ACIT - 9(2)(2), MUMBAI V. E-CITY PROJECTS CONSTRUCTION PVT. LTD., MUMBAI

ITA 5097/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8959 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 10-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 5 0 97 /MUM/2016 : A.Y : 201 2 - 1 3 ACIT 9(2)(2) MUMBAI (APPELLANT) VS. E - CITY PROJECTS CONSTRUCTION PVT. LTD., 844/4, FUN REPUBLIC SHAH INDUSTRIAL ESTATE OFF. NEW LINK ROAD, ANDHERI (W) MUMBAI 400 053 (RESPONDENT) PAN : AA BCE5486E APPELLANT BY : SHRI R.P. MEENA RESPONDENT BY : SHRI JAY BHANSALI DATE OF HEARING : 30/10/2017 DATE OF PRONOUNCEMENT : 30 /10/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 16 , MUMBAI DATED 27.05.2016 , PERTAINING TO THE ASSESSMENT YEAR 2012 - 13 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 10.03.2015 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 5097/MUM/2016 E - CITY PROJECTS CONSTRUCTION PVT.LTD., 2. IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - (I) W HETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT UPHOLDING THE ACTION TAKEN BY THE AO IN TREATING THE RENTAL INCOME FROM OPERATING FAMILY ENTERTAINMENT CENTER CUM MALL AND MAINTENANCE CHARGES AMOUNT ING TO RS 12,37, 03 , 00 4/ - AND RS 4,12,56,372/ - RESPECTIVELY AS 'INCOME FROM HOUSE PROPERTY ' AGAINST THE ASSESSEE'S CLAIM OF ''PROFIT AND GAINS FROM BUSINESS OR PROFESSION ' (II) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN COMPLETELY IGNORING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT (P) LTD VS CIT(2003) 184CTR (SC) 91: (2003) 263 ITR 143(SC) WHEREIN IT IS HELD THAT INCOME DERIVED BY AN ASSESSEE BY LETTING OUT FURNISHED PREMISES ON MONTHLY RENT BASIS TO VARIOUS PARTIES ALONGWITH VARIOUS SERVICES / IS ASSESSABLE AS INCOME FROM PROPERTY AND NO T BUSINESS INCOME' (III) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE INTEREST EXPENDITURE OF RS 1,81,97,47S/ - U/S 24 B OF THE ACT BY TREATING THE INCOME FROM HOUSE PROPERTY AS BUSINESS INCOME IGNORING THE FACT THAT THE REVENUE HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE IN THE PRESENT A.Y AND EARLIE R YEARS AND THE REVENUE IS IN APPEAL FOR A.Y. 2008 - 09, 2009 - 10, 2010 - 11 AND 2011 - 12 BEFORE THE HON'B L E HIGH COURT'. 3. AT THE TIME OF HEARING, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT SO FAR AS THE MERITS OF THE ISSUES RAISED THE APPEALS ARE CONCERNED , THE SAME ARE FULLY COVERED BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y .2009 - 10 AND 2010 - 11 WHICH HAVE BEEN APPLIED BY THE CIT(A). APART THERE FROM, AT THE TIME OF HEARING , THE LEARNED REPRESENTATIVE FOR T HE RESPONDENT - ASSESSEE FURTHER POINTED OUT THAT THE DECISIONS OF THE TRIBUNAL RELIED UPON BY THE CIT(A) HAVE SINCE BEEN AFFIRMED BY THE HONBLE HIGH COURT OF BOMBAY ALSO AND FOR THAT MATTER HE FURNISHED COPY OF THE JUDGMENT OF HONBLE BOMBAY HIGH 3 ITA NO. 5097/MUM/2016 E - CITY PROJECTS CONSTRUCTION PVT.LTD., COURT IN ITA NO.149 AND OTHERS OF 2015 DATED 18/07/2017. THE SAID FACTUAL MATRIX IS ALSO NOT DISPUTED BY THE LEARNED DR. IN THE ABOVE BACKGROUND, FOR THE PURPOSE OF COMPLETENESS OF THE ORDER, THE FOLLOWING DISCUSSION IS RELEVANT. 4 . THE RESPONDENT ASSESSEE IS A CO MPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT , 1956 , AND , INTERALIA , ENGAGED IN THE BUSINESS OF CONSTRUCTING AND ACQUIRING IMMOVABLE PROPERTIES AND MORE PARTICULARLY MANAGING, OPERATING AND RUNNING FAMILY ENTERTAINMENT CENTRE CUM MALLS AND SHOPP ING COMPLEX. THE INCOME DERIVED BY THE ASSESSEE FROM THE ACTIVITY OF LEASING, LICENSING OF FAMILY ENTERTAINMENT CENTRES CUM MALLS / C OMMERCIAL COMPLEXES WERE ASSESSED BY THE ASSESSING OFFICER A S RENTAL INCOMES UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS AGAINST ASSESSEES CLAIM OF ASSESSING SUCH INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION . THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD SHOWN SUCH INCOME UNDER THE HEAD OPERATING INCOME COMPRISING OF RENTALS OFRS.12,37,03,004/ - AND MAINTENANCE CHARGES OF RS.4,12,56,372/ - BESIDES OTHER INCOME OF RS.9,80,960/ - . FOLLOWING THE STAND OF THE ASSESSING AUTHORITIES IN THE PAST YEARS OF A.Y.2008 - 09 TO 2011 - 12, THE ASSESSING OFFICER PROCEEDED TO A SS ESS THE SAID INCOME UNDER THE HEAD INCOME F ROM HOUSE PROPERTY AS AGAINST ASSESSEES CLAIM FOR TREATING THE SAME AS BUSINESS INCOME. 5 . IT IS NOTEWORTHY THAT IN PARA 4.4.3 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER WAS MADE AWARE OF THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE WHEREIN SUCH RECEIPTS HAVE BEEN HELD TO BE TAXABLE AS BUSINESS INCOME. THE ASSESSING OFFICER NOTICED THAT THE DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND I T S APPEAL FILED BEFORE THE HONBLE BOMBAY HIGH COURT U/S.260A OF THE ACT WAS 4 ITA NO. 5097/MUM/2016 E - CITY PROJECTS CONSTRUCTION PVT.LTD., PENDIN G. FOR THE SAID REASONS, HE HAS NOT FOLLOWED THE DECISION OF THE TRIBUNAL FOR EARLIER YEARS . ON THE CONTRARY, THE CIT(A) FOLLOWED THE DECISION OF THE TRIBUNAL AND ALLOWED THE CLAIM OF THE ASSESSEE FOR TREATING SUCH INCOME S AS BUSINESS INCOME. 6 . THE HONBLE BOMBAY HIGH COURT IN ITS ORDER DATED 18/07/2017 (SUPRA) HAS UPHELD THE STAND OF THE ASSESSEE THAT SUCH INCOMES ARE LIABLE TO BE ASSESSED AS BUSINESS INCOME. FOLLOWING SAID DECISION OF THE HONBLE BOMBAY HIGH COURT, THE IMPUGNED STAND OF CIT(A) IS A FFIRMED AND THUS REVENUE FAILS IN ITS G ROUND OF APPEAL NO S . 1 & 2 AS ABOVE. 7 . IN SO FAR AS THE ISSUE RAISED IN G ROUND OF APPEAL NO.3 IS CONCERNED, THE SAME RELATES TO INTEREST PAID ON LOAN AVAILED BY THE ASSESSEE FROM HDFC IN RESPECT TO A PROPERTY LOCATED AT CHANDIGARH. THE ASSESSING OFFICER FOLLOWING HIS DECISION OF EARLIER YEARS , DISALLOWED THE INTEREST EXPENDITURE . ACCORDINGLY, INTEREST PAID IN RESPECT OF CHANDIGARH PROPERTY PERTAINING TO CURRENT YEAR OF RS.1,81,97,475/ - WAS DISALLOWED AND AT THE SAME T IME HE ALLOWED DEDUCTION U/S.24(B) OF THE ACT OF RS.8,69,79,453/ - (I.E. RS.10,51,76,928/ - - RS.1,81,97,475/ - ). 8 . THE CIT(A) ALLOWED CLAIM OF THE ASSESSEE BY NOTING THAT THE INCOME FROM LEASE / RENTALS WAS ASSESSED AS BUSINESS INCOME AND THEREF ORE, THE INT EREST EXPENDITURE ON LOANS AVAILED FROM HDFC WAS AN ALLOWABLE EXPENDITURE. 9 . ON THIS ASPECT ALSO, WE FOUND NO MERIT IN THE APPEAL OF THE REVENUE IN AS MUCH AS IT IS CONSEQUENTIAL TO THE UPHOLDING OF ASSESSEES STAND OF THE INCOME FROM LEASE / RENTALS BEIN G LIABLE TO BE ASSESSED AS BUSINESS INCOME. 5 ITA NO. 5097/MUM/2016 E - CITY PROJECTS CONSTRUCTION PVT.LTD., 10 . AT THE TIME OF HEARING, THE L EARNED DR FAIRLY CONCEDED THE AFORESAID IN VIEW OF THE HONBLE BOMBAY HIGH COURT ORDER DATED 18/07/2017 (SUPRA) IN ASSESSEES OWN CASE. THUS, ON THIS ASPECT ALSO R EVENUE FAILS. 1 2. RESULTANTLY THE APPEAL OF THE R EVENUE IS DISMISSED . THE A BOVE DECISION WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARING ON 30 TH OCTOBER, 2017. S D / - S D / - ( RAM LAL NEGI ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H OCTOBER , 201 7 KARUNA C OPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. 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