Bimanagar Co.Op.hsg.So.Ltd., Ahmedabad V. The Income tax Officer,Ward-7(2), Ahmedabad

ITA 423/AHD/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8412 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: D K PARIKH
• Section: 143(3)

Judgement Text

ITA NO. 423/AHD/ 2012 ASSESSMENT/ YEAR : 2008 - 09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 423 / AHD / 2 0 1 2 ASSESSMENT YEAR: 2008 - 09 BIMANAGAR CO. OP. HOUSING SOCIETY LTD. ....... ...... ..... APPELLANT OPP. SHIVRANJANI CROSS ROA DS, SATELLITE, AHMEDABAD - 380015 [ PAN : AAAAB 4535 A ] VS. INCOME - TAX OFFICER , WARD 7 ( 2 ), AHMEDABAD . ............................RESPONDENT APPEARANCES BY: DK PARIKH FOR THE APPELLANT DINESH SINGH FOR THE RESPONDENT D ATE OF CONCLUDI NG THE HEARING : 28.06.2017 DATE OF PRONOUNCING THE ORDER : 22 .0 9 .2017 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER DA T ED 5 TH DECEMBER 2011, PASSED BY THE LEARNED CIT (A), IN THE M A TTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TA X A CT , 1961, FOR THE ASSESSMENT YEAR 2008 - 09. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS : 1 . THE LD. CIT (A) HAS ERRED IN BOTH IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ID AO DISALLOWING THE CLAIM O F RS.480000/ - AS AGAINST LEGITIMATE CLAIM OF DEDUCTION UNDER SECTION 24 (A) OF THE INCOME TAX ACT AND ASSESS THE INCOME AS INCOME FROM OTHER SOURCES' AS AGAINST THE 'INCOME FORM HOUSE PROPERTY' AS PER RETURN OF INCOME FILED BY THE ASSESSEE. THE ID CIT(A) FAILE D TO APPRECIATE THAT RENTING OUT LAND APPURTENANT TO THE BUILDINGS OWNED BY THE SOCIETY FOR THE PURPOSE OF ERECTING HOARDINGS SHALL BE IN THE NATURE OF THE 'INCOME FROM HOUSE PROPERTY' AND NOT AS 'INCOME F RO M OTHER SOURCES'. 2 . BOTH THE LOWER AUTHORITIES PATENTLY ERRED IN LAW AND ON FACTS IN HOLDING THAT R ENT INCOME F RO M LETTING OUT LAND 'APPURTENANT' TO BUILDING OWNED BY THE SOCIETY IS IN THE NATURE OF 'INCOME FORM HOUSE PROPERTY' AND NOT IN THE NATURE OF 'INCOME F ROM OTHER SOURCES'. ITA NO. 423/AHD/ 2012 ASSESSMENT/ YEAR : 2008 - 09 PAGE 2 OF 5 3 . WI THOUT PREJUDICE TO THE ABOVE, T HE ID CIT(A) ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE CLAIM OF DEDUCTION OF RS.480000/ - BEING 30% OF THE RENT INCOME SHALL BE ALLOWED AS PROV ID ED IN SECTION 24(A) OF THE I.T. ACT. 4 . THE ID CIT(A) FAILED TO PROPERLY APPLY THE RATIO OF VARIOUS CASE LAWS WHICH WERE APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. 5 . THE ID CIT(A) OUGHT TO HAVE ALLOWED THE APPEA L IN TO TO . 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS A COOPERA TIVE HOUSING SOCIETY. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE RECEIVED RS.16,00,000/ - FROM M/S SELVEL MEDIA SERVICES PVT. LTD., IN RESPECT OF HOARDING RENT. THESE HOARDINGS, AS IS THE CLAIM OF THE ASSESSEE, ARE BUILT ON COMMON LAND OWNED BY THE S OCIETY. THE ASSESSEE TREATED THE HOARDING RENT RECEIPTS AS INCOME TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY , AND, ACCORDINGLY CLAIMED DEDUCTION UNDER SECTION 24(A) OF THE ACT @ 30% OF THE ANNUAL VALUE. THE ASSESSING OFFICER, HOWEVER, DECLINED T HIS CLAIM BY OBSERVING THAT THESE HOARDINGS ARE ERECTED IN THE GROUND ADJACENT TO SATELLITE ROAD AND THERE IS NO BUILDING NEARBY. MEANING THEREBY THAT THE LAND ON WHICH THERE HOARDINGS ARE ERECTED CANNOT BE TERMED AS LAND APPURTENANT THERETO . THE ASSE SSING OFFICER, IN THE IMPUGNED ASSESSMENT ORDER, FURTHER OBSERVED AS FOLLOWS : - ADMITTEDLY , THESE HOARDINGS ERECTED BY THE SAID M/S SELVEL MEDIA SERVICES (P) LIMITED ARE IN THE BACK YARD OF SOME OF THE BUILDINGS OWNED BY THE MEMBERS OF THE ASSESSEE SOCIET Y FOR THEIR OWN RESIDENCE. THE CORE ISSUE IS WHETHER THE RECEIPTS IN THE HANDS OF THE ASSESSEE SOCIETY CAN BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . SECTION 22 OF THE ACT REDS AS 22. THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDINGS OR LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER, OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR PROFESSION CARRIED ON B Y HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME T A X, SHALL BE CHARGEABLE TO INCOME T A X UNDER T H E HEAD INCOME FROM HOUSE PROPERTY THUS, IT IS CLEAR THAT UNLESS THE PROPERTY OWNED BY THE ASSESSEE IS OF SUCH NATURE AS COULD BE LET OUT, THE CHARGE UNDER SECTION 22 CANNOT BE ATTRACTED. IN OTHER WORDS, IF THE PROPERTY IS OF SUCH NATURE THAT IT IS INHERENTLY INCAPABLE OF BEING LET OUT AND THE ASSESSEE IS THE OWNER THEREOF, THEN THE CHARGE UNDER SECTION 22 CANNOT ARISE. IN THE CASE OF THE ASSESSEE CO - OPERATIVE SOCIETY, THE RESIDENTIAL BUILDINGS ARE OWNED BY THE MEMBERS AND NOT BY THE SOCIETY. THEREFORE, THE ASSESSEE SOCIETY IS NOT IN A POSITION TO LET OUT THE RESIDENTIAL BUILDINGS WHICH ARE OWNED BY THE MEMBERS. THEN HOW CAN THE LAND ON WHICH HOARDINGS ARE ERE CT ED BE TERMED AS LAND APPURTENANT THERETO. THE ASSESSEE C O - OPERATIVE SOCI E TY IS NEITHER OWNER OF THE RESIDENTIAL BUILDINGS CONSTRUCTED ON THE LAND ON WHICH ITA NO. 423/AHD/ 2012 ASSESSMENT/ YEAR : 2008 - 09 PAGE 3 OF 5 HOARDINGS ARE ERECTED NOR THE ASSESSEE IS IN A POSITION TO LET OUT THESE RESIDENTIAL BUILDINGS. THEREFORE, THE RENT DERIVED FROM HOARDINGS CANNOT BE TERMED AS HAVING BE EN DERIVED FROM LAND APPURTENANT THERETO. IN VIEW OF THE FOREGOING, THE RECEIPTS OF RS.16,00,000/ - IN THE HANDS OF THE ASSESSEE CO - OPERATIVE SOCIETY IS TAXED AS INCOME FROM OTHER SOURCES. 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED C IT(A) , WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER, OPINED AS FOLLOWS : - I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE APPELLANT DURING THE COURSE OF APPELLATE PROC EEDINGS. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE APPELLANT T REATING THE PAYMENT RECEIVED FROM SELVEL MEDIA SERVICES (P) LIMITED F OR NUMBER OF HOARDINGS ERECTED ON COMMON LAND OWNED BY THE SOCIETY AS INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER HELD THAT SINCE THE APPELLANT SOCIETY DID NOT OWN THE RESIDENTIAL BUILDING, IT CANNOT LET OUT THE RESIDENTIAL BUILDING OWNED BY THE MEMBERS AND, THEREFORE, THE RENT DERIVED FROM THE HOARDINGS CANNOT BE TERMED AS HAVING BEEN DERIVED FROM THE LAND A PPURTENANT THERETO. THE APPELLANT H A S CLAIMED THAT IT WAS THE OWNER OF THE LAND AND ALL THE RESIDENTIAL UNITS. THE MEMBERS HAVE ONLY BEEN ALLOTTED THE FLATS FOR USE A ND THEY ARE NOT THE ABSOLUTE OWNERS. FURTHER, T H E HOARDINGS HAVE B E EN PUT UP IN THE BAC KYARD OF SOME OF THE RESIDENTIAL UNITS WHICH WAS TH E SOCIETY LAND, AND THEREFORE, THE HOARDING WERE ON THE LAND APPURTENANT TO BUILDING. THE CLAIM OF THE APPELLANT IS NOT ACCEPTABLE. THE APPELLANT HAS NOT LET OUT THE LAND OR ANY BUILDING FROM WHICH IT IS DERIVING ANY INCOME. THE INCOME IS BEING DERIVED BY GIVING PERMISSION FOR I NSTALLING THE HOARDING IN THE COMPOUND . THE APPELLANT HAS NOT GIVEN R IGHT OF USER OF LAND TO THE ADVERTISING COMPANY. THE INCOME EARNED THEREFROM WILL THEREFORE BE NOT THE INCOM E FROM LETTING OUT OF LAND OR BUILDING AND, THEREFORE, IT CANNOT BE ASSESSED AS HOUSE PROPERTY INCOME. THE HOARDINGS CANNOT BE TREATED AS PART OF THE BUILDING AND, THEREFORE, THE INCOME CAN BE ASSESSED ONLY AS INCOME FROM OTHER SOURCES. THE RELIANCE IS A LSO PLACED ON THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF MUKHERJEE ESTATE (P) LTD . (224 ITGR 1). HE GROUND OF APPEAL IS, THEREFORE, DISMISSED. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME . 6. I HAVE HEARD THE RIVAL CONTEN TIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 7. I FIND THAT, AS LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POINTS OUT, THE AS SESSEE SOCIETY IS A TENEMENT CO - OPERATIVE HOUSING SOCIETY, IN WHICH OWNERSHIP OF THE LAND AND BUILDING VESTS IN THE SOCIETY ITSELF, AND NOT THE MEMBER OF SOCIETY. THIS LEGAL DISTINCTION, IN PRINCIPLE, IN RECOGNIZED BY HON BLE JURISDICTIONAL H IGH C OURT IN THE CASE OF MULSHANKAR KUNWERJI GOR AND OTHERS VS. J . S . JUD GA [AIR 1980 GUJ . 62]. THE VERY FOUNDATION OF STAND TAKEN BY THE AUTHORITIES BELOW IS THUS LEGALLY UNSUSTAINABLE. COMING TO THE CONNOTATIONS OF LAND APPURTENANT THERETO IN THE EXPRESSION BUILDING OR LAND ITA NO. 423/AHD/ 2012 ASSESSMENT/ YEAR : 2008 - 09 PAGE 4 OF 5 APPURTENANT THERETO , IT DOES NOT MEAN THAT LAN D SHOULD BE USED AS AN INTEGRAL PART OF THE BUILDING AS A UNIT. THE ASSESSEE IN THE PRESENT CASE IS OWNER OF ENTIRE SET OF HOUSING UNITS, WHICH CAN BE COLLECTIVELY REFERRED TO AS HOUSING COMPLEX, AND, THE VACANT LAND IN THIS COMPLEX IS THUS ESSENTIALLY A N INTEGRAL PART OF THE HOUSING COMPLEX. AS OBSERVED BY THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CN ANANTHRAM VS. ACIT [JUDGEMENT DATED 10.10.2014 IN I T A NO.1012 OF 2008), WHICH IS EQUALLY VALID IN THE PRESENT CONTEXT. WHEN THE LEGISLATURE HAS USED THE WORD OR WHICH MEANS THE WORD BUILDINGS OR LAND APPURTENANT THERETO SHOULD BE UNDERSTOOD DISJUNCTIVELY HAVING REGARD TO THE CONTEXT IN WHICH IT IS U SED, IT CANNOT BE READ AS AND AS CLEARLY, THEREFORE, LAND BEING APPURTENANT TO THE BUILDING IS SUFFI CIENT; IT NEED NOT BE INTEGRAL PART OF THE BUILDING ITSELF. IN ANY CASE, HAVING SEEN PICTURES OF HOARDINGS IN QUESTION, I AM SATISFIED THAT LAND ON WHICH HOARDING RIGHTS WERE GIVEN IS APPURTENANT TO THE BUILDING AND CANNOT BE VIEWED ON STANDALONE BASIS. AS REGARDS REVENUE S RELIANCE ON HON BLE CALCUTTA HIGH COURT S JUDGEMENT IN THE CASE OF MUKHERJEE ESTATES PVT. LTD. VS. CIT [(2000) 244 ITR 1 (CAL)], I MAY ONLY REFER TO THE FOLLOWING OBSERVATIONS MADE BY ME IN THE CASE OF MANPREET SINGH VS. ITO [(2015) 38 ITR (TRIB) 55 (DEL)]. 7. WE FIND THAT SO FAR AS HON BLE CALCUTTA HIGH COURT S JUDGMENT IN THE CASE OF MUKERJEE ESTATES PVT . LTD . (SUPRA) IS CONCERNED, IT IS WHOLLY MISPLACED INASMUCH AS IT WAS A CASE IN WHICH THE TRIBUNAL HAD GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD LET OUT THE HOARDINGS AND IN WHICH THE ASSESSEE S CLAIM THAT HE HAD LET OUT THE ROOF FOR ADVERTISEMENT AND HOARDING REMAINED TO BE UNSUBSTANTIATED INASMUCH AS WHEN A QUERY WAS PUT TO HIM (I.E. THE ASSESSEE) WHETHER THERE WAS AN AGR EEMENT TO THIS EFFECT TO CONCLUDE WHETHER THE HOARDING WAS LET OUT OR THE ROOF IS LET OUT , THE ASSESSEE FAILED TO PRODUCE THAT AGREEMENT NOR THERE IS (WAS) ANY REFERENCE TO SUCH AN AGREEMENT BEFORE THE AUTHORITIES BELOW . IT WAS IN THIS BACKDROP THAT HON BLE CALCUTTA HIGH COURT CONCLUDED AS FOLLOWS: .THEREFORE, CONSIDERING THE FINDING OF THE TRIBUNAL THAT THE ASSESSEE HAS LET OUT THE HOARDING, THESE ARE NEITHER PART OF THE BUILDING NOR LAND APPURTENANT THERETO. THEREFORE, PERMITTING SOME COMPANIES TO DISPLAY THEIR BOARDS ON HOARDINGS CANNOT BE TAKEN AS INCOME FROM THE HOUSE PROPERTY AS HOARDINGS CANNOT BE TAKEN AS PART OF THE