ASHAPURA DEVELOPERS, MUMBAI V. JCIT -RANGE 25(1), MUMBAI

ITA 7119/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3162 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.7119/MUM/2013 ( %' ( / ASSESSMENT YEAR: 2010-11) M/S. ASHAPURA DEVELOPERS 101B, HALLMARK BUSINESS PLAZA, OPP. GURUNANAK HOSPITAL, SANT GYANESHWAR MARG, BANDRA (EAST), MUMBAI - 400051 ' / VS. JT. COMMISSIONER OF INCOME TAX RANGE 25(1) 1 ST FLOOR, PRATYAKSKAR BHAVAN, BANDRA (E), MUMBAI - 400051 ./ ./ PAN/GIR NO. : AANFA1971F ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 24.05.2016 !' /DATE OF PRONOUNCEMENT: 24.08.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 03.09.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 35, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2010-11. ASSESSEE BY: SHRI VIJAY C. KOTHARI DEPARTMENT BY: SHRI B.D.NAIK ITA NO.7119/M/2013 A.Y. 2010-11 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) FAILS TO APPRECIATE THE IDENTIFICATION OF IMMOVABLE PROPERTY AND ANY ANCILLARY ASSETS OR INFRASTRUCTURE SERVICES PRO VIDED TO LICENSEES. 1.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILS TO APPRECIATE THE PROVISIONS OF SECTION 14 AND SECTION 22 OF THE INCOME TAX ACT, 1961. 1.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN NOT APPLYING THE EXPRESS PROVISIONS OF SECTION 1 4 AND SECTION 22 FOR INCOME FROM HOUSE PROPERTY, WHICH IS AGAINST TO THE PRINCIPLE OF LAW. 1.4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS MADE AN ERROR IN PRESUMING THAT WE HAVE LET OUT ANC ILLARY AND INCIDENTAL ASSETS ALONG WITH IMMOVABLE PROPERTY AND CARRIED OUT BUSINESS ACTIVITY IN SYSTEMATIC AND SC IENTIFIC MANNER WITH EXPLOITATION OF IMMOVABLE PROPERTY BY Q UOTING THE FOLLOWING CITATIONS: I. CIT V/S. NATIONAL STORAGE PVT. LTD. [48 ITR 477(BOM)] II CIT V/S. ADMIRALTY FLATS MOTEL [133 ITR 985 (MAD)] III CIT V/S. ASSOCIATED BUILDINGS COMPANY LTD. [137 ITR 339 (BOM)] IV CIT V/S. K.L.PURI HUF [223 ITR 43(DEL)] V THE SASWAD MALI SUGAR FACTORY LTD. V/S. CIT [236 ITR 706 (BOM)] VI CIT V/S. HALAI MEMON ASSOCIATION [243 ITR 439 (MAD)] VII MUKHERJI ESTATE (P) LTD. V/S CIT [244 ITR 1(CAL )] 1.5 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILS TO IDENTIFY THE BASE OF DIFFERENCE BETWEEN IMMOVABLE P ROPERTY AND COMMERCIAL ASSET BEFORE APPLYING THE ABOVE REFE RRED CITATIONS. ITA NO.7119/M/2013 A.Y. 2010-11 3 1.6 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN NOT APPLYING FOLLOWING CITATIONS WITHOUT IDENTIF YING THE DIFFERENCE OF FACTS, WHICH IS A VIOLATION OF PRINCI PLE OF LAW. I. AZIMGANJ ESTATE PVT. LTD. V/S. CIT [ITA NO.242 O F 2003 (KOL)] II ROMA BUILDERS [ITA NO.4118/MUM/2008 DT.09.03.2011, 60 DTR (MUM) TRI 231] III EAST INDIA HOUSING & LAND DEVELOPMENT TRUST LTD . [42 ITR 49 (SC)] IV SULTAN BROTHERS PVT. LTD. VS/ CIT [51 ITR 353 (S C)] V O. RM. SP. SV. FIRM V/S. CIT [39 ITR 327 (MAD)] VI SALISBURY HOUSE ESTATES LTD. V/S. FRY [AC 432 (HL)] VII ATMA RAM PROPERTIES (P)LTD. V/S. DY.CIT [85 ITD 86 (DEL)] 3. HOWEVER, THE ASSESSEE HAS TAKE THE NUMBER OF GRO UNDS IN HIS APPEAL BUT THE SOLE GROUND WHICH IS IN DISPUTE IS T HAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE IS LIABLE TO BE TREATED AS INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS. THE ASSESSEE FIL ED THE RETURN OF INCOME DECLARING TOTAL INCOME TO THE TUNE OF RS.14, 52,84,405/- ON 14.10.2010. THE RETURN OF INCOME WAS PROCESSED U/S .143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THEREA FTER, THE CASE WAS SELECTED FOR SCRUTINY. IT CAME INTO NOTICE THAT TH E ASSESSEE FIRM HAS SHOWN THE RENTAL INCOME TO THE TUNE OF RS.8,34,46,5 73/- AND CLAIMED 30% DEDUCTION U/S.23 OF THE ACT. THE ASSESSEE HAS DEVELOPED A SHOPPING-CUM-OFFICE COMPLEX IN THE NAME AND STYLE O F M/S.HALLMARK BUSINESS PLAZA IN BANDRA (EAST), MUMBAI. APART FRO M LETTING OUT OFFICE SPACE HE WAS DERIVING RENT FROM IT, THE APPE LLANT ALSO MAINTAINED THE COMPLEX AND ALSO EARNED INCOME FROM VARIOUS ITA NO.7119/M/2013 A.Y. 2010-11 4 ACTIVITIES LINKED TO THE COMPLEX LIKE PARKING CHARG ES, AMENITIES CHARGES, MOBILE CHARGES ETC. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS LETTING OUT THE PROPERTY USED FOR BUSINESS, THEREFORE, THE SAME WAS NOT LIABLE TO BE TREATED A S INCOME FROM HOUSE PROPERTY BUT AS BUSINESS INCOME. THEREFORE, THE LE ASE INCOME WAS TREATED AS BUSSINESS INCOME AND ASSESSING OFFICER A SSESSED THE INCOME TO THE TUNE OF RS.15,99,62,580/-. FEELING A GGRIEVED THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE CI T(A) WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER, HENCE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSES SEE IS IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF THE PRO PERTY. ITS MAIN OBJECT IS CONSTRUCTION AND THE ASSESSEE LEASED OUT THE UNSOLD PROPERTY ON RENT, THEREFORE THE RENTAL INCOME FROM THE SAID PROPERTY IS LIABLE TO BE TREATED AS HOUSE RENT INCOME. IN SUPPORT OF HI S CLAIM, THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED BY HONBLE BOMBAY HIGH COURT IN CASE OF COMMISSIONE R OF INCOME TAX 12 VS. M/S. SANE & DOSHI ENTERPRISES ON 9 APRIL , 2015. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE DEPART MENT HAS PLACED RELIANCE UPON THE ORDER PASSED BY THE CIT(A) IN QUE STION. IT IS NOT IN DISPUTED THAT THE ASSESSEE HAS DEVELOPED A SHOPPING -CUM-OFFICE COMPLEX IN THE NAME AND STYLE OF M/S.HALLMARK BUSIN ESS PLAZA IN BANDRA (EAST), MUMBAI. HE HAS LET OUT THE OFFICE P LACE FOR RENT TO ITA NO.7119/M/2013 A.Y. 2010-11 5 DIFFERENT ENTITIES AND DERIVED INCOME FROM IT. BES IDE THIS THE ASSESSEE WAS ALSO DOING THE MAINTENANCE OF COMPLEX AND ALSO EARNING INCOME FROM VARIOUS ACTIVITIES LINKED TO THE COMPLEX LIKE PARKING CHARGES, AMENITIES CHARGES, MOBILE CHARGES ETC. IN BRIEF T HE ASSESSEE HAD LET OUT THE PROPERTY AND WAS RENDERING THE SERVICES ATT RIBUTABLE TO THE COMPLEX. SINCE THE ASSESSING OFFICER WAS OF THE VI EW THAT THE ASSESSEE WAS COMMERCIALLY EXPLOITING HIS SHOPS CUM OFFICE COMPLEX, THEREFORE THE INCOME OF THE ASSESSEE IS LIABLE TO B E TREATED AS BUSINESS INCOME. HENCE THE ASSESSING OFFICER DECLINED THE C ONTENTION OF THE ASSESSEE AND TREATED THE INCOME FROM BUSINESS INCOM E DESPITE INCOME FROM HOUSE PROPERTY. UNDOUBTEDLY THE LEARNED CIT(A) HAS CONFIRMED THE SAME. THE LEARNED REPRESENTATIVE OF THE ASSESS EE HAS RELIED UPON THE LAW SETTLED BY THE HONBLE BOMBAY HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX 12 VS. V/S. SANE & DOSHI ENTERPRISES DECIDED ON 9 APRIL, 2015. NOW IT IS TO BE SEEN WHE THER THE FACTS OF THE CASE IS IDENTICAL TO THE FACTS OF THIS CASE OR NOT. THE SAID ORDER PERUSED WHICH SPEAKS THAT THE ASSESSEE WAS ENGAGED IN THE R EAL ESTATE BUSINESS AND CONSTRUCTED A COMPLEX VIZ. MAY FAIR TOWER. IT IS STATED TO BE A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNE RSHIP ACT, 1932. HE HAS ALSO SHOWN THE RENTAL INCOME BUT THE AUTHORI TY TREATED THE SAME AS INCOME FROM BUSINESS. THEREFORE, THE MATTER WEN T UP TO THE JURISDICTIONAL HIGH COURT AND THE HONBLE HIGH COUR T IN THE CASE CITED ABOVE DECIDED THE MATTER IN FAVOUR OF THE ASS ESSEE. THE FACTS AND CIRCUMSTANCES OF THIS CASE IS QUITE SIMILAR TO THE FACTS AND ITA NO.7119/M/2013 A.Y. 2010-11 6 CIRCUMSTANCES OF THE PRESENT CASE. IN BOTH THE CAS ES THE ASSESSEE HAVE CONSTRUCTED COMMERCIAL COMPLEX AND RENTED OUT THE U NSOLD SHOPS / OFFICES ON LEASE. IN CASE OF THE HONBLE BOMBAY HI GH COURT, COMMISSIONER OF INCOME TAX 12 VS. M/S. SANE & DOSHI ENTERPRISES DECIDED ON 9 APRIL, 2015,THE INCOME OF THE ASSESSEE WAS TREATED AS INCOME FROM HOUSE PROPERTY. FINDING IDENTICAL FACT S AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW THAT IN THE PRESENT CASE THE LAW IS QUITE APPLICABLE AND THE IN COME OF THE ASSESSEE IS LIABLE TO BE TREATED AS INCOME FROM THE HOUSE PR OPERTY AND ACCORDINGLY HE WOULD BE ENTITLED EXEMPTION U/S.22 O F THE ACT. HENCE IN VIEW OF THE ABOVE SAID LAW WE SET ASIDE THE FIND ING OF THE CIT(A) IN QUESTION AND DIRECT THE ASSESSING OFFICER TO RE-ASS ESS THE INCOME OF THE ASSESSEE IN VIEW OF THE OBSERVATION MADE ABOVE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 24 TH AUGUST, 2016 MP MP MP MP ITA NO.7119/M/2013 A.Y. 2010-11 7 * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI