MACHINERY & SPARES, MUMBAI V. JTCIT 23(1), MUMBAI

ITA 5965/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2526 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 08-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KR SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.5965/MUM/2013 (ASSESSMENT YEAR 2010-11) MACHINERY & SPARES, 201/202, KARMA STAMBH, OPP. MTNL OFFICE, VIKHROLI(W), MUMBAI 400 051. PAN: AAAFM 1528K ...... APPEL LANT VS. JT. COMMISSIONER OF INCOME TAX 23(1), C-10, 1 ST FLOOR, B.K.C., BANDRA (E), MUMBAI 400051 .... RESPONDE NT ASSESSEE BY : SHRI VIMAL PUNMIYA REVENUE BY : SHRI PRADEEP KR. SIN GH DATE OF HEARING : 18/10/2016 DATE OF PRONOUNCEMENT : 21 /10/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAI NING TO ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-33, MUMBAI DATED 02/09/2013 WHICH IN TURN ARISES OUT OF AN ORDER PA SSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 10/09/2012. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 2 ITA NO.5965/MUM/2013 (ASSESSMENT YEAR 2010-11) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHE THER THE LEARNED CIT CA) & ASSESSING OFFICER WERE CORRECT IN NOT FOLLOWING THE JUDGMENT OF HON'BIE ITAT FOR A.Y. 2005-06, 2006-07, 2007-08 & HOLDING THAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE SHOULD BE ASSESSED AS INCOME FROM OTHER SOURCES INS TEAD OF INCOME FROM HOUSE PROPERTY AS DECLARED BY THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LEARNED CIT(A) & ASSESSING OFFICER WERE CORRECT IN HOLDING THAT THE ASSESSSEE IS NOT A DEEMED OWNER AS PER SECTION 27(IIIB) R.W.S. 269 UA & AS SUCH WAS NO T ENTITLED TO DECLARED INCOME U/S 22 & CLAIM STANDARD DEDUCTION @ 30% U/S 24B OF THE INCOME TAX ACT 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR THE AT THE TIME OF HEARING . 2. IN THIS APPEAL, THE SOLITARY DISPUTE RELATES TO THE MANNER IN WHICH THE RENT OF RS.68.02 LACS RECEIVED BY THE ASSESSEE FROM ICICI BANK LTD IS TO BE TAXED. IN THE RETURN OF INCOME ASSESSEE HAS DECLAR ED SUCH INCOME AS BEING TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE ASSESSING OFFICER NOTICED THAT THE AMOUNT RECEIVED IS NOT FROM A PR OPERTY OWNED BY THE ASSESSEE BUT IT IS IN RESPECT OF A PROPERTY WHICH H AS BEEN SUB-LET TO ICICI BANK LTD. THEREFORE, HE HAS PROCEEDED TO TAX THE SAME A S INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER FURTHER NOTICED TH AT THOUGH IN ASSESSMENT YEAR 2005-06, THE TRIBUNAL HAD UPHELD THE PLEA OF THE AS SESSEE FOR ASSESSING SUCH INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY BUT SINCE THE APPEAL OF THE REVENUE WAS PENDING BEFORE THE HON'BLE BOMBAY HIGH COURT , HE PROCEEDED TO TAX SUCH RECEIPT AS INCOME FROM OTHER SOURCES. THE CIT(A) HAS ALSO AFFIRMED THE STAND OF THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE IS A MERE LICENSOR OF THE PROPERTY AND, THEREFORE, THE INCOME RECEIVED BY IT FROM ICICI BANK LTD. WAS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT INCOME FROM HOUSE PROPERTY. AGAINST SUCH A D ECISION ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3 ITA NO.5965/MUM/2013 (ASSESSMENT YEAR 2010-11) 3. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE PAST YEARS, THE ISSUE HAS BEEN CONSISTENTLY DECIDED BY T HE TRIBUNAL IN FAVOUR OF THE ASSESSEE, STARTING WITH THE LEAD ORDER FOR ASSESSME NT YEAR 2005-06 VIDE ITA NO.3008/MUM/2008 DATED 09/10/2009. IN THIS CONTEXT , THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 9/10/ 2009(SUPRA) IS RELEVANT:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE IS IN POSSESSION OF THE PREMISES FOR THE LAST 40 YEARS. T HE PREMISES WERE WITH M/S BHARAT IMPORT AND EXPORTS AS TENANT AND THIS FIRM WAS DISS OLVED VIDE DISSOLUTION OF THE PARTNERSHIP MADE ON 3-4-1958. THEREAFTER THE TENANC Y RIGHT IN THE PREMISES WERE RECEIVED BY THE ASSESSEE. THE OWNERS OF THE PROPERT Y M/S. VRINDAVAN LAL GOVERDHAN LAL HAVE ALLOWED THE ASSESSEE FIRM TO CREATE SUB-TE NANCY WITH THE REGARD TO THE PREMISES AND HAS GIVEN THEIR PREMISES FOR CREATING THE SUB-TENANCY IN FAVOUR OF ICICI BANK, LTD. FOR A PERIOD OF 15 YEARS ON CERTAIN TERM S AND CONDITIONS AS DETAILED IN THEIR LETTER DATED 24/11/2000 ADDRESSED TO THE ASSESSEE, COPY THEREOF FILED IN THE COMPILATION BEFORE US. IN THESE FACTS OF THE CASE W E FIND THAT THE ASSESSEE BECOME A DEEMED OWNER IN ACCORDANCE WITH PROVISION OF SECTI ON 27(IIIB) R.W.S. 269UA(F)(I) OF THE ACT. 3 ITA 5689/M/12 THERE IS NO MATERIAL ON RE CORD TO SUGGEST THAT THE LETTER DATED 24/11/2000 OF M/S. VRINDAVAN LAL GOVERDHAN LA L IS NOT GENUINE. THE FACT THAT THE AGREEMENT FOR LETTING OUT THE PREMISES TO ICICI BANK LTD. IS FOR A PERIOD OF 15 YEARS, CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE AS THEY BECOME THE DEEMED OWNER UNDER THE PROVISION OF SECTION 27(IIIB) R.W.S. 269 UA (F)(I) OF THE ACT AND ACCORDINGLY IS ENTITLED TO DEDUCTION AS PROVIDED U/S 24(A) OF THE ACT. THE DECISION OF THE MUMBAI TRIBUNAL IN 8 SOT 441 AND CALCUTTA TRIBUNAL IN 89 I TD 199 COVERS THE ISSUE IN THIS CASE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY WE HOLD T HAT THERE IS NO MISTAKE IN THE ORDER OF CIT(A) IN HOLDING THAT THE ASSESSEE IS THE DEEMED OWNER OF THE PREMISES U/S 27(IIIB) OF THE ACT AND THE ORDER OF THE CIT(A) IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 4. SIMILARLY IN ASSESSMENT YEARS 2006-07, 2007-08 A ND 2008-09 THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 5419/MUM/2009, ITA NO. 45 84/MUM/2010 , ITA NO. 6186/MUM/2011 AND ITA NO.5689/MUM/2012 DATED 29-12- 2010, 29-7- 2011, 09-01-2014 AND 28/04/2015 RESPECTIVELY FOLLOWED TH E EARLIER PRECEDENTS IN ASSESSEES OWN CASE FOR A.Y. 2005-06 (SUPRA) AND DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4 ITA NO.5965/MUM/2013 (ASSESSMENT YEAR 2010-11) 3.1 IN VIEW OF THE AFORESAID PRECEDENTS THE ISSUE I S LIABLE TO BE DECIDED IN FAVOUR OF THE ASSESSEE. SO HOWEVER, WE FIND THAT T HE CIT(A) HAS NOTED THAT THE TRIBUNAL ERRED IN TREATING THE ASSESSEE AS A DEEMED OWNER IN TERMS OF SECTION 27(IIIB) R.W.S. 269 UA (F)(I) OF THE ACT BECAUSE TH E FACT THAT THE ASSESSEE WAS A MERE LICENSOR WAS NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL IN ASSESSMENT YEAR 2005-06. NOTABLY, ASSESSEE HAS EARNED THE RENTAL I NCOME FROM ICICI BANK IN TERMS OF SUB-TENANCY DATED 29/11/2000 AND AN AGREEM ENT DATED 24/11/2000 BETWEEN ASSESSEE AND THE OWNER OF THE PROPERTY, NAM ELY, M/S. VRINDAVAN LAL GOVERDHAN LAL, WHICH SETS OUT ALL THE TERMS AND CON DITIONS OF THE ARRANGEMENT. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNA L FOR 2005-06 (SUPRA), WHICH HAS BEEN REPRODUCED BY US IN THE EARLIER PARAS, CLE ARLY SHOWS THAT THE ENTIRE ARRANGEMENT IN TERMS OF WHICH ASSESSEE HAS EARNED T HE IMPUGNED RENTALS HAS BEEN EXAMINED. IT HAS ALSO BEEN SPECIFICALLY NOTIC ED THAT THE OWNER OF THE PROPERTY M/S. VRINDAVAN LAL GOVERDHAN LAL ALLOWED THE ASSESSEE FIRM TO CREATE SUB-TENANCY WITH REGARD TO THE PREMISES IN Q UESTION AND ASSESSEE CREATED THE SUB-TENANCY IN FAVOUR OF ICICI BANK LTD . FOR A PERIOD OF 15 YEARS ON CERTAIN TERMS AND CONDITIONS. THE TRIBUNAL HAS NOT ED THAT SUCH TERMS AND CONDITIONS HAVE BEEN PLACED BEFORE THEM. IN THIS B ACKGROUND, THE TRIBUNAL HELD THAT ASSESSEE BECAME A DEEMED OWNER ON AN AP PLICATION OF SECTION 27(IIIB) R.W.S. 269 UA (F)(I) OF THE ACT. ON THE C ONTRARY, REFERENCE MADE BY THE CIT(A) TO THE FACT THAT ASSESSEE WAS A MERE LICENSO R OF THE PROPERTY AND, THEREFORE, CANNOT BE TREATED TO BE A DEEMED OWNER IN TERMS OF THE SECTION 27(IIIB) R.W.S. 269 UA(F)(I)OF THE ACT IS A BALD A SSERTION, AND IS DEHORS ANY REFERENCE TO THE TERMS AND CONDITIONS OF THE AGREEM ENT. THE TRIBUNAL, ON THE OTHER HAND, HAD CONSIDERED THE ENTIRE ARRANGEMENT A ND ARRIVED AT A CONSIDERED FINDING ON THE APPLICATION OF SECTION 2 7(IIIB) R.W.S. 269 UA(F)(I) OF 5 ITA NO.5965/MUM/2013 (ASSESSMENT YEAR 2010-11) THE ACT TREATING ASSESSEE AS A DEEMED OWNER. THE REFORE, IN OUR CONSIDERED OPINION, THE CIT(A) HAS GROSSLY ERRED IN NOT FOLLOW ING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, WHICH HAS BEE N RENDERED UNDER IDENTICAL CIRCUMSTANCES, WITHOUT ANY COGENT AND SUBSTANTIVE R EASONS OF FACT OR LAW. BE THAT AS IT MAY, WE SET-ASIDE THE ORDER OF THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO TREAT THE SUB-TENANCY RENT REC EIPTS FROM ICICI BANK LTD. AS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERT Y FOLLOWING THE AFORESAID PRECEDENTS. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 21/10/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 21/10/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI