SATYAVATI RUIA, MUMBAI V. DCIT 3(1), MUMBAI

ITA 3915/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79067 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-05-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 3915/MUM/2012 ( / ASSESSMENT YEAR: 2005-06) SATYAVATI RUIA 901, MAKER CHAMBERS V, NARIMAN POINT, MUMBAI-400 021 / VS. DY. CIT-3(1), INCOME TAX OFFICE, AAYAKAR BHAVAN, MUMBAI ' ./# ./PAN/GIR NO. ADAPR 2027 H ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI PANKAJ R. TOPRANI %&'$ ' ( / RESPONDENT BY : SHRI MAURYA PRATAP )* + ' , / DATE OF HEARING : 20.05.2014 -./ ' , / DATE OF PRONOUNCEMENT : 13.06.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, MUMBAI (CIT(A) FOR SHO RT) DATED 30.01.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2005-06 VIDE ORDER DATED 26.12.2007. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL, HAD ENTERED INTO A LEASE AGREEMENT ON 14.05.1984 WITH M/S. NEW INDIA A SSURANCE CO. LTD. (NIACL) TO LET OUT OFFICE SPACE AT ITS COMMERCIAL PREMISES AT MAKE R CHAMBERS-3, NARIMAN POINT, MUMBAI AT A MONTHLY RENT OF RS.3,89,640/-, I.E., AT A ANNUAL RENT OF RS.46,75,680/- . THE 2 ITA NO. 3915/MUM/2012 (A.Y. 2005-06) SATYAVATI RUIA VS. DY. CIT ASSESSING OFFICER (A.O.), THEREFORE, BROUGHT THE SA ID AMOUNT TO TAX AS INCOME FROM HOUSE PROPERTY, I.E., BY ASSESSING IT AS THE ANNUA L VALUE OF THE SAID PROPERTY. IN APPEAL, IT WAS CONTENDED BY THE ASSESSEE THAT SHE IS NEITHER T HE OWNER NOR THE DEEMED OWNER OF THE PREMISES AND, THEREFORE, THERE IS NO QUESTION OF AS SESSING THE SAID INCOME AS INCOME FROM HOUSE PROPERTY. IN FACT, THE TENURE OR THE PERIOD F OR WHICH THE AGREEMENT WAS ENTERED INTO HAD EXPIRED ON 13.05.1994, AND THERE WAS NO EXTENSI ON CLAUSE THEREIN, SO THAT THE TENANT WAS IN ILLEGAL POSSESSION OF ITS HOUSE PROPERTY, TO WARD WHICH AN EVICTION SUIT HAS ALSO BEEN FILED BEFORE THE HONBLE BOMBAY HIGH COURT. AC CORDINGLY, THE AMOUNT RECEIVED FROM NIACL (RS.30,26,400/-) BE ASSESSED AS BUSINES S INCOME, ALSO ALLOWING DEDUCTION FOR EXPENSES INCURRED BY THE ASSESSEE (AT RS.14,44, 200/-). ALTERNATIVELY, THE RENTAL INCOME BE ASSESSED AS BUSINESS INCOME AT RS.60,175/- (PER MONTH), I.E., AS PER THE ORDER OF THE SMALL CAUSES COURT DATED 20.03.2007 (IN RAN SUIT NO .79/SR/1989/COPY ON RECORD). THAT IS, THOUGH THE ASSESSEE HAD BOOKED INCOME AT R S.30,26,400/- (@ RS.2,52,200/- P.M.), IT HAD ACTUALLY RECEIVED INCOME AT A REDUCED AMOUNT OF RS.60,175/- P.M. THE LD. CIT(A) CONSIDERING THE AFORE-STATED FACTS WAS OF TH E VIEW THAT UNDER THE CIRCUMSTANCES IT IS ONLY PROPER THAT THE RENTAL INCOME BE ASSESSED A T RS.30,26,400/- AS INCOME FROM HOUSE PROPERTY. AGGRIEVED, THE REVENUE IS IN APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE RETURNED INCOME FOR THE YEAR, I.E., RS.30,2 6,400/-, IS BASED ON THE RENTAL INCOME AS PER THE AGREEMENT DATED 14.05.1984. THE I NCOME FOR THE IMMEDIATELY PRECEDING YEAR, AS NOTED BY THE LD. CIT(A), HAS ALS O BEEN ASSESSED BY THE REVENUE AT THE RETURNED AMOUNT OF RS.29.784 LACS. THE ASSESSEE, AS INFORMED TO US BY THE LD. AUTHORIZED REPRESENTATIVE (AR) DURING HEARING, HAS PREFERRED A N APPEAL AGAINST THE ORDER OF THE SMALL CAUSES COURT DATED 20.03.2007 (SUPRA), FIXING THE STANDARD RENT OF THE PROPERTY AT RS.60,175/- P.M. THE MATTER WITH REGARD TO THE QUA NTIFICATION OF THE RENT PAYABLE TO THE ASSESSEE IS SUBJUDICE BEFORE THE HONBLE BOMBAY HIG H COURT, EVEN AS THE ASSESSEE IN FACT ALLEGES OR CONTENDS OF NO CONTINUING ARRANGEMENT WI TH NIACL IN-AS-MUCH AS THE LEASE AGREEMENT EXPIRED ON 13.05.1994, AND WHICH HAS NOT BEEN EXTENDED FURTHER. THE MATTER 3 ITA NO. 3915/MUM/2012 (A.Y. 2005-06) SATYAVATI RUIA VS. DY. CIT WITH REGARD TO THE HEAD OF INCOME WAS NOT ARGUED BE FORE US, AND NEITHER DO WE FIND ANY GROUND IN ITS RESPECT, THE ASSESSEE NOT PRESSING IT S GROUNDS 2 & 3, BUT ONLY ITS GROUND NO. 1 AND ADDITIONAL GROUND BEFORE US. IN FACT, WE FIND IT TO BE SO BEFORE THE TRIBUNAL EVEN FOR A.Y. 2004-05; THE ASSESSEE ONLY PRESSING ITS CLAIM WITH REGARD TO THE QUANTUM OF RENT, AND WITH REFERENCE TO THE ORDER BY THE HONBLE SMAL L CAUSE COURT. WE ARE CONSCIOUS OF THE FACT THAT THE STANDARD RENT STANDS FIXED BY THE HONBLE SMALL CAUSES COURT AT A MUCH LOWER SUM. SO, HOWEVER, IT NEEDS TO BE APPRECIATED THAT THE ORIGINAL AGREEMENT HAS SINCE EXPIRED, AND WHICH HAS NOT BEEN EXTENDED, AND WHICH COULD ONLY BE AT THE INSTANCE OF AND UPON AGREEMENT BETWEEN THE PARTIES THERETO. THE STA NDARD RENT COULD APPLY ONLY TO A TENANT AND NOT TO ONE WHO OCCUPIES THE PROPERTY ILL EGALLY. SO, HOWEVER, THE COMPENSATION OR RENT TOWARD THE SAME, EVEN FROM ANY ILLEGAL TENA NT, WOULD STAND TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. 3.2 UNDER THE CIRCUMSTANCES, WE, THEREFORE, ONLY CO NSIDER IT PROPER THAT THE INCOME CONTINUES TO BE ASSESSED AT THE RETURNED SUM OF RS. 30.264 LACS, BEING IN TERMS OF THE ORIGINAL AGREEMENT. SO, HOWEVER, THE SAME SHALL BE SUBJECT TO ANY DOWNWARD REVISION THEREIN THAT MAY BE DIRECTED BY THE HONBLE HIGH CO URT, BEFORE WHOM THE MATTER IS SUBJUDICE. ANY INCREASE THEREIN, HOWEVER, IF ANY, T HAT MAY BE DIRECTED BY THE HONBLE COURT; THE LD. AR CONCEDING BEFORE US OF THE ASSESS EE AS HAVING RAISED A HIGHER CLAIM, WOULD BE ASSESSABLE AS THE INCOME FOR THE YEAR IN W HICH IT IS SO DIRECTED BY THE HONBLE HIGH COURT IN-AS-MUCH AS THE RIGHT FOR THE SAME CAN ONLY BE CONSIDERED AS HAVING ACCRUED THEREAT (REFER: CIT VS. EXCEL INDUSTRIES [2013] 358 ITR 295 (SC)). WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISPOSED OF IN THE AFORE-SAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 13, 2014 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 0+ MUMBAI; 1) DATED : 13.06.2014 4 ITA NO. 3915/MUM/2012 (A.Y. 2005-06) SATYAVATI RUIA VS. DY. CIT *.)../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. 4*5 6 %)78 , , 78/ , 0+ / DR, ITAT, MUMBAI 6. 6 9: ; + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , 0+ / ITAT, MUMBAI