ACIT, New Delhi V. M/s. HB Estate Developers Ltd., New Delhi

ITA 4782/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61602 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: SANTOSH KUMAR AGGARWAL
• Keywords: Business income; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `C : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NOS.4782 & 4783/DEL./2011 (ASSESSMENT YEARS : 2004-05 & 05-06 ) ACIT, CIRCLE 12(1), VS. HB ESTATE DEVELOPERS LT D., NEW DELHI H-72, CONNAUGHT CIRCUS, NEW DELHI. (PAN/GIR NO.AAACH3122M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANTOSH KUMAR AGGARWAL, ADV. REVENUE BY : SHRI SAT PAL SINGH, SR.DR ORDER PER U.B.S. BEDI, J.M. THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINST S EPARATE ORDERS PASSED BY THE CIT (A)-VIII, NEW DELHI, BOTH DATED 09.08.2011, REL EVANT TO ASSESSMENT YEARS 2004-05 & 05-06. THESE APPEALS INVOLVE IDENTICAL FACTS AND SIMILAR ISSUES, THEREFORE, WERE HEARD TOGETHER AND BEING DISPOSED OF BY A SINGLE ORDER FO R THE SAKE OF CONVENIENCE. 2. IN THE APPEAL FOR ASSESSMENT YEAR 2004-05, BESID ES CHALLENGING TREATING THE INCOME FROM HOUSE PROPERTY FROM LEASE RENTAL AS I NCOME FROM BUSINESS INSTEAD OF TREATING THE SAME AS INCOME FROM HOUSE PROPERTY A S TREATED BY THE ASSESSING OFFICER, THE DEPARTMENT HAS ALSO CHALLENGED IN DELETING THE DISALLOWANCE OF RS.3,01,156/- ON ACCOUNT OF BROKERAGE EXPENSES AND OF RS.21,71,207/- , ON ACCOUNT OF BUILDING MAINTENANCE AND REPAIRS AND DELETING THE DISALLOWA NCE OF RS.5,11,101/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES AND ISSUES EXCEPT FIRST ISS UE WHICH ARE STATED TO BE CONSEQUENTIAL. I.T.A. NOS.4782 & 4783/DEL./2011 (A.YS.: 2004-05 & 05-06) 2 3. AT THE VERY OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUES WERE THERE IN ASSESSMENT YEAR 2006-07 BEFORE ITAT, C B ENCH, NEW DELHI IN I.T.A. NO.2286/DEL./2010, IN WHICH DELETION ORDERED BY CIT (A), HAS BEEN CONFIRMED VIDE ITS ORDER DATED 24.1.2011, IN WHICH THE LEASE RENTAL O F RS.17,69,646/- WAS ASSESSED AS BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPE RTY, WHILE FOLLOWING EARLIER DECISION OF ITAT IN I.T.A NO.872/DEL./2007 FOR ASSE SSMENT YEAR 2002-03 DATED 26.09.2008. THE CIT(A) HAS FOLLOWED THE DECISION F OR THE ASSESSMENT YEAR 2006-07 TO ALLOW THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 9 .8.2011 (WHICH IS CHALLENGED BEFORE US). SINCE ISSUE IS COVERED IN FAVOUR OF THE ASSES SEE BY THE EARLIER DECISION OF THE TRIBUNAL WHICH HAS BEEN FOLLOWED BY CIT(A) AND THERE IS ALS O HONBLE DELHI HIGH COURT JUDGMENT IN CIT VS. NEO POLY PACK(P) LTD., 245 I.T. R. 492(DEL.), WHICH HAS ALSO BEEN NOTED AND FOLLOWED BY ITAT C BENCH, NEW DELHI WHI LE DECIDING THE APPEALS OF THE REVENUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2002-03 AND 06-07. THEREFORE, APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED, WH ICH MAY BE DISMISSED. 4. THE LD.DR COULD NOT CONTROVERT THIS FACTUAL ASPE CT THAT IT IS A COVERED MATTER, HAS JUST RELIED UPON THE ORDER OF ASSESSING OFFICER. 5. AFTER HEARING BOTH THE SIDES, CONSIDERING THE MA TERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON, WE FIND THAT ISSUES RAISED IN THESE APPEALS ARE COVERED IN FAVOUR OF THE ASSESSEE BY NOT ONLY ITAT DECISION IN THE CA SE OF THE ASSESSEE, BUT ALSO BY THE DELHI HIGH COURT JUDGMENTS AS RELIED UPON BY THE LD .COUNSEL AND CIT(A) HAS FOLLOWED THESE DECISIONS TO DECIDE THE ISSUE IN FAVOUR OF TH E ASSESSEE AND RELEVANT PORTION OF ITAT ORDER AS CONTAINED IN PARAS. 8 & 9 FOR ASSESSMENT Y EAR 2002-03 IS REPRODUCED AS UNDER: 8. `WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENTS CITE D BY BOTH SIDES. WE FIND THAT THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. (SUPRA) IS NOT APPL ICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THE ASSESSEE PURCHASED LAND AND SET UP MARKET THEREIN. SOME STALLS REMAINED OCCUPIED BY T HE SAME OCCUPANTS AND THE REMAINING SHOPS/STALLS WERE OCCUPIED BY A SHIFTING CLASS OF OCCUPANTS. UNDER THESE FACTS, IT WAS HELD BY HON'BLE APEX COURT THAT THE CHARACTER OF INCOME WAS NOT ALTERED MERELY BECAUSE SOME STALLS WERE OCCUPIE D BY THE SAME OCCUPANTS AND I.T.A. NOS.4782 & 4783/DEL./2011 (A.YS.: 2004-05 & 05-06) 3 THE REMAINING STALLS WERE OCCUPIED BY SHIFTING CLAS S OF OCCUPANTS. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND HENCE THIS JUDGME NT IS NOT APPLICABLE IN THE PRESENT CASE. SIMILARLY, THE TRIBUNAL JUDGMENT REND ERED IN THE CASE OF ATMARAM PROPERTIES PVT. LTD. (SUPRA) IS NOT APPLICABLE IN T HE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. FACTS IN THAT CASE ARE NOTED BY THE TRIBUNAL IN PARA NO.7, AS PER WHICH, THE PROPERTY IN QUESTION COULD NOT BE TREATE D AS STOCK IN TRADE AND THERE WAS NO POSSIBILITY OF ANY CONSTRUCTION THEREON IN V IEW OF NDMC AND L&DO STAND IN THAT CASE. IT IS ALSO NOTED THAT THERE WA S NO ACTIVITY IN RESPECT OF PROPERTY WHICH COULD BE CONSTRUED AS BUSINESS ACTIVITY UNDER THE LAW. 9. AS AGAINST THIS, WE FIND THAT LD CIT(A) HAS DECI DED THIS ISSUE IN FAVOUR OF THE ASSESSEE ON THE BASIS OF RULE OF CONSISTENCY. I T IS NOTED BY THE LD CIT(A) IN PARA NO.7 OF HIS ORDER THAT THE ASSESSING OFFICER I N SCRUTINY ASSESSMENT ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-0 2 AND 2003-04 HAS ACCEPTED THE CLAIM OF THE ASSESSEE THAT LEASE RENTAL INCOME IS INCOME FROM BUSINESS. NO DIFFERENCE IN FACTS IS POINTED OUT BY THE ASSESSING OFFICER IN THE PRESENT YEAR AS COMPARED TO FACTS IN ASSESSMENT YEAR 2001-02. AS PE R THE DETAILS OF AREA SOLD OUT OF LEASED OUT FLATS IN THE BUILDING AT HB TWIN TOWE R, NEW DELHI AS APPEARING ON A PAGE NO.3 OF THE PAPER BOOK, WE FIND THAT THE ARE A SOLD OUT IN ASSESSMENT YEAR 2001-02 WAS 2672 SQ. FT., OUT OF WHICH, 2369 SQ. FT . WAS FOR THOSE FLATS WHICH WERE LEASED OUT. SIMILARLY, IN THE PRESENT YEAR TOTAL AR EA SOLD OUT IS 37864 SQ. FT. AND ALL THESE FLATS WHICH WERE SOLD DURING THE PRESENT YEAR WERE LEASED OUT. IN ASSESSMENT YEAR 2003-04, TOTAL AREA SOLD OUT IS 2400 SQ. FT. O UT OF WHICH 2000 SQ. FT. WAS FOR THOSE FLATS WHICH WERE LEASED OUT. FROM THE DETAILS FOR ASSESSMENT YEAR 2001-02 TO 2007-08, WE FIND THAT ONLY TWO FLATS WERE SOLD FROM VACANT FLATS I.E. 303 SQ.FT. IN ASSESSMENT YEAR 2001-02 AND 400 SQ. FT. IN ASSESSM ENT YEAR 2003-04 AND THE REMAINING SALES IN ALL THESE YEARS WAS OF THOSE FLA TS WHICH WERE LEASED OUT. IN THE LIGHT OF THESE FACTS, THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF NEO POLY PACK LTD. (SUPRA) IS SQUARELY APPL ICABLE IN THE PRESENT CASE BECAUSE IN THAT CASE IT WAS HELD THAT WHERE AN ISSU E HAD BEEN DECIDED CONSISTENTLY IN A PARTICULAR MANNER FOR EARLIER ASSESSMENT YEARS , FOR THE SAKE OF CONSISTENCY, THE SAME VIEW SHOULD CONTINUE TO PREVAIL FOR SUBSEQUENT YEAR ALSO UNLESS THERE IS MATERIAL CHANGE IN THE FACTS. IN THAT CASE ALSO, IT WAS NOTED THAT RENTAL INCOME FROM THE FACTORY BUILDING OWNED BY THE ASSESSEE COMPANY WAS ASSESSED UNDER THE HEAD BUSINESS IN ALL THE EARLIER YEARS STARTING FROM ASS ESSMENT YEAR 1984-85 ONWARDS. THE ASSESSMENT YEAR IN DISPUTE BEFORE HON'BLE DELHI HIGH COURT WAS ASSESSMENT YEAR 1989-90 IN WHICH THE ASSESSING OFFICER SOUGHT TO ASSESS THE SAID INCOME AS INCOME FROM HOUSE PROPERTY. IT IS ALSO NOTED BY THE HON'BLE DELHI HIGH COURT THAT THERE WAS NO SINGLE DISTINGUISHING FEATURE POINTING A DIFFERENT VIEW AND HENCE THE INCOME WAS LIABLE TO BE ASSESSED AS BUSINESS INCOME IN VIEW OF RULE OF CONSISTENCY. IN THE PRESENT CASE ALSO, WE FIND THAT NOT A SINGLE DISTINGUISHING FEATURE HAS BEEN POINTED OUT BY THE ASSESSING OFFIC ER OR BY THE LD DR OF THE REVENUE IN EARLIER ASSESSMENT YEAR AND ALSO IN SUBS EQUENT YEAR WHEREIN THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT THAT THE LEASE RENTAL INCOME IS ASSESSABLE AS BUSIN ESS INCOME. WE, THEREFORE, FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD CIT(A ) ON THIS ISSUE BY RESPECTFULLY I.T.A. NOS.4782 & 4783/DEL./2011 (A.YS.: 2004-05 & 05-06) 4 FOLLOWING THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT V. NEO POLY PACK LTD. (SUPRA). THE OTHER JUDGMENTS CITED BY THE LD AR OF THE ASSESSEE ARE NOT RELEVANT BECAUSE WE HAVE DECIDED T HIS ISSUE ON THE BASIS OF RULE OF CONSISTENCY. THIS GROUND OF THE REVENUE IS REJEC TED. 6. SINCE, FIRST ISSUE IN THIS CASE IS A COVERED ISS UE, THEREFORE FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION AND THE ITAT, D ELHI BENCH DECISIONS IN THE CASE OF THE ASSESSEE, WE UPHOLD THE ORDER OF CIT(A). AS SU CH, WE DISMISS THE APPEAL OF THE REVENUE. THE OTHER ISSUES ARE CONSEQUENTIAL AS ADM ITTED BY LD.DR, THEREFORE, NOT REQUIRED TO BE ADJUDICATED. 7. SINCE THE APPEAL FOR ASSESSMENT YEAR 2004-05 HAS IDENTICAL FACTS AND COMMON ISSUES, WITH DIFFERENCE IN AMOUNTS, THEREFORE, FOLL OWING OUR ORDER FOR ASSESSMENT YEAR 2003-04 AS CONFIRMED IN EARLIER PART OF THIS ORDER, WE UPHOLD THE ORDER OF CIT(A) WHILE APPLYING THE SAME BASIS AND REASONING AND DISMISS T HE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 ALSO. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE DEP ARTMENT ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT SOON AFTER THE CONCL USION OF THE HEARING ON 12.04.2012. SD/- SD/- (A.N. PAHUJA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : APRIL 12, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-VIII, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT I.T.A. NOS.4782 & 4783/DEL./2011 (A.YS.: 2004-05 & 05-06) 5