BUILDING 8. LEARNED CIT(A) WAS THUS CLEARLY IN ERROR IN OBSERVING, IN THE IMPUGNED ORDER, THAT HON BLE HIGH COURT HAS HELD THAT IF THE RENT IS ONLY FOR FIXING THE HOARDING, IT CANNOT BE TREATED AS PART OF THE BUILDING, NOR COULD IT BE TREATED AS LAND APPURTENANT THERETO, THEREFORE SUCH INCOME WILL HAVE TO BE SEPARATELY CONSIDERED AS INCOME FROM OTHER SOURCES (EMPHASIS BY I.T. A. NO.: 3976/DEL/13 ASSESSMENT YEAR: 2009 - 10 PAGE 5 OF 7 UNDERLINING SUPPLIED BY US) . AS IS CLEARLY DISCERNIBLE FROM THE EXTRACTS FROM THE OBSERVATIONS OF THEIR LORDSHIPS OF HON BLE CALCUTTA HIGH COURT, THE RENT WAS TAKEN AS RENT FOR HOARDINGS PER SE RATH ER THAN RIGHTS ON THE ROOF WHERE HOARDINGS COULD BE INSTALLED OR, AS THE LEARNED CIT(A) PUTS IT, FIXED . THERE WAS A CATEGORICAL FINDING TO THAT EFFECT IN THE ORDER OF THE ITA NO. 423/AHD/ 2012 ASSESSMENT/ YEAR : 2008 - 09 PAGE 5 OF 5 TRIBUNAL AS WELL AND THIS FINDING REMAINED UNCONTROVERTED BEFORE HON BLE CALCUTTA H IGH COURT AS WELL. IT WAS BASED ON THIS UNCONTROVERTED FINDING THAT HON BLE CALCUTTA HIGH COURT REACHED THE CONCLUSION THAT THE INCOME IN QUESTION IS TAXABLE AS INCOME FROM OTHER SOURCES. THIS DECISION, THEREFORE, CANNOT EVEN BE AN AUTHORITY FOR THE PROPOS ITION THAT THE INCOME FROM RENTING OUT THE ROOF FOR PLACING THE HOARDINGS CAN BE TREATED AS INCOME FROM OTHER SOURCES. QUITE TO THE CONTRARY TO THIS INTERPRETATION, THE OBSERVATIONS MADE IN THIS DECISION UNAMBIGUOUSLY SHOW THAT WHEN IT CAN BE DEMONSTRATED, AS THEIR LORDSHIPS WANTED THE ASSESSEE TO DEMONSTRATE IN THAT CASE, THAT THE CONSIDERATION RECEIVED IS RENT FOR LETTING OUT THE ROOF RATHER THAN THE HOARDINGS, THE LEGAL POSITION WILL BE MATERIALLY DIFFERENT. 8. IN THE PRESENT CASE ALSO, THE CONSIDERATI ON RECEIVED BY THE ASSESSE E IS FOR THE RIGHT TO INSTALL THE HOARDING RATHER THAN RENT FOR HOARDING INSTALLED BY THE ASSESSEE. THE ABOVE OBSERVATIONS ARE THUS EQUALLY VALID IN THE PRESENT CONTEXT. 9. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIN D ENTIRETY OF THE CASE, I HOLD THAT THE INCOME EARNED BY THE ASSESSEE, IN CONSIDERATION OF HAVING GIVEN RIGHTS TO HAVE PLAY HOARDINGS ETC. ARE TAXABLE AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY, DEDUCTION UNDER SECTION 24(A) WAS INDEED ADMISSIBLE IN THE P RESENT CASE. I DIRECT THE ASSESSING O FFICER TO ALLOW THE DEDUCTION UNDER SECTION 24(A), AS CLAIMED BY THE ASSESSEE . THE ASSESSEE GET S THE RELIEF ACCORDINGLY. 10. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN C OURT TODAY ON THE 22 ND DAY OF SEPTEMBER , 2017. SD/ - PRAMOD KUMAR ACCOUNTANT MEMBER) AHMEDABAD, THE 22 ND DAY OF SEPTEMBER , 2017 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD