DISTINCT DEVELOPERS P.LTD, MUMBAI V. ITO WD 6(2)(3), MUMBAI

ITA 6943/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1115 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2016
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Assessee Lawyers: MATHURIA
• Keywords: Business income; Tax effect

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 6943 /MUM/ 201 6 (ASSESSMENT YEAR 20 1 2 - 1 3 ) DISTINCT DEVELOPERS PVT. LTD. 15 - A, KASAM MITHA BUILDING DADA SAHEB PHALKE ROAD DADAR EAST MUMBAI - 400 014. VS. ITO WARD 6(2)(3) ROOM NO. 513 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AACCB 3733A ASSESSEE BY SHRI M.S. MATHURIA DEPARTMENT BY M ISS BHARTI SINGH DATE OF HEARING 3 . 5. 201 7 DATE OF PRONOUNCEMENT 3 .5 . 201 7 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12.8.2016 PASSED BY THE LEARNED CIT(A) - 12, MUMBAI AND IT RELATES TO A.Y. 2012 - 13. THE SOLITARY ISSUE URGED IN THIS APPEAL IS WHETHER LEASE RENTAL INCOME RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR UNDER THE HEAD INCOME FROM BUSINESS. 2. THE ASSESSEE RECEIVED RENTAL INCOME OF ` 16,80,000/ - FROM TWO PROPERTIES HELD BY IT. THE ASSESSEE DECLARED THE SAME AS ITS BUSINESS RECEIPTS. HOWEVER, THE ASSESSING OFFICER ASSESSED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE LEARNED CIT(A) ALSO CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING LEARNE D AR SUBMITTED THAT THE ASSESSEE COMPANY WAS FORMED WITH OBJECTIVE OF ACQUIRING LANDS AND BUILDINGS, DEVELOPING AND MANAGING THEM , REALIZING RENTS AND PROFITS FROM THEM ETC. IN THIS REGARD, H E DISTINCT DEVELOPERS PVT. LTD. 2 INVITED MY ATTENTION TO THE MAIN OBJECT OF THE ASSESSEE - COMPANY WHICH READ S AS UNDER : - TO CARRY ON BUSINESS OF ACQUIRING LANDS AND BUILDINGS, DEVELOPING AND MANAGING THEM, REALIZING RENTS AND PROFITS FROM THEM AND CONSTRUCTING BUILDINGS, FACTORIES, SHOPPING CENTERS, ROAD AND OTHER STRUCTURES AND ALSO BUYING, SELLIN G AND LEASING, BUNGALOWS, FLATS, ROOM, FACTORIES, OFFICES, SHOPS, GODOWNS, OPEN PLOTS, BUILDINGS AND OTHER STRUCTURES AND ALSO CARRY ON BUSINESS OF BUILDERS AND CONTRACTORS. ACCORDINGLY , BY PLAC ING RELIANCE ON THE FOLLOWING DECISIONS RENDERED BY HON'BL E SUPREME COURT , THE LEARNED AR SUBMITTED THAT THE RENTAL INCOME RECEIVED BY IT SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS : - (A) CHENNAI PROPERTIES AND INVESTMENTS LTD. (2015) 373 ITR 673 (B) RAYALA CORPORATION PVT. LTD. VS. ACIT (2016) 386 ITR 50 0 4 . LEARNED AR FURTHER SUBMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE COORDINATE BENCH IN THE CASE OF ACIT VS. M/S. STELLAR DEVELOPER PVT. LTD. (2015) 68 SOT 34 AND THE SAME HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. L EARNED AR SUBMITTED THAT THE ASSESSEE DOES NOT HAVE ANY OTHER INCOME EXCEPT RENTAL INCOME. LEARNED AR ALSO SUBMITTED THAT THE LEARNED CIT(A) HAS CONSIDERED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN A.Y. 2011 - 12 AND HE HAS ACCEPTED THE CONTENTION OF T HE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY HON'BLE SUPREME COURT IN CHENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA) . ACCORDINGLY, HE SUBMITTED THAT THE RENTAL INCOME SHOULD BE ASSESSED UNDER THE HEAD BUSINESS INCOME AS PER DECISION RENDERED BY H ON'BLE SUPREME COURT IN THE ABOVE SAID CASE. 5 . ON THE CONTRARY , LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAD ASSESSED THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN A.Y. 2010 - 11 AND THE SAME HAS BEEN CON FIRMED BY THE LEARNED CIT(A) VIDE HIS ORDER DATED 30.10.2013. THE ASSESSEE HAS ACCEPTED THE SAID DECISION OF THE LEARNED CIT(A) BY NOT FILING THE APPEAL BEFORE THE TRIBUNAL. DISTINCT DEVELOPERS PVT. LTD. 3 6 . IN THE REJOINDER, LEARNED AR SUBMITTED THAT THE ASSESSEE DID NOT PREFER THE A PPEAL CHALLENGING THE ORDER PASSED BY THE LEARNED CIT(A) IN A.Y. 2010 - 11 AS THE TAX EFFECT INVOLVED THEREIN WAS MINIMAL. HE SUBMITTED THAT THE LD CIT(A) HAS DECIDED AN IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN AY 2011 - 12. 7 . HAVING HEARD THE RIV AL SUBMISSIONS, I AM OF THE VIEW THAT THERE IS MERIT IN THE CONTENTION S OF THE ASSESSEE , AS THE ASSESSEE - COMPANY HAS BEEN FORMED WITH THE OBJECTIVE OF ACQUIRING AND DEVELOPING LANDS AND BUILDINGS, REALIZING RENT ETC. THE CLAIM OF THE ASSESSEE IS SUPPORTED BY THE DECISION S OF H ON'BLE SUPREME COUR, REFERRED SUPRA. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO ASSESS THE RENTAL INCOME UNDER THE HEAD INCOME FROM BUSINESS'. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 3 . 5 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 3 / 5 / 20 1 7 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) PS ITAT, MUMBAI