEIVED AS RENT/LEASE FROM SHOPS AS WELL AS HOARDINGS IS TAXABLE IN THE HANDS OF THE ASSESSEE, AS ALL THESE FACILITIES HAVE BEEN GIVEN TO OUTSIDERS ON COMMERCIAL BASIS, WHICH VITIATES THE P RINCIPLE OF MUTUALITY. HE FURTHER OSBER4VED THAT PUTTING UP OF HOARDINGS O N LAND BY OUTSIDE AGENCIES CANNOT BE HELD AS INCOME FROM HOUSE PROPER TY. IN THIS REGARD, HE ITA NO.38/HYD/2011 M/S. NIZAM CLUB HYDERABAD. 3 RELIED ON THE DECISION OF THE CALCUTTA HIGH COURT I N THE CASE OF MUKHERJEE ESTATE (P)LTD. V/S. CIT(244 ITR 1). AGGRIEVED BY T HE ORDER OF THE CIT(A), ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING T HE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT T HE HOARDINGS HAVING BEEN ERECTED IN THE PREMISES HOUSING THE ASSESSEE-C LUB ITSELF, INCOME DERIVED THEREFROM HAVE TO BE TAXED UNDER THE HEAD HOUSE PROPERTY INCOME AND NOT BY WAY OF INCOME FROM OTHER SOURCES. HE SUB MITTED THAT THE ASSESSEE-CLUB, WHICH IS THE OWNER OF THE PREMISES H AS ENTERED INTO LEASE AGREEMENTS, LEASING OUT A PORTION OF ITS PROPERTY, WHICH IS THE LAND APPURTENANT TO ITS BUILDING NOT OCCUPIED FOR THE PU RPOSE OF BUSINESS OR PROFESSION CARRIED ON BY THE CLUB. HE TOOK US THRO UGH THE LEASE AGREEMENTS AND THE PLAN, COPIES OF WHICH ARE FIELD IN THE PAPE R-BOOK, AND SUBMITTED THAT THESE DOCUMENTS CLEARLY REFLECT THE ABOVE FACT UAL POSITION, AND JUSTIFIES THE CLAIM OF THE ASSESSEE THAT THE RENTAL INCOME DE RIVED FROM THE HOARDINGS IS TAXABLE UNDER THE HEAD HOUSE PROPERTY. HE DI STINGUISHED THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF MUKHERJEE ESTATE (P) LTD. (SUPRA), RELIED UPON BY THE CIT(A) IN THE IMPUGNED ORDER, AN D SUBMITTED THAT THE CALCUTTA HIGH COURT IN THAT CASE HAS CONCLUDED THAT IT WAS NOT KNOWN WHETHER THE ASSESSEE IN THAT CASE LEASED OUT HOARDI NGS OR ROOF AND THE HOARDINGS ARE NEITHER PART OF THE BUILDING NOR THE LAND APPURTENANT, AND AS AGAINST THIS, IN THE PRESENT CASE IT IS ESTABLISHED THAT THE HOARDINGS ARE NOT LEASED OUT AND THE LAND APPURTENANT TO THE CLUB BUI LDING WHICH IS NOT OCCUPIED FOR ITS BUSINESS, WAS LEASED OUT. IN THE C IRCUMSTANCES OF THE CASE, THEREFORE, IT WAS PLEASED THAT THE CONDITIONS LAID DOWN UNDER S.22 OF THE ACT ARE FULFILLED AND THE RENTAL INCOME DERIVED FROM TH E HOARDINGS WAS ASSESSABLE UNDER THE HEAD HOUSE PROPERTY. ITA NO.38/HYD/2011 M/S. NIZAM CLUB HYDERABAD. 4 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORIT IES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. THERE IS NO DISPU TE WITH REGARD TO THE TAXABILITY OF THE RENTAL INCOME DERIVED BY THE ASSE SSEE-CLUB FROM THE HOARDINGS ERECTED ON ITS PREMISES, VIZ. LAND APPURT ENANT TO THE BUILDING IN WHICH THE ASSESSEE-CLUB CARRIES ON ITS ACTIVITIES, AND THE ONLY DISPUTE IS WITH REGARD TO THE HEAD UNDER WHICH SUCH INCOME IS TAXAB LE, VIZ. UNDER THE HEAD HOUSE PROPERTY AS CLAIMED BY THE ASSESSEE OR UNDER THE HEAD OTHER SOURCES AS HELD BY THE ASSESSING OFFICER AND CONF IRMED BY THE CIT(A). THIS VERY ISSUE CAME UP FOR CONSIDERATION BEFORE THE HO NBLE CALCUTTA HIGH COURT IN THE CASE OF MUKHERJEE ESTATE (P) LTD. (SUP RA), WHEREIN IT WAS HELD, VIDE HEAD-NOTE ON PAGE 1 OF THE REPORTS (244 ITR) A S FOLLOWS- HELD THAT PERMITTING SOME COMPANIES TO DISPLAY THE IR BOARDS ON THE HOARDING COULD NOT BE TAKEN AS INCOM E FROM HOUSE PROPERTY AS HOARDINGS COULD NOT BE TREATED AS PART OF THE BUILD ING. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN CONCLUDING THAT THE IN COME WAS ASSESSABLE AS INCOME FROM OTHER SOURCES. THE ABOVE DECISION SQUARELY COVERS THE ISSUE AGAINS T THE ASSESSEE AND IN FAVOUR OF THE REVENUE, AND THE DISTINGUISHING FEATU RES BROUGHT OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, ARE NOT MATERIAL ENOUGH TO TAKE A DIFFERENT VIEW IN THE MATTER, SINCE IN THE ULTIMATE ANALYSIS, ASSESSEE IN THE PRESENT CASE ALSO DERIVED INCOME, BY PERMITTING SOM E COMPANIES TO DISPLAY THEIR ADVERTISEMENT BOARDS ON THE HOARDINGS ERECTED BY THE LESSEE ON THE PREMISES OF THE ASSESSEE. IN THIS VIEW OF THE M ATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. W E ACCORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF THE ASSESSEE IN THIS APPEAL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 12.01.2012 ITA NO.38/HYD/2011 M/S. NIZAM CLUB HYDERABAD. 5 SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DATED 12TH JANUARY, 2012 COPY FORWARDED TO: 1. M/S. NIZAM CLUB, 5 - 9 - 5 &6, OPP. ASSEMBLY, SAIFABAD, HYDERABAD 2. ADDL. COMMISSIONER OF INCOME-TAX RANGE-5, HYDER ABAD 3. CIT (A) - V , HYDERABAD. 4. COMMISSIONER OF INCOME - TAX IV, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S