SHAH RUKH KHAN, MUMBAI V. CIT -40, MUMBAI

ITA 647/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9467 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 13-09-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 30-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJGURU
• Keywords: Deemed owner of house property; Residential status; Double taxation relief; Deemed to accrue or arise in india; Revised return
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL L , BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO. 647 / MUM/ 201 5 ( / ASSESSMENT YEAR: 2011 - 12 ) SHRI SHAH RUKH KHAN, 44, MANNAT, B.J. ROAD, BANDRA (WEST), MUMBAI - 400050 VS. THE ACIT, CENTRAL CIRCLE - 29, MUMBAI ./ ./ PAN/GIR NO. : AAHPK 3293 L ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI HIRO RAI (AR) / REVENUE BY : SH RI RAJGURU (DR) / DATE OF HEARING : 13/09 /2017 / DATE OF PRONOUNCEMENT : 29 / 09 / 2017 / O R D E R PER RAM LAL NEGI, JM THIS APPEA L HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 0 7/11/2014 PASSED BY THE LD. CIT (A) - 4 0 , MUMBAI PERTAI NING TO THE ASSESSMENT YEAR 2011 - 12 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN A CTOR BY PROFESSION, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 1 04,34,24,830/ - . THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 142 (2) AND 142 (1) WERE ISSUED AND DETAILS WERE CALLED FOR. IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO AND FURNISHED THE DETAILS INCLUDING BOOKS OF ACCOUNTS. THE 2 ITA NO. 647/MUM/2015 ASSESSMENT YEAR: 2011 - 12 ASSESSEE HAD SHOWN INCOME FROM HOUSE PROPER TY, PROFESSION, CAPITAL GAINS AND OTHER SOURCES. AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE , THE AO MADE ADDITION OF RS. 1,41,616 U/S 14A OF THE ACT AND RS. 51,27,445/ - AS NOTIONAL RENTAL INCOME FROM THE HOUSE, DUBAI PALM SIGNATURE VILLA AND DETERMI NED THE TOTAL INCOME OF THE ASSESSEE AT RS. 104,35,66,450/ - (ROUNDED OF U/S 288 OF THE ACT). THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY PREFERRING FIRST APPEAL BEFORE THE LD. CIT (A) ON THE GROUND THAT THE AO HAS ERRED IN MAKING ADDITION OF RS. 51,2 7,445/ - AS DEEMED INCOME FROM HOUSE PROPERTY OF THE ASSESSEE IN RESPECT OF THE SIGNATURE VILLA AFORESAID . AFTER HEARING THE ASSESSEE, THE LD. CIT (A) FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT PASSED IN THE CASE OF GOETZ INDIA LTD. V S. CIT 284 ITR 323 REJECTED THE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL. AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), THE ASSESSEE IS APPEAL BEFORE THE TRIBUNAL. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE ASSESSMENT OF HOUSE PROPERTY INCOME OF RS. 51,27,445/ - IN RESPECT OF THE SIGNATURE VILLA IN UAE OWNED BY THE APPELLANT AND KEPT FOR SELF USE, THOUGH NO HOUSE PROPERTY INCOM E IS ASSESSABLE ON ACCOUNT OF THE SAID PROPERTY TAKING INTO CONSIDERATION THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES AND THE PROTOCOL THERETO. 2. THE LEARNED CIT (A) ERRE D IN UPHOLDING THE ADDITION OF DEEMED HOUSE PROPERTY INCOME OF RS. 51,27,445/ - IN THE INCOME OF THE APPELLANT IN RESPECT OF THE SIGNATURE VILLA LOCATED IN UAE. 3. THE LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING THE POSITION OF LAW THAT THE PROVISIONS OF DT AA BETWEEN INDIA AND UAE WILL TAKE PRECEDENCE OVER THE INCOME TAX ACT AND NOT VICE VERSA. 3 ITA NO. 647/MUM/2015 ASSESSMENT YEAR: 2011 - 12 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROPERTY IN QUESTION WAS NOT LET OUT DURING THE PREVIOUS YEAR, THE APPELLANT/ASSESSEE INCLUDED R S. 51,27,445/ - AS NOTIONAL HOUSE PROPERTY INCOME IN RETURN OF INC OME. THE SAID PROPERTY IN QUESTION IS NOT TAXABLE IN INDIA AS PER THE PROVISIONS OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND UAE. THE LD. COUNSEL FURTHER SUBMITTED THA T THE IMPUGNED ORDER MAY BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE FINDINGS OF THE LD CIT(A) SUBMITTED THAT THE MUMBAI BENCH OF THE ITAT HAS DECIDED THE IDENTICAL ISSUE AGAINST THE ASSESSEE IN ASSESSEES OW N APPEAL FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11, THEREFORE, THE APPEAL OF THE ASSESSEE IS LIABLE TO DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL ON RECORD INCLUDING THE DECISION RELIED UPON THE LD. DR. THE ONLY G RIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS WRONGLY AFFIRMED THE ASSESSMENT ORDER PASSED BY THE AO. THE CONTENTION OF THE ASSESSEE IS THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE NOTIONAL INCOME FROM HOUSE PROPERTY IN QUESTION IN THE LIGHT OF THE PROVISIONS OF DTAA. ALTHOUGH, FROM THE CONTENTION OF THE ASSESSEE TWO QUESTIONS EMERGE I.E., 1 ST . WHETHER THE ASSESSEE CAN CLAIM ANY DEDUCTION IN RESPECT OF STATEMENT ALREADY MADE IN HIS RETURN OF INCOME WITHOUT FILING ANY REVISED RETURN A ND 2 ND . WHETHER ON MERIT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION CLAIMED ? HOWEVER, IN OUR CONSIDERED OPINION THE ONLY SECOND QUESTION REQUIRES ADJUDICATION AS THE FIRST QUESTION COMES INTO PICTURE IN CASE THE ANSWER TO THE SECOND QUESTION GOES IN FAVOUR OF THE ASSESSEE. 7. AS POINTED OUT BY THE LD. DR. THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE AGAINST THE ASSESSEE IN ASSESSEES OWN APPEALS ITA NO 623 AND 4 ITA NO. 647/MUM/2015 ASSESSMENT YEAR: 2011 - 12 4763/MUM/2013 , FOR THE ASSESSMENT YEARS 2009 - 2010 AND 2010 - 11 RESPECTIVELY. THE OPERATIVE PART OF THE DECI SION IS REPRODUCED HEREUNDER: 13.4 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. ON THIS ASPECT, AT THE OUTSET, WE MAY SAY THAT THE ACTION OF THE LOWER AUTHORITIES DESERVES TO BE UPHELD IN VIEW OF THE NOTIFICATION NOS. 90 & 91/2008, DATED 28/08/2 008. IN FACT, THE ENTIRE CONTROVERSY IS ARISING FROM THE UNDERSTANDING OF THE EXPRESSION MAY BE TAXED IN THAT OTHER STATE AS MENTIONED IN PARA - 1 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND UAE. THE MEANING OF THE SAID EXPRESSION HAS BEEN EXPLAINED BY OUR CO - ORDINATE BENCH IN THE CASE OF ESSAR OIL LTD. V. ADDL. CIT [2014] 42 TAXMANN.COM 21 (MUM. - TRIB.) IN THE FOLLOWING WORDS: - (I) THE RATIO OF ALL THE JUDGMENTS RENDERED BY THE HONBLE HIGH COURTS , AS DISCUSSED HEREINABOVE AND CONFIRMED BY TH E HONBLE SUPREME COURT SPECIFICALLY IN THE CASE OF TURQUOISE INVESTMENT, ON THE INTERPRETATION OF THE EXPRESSION MAY BE TAXED, THAT ONCE THE TAX IS PAYABLE OR BANK OF BARODA PAID IN THE COUNTRY OF SOURCE , THEN COUNTRY OF RESIDENCE IS DENIED OF THE RIGHT TO LEVY TAX ON SUCH INCOME OR THE SAID INCOME CANNOT BE INCLUDED IN RETURN OF INCOME FILED IN INDIA, WOULD NO LONGER APPLY AFTER THE INSERTION OF PROVISION OF SUB - SECTION (3) OF SECTION 90 W.E.F. 1 ST APRIL, 2004, I.E. ASSESSMENT YEAR 2004 - 05. THE SAID PR OVISION AS CONFERRED UPON THE CENTRAL GOVERNMENT A POWER TO ISSUE NOTIFICATION, ASSIGNING MEANING TO THE TERMS USED IN THE DTAA, WHICH HAS NEITHER BEEN DEFINED UNDER THE ACT NOR IN THE AGREEMENT PROVIDED THAT SUCH A MEANING SHOULD NOT BE INCONSISTENT WITH THE PROVISIONS OF THE ACT OR AGREEMENT. IN PURSUANCE OF SUCH A STATUTORY EMPOWERMENT, CENTRAL GOVT. HAS ISSUED A NOTIFICATION ON 28 TH AUGUST, 2008, CLEARLY SPECIFYING THAT WHERE THE DTAA ENTERED INTO BY THE CENTRAL GOVT. WITH THE GOVT. OF ANY OTHER COUNTR Y PROVIDES THAT ANY INCOME OF A RESIDENT OF INDIA MAY BE TAXED IN THE OTHER COUNTRY, SUCH INCOME SHALL BE INCLUDED IN HIS TOTAL INCOME CHARGEABLE TO TAX IN INDIA IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME - TAX ACT, 1961 AND RELIEF SHALL BE GRANTED IN ACCORDANCE WITH THE METHOD FOR ELIMINATION OR AVOIDANCE OF DOUBLE TAXATION PROVIDED IN SUCH AGREEMENT. THIS MEANING ASSIGNED TO THE TERM MAY BE TAXED HAS CHANGED ITS COMPLEXION , (II). THE NOTIFICATION 5 ITA NO. 647/MUM/2015 ASSESSMENT YEAR: 2011 - 12 DATED 28 TH AUGUST 2008, REFLECTS A PARTICULAR INTEN T AND OBJECTIVE OF THE GOVERNMENT OF INDIA, AS UNDERSTOOD DURING THE COURSE OF NEGOTIATIONS LEADING TO FORMALIZATION OF TREATY. THEREFORE, SUCH A NOTIFICATION HAS TO BE RECKONED AS CLARIFICTORY IN NATURE AND HENCE INTERPRETATION GIVEN BY GOVT. OF INDIA THR OUGH THIS NOTIFICATION WILL BE EFFECTIVE FROM 1 ST APRIL, 2004 I.E. FROM THE DATE WHEN PROVISION OF SECTION 90(3) WAS BROUGHT IN THE STATUTE GIVING A LEGAL FRAMEWORK FOR CLARIFYING THE INTENT OF ONE OF THE NEGOTIATING PARTIES (III). THE PHRASE MAY BE TAXED IS NOT APPEARING IN THE STATUTE, BUT IT IS APPEARING IN THE AGREEMENT AND THEREFORE, THE INTERPRETATION AS UNDERSTOOD AND INTENDED BY THE NEGOTIATING PARTIES SHOULD BE ADOPTED. HERE ONE OF THE PARTIES I.E., GOVERNMENT OF INDIA HAS CLEARLY SPECIFIED THE I NTENT AND THE OBJECT OF THIS PHRASE. IF PHRASE IS USED IN A STATUTE, THEN ANY INTERPRETATION GIVEN BY THE HIGH COURT OR THE SUPREME COURT IS BINDING ON ALL THE SUBORDINATE COURTS AND HAS TO BE RECKONED AS LAW OF THE LAND. HOWEVER, THE MEANING ASSIGNED BY G OVERNMENT OF INDIA FOR A PHRASE OR TERM USED IN THE AGREEMENT THROUGH NOTIFICATION WILL PREVAIL AT LEAST FROM THE ASSESSMENT YEAR 2004 - 05. BECAUSE, WHILE INTERPRETING THE TREATY, THE INTENTION OF THE PARTIES TO THE AGREEMENT HAS TO BE BANK OF BARODA GIVEN PRIMACY AND HAS TO BE UNDERSTOOD IN THAT MANNER ONLY. THEREFORE, THE NOTIFICATION IS NOT CONTRARY TO THE PROVISIONS OF THE ACT. CONSEQUENTLY, THE EARLIER JUDGMENTS RENDERED IN ASSESSEES CASE PRIOR TO ASSESSMENT YEAR 2004 - 05, WILL NOT HAVE BINDING PRECEDEN CE IN THIS YEAR OR SUBSEQUENT YEAR. 13.5 IN VIEW OF THE AFORESAID PRECEDENT, IT HAS TO BE HELD THAT INCOME FROM THE DUBAI VILLA IS LIABLE TO BE TAXED IN INDIA INASMUCH AS THE SAME IS INCLUDIBLE IN THE RETURN OF INCOME AND WHATEVER TAXES THAT MAY HAVE BEE N LEVIED IN THE OTHER CONTRACTING STATE, THE CREDIT THEREOF IS REQUIRED TO BE ALLOWED AS PER LAW. THEREFORE, IN VIEW THEREOF WE HOLD THE ISSUE AGAINST THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO REWORK THE FINAL TAX LIABILITY IN ACCORDANCE WITH AFORES AID DIRECTION. THUS, ON THIS ASPECT ASSESSEE FAILS ON ITS GROUND. 13.6 . 6 ITA NO. 647/MUM/2015 ASSESSMENT YEAR: 2011 - 12 14. IN THE APPEAL FOR ASSESSMENT YEAR 2010 - 11, THE ONLY GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO BRINGING THE ANNUAL VALE OF DUBAI VILLA TO T AX IN INDIA WHICH HAS ALREADY BEEN DECIDED BY US WHILE DISPOSING OFF THE APPEAL OF ASSESSEE FOR ASS ESSMENT YEAR 2009 - 10 IN THE EARLIER PARAS. AS THE FACTS AND CIRCUMSTANCES IN THE APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS PARI MATERIAL TO THOSE CONSIDERED BY U S IN APPEAL FOR ASSESSMENT YEAR 2009 - 10, OUR DECISION THEREIN SHALL APPLY MUTATIS MUTANDIS TO THE SAID APPEAL ALSO. 8. WE NOTICE THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION IN QUEST ION IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT PASSED IN GOETZ INDIA LTD. V S. CIT (SUPRA) , WITHOUT ADJUDICATING THE ISSUE THAT WHETHER UNDER THE PROVISIONS DTAA THE ASSESSEE IS ENTITLED TO CLAIM AS CONTENDED BY THE ASSESSEE OR WITHOUT GOING INTO THE MERIT OF THE CASE. NOW THE TRIBUNAL HAS DECIDED THE SAID ISSUE AGAINST THE ASSESSEE IN ASSESSEES OWN APPEALS FOR THE ASSESSMENT YEARS 2009 - 2010 AND 2010 - 11, DISCUSSED ABOVE . W E , THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH P ASSED IN THE ASSESSEES OWN APPEALS, DISMISS ALL THE GROUNDS APPEAL OF THE ASSESSEE . IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPT. , 2017 . SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 29 / 9 / 2017 ALINDRA, PS 7 ITA NO. 647/MUM/2015 ASSESSMENT YEAR: 2011 - 12 / 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, MU MBAI