ACIT CIR 7(3)(2), MUMBAI V. PRISTINE DEVELOPERS P. LTD, MUMBAI

ITA 6368/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2789 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH WAJALE
• Keywords: Business income
• Section: 201; 44AB; 13

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 6368 /MUM/ 201 8 (ASSESSMENT YEAR 20 14 - 1 5 ) I.T.A. NO. 636 9 /MUM/2018 (ASSESSMENT YEAR 201 5 - 1 6 ) ACIT, CIRCLE - 7(3)(2) ROOM NO. 128A 1 ST FLOOR, AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. V S . M/S. PRISTINE DEVELOPERS PVT. LTD. 3, NARAYAN BUILDING 23, L.N. ROAD, DADAR(EAST) MUMBAI - 400 014 . PAN : AADCP5436F ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI MALAV P. SHETH DEPARTMENT BY SHRI SOMNATH WAJALE DATE OF HEARING 07.01.2020 DATE OF PRONOUNCEMENT 02.03 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THESE ARE APPEALS BY THE REVENUE AGAINST RESPECTIVE ORDERS OF LEARNED CIT(A) FOR A.Y. 2014 - 15 & 2015 - 16. SINCE THE ISSUES A RE COMMON, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. COMMON GROUNDS OF APPEAL : - 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED WHILE TREATING THE BUSINESS RECEIPTS (RENTAL INCOME) AS INCOME FROM HOU SE PROPERTY IGNORING THE VITAL FACTS THAT THE ASSESSEE IS A DEVELOPER AND HAS BEEN FILING AUDIT REPORT U/S 44AB OF THE I.T.ACT WHICH APPLIES ONLY FOR A PERSON CARRYING ON BUSINESS OR PROFESSION'? 2. 'WHETHER ON THE FACTS AND IN. CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE RENTAL INCOME AS WELL AS SERVICE CHARGES UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF 'BUSINESS INCOME'? 3. T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O F PROPERTY DEV ELOPMENT. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED RENT AL INCOME AND SERVICE CHARGES, AND TREATED THE ENTIRE RECEIPTS AS 'INCOME M/S. PRISTINE DEVELOPERS PVT. LTD. 2 FROM HOUSE PROPERTY' AND ACCORDINGLY, CLAIMED PROPERTY TAX, STANDARD DEDUCTION U/S. 24(A) AND INTEREST EX PENSES. 4 . AT THE OUTSET, LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY A SERIES OF ITAT ORDER IN ASSESSEES OWN CASE. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THE ABOVE PROPOSITION . 5 . FOR THE SAKE REFERENCE WE ARE REFERRING THE FACTS AND FIGURES OF A.Y. 2014 - 15. WE NOTE THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BY CONCLUDING AS UNDER : - IN VIEW OF THE ABOVE DISCUSSION, THE CLAIM OF THE ASSESSEE OF TREATING SERVICE CH ARGES AND RENTAL RECEIPTS AS HOU SE PROPERTY INCOME IS HEREBY REJECTED. FOLLOWING THE PRECEDENT OF STAND O F THE RE VENUE CORRECTLY TAKEN IN EARLIER ASSESSMENT YEARS I.E. A.Y. 2009 - 10, 2011 - 12 & 2012 - 13, I TREAT THE BUSINESS ACTIVITY OF THE ASSESSEE AS COMMERCIA L ACTIVI TY AND ACCORDINGLY, THE ENTIRE RECEIPTS ARE TREATED AS BUSINESS RECEIPTS TAXABLE UNDER THE HEAD OF 'INCOME FROM BUSINESS'. AS REGARDS FURTHER SUBMISSION MADE BY THE ASSESSEE ON 31.10.2014 THAT THE HON B LE ITAT VIDE ORDER IN ITA NO.33 79MUM/2013 DATED 27. 08.2014 FOR A.Y. 2009 - 10 HAS DISMISSED THE APPEAL FILED BY THE REVENUE ON THIS ISSUE, IT NEEDS TO MENTIONED THAT THE ISSUE I S NOT YET REACHED FINALITY AS THE DEPARTMENT HAS PRAYED BEFORE THE HON'BLE BOMBAY HIGH COURT BY FILING APPEAL ON 16.02.2015. 6. LEARNED CIT(A) HAS DELETED THE SAME BY HOLDING AS UNDER : - I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE REASONS RECORDED BY THE AO. IT IS SEEN THAT THE ISSUE UNDER CONSIDERATION IS A RECURRING ONE AND IT IS COVERED IN FAVOUR OF THE A PPELLANT BY THE DECISION OF HONB LE TRIBUNAL IN THE CASE OF THE APPELLANT FOR A.Y. 2009 - 10 AND 2010 - 11. IT IS ALSO COVERED IN FAVOUR OF THE APPELLANT BY THE DECISION OF MY ID. PREDECESSOR IN THE CASE OF THE APPELLANT FOR A.Y. 2011 - 12 AND 201 2 - 13. SINCE THERE IS NO CHANGE IN THE FACTS OF THE CASE DURING THE PREVIOUS YEAR UNDER CONSIDERATION, RESPECTFULLY FOLLOWING THESE DECISIONS, IT IS HELD THAT THE APPELLANT WAS JUSTIFIED IN RETURNING ITS ENTIRE INCOME FROM RENTING OUT OF UNITS IN THE CORPOR ATE PARK UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE AO IS DIRECTED TO ASSESS THE INCOME ACCORDINGLY. M/S. PRISTINE DEVELOPERS PVT. LTD. 3 W E FIND THAT ITAT IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR. THE TRIBUNAL IN ORDER DATED 20.11.2019 FOR A.Y. 2013 - 14 HAS HE LD AS UNDER : - 5. WE HAVE HEARD THE SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ITA. NOS. 3379/MUM/2013 DATED 2 7.08.2014, ITA.NO. 4417/MUM/2014 DATED 25.02.2016 FOR THE A.Y. 2009 - 10, A.Y. 2010 - 11 AND IN ITA.NOS. 2102 & 2111/MUM/2017 DATED 31.08.2018 FOR THE A.YS. 2011 - 12 & 2012 - 13 IN FAVOUR OF THE ASSESSEE, WHEREIN IT HAS BEEN HELD THAT RENTAL INCOME AS WELL AS SER VICE CHARGES RECEIVED BY THE ASSESSEE ARE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE TRIBUNAL IN ITS ORDER DATED 31.08.2018 HELD AS UNDER: - 3. WE BEGIN WITH THE AY 2011 - 12. BRIEFLY STATED, FACTS OF THE CASE ARE THAT, THE ASSESSEE - COMPA NY IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. SOME OF THE UNITS IN ITS CORPORATE PARK WERE LEASED OUT DURING THE RELEVANT PREVIOUS YEAR AND RENTAL INCOME AND SERVICE CHARGES WERE RECEIVED IN LIEU THEREOF. THE ASSESSEE HAD TREATED THE ENTIRE RECEIP T AS INCOME FROM HOUSE PROPERTY AND CLAIMED STATUTORY DEDUCTION U/S. 24 OF THE ACT. WHILE THE RENTAL RECEIPT WAS RS.2.44 CRORE, THE AMOUNT OF SERVICE CHARGES RECEIVED WAS RS.16.38 CRORE. THE ASSESSING OFFICER (AO) PROCEEDED TO TREAT THE ENTIRE RECEIPT AS BUSINESS RECEIPT TAXABLE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THE AO HAS CLARIFIED THE ISSUE AT PARAGRAPH 6 ON PAGE - 3 OF THE ASSESSMENT ORDER DATED 17/12/2013 THAT THIS IS A RECURRING ISSUE WHEREIN SIMILAR ADDITIONS WERE MADE IN AYS 2009 - 10 AND 2010 - 11. AT PARAGRAPH 6.2.1 ON PAGE - 10 AND 11, THE AO HAS STATED THAT HE HAD FOLLOWED THE STAND TAKEN BY THE REVENUE IN THE TWO PRECEDING AYS AND ACCORDINGLY SUBJECTED TO TAX THE ENTIRE RECEIPTS OF THE ASSESSEE ON ACCOUNT OF RENTING OUT OF THE CORP ORATE PARK UNITS UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). IT IS OBSERVED BY THE LD. CIT(A) THAT THE SAME ISSUE HAS BEEN DECIDED BY THE ITAT IN ASSESSEES OWN CASE FOR AY 2010 - 11, BY FOLLOWING THE EARLIER ORDER OF THE CO - ORDINATE BENCH OF THE TRIBUNAL FOR AY 2009 - 10. FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009 - 10 AND 2010 - 11, THE LD. CIT(A) HELD THAT THE ASSESSEE WAS J USTIFIED IN RETURNING THE ENTIRE INCOME FROM RENTING OUT OF THE UNITS IN THE CORPORATE PARK UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5. BEFORE US, THE LD. DR SUBMITS THAT THE AO HAS RIGHTLY TREATED THE BUSINESS ACTIVITY OF THE ASSESSEE AS COMMERCIAL ACTIVITY AND ACCORDINGLY BROUGHT TO TAX THE ENTIRE RECEIPTS TAXABLE UNDER THE HEAD INCOME FROM BUSINESS. M/S. PRISTINE DEVELOPERS PVT. LTD. 4 6. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009 - 10 AND 2010 - 11 AND THE REFORE SUPPORTS THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE SAME ISSUE AROSE BEFORE THE ITAT C BENCH, MUMBAI IN ASSESSEES OWN CASE FOR AY 2009 - 10 (ITA NO.3379/M/201 3 DTD. 27/08/2014) AND AY 2010 - 11 (ITA NO.4417/M/2014 DTD. 25/02/2016). IT WOULD BE RELEVANT TO MENTION HERE THAT THE TRIBUNAL AGREED WITH THE ORDER OF THE LD. CIT(A) DIRECTING THE AO TO ASSESS THE RENTAL INCOME AS WELL AS SERVICE CHARGES RECEIPTS UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND CONFIRM THE ORDER OF THE LD. CIT(A). 6. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE SAID DECISION WE UPHOLD THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND REJECT THE GROUNDS RAISED BY THE REVENUE. 7. SINCE FACTS ARE IDENTICAL, R ESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(A). 8. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORD ER HAS BE EN PRONOUNCED IN THE COURT ON 2 . 3 . 20 20 . SD/ - SD/ - ( AMARJIT SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 02 / 0 3 / 20 20 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// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI