ACIT - 29(2), MUMBAI V. MACHINERY & SPARES, MUMBAI

ITA 707/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6774 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2013-2014
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL JUMANI C A S
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , HONBLE JUDICIAL MEMBER & SHRI DR. A.L. SAINI , HONBLE ACCOUNTANT MEMBER ITA NO. 707 / MUM /201 7 (ASST. YEAR : 20 13 - 14 ) ACIT - 29(2), BUILDING NO. C - 10, ROOM NO. 202, INCOME TAX OFFICE, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 51 V S . M/S. MACHINERY & SPARES, 201 - 202 KARM STAMBH, LBS MARG, OPP. MTNL, VIKHROLI - W, MUMBAI - 400 0 83 . PAN NO. AAAFM 1528 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL PUNMIYA & SHRI SUNIL JUMANI C A S . DEPARTMENT BY : SHRI SAURABH KUMAR RAI DR DATE OF HEARING : 19 / 0 6 /201 8 . DATE OF PRONOUNCEMENT : 27 / 0 6 /201 8 . O R D E R PER DR. A.L. SAINI , ACCOUNTANT MEMBER THE CAPTIONED APPEAL FILED BY THE REVENUE , PERTAINING TO ASSESSMENT YEAR 2013 - 14, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) - 40, MUMBAI IN APPEAL NO. CIT(A) - 40/IT - 40/2015 - 16, DATED 07/11/2016 , WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) DATED 30/03/2015. 2 ITA NO. 707 / MUM/2017 ( M/S. MACHINERY & SPARES ) 2. THE GRIEVANCE S RAISED BY THE REVENUE ARE AS FOLLOWS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW AND IN ABSENCE OF ANY AUTHENTICATED AND REGISTERED DOCUMENTS ON RECORDS TO PROVE THE OWNERSHIP OF IMMOVABLE PROPERTY IN ASSESSEE'S FAVOUR THE LD.CIT(A) ERRED IN HOLDING THAT THE INCOME EARNED BY THE ASSESSEE IN RESPECT OF PROPERTY LET OUT TO ICICI BANK IS ENTITLED FOR DEDUCTION U/S.24(A) OF THE LT ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND IN ABSENCE OF ANY AUTHENTICATED A ND REGISTERED DOCUMENTS ON RECORD TO PROVE THAT THERE WAS 'PART PERFORMANCE' AS STATED IN SECTION 53A OF TRANSFER OF PROPERTY ACT,1882 VIDE CLAUSE ( F ) OF SECTION 269UA OF THE I.T. ACT, 1961 R.W.S.27(IIIB) OF THE I.T. ACT, 1961, THE LD.CIT(A)ERRED IN HOLDING THAT THE ASSESSEE WAS A DEEMED OWNER WITHIN THE MEANING OF SECTION 27 OF I.T. ACT, AS THE FACT WHETHER THE ICICI BANK IS TENANT OR A SUB - TENANT OF THE ASSESSEE, IS OF NO RELEVANCE UNDER SECTION 27(IIIB). 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT FOR THE PURPOSE OF ACCORDING A STATUS OF DEEMED OWNER U/S.27 (III B), WHAT IS REQUIRED IS THERE WAS PART PERFORMANCE AS STATED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACTS, 1882, I.E. IN OTHER WORDS THE COMPLIANCE OF ALL THE CONDITIONS STATED IN SECTION 53A OF THE I.T. ACT, AND ASSESSEE FAILED TO PROVE ANY SUCH 'PART PERFORMANCE'. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN IMPORTING THE CONCEPT OF ACQUIRING RIGHTS FOR 'TWELVE YEAR' FRO SECTION 269UA CLAUSE (F) , WHILE INTERPRETING SECTION 27 (III B) WHEREAS WHAT IS REQUIRED TO BE SEEN ONLY IS THE 'PART PERFORMANCE' AS STATED IN SECTION 53 A OF TRANSFER OF PROPERTY ACT, R.W.S.269 UA CLAUSE (F). 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) FURTHER ERRED IN RELYING UPON A LETTER FROM M /S. V RANDAVANLAL GOVERDHANLAL (HUF), THE LANDLORDS AS A DOCUMENT FOR DRAWING A LEGAL CONCLUSION IN RESPECT OF THE SUBJECT PROPERTY. 3 ITA NO. 707 / MUM/2017 ( M/S. MACHINERY & SPARES ) 6. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, ALTER, SUBSTITUTE OR MODIFY ANY OF THE ABOVE GROUND OR ADD A FRESH GROUND AS AND WHEN FOUND NECESSARY EITHER BEFORE OR AT THE TIME OF HEARING.' 3 . AT THE OUTSET ITSELF, WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LD. C OUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 21/10/2016 PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 IN ITA NO. 5965/MUMBAI/2013 , WHEREBY THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE DISPUTED ISSUE WAS DELETED BY THE TRIBUNAL. LD. C OUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PRESENT APPEAL IS SQUARELY COVERED BY THE AFORESAID ORDER OF THIS TRIBUNAL, COPY OF WHICH IS PLACED BEFORE THE BENCH FOR PERUSAL. 4 . LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. 5. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 21/10/2016 , IN ITA NO. 5965/MUM/2013 (SUPRA) . IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS UNDER: - 2. IN THIS APPEAL, THE SOLITARY DISPUTE RELATES TO THE MANNER IN WHICH THE RENT OF RS.68.02 LACS RECEIVED BY THE ASSESSEE FROM ICICI BANK LTD IS TO BE TAXED. IN THE RETURN OF INCOME ASSESSEE HAS DECLARED SUCH INCOME AS BEING TAXABLE UNDER THE HEAD 4 ITA NO. 707 / MUM/2017 ( M/S. MACHINERY & SPARES ) INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER NOTICED THAT THE AMOUNT RECEIVED IS NOT FROM A PROPERTY OWNED BY THE ASSESSEE BUT IT IS IN RESPECT OF A PROPERTY WHICH HAS BEEN SUB - LET TO ICICI BANK LTD. THEREFORE, HE HAS PROCEEDED TO TAX THE SAME AS INCOME FR OM OTHER SOURCES. THE ASSESSING OFFICER FURTHER NOTICED THAT THOUGH IN ASSESSMENT YEAR 2005 - 06, THE TRIBUNAL HAD UPHELD THE PLEA OF THE ASSESSEE FOR ASSESSING SUCH INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY BUT SINCE THE APPEAL OF THE REVENUE WAS PENDING BEFORE THE HON'BLE BOMBAY HIGH COURT , HE PROCEEDED TO TAX SUCH RECEIPT AS INCOME FROM OTHER SOURCES. THE CIT(A) HAS ALSO AFFIRMED THE STAND OF THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE IS A MERE LICENSOR OF THE PROPERTY AND, THEREFORE, T HE INCOME RECEIVED BY IT FROM ICICI BANK LTD. WAS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT INCOME FROM HOUSE PROPERTY. AGAINST SUCH A DECISION ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINT ED OUT THAT IN THE PAST YEARS, THE ISSUE HAS BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, STARTING WITH THE LEAD ORDER FOR ASSESSMENT YEAR 2005 - 06 VIDE ITA NO.3008/MUM/2008 DATED 09/10/2009. IN THIS CONTEXT, THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 9/10/2009(SUPRA) IS RELEVANT: - WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE IS IN POSSESSION OF THE PREMISES FOR THE LAST 40 YEARS. THE PREMISES WERE WITH M/S BHARAT IMPORT AND EXPORTS AS TENANT AND THIS FIRM WAS DISSOLVED VIDE DISSOLUTION OF THE PARTNERSHIP MADE ON 3 - 4 - 1958. THEREAFTER THE TENANCY RIGHT IN THE PREMISES WERE RECEIVED BY THE ASSESSEE. THE OWNERS OF THE PROPERTY M/S. VRINDAVAN LAL GOVERDHAN LAL HAVE ALLOWED THE ASSESSEE FIRM TO CRE ATE SUB - TENANCY WITH THE REGARD TO THE PREMISES AND HAS GIVEN THEIR PREMISES FOR CREATING THE SUB - TENANCY IN FAVOUR OF ICICI BANK, LTD. FOR A PERIOD OF 15 YEARS ON CERTAIN TERMS AND CONDITIONS AS DETAILED IN THEIR LETTER DATED 24/11/2000 ADDRESSED TO THE A SSESSEE, COPY THEREOF FILED IN THE COMPILATION BEFORE US. IN THESE FACTS OF THE CASE WE FIND THAT THE ASSESSEE BECOME A DEEMED OWNER IN ACCORDANCE WITH PROVISION OF SECTION 27(IIIB) R.W.S. 269UA(F)(I) OF THE ACT. 3 ITA 5689/M/12 THERE IS NO MATERIAL ON RE CORD TO SUGGEST THAT THE LETTER DATED 24/11/2000 OF M/S. VRINDAVAN LAL GOVERDHAN LAL IS NOT GENUINE. THE FACT THAT THE AGREEMENT FOR LETTING OUT THE PREMISES TO ICICI BANK LTD. IS FOR A PERIOD OF 15 YEARS, CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE AS TH EY BECOME THE DEEMED OWNER UNDER THE PROVISION OF SECTION 27(IIIB) R.W.S. 269 UA (F)(I) OF THE ACT AND ACCORDINGLY IS ENTITLED TO DEDUCTION AS PROVIDED U/S 24(A) OF THE ACT. THE DECISION OF THE MUMBAI TRIBUNAL IN 8 SOT 441 AND CALCUTTA TRIBUNAL IN 89 ITD 1 99 COVERS THE ISSUE IN THIS CASE IN FAVOUR OF 5 ITA NO. 707 / MUM/2017 ( M/S. MACHINERY & SPARES ) THE ASSESSEE AND ACCORDINGLY WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF CIT(A) IN HOLDING THAT THE ASSESSEE IS THE DEEMED OWNER OF THE PREMISES U/S 27(IIIB) OF THE ACT AND THE ORDER OF THE CIT(A) IS CONFI RMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 4. SIMILARLY IN ASSESSMENT YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 5419/ MUM/2009, ITA NO. 4584/MUM/2010 , ITA NO. 6186/MUM/2011 AND ITA NO.5689/MUM/2012 DATED 29 - 12 - 2010, 29 - 7 - 2011, 09 - 01 - 2014 AND 28/04/2015 RESPECTIVELY FOLLOWED THE EARLIER PRECEDENTS IN ASSESSEES OWN CASE FOR A.Y. 2005 - 06 (SUPRA) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 3.1 IN VIEW OF THE AFORESAID PRECEDENTS THE ISSUE IS LIABLE TO BE DECIDED IN FAVOUR OF THE ASSESSEE. SO HOWEVER, WE FIND THAT THE CIT(A) HAS NOTED THAT THE TRIBUNAL ERRED IN TREATING THE ASSESSEE AS A DEEMED OWNER IN TERMS OF SECTION 27(IIIB) R.W.S. 269 UA (F) (I) OF THE ACT BECAUSE THE FACT THAT THE ASSESSEE WAS A MERE LICENSOR WAS NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL IN ASSESSMENT YEAR 2005 - 06. NOTABLY, ASSESSEE HAS EARNED THE RENTAL INCOME FROM ICICI BANK IN TERMS OF SUB - TENANCY DATED 29/11/2000 AND AN A GREEMENT DATED 24/11/2000 BETWEEN ASSESSEE AND THE OWNER OF THE PROPERTY, NAMELY, M/S. VRINDAVAN LAL GOVERDHAN LAL, WHICH SETS OUT ALL THE TERMS AND CONDITIONS OF THE ARRANGEMENT. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNAL FOR 2005 - 06 (SUPRA), WH ICH HAS BEEN REPRODUCED BY US IN THE EARLIER PARAS, CLEARLY SHOWS THAT THE ENTIRE ARRANGEMENT IN TERMS OF WHICH ASSESSEE HAS EARNED THE IMPUGNED RENTALS HAS BEEN EXAMINED. IT HAS ALSO BEEN SPECIFICALLY NOTICED THAT THE OWNER OF THE PROPERTY M/S. VRINDAVAN LAL GOVERDHAN LAL ALLOWED THE ASSESSEE FIRM TO CREATE SUB - TENANCY WITH REGARD TO THE PREMISES IN QUESTION AND ASSESSEE CREATED THE SUB - TENANCY IN FAVOUR OF ICICI BANK LTD. FOR A PERIOD OF 15 YEARS ON CERTAIN TERMS AND CONDITIONS. THE TRIBUNAL HAS NOTED THA T SUCH TERMS AND CONDITIONS HAVE BEEN PLACED BEFORE THEM. IN THIS BACKGROUND, THE TRIBUNAL HELD THAT ASSESSEE BECAME A DEEMED OWNER ON AN APPLICATION OF SECTION 27(IIIB) R.W.S. 269 UA (F)(I) OF THE ACT. ON THE CONTRARY, REFERENCE MADE BY THE CIT(A) TO TH E FACT THAT ASSESSEE WAS A MERE LICENSOR OF THE PROPERTY AND, THEREFORE, CANNOT BE TREATED TO BE A DEEMED OWNER IN TERMS OF THE SECTION 27(IIIB) R.W.S. 269 UA(F)(I)OF THE ACT IS A BALD ASSERTION, AND IS DEHORS ANY REFERENCE TO THE TERMS AND CONDITIONS OF T HE AGREEMENT. THE TRIBUNAL, ON THE OTHER HAND, HAD CONSIDERED THE ENTIRE ARRANGEMENT AND ARRIVED AT A CONSIDERED FINDING ON THE APPLICATION OF SECTION 27(IIIB) R.W.S. 269 UA(F)(I) OF THE ACT TREATING ASSESSEE AS A DEEMED OWNER. THEREFORE, IN OUR CONSIDER ED OPINION, THE CIT(A) HAS GROSSLY ERRED IN NOT FOLLOWING 6 ITA NO. 707 / MUM/2017 ( M/S. MACHINERY & SPARES ) THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, WHICH HAS BEEN RENDERED UNDER IDENTICAL CIRCUMSTANCES, WITHOUT ANY COGENT AND SUBSTANTIVE REASONS OF FACT OR LAW. BE THAT AS IT MAY, WE SET - A SIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO TREAT THE SUB - TENANCY RENT RECEIPTS FROM ICICI BANK LTD. AS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY FOLLOWING THE AFORESAID PRECEDENTS. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE. 6 . SINCE THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) , AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS AND THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY F O LLOWING THE ABOVE DECISION IN ASSESSEES OWN CASE , W E FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. T HEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 7 T H DAY OF JUNE , 201 8 . S D / - S D / - ( SAKTIJIT DEY ) ( A.L. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 7 T H JUNE , 201 8 . VR/ - 7 ITA NO. 707 / MUM/2017 ( M/S. MACHINERY & SPARES ) COPY TO: 1 . THE ASSESSEE - M/S. MACHINERY & SPARES, 201 - 202 KARM STAMBH, LBS MARG, OPP. MTNL, VIKHROLI - W, MUMBAI - 400 0 83 . 2 . THE REVENUE - ACIT - 29(2), BUILDING NO. C - 10, ROOM NO. 202, INCOME TAX OFFICE, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 51 3 . THE PR. CIT - 29, MUMBAI. 4 . THE CIT(A) - 40, MUMBAI. 5 . THE D.R . , MUMBAI. 6 . GUARD FILE. BY ORDER DY./ASST. REGISTRAR, ITAT, MUMBAI.