DCIT, Bangalore V. Smt. Dr. S. Kanchana, Bangalore

ITA 470/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57473 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA CITI
• Assessee Lawyers: JYOTHI M MARADI
• Section: 143(3); 153A

Judgement Text

PAGE 1 OF 5 ITA NOS.468 TO 470 /BANG/2011 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NOS.468 TO 470/BANG/2011 (ASST. YEARS 2004-05 TO 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), BANGALORE. VS SMT. DR. S KANCHANA, NO.303, MAITHRI, 5 TH MAIN BEL LAYOUT, 1 ST STAGE, BASAVESWARANAGAR, BANGALORE. PA NO.ABDPK8839M (APPELLANT) (RESPONDENT) DATE OF HEARING 15.02.2012 DATE OF PRONOUNCEMENT 15.02.2012 APPELLANT BY : SHRI S K AMBASTHA, CIT-I RESPONDENT BY : JYOTHI M MARADI, ADVOCATE O R D E R PER BENCH : THESE APPEALS INSTITUTED BY THE REVENUE ARE DIRECT ED AGAINST THE CONSOLIDATED ORDER OF THE LD. CIT(A)-VI, BANGAL ORE DATED 10.02.2011. THE RELEVANT ASSESSMENT YEARS ARE 2004-05 TO 2006-07 . 2. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEA LS AND THEY PERTAIN TO THE SAME ASSESSEE, THEY ARE HEARD TOGETHE R AND DISPOSE OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. IN ALL THE ASSESSMENT YEARS, IDENTICAL ISSUES AR E RAISED. THE EFFECTIVE GROUNDS READ AS UNDER:- PAGE 2 OF 5 ITA NOS.468 TO 470 /BANG/2011 2 (I) THE LEARNED CIT(A) ERRED IN ALLOWING ASSESSEE S CLAIM AND DIRECTING THE ASSESSING OFFICER TO TREAT THE FURNIT URE HIRING CHARGES AS INCOME FROM OTHER SOURCES. (II) THE LEARNED CIT(A) HAS NOT APPRECIATED THE FAC T THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF SAMBHU INVESTMENTS PVT. LIMITED V CIT 263 ITR 1431 IS SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE. (III) WHILE RELYING ON THE HONBLE ITAT, A BENCH, BANGALORES ORDER IN ITA NO.256 TO 534/BANG/2008 AND ITA NO.550 TO 553/BANG/2008, DATED 31.12.2008, THE LEARNED CIT (A) HAS NOT CONSIDERED THE FACT THAT THE DEPARTMENT HAS FILED APPEALS BEFORE THE HONBLE HIGH COURT, KARNAT AKA AGAINST THE SAID ORDERS. 4. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE ALONG WITH OTHER CO-OWNERS HAD INHER ITED A LANDED PROPERTY. ALL THE CO-OWNERS HAD ENTERED INTO A JOIN T DEVELOPMENT AGREEMENT WITH M/S EMBASSY BUILDERS FOR CONSTRUCTION OF A COMM ERCIAL COMPLEX. THE ASSESSEE GOT 1/6 TH SHARE IN THE CONSTRUCTED AREA. THE WHOLE COMPLEX WAS LET OUT TO M/S GLOBAL SYMPHONEY SOFTWARE (P) LTD.. AS PE R LEASE AGREEMENT, THE OWNERS WERE TO DO ALL THE INTERIORS INCLUDING P ARTITIONS, CUBICLES, FURNISHING, AIR-CONDITIONING ETC. THE INTERIOR WOR KS DONE BY THE BUILDER COSTED THE CO-OWNERS RS.1.56 CRORE, OUT OF WHICH RS .1.25 CRORES WERE CLAIMED TO BE THE LOAN RAISED FROM ICICI BANK. AS PER THE LEASE AGREEMENT ENTERED BETWEEN THE CO-OWNERS OF THE BUILDING AND M /S GLOBAL SYMPHONEY SOFTWARE (P) LTD., THE LEASE RENTALS WERE DIVIDED I NTO TWO PORTIONS, NAMELY, SHELL SPACE AND HIRE CHARGES FOR FULLY FITTED INTERI OR FURNITURE ETC. THE LEASE AMOUNT FIXED FOR SHELL SPACE WAS RS.35 PER SF T, WHEREAS FOR HIRE CHARGES FOR FULLY FITTED INTERIORS, FURNITURE ETC. W AS RS.22.50 PER SFT. PAGE 3 OF 5 ITA NOS.468 TO 470 /BANG/2011 3 4.1 IN THE RETURN OF INCOME FILED FOR ALL THE ASS ESSMENT YEARS, THE ASSESSEE HAD COMPUTED THE RENT RECEIVED FROM SHELL SPACE AT RS.35 AS INCOME FROM HOUSE PROPERTY WHEREAS RS.22.50 PER SFT AS LEASE RENTAL RECEIVED FOR INTERIOR FITTINGS, FURNITURE AND PARTI TIONS WERE TREATED AS INCOME FROM OTHER SOURCES. THE ASSESSMENT IN ALL T HE YEARS WERE COMPLETED UNDER SECTION 143(3) RWS 153A OF THE ACT, WHEREIN T HE ASSESSING OFFICER HAD TREATED THE FURNITURE HIRING CHARGES AS PART OF INCOME FROM HOUSE PROPERTY AND NOT AS INCOME FROM OTHER SOURCES AS CLAIMED BY THE ASSESSEE. 5. AGGRIEVED BY THE ASSESSMENTS, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 6. THE FIRST APPELLATE AUTHORITY NOTICED THAT IN TH E CASE OF OTHER FIVE CO-OWNERS, THE TRIBUNAL HAD DECIDED THE MATTER VIDE ITS ORDER DATED 31/12/2008 (ITA NOS.526 TO 534/BANG/2008 AND ITA NO S.550 TO 553/BANG/2008) IN FAVOUR OF THE CO-OWNERS. THE CIT (A), AFTER EXTRACTING THE FINDINGS OF THE TRIBUNAL IN THE CASE OF THE CO- OWNERS, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECTED THE ASSESSIN G OFFICER TO TREAT THE LEASE AMOUNT RECEIVED FOR INTERIOR FITTINGS, FURNIT URE AND PARTITIONS AT RS.22.50 PER SFT AS INCOME FROM OTHER SOURCES. 7. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 8. AT THE VERY OUTSET, IT WAS POINTED OUT BY THE L EARNED AR THAT THE TRIBUNALS ORDER IN THE CASE OF OTHER CO-OWNERS HAS BEEN AFFIRMED BY PAGE 4 OF 5 ITA NOS.468 TO 470 /BANG/2011 4 THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH CO URT IN ITA NOS.321, 324, 325, 326, 328 AND 329/2009 DATED 7 TH FEBRUARY, 2011. 9. THE LEARNED DR WAS UNABLE TO CONTROVERT THE ASS ERTION MADE BY THE LEARNED AR. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. THE TRIBUNAL IN THE CASE OF THE CO-OWNE RS IN ITA NOS.526 TO 534 AND 550 TO 553/BANG/2008 DATED 31/12/2008 HAS CATEG ORICALLY HELD THAT THE LEASE AMOUNT RECEIVED FROM INTERIOR FITTINGS, F URNITURE AND PARTITIONS ETC. ARE TO BE ASSESSED AS INCOME FROM OTHER SOURC ES. THE RELEVANT FINDING OF THE TRIBUNAL IS EXTRACTED AT PARA 2.4.3 OF THE IMPUGNED ORDER OF THE CIT(A). HENCE, THE SAME IS NOT REITERATED HERE . 10.1 THE ORDER OF THE TRIBUNAL IN THE CASE OF THE CO-OWNERS HAS BEEN AFFIRMED BY THE JUDGEMENT OF THE HONBLE JURISD ICTIONAL HIGH COURT (SUPRA). THE RELEVANT FINDING OF THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT READS AS FOLLOWS:- 17. THEREFORE, FROM THE AFORESAID STATUTORY PROVISIONS, IT IS CLEAR THAT IF THE INCOME IS TO BE CHARGEABLE UNDER THE HEADING OF INCOME FROM HOUSE PROPERTY, IT SHOULD BE THE INCOME WHICH REPRESENTS THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDING O R LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER AND ONLY SUCH INCOME SHALL BE CHARGEABLE TO IN COME TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WH EN SECTION 56(2)(III) MAKES IT EXPLICITLY CLEAR THAT TH E INCOME FROM MACHINERY OR FIXTURE BELONGING TO THE ASSESSEE AND LET OUT ON HIRE, IF IT IS NOT CHARGEABLE UNDER THE HEADING OF PROFITS AND GAINS OF BUSINESS OR PROFESSION, T HEN IT PAGE 5 OF 5 ITA NOS.468 TO 470 /BANG/2011 5 HAS TO BE CHARGED TO INCOME TAX UNDER THE HEADING INCOME FROM OTHER SOURCES. IF THE AFORESAID INCO ME IS INSEPARABLE FROM LETTING OUT THE SAID PLANT AND MAC HINERY OTHER THAN THE INCOME OF SUCH LETTING OUT CANNOT IF IT IS NOT CHARGEABLE TO INCOME TAX UNDER PROFITS AND GAI NS OR PROFESSION, IS CHARGEABLE UNDER THE HEAD INCOME F ROM OTHER SOURCES. THEREFORE UNDER THESE CIRCUMSTANCE S, THE INCOME DERIVED FROM LETTING OUT THE FURNITURE A ND FIXTURE IS NOT CHARGEABLE UNDER THE HEADING OF INC OME FROM HOUSE PROPERTY. 10.2 RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HO NBLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE CIT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO TREAT THE LEASE AMOUNT REC EIVED ON ACCOUNT OF INTERIOR FITTINGS, FURNITURE AND PARTITIONS AS INCO ME FROM OTHER SOURCES. 11. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH DAY OF FEBRUARY, 2012 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONC ERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.