NEW SHIV TIRTH CO OP HSG. SOCIETY, MUMBAI V. ITO 16(2)(1), MUMBAI

ITA 6407/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7972 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Section: 2

Judgement Text

, CH CHCH CH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . . , , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 6407/MUM/2011, ! ! ! ! / ASSESSMENT YEAR-2007-08 NEW SHIV TIRTH CO - OP. HSG. SOCIETY LTD.,BHULABHAI DEAI ROAD, MUMBAI-26 PAN: AAAAN1255B VS ITO 16(2)(1) , MUMBAI-400051 ( '# / APPELLANT) ( $%'# / RESPONDENT) &' &' &' &' ( ( ( ( / ASSESSEE BY : SHRI KIRAN MEHTA ) ( / REVENUE BY : SHRI VIVEK BATRA ) )) ) '* '* '* '* / DATE OF HEARING : 13-08-2014 +,! ) '* / DATE OF PRONOUNCEMENT : 13-08-2014 , 1961 1961 1961 1961 ) ) ) ) 254 254 254 254( (( (1 11 1) )) ) '6' 7 '6' 7 '6' 7 '6' 7 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DATED.26.05.2011 OF THE CIT(A )-27,MUMBAI, ASSESSEE HAS RAISED FOLLOWING GROUNDS APPEAL: 1.IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THAT CHARGES OF RS.8,92,731/-RECEIVED BY THE APPELLANT F OR ALLOWING HOARDING TO BE PUT UP IN THE COMPOUND OF THE APPELLANT SOCIETY WAS TAXABLE AS IN COME FROM OTHER SOURCES AND NOT AS INCOME FROM HOUSE PROPERTY AND THEREBY DENYING THE APPELLA NT STATUTORY 30% DEDUCTION U/S 24 QUA SUCH INCOME. 2.THE APPELLANT CRAVES YOUR HONORS LEAVE TO ADD TO OR MODIFY THE ABOVE GROUND OF APPEAL AT OR BEFORE THE FINAL HEARING. 2. ASSESSEE-SOCIETY,FILED ITS RETURN OF INCOME ON 02.0 1.2008,DECLARING TOTAL INCOME OF RS.753572/-. ASSESSING OFFICER(AO)FINALISED THE ASSESSMENT U/S.1 43(3) OF THE ACT,ON 16.12.2009,DETERMINING THE TOTAL INCOME AT RS.9,93,540/-.EFFECTIVE GROUND OF APPEAL PERTAINS TO INCOME OF HEAD UNDER WHICH RS.8.92 LAKHS WERE TO BE TAXED.DURING THE ASS ESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE SHOWN GROUND RENT AND PUBLICITY AND HOARDI NG RECEIPT OF RS.18000/-AND RS.8.92 LAKHS RESPECTIVELY,THAT IT HAD CLAIMED DEDUCTION @ 24% U/ S.24(1)OF THE ACT,AMOUNTING TO RS.2,73,219/- .HE FURTHER FOUND THAT THE GRANTOR HAD ENTERED IN T WO AGREEMENTS ON 14.04.2004 WITH SELVEL PUBLICITY & CONSULTANTS PVT. LTD.,THAT AS PER THE F IRST AGREEMENT THE ASSESSEE WAS TO GET MONTHLY GROUND RENT OF RS.1500/- AND AS PER THE OTHER AGREE MENT IT WAS TO RECEIVE RS.83,5000/-PER MONTH FOR THE PERIOD 01.04.2006 TO 31.03.2010 FOR PERMITT ING THE ADVERTISERS TO RENEW ILLUMINATE/NEON/ BACKLIFT/COMPUTERISED THE SITE MORE PARTICULARLY DE LINEATED IN THE SKETCH SHOWN OF 20X12,FACING TRAFFIC FROM PEDDAR ROAD TO HAJI ALI AND INSTALLED IN THE COMPOUND OF THE BUILDING.THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE ABOVE RECEIPT S SHOULD NOT TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES.AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE AND THE VARIOUS CLAUSES OF THE AGREEMENTS,HE HELD THAT THE ASSESSEE RECEIVED THE C HARGES FOR THE USE OF WALL OF THE SOCIETY THAT WAS FOR COMMERCIAL PURPOSES AND NOT FOR RESIDENTIAL PURPOSES,THAT MAJOR PART OF RECEIPTS WAS SERVICE CHARGES,THAT GROUND RENT WAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY,THAT THE SUM, AMOUNTING TO RS.8.92 LAKHS,RECEIVED BY THE ASSESSEE WAS TO TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES,THAT SAME WAS NOT IN RESPECT OF LETTI NG OUT OF PROPERTY,THAT THE EXPENSES HAD TO BE BORNE BY THE ADVERTISER,THAT THERE WAS NO JUSTIFICA TION FOR ALLOWING ANY EXPENDITURE EXCEPT SERVICE ITA NO. 6407/MUM/2011 NEW SHIV TIRTH CO-OP. HSG. SO CIETY LTD. 2 TAX TOWARDS THE ABOVE RECEIPT.ACCORDINGLY,HE HELD T HAT NET RECEIPT OF RS.8.92 LAKHS WAS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT NO ACTUAL PROPERTY WAS LET OUT TO THE ADVERTISER,THAT SERVICE CHARGES WERE PAID ONLY FOR ALLOWING THE ADVERTISER TO USE WALL OF THE BUILDING,THAT THE WAL L OF THE BUILDING COULD NOT BE CONSIDERED A BUILDING ITSELF,THAT IT COULD NOT BE TREATED AS A B UILDING EXPLOITATION OF WHICH INCOME FROM HOUSE PROPERTY WAS CLAIMED BY THE ASSESSEE,THAT RS.8.92 L AKHS RECEIVED BY THE ASSESSEE WAS TO TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) STATED THAT THE ASSESSEE HAD ENTERED IN TO AN AGREEMENT WITH THE ADVERTISER FOR PLACING HOARDING IN THE COMPOUND OF THE PROPERTY OWNED BY IT,THAT THE COMPOUND WAS TO REGARDED AS LAND APPURT ENANT TO THE BUILDING,THAT ANY INCOME ARISING FROM LETTING OUT OF THE PROPERTY COMPRISING OF BUIL DING OR LAND APPURTENANT THERETO WAS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT A S INCOME FROM OTHER SOURCES.HE REFERRED TO THE CLAUSE 1 OF THE AGREEMENT AND RELIED UPON THE J UDGMENT OF THE G BENCH OF THE DELHI TRIBUNAL DELIVERED IN THE CASE OF S.K.KHANNA(ITA NO./828/DEL /2010,AY.2005-06,DATED 31.08.2010.) DEPARTMENTAL REPRESENTATIVE (DR)SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AS PER THE AGREEMENT THE ADVERTISER WAS ALLOWED TO USE A P LACE IN THE COMPOUND BUILDING.SECTION 22 OF THE ACT PROVIDES THAT THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDINGS OR LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER, OTHER T HAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR PROFESSI ON CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME-TAX, SHALL BE CHARGEABLE TO IN COME-TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN ORDINARY ENGLISH LANGUAGE APPURTENANT MEANS THAT WHICH APPERTAINS AND THE WORD APPERTAINS MEANS BELONGING TO. IN THE CONTEXT OF HOUSE PROPERTY, IT WILL BE LAND BELONGING TO THE HOUSE PROPERTY. THE OTHER MEANINGS OF THE WORD APP URTENANCE IN THE DICTIONARY ARE APPENDAGE OR ACCESSORY.IN THE LAW DICTIONARY OF MOZLEY AND WHITELY (8TH EDITION) WORDS APPURTENANCE OR THINGS APPURTENANT HAVE BEEN DEALT UNDER : APPURTENANCE, IN RELATION TO A DWELLING OR TO A S CHOOL ; COLLEGE OR OTHER EDUCATIONAL ESTABLISHMENT INCLUDES ALL LAND OCCUPIED THEREWITH AND USED FOR T HE PURPOSE THEREOF. IT IS CLEAR FROM THE ABOVE DEFINITIONS THAT THE CON CEPT OF APPURTENANCE IN THE CONTEXT OF A HOUSE IS THAT THE LAND IS NECESSARY OR CONNECTED WITH THE EN JOYMENT OF THE HOUSE AND THAT ONCE THE LAND IS DISANNEXED FROM THE MAIN PROPERTY, IT CAN NEVER BEC OME APPENDANT OR APPURTENANT AGAIN.IT IS AN ACCEPTED PRINCIPLE OF TAXATION LAW THAT THE WORD BU ILDING IS NOT CONFINED IN ITS SCOPE ONLY TO DWELLING HOUSES.IN SHORT ,THE EXPRESSION APPURTENAN T TO BUILDING COVERS THE LAND WHICH IS NECESSARY FOR ENJOYMENT OF THE BUILDING AND NOT THE LAND ONLY.IN THE CASE UNDER CONSIDERATION THERE IS NO DOUBT THAT THE PLACE TO BE USED BY THE ADVERTISER WAS PART OF THE PROPERTY OWNED BY THE ASSESSEE AND IT WAS LOCATED IN THE COMPOUND OF THE BUILDING IT WAS NOT ONLY LAND THAT COULD BE ALIENATED FROM THE PROPERTY AND COULD BE USED INDEP ENDENTLY.THEREFORE CONSIDERING THE PECULIAR FACTS OF THE CASE AND REVERSING THE ORDER OF THE FA A,WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 8'9 &' : ; ) 6 < ) ' => . ORDER PRONOUNCED IN THE OPEN COURT ON 13TH AUGUST 2014 . 7 ) +,! ? @ 13 6' , 201 4 , ) 6 A SD/- SD/- . . / I.P. BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, @ /DATE: 13 .08 . 2014. ITA NO. 6407/MUM/2011 NEW SHIV TIRTH CO-OP. HSG. SO CIETY LTD. 3 SK 7 7 7 7 ) )) ) $'B $'B $'B $'B CB!' CB!' CB!' CB!' / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ D E , 4. THE CONCERNED CIT / D E 5. DR B BENCH, ITAT, MUMBAI / BF6 $' CH , . . . 6. GUARD FILE/ 6 8 %B' %B' %B' %B' $' $'$' $' //TRUE COPY// 7 / BY ORDER, G / = DY./ASST. REGISTRAR , /ITAT, MUMBAI