G. Madhuri Kiran, Hyd, Hyderabad V. DCIT, Circle-6(1), Hyderabad, Hyderabad

ITA 479/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6284 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: P VINOD
• Keywords: Depreciation; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 479 & 480/HYD/2016 ASSESSMENT YEARS : 2007-08 & 2010-11 SMT. G. MADHURI KIRAN, HYDERABAD. VS. DY. CIT, CIRCLE-6(1), HYDERABAD. PAN: ACAPG 3917 C APPELLANT RESPONDENT FOR ASSESSEE: SHRI P. VINOD A.R. FOR REVENUE: SHRI K.E. SUNIL BABU D.R. DATE OF HEARING: 20/07/2016 DATE OF PRONOUNCEMENT: 27/07/2016 O R D E R PER LALIET KUMAR, J.M. : THESE ARE THE APPEALS FILED BY THE ASSESSEE ARISE AG AINST THE ORDER DATED 12/01/2016 PASSED BY THE LD.. CIT(A)-6, HYDERABAD FOR THE A.Y. 2007-08 AND 2010-11. THE COMMON EFFECTIV E GROUND TAKEN BY THE ASSESSEE IN BOTH THE ASSESSMENT YEARS ARE REPRODUCED AS UNDER:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BO TH ON FACTS AND IN LAW. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE A.O. IN HOLDING THAT THE INCOME FROM AMENITIES IS T O BE TREATED AS INCOME FROM PROPERTY WITHOUT APPRECIATIN G I.T.A. NO. 479 & 480/HYD/2016 G. MADHURI KIRAN VS DCIT, :- 2 -: THE FACT THAT ARE BROUGHT ON RECORD IN THE CASE OF LULLA BROTHERS TRUST TO COMPARE WITH THAT OF THE ASSESSE AND THAT THE ITAT DECISION FOR THE A.Y. 2005-06 IS BASE D ON MISCONCEPTION ON FACTS. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSE IS AN INDIVID UAL FILED HER RETURN OF INCOME FOR THE A.Y. 2007-08 ON 30/10/20 07 DECLARING NIL INCOME AND RETURN FOR THE A.Y. 2010-11 ON 15/10/2010 DECLARING TOTAL INCOME OF RS. 67,08,476/- . DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, THE LD. A.O. NOTIC ED THAT THE ASSESSE ALONG WITH HER BROTHER AND MOTHER OWNED S PACE IN THE BUILDING VIZ. SDE PRAMEELA TECHNO PARK, SITUATED AT SURVEY NO. 12P OF KONDAPUR VILLAGE, SERILINGAMPALLY MANDAL , RANGA REDDY DISTRICT, HYDERABAD WHEREIN HER SHARE IS 50% AG GREGATING TO 51,516 SQ.FT OF SUPER BUILT UP AREA. THE ASSESSE AL ONGWITH HER BROTHER AND MOTHER LEASED OUT THE SPACE IN THE SAID BU ILDING TO M/S SATYAM COMPUTER SERVICES LIMITED FROM 01/4/2009 T O 15/02/2010 AND TO M/S CAPITAL IQ INFORMATION SYSTEMS P RIVATE LIMITED FROM 16/2/2010 TO 31/3/2010. THE ASSESSE ENTE RED INTO TWO AGREEMENT WITH THE TENANTS, ONE TOWARDS THE RENT OF THE SPACE IN THE BUILDING AND THE OTHER TOWARDS HIRE OR TH E AMENITIES THEREIN. THE ASSESSE HAS OFFERED RENTAL INCOME RECEI VED UNDER THE FIRST AGREEMENT AS INCOME FROM HOUSE PROPERTY WHEREAS THE OTHER I.T.A. NO. 479 & 480/HYD/2016 G. MADHURI KIRAN VS DCIT, :- 3 -: AMOUNT RECEIVED FROM THE SECOND AGREEMENT TOWARDS THE HI RE OF AMENITIES WAS OFFERED UNDER THE INCOME FROM BUSINESS. THE LD. A.O. HAS NOT AGREED TO THE TREATMENT GIVEN BY THE ASSESSE IN RESPECT OF THE SECOND AGREEMENT FOR THE FOLLOWING REAS ONS. THE TREATMENT OF THE ASSESSEE ON THE AMOUNTS RECEIV ED OUT OF THE SECOND AGREEMENT AS INCOME FROM BUSINESS IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS. 1) THOUGH THERE ARE TWO AGREEMENTS ONE FOR THE RENT AL INCOME AND THE OTHER FOR THE AMENITIES PROVIDED, THE TENANTS H AVE DEDUCTED TAX AT SOURCE TREATING THE WHOLE AMOUNT AS RENTAL I NCOME AND TDS WAS MADE U/S 194I ON THE WHOLE AMOUNT PAID BY THEM AND ISSUED CERTIFICATES MONTH WISE MENTIONING THE NATURE OF TH E PAYMENTS AS RENT ON BOTH THE CERTIFICATES. 2) THE ULTIMATE AIM OF THE ASSESSEE IS ONLY LETTING OUT THE PROPERTY, BUT NOT EXPLOITING THE SAID PROPERTY COMMERCIALLY. LETTING THE PROPERTY AND RECEIVING AMOUNTS ARE TO BE ASSESSED A S INCOME FROM HOUSE PROPERTY ONLY AS HAS BEEN HELD. BY THE H ON'BLE APEX COURT IN THE CASE OF SHAMBHU INVESTMENTS VS CIT 263 ITR 143. 3) AS PER THE AGREEMENT OF LEASE, THE INTENTION OF LEASE WAS TO LET OUT THE PROPERTY TO TENANTS FOR THE PURPOSE OF UTILIZAT ION OF THE PREMISES AS OFFICE. THE ITEMS MENTIONED IN THE HIRE OF EQUIPMENT AGREEMENT ARE COMMON IN NATURE TO BE PROVIDED BY TH E LANDLORD TO A COMPANY TO USE THE PREMISES AS SOFTWARE OFFICE TO CARRY OUT THEIR DAY TO DAY WORKS, WITHOUT WHICH, THEY CANNOT FUNCTION AS SOFTWARE OFFICE TO CARRY OUT DAY TO DAY ACTIVITIES. KEEPING IN VIEW THE NATURE OF ACTIVITIES OF THE TENANTS, THE AMENIT IES ARE PROVIDED BY THE ASSESSEE TO EXPLOIT THE PROPERTY IN MOST PRO FITABLE MANNER. THE ASSESSEE MADE SEPARATE LEASE AGREEMENTS IN ORDE R TO HELP IN I.T.A. NO. 479 & 480/HYD/2016 G. MADHURI KIRAN VS DCIT, :- 4 -: TAX PLANNING ONLY, THE LEASE FROM THE LESSEE'S POIN T OF VIEW IS ONLY FOR THE PROPERTY AS A WHOLE. THIS IS EVIDENT FROM T HE TDS CERTIFICATES WHEREIN TDS WAS MADE AS PER THE PROVIS IONS OF SEC. 1941 AND ALSO SINGLE CHEQUES HAVE BEEN ISSUED TO TH E ASSESSEE EVERY MONTH TOWARDS LEASE AND HIRE CHARGES. THIS CL EARLY SHOWS THAT THE ENTIRE PAYMENT MADE BY THE TENANTS WAS TOW ARDS RENT ONLY. 4) THE ITAT-'A' BENCH HYDERABAD IN THE CASE OF THE ASSESSEE FOR AY 2005-06 & 2006-07 IN ITA NOS.67 TO 70/HYD/2010 HELD . THAT THE INCOME REALIZED BY THE ASSESSEE BY WAY OF RENTAL IN COME FROM A BUILDING IF THE PROPERTY WITH OTHER ASSET ATTACHED TO THE BUILDING IS TO BE ASSESSED AS 'INCOME FROM HOUSE PROPERTY' ONLY . IN VIEW OF THE FOREGOING, THE ARGUMENT THAT THE AMO UNTS RECEIVED TOWARDS PROVIDING AMENITIES BY THE ASSESSEE ARE TO BE ASSESSED AS INCOME FROM BUSINESS IS NOT ACCEPTED. THEREFORE, TH E SAID AMOUNTS ARE ALSO CLUBBED WITH THE AMOUNTS RECEIVED AS RENTS AND THE TOTAL AMOUNTS ARE ASSESSED UNDER THE HEAD 'INCOME FROM HO USE PROPERTY. ACCORDINGLY, NO DEPRECIATION IS ALLOWED ON THESE AMOUNTS AND THE INTEREST IS SINCE ALLOWABLE EVEN UN DER THE PROVISIONS OF HOUSE PROPERTY, ALLOWED IN ADDITION T O THE STATUTORY DEDUCTION OF SEC. 24(1) OF THE ACT. THUS, THE INCOME OF THE ASSESSE IS COMPUTED AS UNDE R- TOTAL AMOUNTS RECEIVED BY THE ASSESSE RS. 1,78,50 ,294/- (RENT OF RS. 89,25,147 + RS. 89,25,147 HIRE CHARGES ) LESS: MUNICIPAL TAXES PAID, AS CLAIMED RS. 4, 24,716/- RS. 1,74,85,578/- LESS: 30% FOR REPAIRS RS. 52,27,673/- RS. 1,21,97,905/- LESS: 1) INTEREST ON TERM LOAN FROM ANDHRA BANK RS . 42,74,601/- 2) INTEREST ON TERM LOAN FROM UCO BANK RS . 5,61,606/- RS. 48,36, 207/- INCOME OF THE ASSESSE UNDER THE HEAD HOUSE PROPERTY RS. 73,61,698/- I.T.A. NO. 479 & 480/HYD/2016 G. MADHURI KIRAN VS DCIT, :- 5 -: 2.1 SIMILAR REASONING WAS ALSO GIVEN BY THE LD. A.O. IN RESPECT OF THE ITA NO. 479/HYD/2016. 3. AGGRIEVED ASSESSEE HAD PREFERRED APPEAL BEFORE TH E LD. CIT(A). CIT(A). THE LD. CIT(A) RELIED UPON THE TRIB UNALS ORDER PASSED IN THE CASE OF THE ASSESSE FOR THE A.Y. 2005- 06, 2006-07 IN ITA NO. 67 TO 70/HYD/2010 ORDER DATED 30/04/2010 AND HELD THAT THE INCOME RECEIVED BY THE ASSESSE FROM THE SECOND AGREEMENT WAS INCOME FROM THE HOUSE PROPERTY. THE LD. CIT(A) RELIES UPON PARAGRAPH NO. 8 AND 9 OF THE TRIBUNALS ORDER DATED 30/4/2010. 4. NOW THE ASSESSE IS IN APPEAL BEFORE US. THE LD. A R OF THE ASSESSE HAS FAIRLY SUBMITTED THAT IN THE CASE OF ASSESS E IN THE SIMILAR FACTS, THIS TRIBUNAL HAS DECIDED THE ISSUE AGA INST THE ASSESSE IN APPEAL NO. 68/HYD/2010 AND THEREFORE, THE LD. CIT(A) HAS APPLIED THE SAID JUDGMENT. IT WAS ALSO POINTED OUT B Y THE LD. AR THAT THE INCOME TAX APPEAL BEARING NO. 518/2010 IS PENDING FOR ADJUDICATION BEFORE THE HONBLE HIGH COURT ON THE VARIOUS QUESTIONS OF LAW AND THE SAME HAS BEEN ADMITTED. IT WAS , THEREFORE, CONTENDED THAT THE ASSESSE SHALL BE BOUND BY THE ORDER PASSED BY THE HONBLE HIGH COURT IN APPEAL NO. 518/2 010. ASSESSEE FILED THE APPLICATION U/S 158(A)(1) IN FORM NO. 8 FOR BOTH THE IMPUGNED YEARS. I.T.A. NO. 479 & 480/HYD/2016 G. MADHURI KIRAN VS DCIT, :- 6 -: 5. THE LD. DR HAS NO OBJECTION TO ACCEPT THE FORM. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE MATT ER IS PENDING FOR ADJUDICATION BEFORE THE HONBLE JURISDICT IONAL HIGH COURT AND A DECLARATION U/S 158A(1) OF THE ACT HAS BEE N FILED BY THE ASSESSEE BEFORE US STATING THAT THE MATTER IS PENDI NG BEFORE THE HONBLE HIGH COURT IN RESPECT OF A.Y. 2006-07 AND SHE WOULD ABIDE BY THAT DECISION. IT WAS FURTHER SUBMITTED THAT THE QUESTION OF LAW ARISES IN THE PRESENT APPEAL ARE IDENTI CAL WITH THE QUESTIONS OF LAW AROSE IN APPEAL FOR THE A.Y. 2006-07 . IN VIEW THEREOF, THE A.O. IS DIRECTED TO APPLY THE DECISION FOR THE A.Y. 2006-07 AS AND WHEN RENDERED, IN RESPECT OF THE A.Y. 2007-08 AND A.Y. 2010-11, IN VIEW OF SECTION 158(5) OF THE AC T. 7. IN THE RESULT, THE BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/2016. SD/- SD/- ( B. RAMAKOTAIAH ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 27 TH JULY, 2016 *RANJAN COPY FORWARDED TO: 1. SMT. G. MADHURI KIRAN, C/O- K. VASANTKUMAR, A.V. RAGH U RAM, P. VINOD ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-500001. I.T.A. NO. 479 & 480/HYD/2016 G. MADHURI KIRAN VS DCIT, :- 7 -: 2. DY. CIT, CIRCLE-6(1), HYDERABAD. 3. CIT(APPEALS)-6, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.