ADDL CIT RG 5(1), MUMBAI V. ESSAR PROPERTIES LTD, MUMBAI

ITA 7411/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71239 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 24-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Keywords: Business income; Depreciation; Business expenditure; Revised return
• Section: 143(3)

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO. 7411/M/2011 ( / ASSESSMENT YEAR : 2008 - 20 09 ) ADDL. CIT - RANGE - 5(1), R.NO.568, 5TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. ESSAR PROPERTIES LTD., ESSAR HOUSE, 11 K.K. ROAD, MAHALAXMI, MUMBAI - 400034. ./ PAN : AAACE 0893 Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI GIRIJA DAYAL / RESPONDENT BY : SHRI VIJAY MEHTA / DATE OF HEARING : 24.9 .2013 / DATE OF PRONOUNCEMENT : 24 .9 .2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 3.11.2011 IS AGAINST THE ORDER OF THE CIT (A) - 9, MUMBAI DATED 12.8.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, REVENUE RAISED THE ONLY EFFECTIVE GROUND WHICH READS AS UNDER: WHE THER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO TREAT THE RENTAL INCOME AS BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY . 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LEAS ING OF PROPERTIES AND ASSETS, INVESTMENTS IN PROPERTIES, MAINTENANCE AND RUNNING GUEST HOUSE, BUSINESS CENTRE SERVICES . ASSESSEE FILED THE RETURN OF INCOME ORIGINALLY ON 29.9.2008 DECLARING THE TOTAL INCOME OF R S. NIL CLAIMING A REFUND OF RS. 1,10,78,086/ - . SUBSEQUENTLY, ASSESSEE FILED THE REVISED RETURN ON 31.3.2010 ON THE REASON THAT THE CLAIM OF TDS WAS NOT CLAIMED IN THE ORIGINAL RETURN. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED 2 INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 63,01,990/ - . DURING THE ASSESSMENT PROCEEDINGS, AO MADE CERTAIN DISALLOWANCES AMOUNTING TO RS. 4,48,057/ - ON ACCOUNT OF INSURANCE CHARGES, REPAIR AND MAINTENANCE AND SECURITY SERVICES. THE RENTAL INCOME CLAIMED BY THE ASSESSEE UNDER THE HEAD BUSINESS INCOME WAS REJECTED AND TREATED THE SAME AS INCOME FORM HOUSE PROPERTY . AO ALSO DISALLOWED AMOUNT OF RS. 1,34,44,714/ - CLAIMED AS DEPRECIATION ON BUILDING AND DEPRECIATION ON FURNITURE AND FIXTURES AMOUNTING TO RS. 28,1 8,786/ - . AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE THE US , SHRI VIJAY MEHTA, AT THE OUTSET, LD COUNSEL FOR THE A SSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.2534/M/2010 FOR THE AY 2006 - 2007, ORDER DATED 6.7.2011 AND AND MENTIONED THE ISSUE STANDS COVERED BY THE SAID ORDER VIDE THE CONTENTS OF PARA 6 OF THE SAID TRIBUNALS O RDER . REVENUE RELIED ON THE ORDER OF THE AO AND THE ARGUMENTATIVE GROUND RAISED IN THE APPEAL. ON HEARING BOTH THE PARTIES, WE HAVE PERUSED THE SAID ORDER OF THE TRIBUNAL AND FIND THE SAME READS AS UNDER: 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ESSAR PROPERTIES LTD. VS. JCIT AND VICE VERSA IN ITA NO.2328/M/2004, 3464/M/2005 AND 2203/M/04 FOR THE AY 1997 - 98 AND 2001 - 02 ORDER DATED 29.2.2008 HAS ALLOWED THE APPEALS OF THE ASESSEE AND DIRECTED THE AO TO ASSESS THE RENTAL INCOME FROM LEASING ACTIVITY UNDER THE HEAD BUSINESS INCOME. THE TRIBUNAL FURTHER ALLOWED DEP RECIATION ON BUILDING AS WELL AS EQUIPMENTS PROVIDED BY THE ASSESSEE AND ALSO DIRECTED THE AO TO ALLOW THE OTHER INCIDENTAL EXPENSES SUCH AS ELECTRICITY CHARGES, SECURITY CHARGES AND REPAIRS OF THE BUILDING. WE FURTHER FIND THAT THE ABOVE ORDER HAS BEEN F OLLOWED BY THE TRIBUNAL IN THE REVENUES APPEAL FOR THE AY 2005 - 06 IN ITA NO.5852/M/09 ORDER DATED 3.6.2011. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE, WE, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL, HOL D THAT THE INCOME FROM LEASING ACTIVITY OF THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. CONSEQUENTLY, WE ALSO ALLOW DEPRECIATION ON BUILDING AS WELL AS EQUIPM ENTS PROVIDED BY THE ASSESSEE. THE AO IS FURTHER DIRECTED TO ALLOW OTHER INC IDENTAL EXPENSES SUCH AS ELECTRICITY CHARGES, SECURITY CHARGES AND REPAIRS OF THE BUILDING AND ACCORDINGLY THE ORDER PASSED BY THE LD CIT (A) ON THE ABOVE ISSUES 3 D OES CALL FOR ANY INTERFERENCE. THE GROUNDS TAKE BY THE REVENUE ARE, THEREFORE, REJECTED. 6. FROM THE ABOVE IT IS UNDISPUTED THAT THE TRIBUNAL HAS ALREADY TAKEN VIEW HOLDING THAT THE RENTAL INCOME EARNED BY THE ASSESSEE IS CHARGEABLE TO TAX AS BUSINESS INCOME OF THE ASSESSEE CONSIDERING THE BUSINESS NATURE OF THE RECEIPTS. AS SEEN FROM THE ABOVE, THIS IS VIEW OF THE TRIBUNAL IN THIS CASE FOR MORE THAN ONE AY. OTHER CLAIMS RELATING TO THE CLAIM OF DEPRECIATION, INCIDENTAL BUSINESS EXPENDITURE ETC ARE INCIDENTAL AND CONSEQUENTIAL. CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE CO NSIDERED OPINION THAT THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. A CCORDINGLY, THE SOLITARY GROUND RAISED BY THE REVENUE IS DISMISSED . 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED . ORDER PRO NOU NCED IN THE OPEN COURT ON 24 TH SEPTEMBER , 2013. SD/ - SD/ - ( AMIT SHUKLA ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 24 .9 .2013 . . ./ 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