ACIT CIRCLE -12(3), MUMBAI V. SIROYA HOLDINGS, MUMBAI

ITA 6563/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2058 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2013
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: B V JHAVERI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.6563/M/2013 (ASSESSMENT YEAR: 2009 - 2010) ACIT - 17(3), MUMBAI. / VS. M/S. SIROYA HOLDINGS, 72, BAJAJ BHAVAN, NARIMAN POINT, MUMBAI 400 021. ./ PAN : AAQFS9329G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AKHILENDRA YADAV, DR / RESPONDENT BY : SHRI B.V. JHAVERI / DATE OF HEARING : 02.11.2016 / DATE OF PRONOUNCEMENT : 04 .11.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 8.11.2013 IS AGAINST THE ORDER OF THE CIT (A) - 23, MUMBAI DATED 16.8.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING EFFECTIVE GROUND AND THE SAME READS AS UNDER: - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CI T (A) WAS JUSTIFIED IN TREATING THE INCOME FROM PLOT OF LAND AS INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME FROM OTHER SOURCES AS TREATED BY THE AO. 2. THE ONLY ISSUE RAISED IN THE ABOVE GROUND RELATES TO THE CORRECT HEAD OF INCOME FOR TAXING THE I NCOME EARNED ON RENTING OF PLOT OF LAND. ASSESSEE CLAIMED THE SAID INCOME IS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY HOWEVER, AO THRUST ON THE ASSESSEE THE HEAD OF INCOME FROM OTHER SOURCES. 3. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGH T OUR ATTENTION TO THE ORDER OF THE CIT (A) IN GENERAL AND THE CONTENTS OF PARAS 2.3.5 AND 2.3.6 IN PARTICULAR AND SUBMITTED THAT THE CIT (A) ANALYZED THE APPLICABILITY OF THE PROVISIONS OF SECTION 22 OF THE ACT AND FOUND THE PLOT OF LAND IN QUESTION FALLS WITHIN THE SCOPE OF EXPRESSION PART OF THE LAND APPURTENANT THERETO AND THEREFORE, THE SECTION 22 OF THE ACT IS 2 RELEVANT FOR TAXING THE RENTAL INCOME FROM THE LAND LET OUT FOR PARKING. THE SAID LAND IS APPURTENANT TO THE SIROYA CENTRE. WE EXAMINED TH E FACTS OF THE CASE AND THE CONTENTS OF THE SAID PARAS. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARAS ARE EXTRACTED AS UNDER: - 2.3.4. SIMILARLY, WHEN ONE PERUSED THE LEAVE AND LICENSE AGREEMENT IN RESPECT OF THE PLOT OF LAND, IT WOULD BE CLEA R THAT THE LAND IN QUESTION IS THE LAND APPURTENANT TO THE BUILDING. CLAUSE (3) OF THE SAID LEAVE AND LICENSE AGREEMENT READS AS FOLLOWS: - 3) THE LICENSORS HEREBY GRANT LEAVE LICENSE AND PERMISSION TO THE LICENSES TO USE THE OPEN SPACE IN COMPOUND OF THE SAID BUILDING FOR PARKING OF VEHICLES FOR AN AGGREGATE TERM OF TEN YEARS COMMENCING FORM 25 TH MAY, 2007. THE LICENSEES SHALL BE ENTITLED TO USE THE OPEN COMPOUND SPACE OF THE SAID BUILDING FOR THE PURPOSE OF PARKING ITS CARS. THE OPEN SPACE OF COMPOUND OF THE SAID BUILDING IS SHOWN AS THE PLAN ANNEXED AND MARKED AS ANNEXURE 1. THIS LICENSE IN RESPECT OF THE SAID OPEN SPACE IN COMPOUND FOR PARKING OF VEHICLES SHALL BE COTERMINOUS WITH THE INDENTURE OF LEASE OF THE SAID BUILDING AND SHALL NOT OTHERWISE BE TERMINABLE. 2.3.5. FROM THE ABOVE, IT IS CLEAR THAT THE RENTS OF RS. 62,07,000/ - PER MONTH AND RS. 8,00,000/ - PER MONTH TOTALLY AMOUNTING TO RS. 8,40,84,000/ - PER YEAR IS BEING RECEIVED BY THE ASSESSEE IN RESPECT OF THE SAME PROPERTY CONSISTING OF THE BUILDING AND THE LAND APPURTENANT THERETO. EARLIER, IN THE AGREEMENT FOR BUILDING LEASE DATED 31.1.2006, RENT OF RS. 70,07,000/ - PER MONTH (RS. 8,40,84,000/ - PER ANNUM) WAS AGREED TO BE PAID BY THE LESSEE FOR THE USE OF THE BUILDING AND THE LAND ON WHICH THE BUILDING IS CONSTRUCTED. HOWEVER, VIDE THE SUBSEQUENT AGREEMENTS, THE MONTHLY RENT OF RS. 70,07,000/ - WAS SEGREGATED AS PER WHICH RENT OF RS. 62,07,000/ - WAS IN RESPECT OF THE BUILDINGS AND RENT OF RS. 8,00,000/ - PER MONTH WAS APPROPRIATED TOWARDS THE RIGHT TO USE THE LAND ON WHICH THE BUILDING STANDS. THE LAND WOULD, THEREFORE, BE LAND APPURTENANT TO THE BUILDING IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, IN VIEW OF THE PROVISIONS OF SECTION 22 OF THE ACT, THE INCOME ON ACCOUNT OF RENT RECEI VED BY THE ASSESSEE BOTH FOR THE BUILDING AND THE LAND WOULD BE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WOULD NOT BE LOGICAL TO HOLD THAT IF A SINGLE AGREEMENT HAD BEEN ENTERED INTO BETWEEN THE TWO PARTIES IN QUESTION FOR THE USE OF THE ENTIRE PROPERTY FOR A RENT OF RS. 70,07,000/ - , THE SAME WOULD HAVE BEEN CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY BUT IF TWO SEPARATE AGREEMENTS HAVE BEEN MADE FOR BUILDING AND THE LAND APPURTENANT THERETO OF THE SAME PROPERTY, THEN RE NTAL INCOME FROM THE BUILDING WOULD BE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHILE THE INCOME FROM THE LAND APPURTENANT THERETO WOULD BE ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. IN MY OPINION, THE PORTION OF LAND IN QUESTION IS PART OF THE PROPERTY ON WHICH THE BUILDING SIROYA CENTRE HAS BEEN CONSTRUCTED AND LET OUT AND IS LAND APPURTENANT THERETO. 4. FROM THE ABOVE, WE FIND THERE IS NO DISPUTE ON FACT THAT ASSESSEE OWNS A PROPERTY CALLED SIROYA CENTRE AT ANDHERI (E), MUMB AI AND THE SAME WAS LET OUT TO M/S. ADITYA BIRLA RETAILS LTD. ASSESSEE RECEIVED A SUM OF RS. 8,40,84,000/ - IN THE YEAR UNDER CONSIDERATION. ASSESSEE ENTERED INTO TWO LEASE AGREEMENTS WITH THE TENANT. THE FIRST AGREEMENT PERTAINS TO LET OUT OF THE SIROY A CENTRE CONSISTING OF BASEMENT + FIVE FLOORS + TOP FLOOR TERRACE. ANOTHER AGREEMENT WAS ENTERED INTO FOR LET OUT THE PLOT OF LAND FOR PARKING PURPOSES FOR A MONTHLY RENT OF RS. 8 LAKHS. ASSESSEE CLAIMED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERT Y AND RELIED ON THE PROVISIONS OF SECTION 22 AND 24 OF THE ACT. HOWEVER, AO IS OF THE OPINION T HAT 3 THE RENT RECEIVED FROM THE LAND PORTION IS OUTSIDE THE AMBIT OF THE PROVISIONS OF SECTION 22 OF THE ACT AND HE CONSIDERED THE TWO LEASE AGREEMENTS LITERALL Y. THEREFORE, THE INCOME FROM THE LAND WAS TAXED BY THE AO AS INCOME FROM OTHER SOURCES AND DENIED THE DEDUCTION ALLOWED U/S 24(A) OF THE ACT IN THIS REGARD. ON THESE FACTS, CIT (A) ANALYZED AND APPLIED THE JUDGMENT OF THE HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. ZAIBUNISA BEGAM [ 1985] 151 ITR 320 (AP) AND THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF BINNY LTD VS. ACWT [2010] 324 ITR 34 (MAD), WHICH ARE RELEVANT FOR EXPLAINING THE MEANING OF THE EXPRESSION LAND APPUR TENANT THERETO. IN ADDITION, HE RELIED ON CERTAIN OTHER DECISIONS OF THE TRIBUNAL ALSO. CIT (A) ALSO ANALYZED THE PROVISIONS OF SECTION 22 OF THE ACT WHICH READ AS UNDER: - 22. THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDINGS OR LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER, OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSE OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME TAX, SHALL BE CHARGEABLE TO INC OME - TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, VIDE PARA 2.3.1 OF HIS ORDER, CIT (A) GAVE A FINDING THAT THE LAND IN QUESTION IS APPURTENANT THERETO TO THE BUILDING SIROYA CENTRE HAVING THE SAME A DDRESS AND MUNICIPAL NUMBER IE CTS NO.41/B/3/A SITUATED AT AIRPORT ROAD, VILLAGE BAPNALA, TALUKA ANDHERI, ANDHERI (E), MUMBAI. THE FIRST AND THE SECOND SCHEDULE CONFIRMS THE ABOVE. IN THE LIGHT OF THESE FACTS, CIT (A) GAVE A FINDING IN FAVOUR OF THE ASSE SSEE AS PER THE DISCUSSIONS GIVEN IN PARAS 2.3.4 AND 2.3.5 EXTRACTED ABOVE. CONSIDERING THE ABOVE FACTUAL MA TRIX OF THE CASE, WE ARE OF THE OPINION, THE CIT (A) DISCUSSED THE ISSUE AT LENGTH AND RELIED ON VARIOUS BINDING JUDGMENTS BEFORE GRANTING RELIEF T O THE ASSESSEE. THEREFORE, IN OUR OPINION, THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRON OU NCED IN THE OPEN COURT ON 0 4 T H NOVEMBER, 2016. S D / - S D / - ( MAHAVIR SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 04.11 .2016 4 . . ./ OKK , 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI