ACIT CIR 6(3), MUMBAI V. MGEE MARKETING SERVICES P. LTD, MUMBAI

ITA 5206/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1592 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M DEVADASAN
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5260/MUM/2009 (ASSESSMENT YEAR 2005-06) ACIT CIRCLE 6(3), AYAKAR BHAVAN, M K ROAD, MUMBAI-400020 . APPELLANT VS M/S MGEE MARKETING SERVICES, P LTD., B-17/18, WADALA UDYOG BHAVAN 8, NAIGAUM X ROAD, WADALA, MUMBAI-400031. PAN: AAACM9726C RESPONDENT APPELLANT BY : SHRI P M DEVADASAN RESPONDENT BY : SHRI HARIDAS BHAT O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10.07.2009 OF THE LEARNED CIT(A)-VI, M UMBAI FOR THE ASSESSMENT YEAR 2005-06. 2. ONLY GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATI NG THE INCOME AS HOUSE PROPERTY INCOME AND ALLOWING DEPRECIATION OF RS.4,18,589/- IGNORING TH E FACT THAT THE ASSESSEE COMPANY WAS NOT HAVING ITA NO. 5260/MUM/2009 (ASSESSMENT YEAR 2005-06) 2 ANY ACTIVITY SINCE ITS INCEPTION EXCEPT GIVING THE FACTORIES ON RENT, HENCE WAS TREATED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY BY THE AO 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE OW NS THE PROPERTY WHICH ARE PURCHASED BY THE ASSESSEE AND LE ASED OUT TO THE HINDUSTAN LEVER LTD (LESSEES) FOR A LEASE RE NT. THE PROPERTY CONSISTS OF BUILDING AND LAND APPURTENANT THERETO WHICH ARE USED BY THE LESSEE FOR ITS BUSINESS PURPO SES. THE ASSESSEE ADMITTED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND CLAIMED TO BE TAXABLE U/S 22 OF THE IT ACT. THE AO HELD THAT SINCE THE COMPANY HAS DONE ONLY ONE AC TIVITY OF LETTING OUT OF THE PROPERTY AND THEREFORE, THE INCO ME FROM RENT FOR LETTING OUT OF THE PROPERTY WAS TREATED AS BUSI NESS INCOME. 4. ON APPEAL, THE CIT(A) HAS ALLOWED THE CLAIM OF T HE ASSESSEE BY FOLLOWING THE DECISION OF THE HONOURABL E SUPREME COURT IN THE CASE OF EAST INDIA HOUSING A ND LAND DEV TRUST LTD V/S CIT (42 ITR 49). ACCORDINGLY, TH E CIT(A) HELD THAT THE RENTAL INCOME IS LIABLE TO BE TAXED A S INCOME FROM HOUSE PROPERTY AND THE DEDUCTION CLAIMED BY TH E ASSESSEE U/S 24(A) AND 24(B) SHALL BE ALLOWED VIDE IMPUGNED ORDER. 5. WE HAVE HEARD THE LEANED DR AS WELL AS THE LEARN ED AR AN CONSIDERED THE RELEVANT RECORD. THE AO HAS DISA LLOWED THE ITA NO. 5260/MUM/2009 (ASSESSMENT YEAR 2005-06) 3 CLAIM OF THE ASESEEE AND TREATED RENTAL INCOME AS BUSINESS INCOME ONLY ON THE BASIS THAT THE ASSESSEE HAVE NO T DONE ANY OTHER ACTIVITY EXPECT GIVING THE PROPERTY ON RENTAL BASIS TO THE LESSEE. SINCE THE OWNERSHIP OF THE PROPERTY IN QU ESTION HAS NOT BEEN DISPUTED BY THE REVENUE, THEREFORE, IN VIE W OF THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF M/S SHAMBHU INVESTMENTS PRIVATE LIMITED V/S CIT (263 I TR 143), THE RENTAL INCOME FOR LETTING OUT OF THE BUILDING A ND OTHER FIXTURES TO BE TAXED UNDER THE HEAD INCOME FROM HO USE PROPERTY . THE CIT(A) HAS DECIDED THE ISSUE IN PA RAGRAPH 3.3 AS UNDER 3.3 I AM OF THE CONSIDERED OPINION THAT THE JUDGMENT OF : EAST INDIA HOUSING AND LAND DEV TRUST LTD V/S CIT (42 ITR 49)(SC) CLARIFIED THE STA ND TAKEN BY THE ASSESSEE, THAT THERE IS NO ALTERATION IN CHARACTER OF INCOME BECAUSE OF ASSESSEES OBJECT. THERE IS NO DISPUTE OVER THE FACT THAT THE ASSESSEE FULFILLS ALL THE CONDITIONS FOR . TAXABILITY UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. THE AO HAS NOT MADE ANY OBSERVATIONS TO THE CONTRARY, AND AGREED THAT THE ASSESSEE OWNS THE BUILDING AND LAND APPURTENANT THERETO, AND LET OUT THE SAME AND RECEIVED RENT. THEREFORE, SAME IS LIABLE TO BE TAX ED AS INCOME FROM PROPERTY AND NOT AS INCOME FROM BUSINESS INCOME. THE DEDUCTIONS CLAIMED BY THE ASSESSEE U/S 24(A) AND (24(B) SHALL BE ALLOWED TO T HE ASSESSEE 6. IN VIEW OF THE DECISION OF THE HON. SUPREME COU RT IN THE CASE OF SHAMBHU INVESTMENT (SUPRA), WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). ITA NO. 5260/MUM/2009 (ASSESSMENT YEAR 2005-06) 4 7. THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19.11.2010 SD SD (T.R.SOOD) (VIJA Y PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI, DATED 19 TH NOV 2010 SRL:81110 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI