DCIT 10(2), MUMBAI V. RIA LABORATORIES P.LTD, MUMBAI

ITA 7656/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4117 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 27; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI D BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 7656 /MUM/2013 ( / ASSESSMENT YEAR : 2010-11) DY. COMMISSIONER OF INCOME- TAX -10(2), ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / V. M/S RIA LABORATORIES PVT. LTD., 24, SHREE DIAMOND CENTRE, LBS MARG, VIKHROLI WEST, MUMBAI- 400 083. ./ PAN :AADCR2622R ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI B.S. BIST ASSESSEE COMPANY BY : SHRI SHAILESH N. DOSHI / DATE OF HEARING : 19-01-2016 / DATE OF PRONOUNCEMENT : 01-02-2016 / O R D E R PER RAMIT KOCHAR, A.M. THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 7 656/MUM/2013, IS DIRECTED AGAINST THE ORDER DATED 21-10-2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 22, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE REVENUE IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- 1(I). 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE INCOME FR OM SUB- LETTING/LEASING OF PROPERTY TO OMNITECH INFOSOLUTIONS PVT. LTD., ASSESSABLE AS 'RENT INCOME' AND NOT AS 'INCOME FROM OTHER SOURCES'. ITA 7656/MUM/2013 2 L.(II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE RENT RECEIPT OF RS.1,04,13,240/ - IS TAXABLE UNDER THE HEA D 'INCOME FROM OTHER SOURCES' AS THE SAID RENT WAS RECEIVED FROM THE L ETTING OUT OF INDUSTRIAL PLOT ALONGWITH BUILDING THEREON. 1.(III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT THE ASSESSEE COMPANY DID NOT CARRY OUT ANY BUSINESS ACTIVITY DURI NG THE YEAR AND ONLY EXPLOITED THE COMMERCIAL ASSETS FOR EARNING HUG E RENTS WHICH IS TAXABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES. 2. THE APPELLANT CRAVES LEAVE TO ADD , AMEND , VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEF ORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTOR ED'. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANYS CASE FOR THE IMPUGNED ASSESSMENT YEAR WAS SELECTED FOR SCRUTINY BY REVENUE TO FRAME ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT,1961(HE REINAFTER CALLED THE ACT) . IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) THAT THE ASSESSEE COMPANY HAS OFFERED INC OME FROM HOUSE PROPERTY AT ANNUAL VALUE OF RS. 1,04,13,240/- WHICH IS THE O NLY INCOME SHOWN BY THE ASSESSEE COMPANY IN ITS PROFITS AND LOSS ACCOUNT. THE ASSESSEE COMPANY WAS ASKED BY THE AO TO FILE COPY OF THE AGREEMENT ENTER ED INTO WITH MIDC WITH RESPECT TO THE PLOT OF LAND ON WHICH BUILDING WAS C ONSTRUCTED BY THE ASSESSEE COMPANY . IN REPLY, THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE COMPANY HAS ENTERED INTO LEAVE AND LICENSE AGREEMEN T TO LET OUT ITS PLOT ALONG WITH BUILDING AT PLOT NO. A-812, IN TRANS THANE CRE EK INDUSTRIAL AREA, IIC INDUSTRIAL AREA, MIDC MAHAPE, VAPI MUMBAI, WITH M/ S OMNITECH INFOSOLUTIONS PVT. LTD. (LICENSEE) FOR A PERIOD SPE CIFIED THEREIN. AS PER THE AGREEMENT, THE AMOUNT OF MONTHLY COMPENSATION AGREE D FOR THE PERIOD OF APRIL 2009 - MARCH 2010, IS RS.8,67,770/-, HENCE, T HE HOUSE PROPERTY INCOME IS DISCLOSED AT ANNUAL VALUE OF RS. 1,04,13,240/-. THE COPY OF LEAVE AND LICENSE AGREEMENT WAS DULY FILED BY THE ASSESSEE CO MPANY WITH THE AO. THE ITA 7656/MUM/2013 3 AMOUNT OF RENT RECEIVED AFTER DEDUCTION OF TDS WAS ALSO REFLECTED IN THE BANK STATEMENTS SUBMITTED BY THE ASSESSEE COMPANY BEFORE THE AO. THE ASSESSEE COMPANY ALSO SUBMITTED THAT IT HAS NOT CARRIED OUT ANY BUSINESS ACTIVITIES DURING THE YEAR AND HENCE THERE IS NO INCOME OTHER THAN INCOME FROM HOUSE PROPERTY AS STATED ABOVE. SINCE THERE WAS NO BUSIN ESS ACTIVITIES CARRIED ON BY THE ASSESSEE COMPANY DURING THE PREVIOUS YEAR RELEV ANT TO THE ASSESSMENT YEAR , THE ASSESSEE COMPANY SUBMITTED THAT IT HAS N OT CLAIMED DEPRECIATION ON ITS FIXED ASSETS. DUE TO THIS, THE ASSETS INCLU DING BUILDING ASSET , ARE DISCLOSED IN THE BALANCE SHEET AT GROSS ACQUISITION VALUE AND NO DEPRECIATION IS CLAIMED ON THE SAID ASSETS. THE ASSESSEE COMPAN Y SUBMITTED THAT THE ASSESSEE COMPANY WAS REGISTERED ON 23.02.2006 AND T HE RELEVANT PLOT WAS PURCHASED BY ONE OF THE DIRECTORS OF THE COMPANY NA MELY MR NARANDAS AMRITLAL SEJPAL IN HIS CAPACITY AS THE DIRECTOR OF THE PROPOSED COMPANY IN THE YEAR 2004 I.E. PRIOR TO INCORPORATION OF THE AS SESSEE COMPANY. THE PLOT AND BUILDING CONSTRUCTED THERETO WAS TRANSFERRED TO THE ASSESSEE COMPANY BY SH NARANDAS AMRITLAL SEJPAL IN THE YEAR 2008 AND HE NCE THE SAME IS REFLECTED IN THE BOOKS OF ACCOUNTS AND THE BALANCE SHEET OF T HE ASSESSEE COMPANY .THE ASSESSEE COMPANY FINALLY PRAYED TO ACCEPT THE RENTA L INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND APPRECIATE IT TO B E A GENUINE INCOME EARNED OUT OF TRANSPARENT ACTIONS OF THE ASSESSEE COMPANY. THE A.O. AFTER CAREFUL PERUSAL OF THE ASSESSEE COMP ANYS SUBMISSION HELD THE SAME ARE NOT ACCEPTABLE. THE A.O. OBSERVED THAT AS PER PARA 3(M) OF THE AGREEMENT OF LEASE BETWEEN SHRI NARANDAS AMRATLAL S EJPAL AND MIDC(LATER ON ASSIGNED TO THE ASSESSEE COMPANY), IT IS STIPULATED THAT THE LICENSEE WILL NOT DIRECTLY OR INDIRECTLY TRANSFER, ASSIGN, SELL, ENCU MBER OR PART WITH HIS INTEREST UNDER OR THE BENEFIT OF THIS AGREEMENT OR ANY PART THEREOF IN ANY MANNER WHATSOEVER WITHOUT THE PREVIOUS CONSENT IN WRITING OF THE CHIEF EXECUTIVE OFFICER. THUS AS PER THE AO, IT IS CLEAR THAT THE ASSESSEE COMPANY IS NOT THE OWNER OF THE PROPERTY AND THUS NOT ENTITLED TO EVEN SUBLET THE PROPERTY TO ITA 7656/MUM/2013 4 THIRD PARTY. THE USE AND OCCUPATION OF THE LEASED PROPERTY IS BASED ON THE CONTRACT BETWEEN THE LESSEE AND LESSOR AND THE AO O BSERVED THAT RIGHT OF OCCUPATION IS CO-TERMINUS WITH THE LEASE AGREEMENT. THE AO OBSERVED THAT THE OBJECTIVE OF THE MIDC TO ALLOCATE THE PLOT ON L EASE FOR A SPECIFIC PURPOSE AS STATED IN THE LEASE DEED AND THE SAME IS FOR THE PU RPOSE OF PROMOTION/ DEVELOPMENT OF INDUSTRIES/ FACTORY BUILDING AND MAN UFACTURE/ PRODUCTION OF ARTICLES/GOODS BY THE PERSON TO WHOM THE PLOT HAS B EEN LEASED BY MIDC. AS PER THE PROVISIONS OF THE ACT , AN INCOME TO BE CHA RGED UNDER HOUSE PROPERTY, INTER-ALIA , THE ASSESSEE COMPANY MUST BE THE LEGAL OWNER OF THE HOUSE PROPERTY AND INCOME FROM SUB-LETTING OF PROPERTY IS NOT TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY U/S 22 OF THE ACT BUT SHALL BE CHARGEABLE TO TAX U/S 56 OF THE ACT AS INCOME FROM OTHER SOUR CES, HENCE, IT COULD BE SEEN THAT ASSESSEE COMPANY HAS INCORRECTLY OFFERED TO TAX RENTAL INCOME RECEIVED FROM M/S OMNITECH INFOSOLUTIONS PVT. LTD. UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN THE RETURN OF INCOME FILED WITH THE REVENUE AND WRONGLY CLAIMED STANDARD DEDUCTION @ 30% U/S 24(A) OF THE ACT AND IT WAS HELD BY THE AO THAT THE RENTAL INCOME RECEIVED BY T HE ASSESSEE COMPANY OF RS. 1,04,13,240/- IS TO BE BROUGHT TO TAX U/S 56 OF THE ACT UNDER THE HEAD INCOME FROM OTHER SOURCES AND CLAIM OF DEDUCTION OF STANDARD DEDUCTION @30% U/S 24(A) WAS DENIED TO THE ASSESSEE COMPANY B Y THE AO VIDE ORDERS DATED 29.12.2012 PASSED U/S 143(3) OF THE ACT . 4. AGGRIEVED BY THE ORDERS DATED 29.12.2012 PASSED U/S 143(3) OF THE ACT BY THE AO, THE ASSESSEE COMPANY CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE COMPANY SUBMITTE D THAT ASSESSEE COMPANY HAD TAKEN A PLOT ON LEASE FROM MIDC FOR A P ERIOD OF 95 YEARS WHICH IS CLEARLY EVIDENT FROM THE AGREEMENT TO LEASE DATE D 26.02.2004 AND LEASE DEED DATED 11.10.2007 , BOTH EXECUTED BY MIDC. A BU ILDING IS CONSTRUCTED ON THIS PLOT BY THE ASSESSEE COMPANY ON ITS EXPENSE. T HE PLOT ALONG WITH ITA 7656/MUM/2013 5 BUILDING IS CLEARLY REFLECTED IN THE BOOKS OF ACCOU NTS OF THE ASSESSEE COMPANY AS ITS ASSET AND WAS LATER ON RENTED OUT TO THE THI RD PARTY. HOWEVER, THE A O. HAS CONTENDED THAT SINCE THE ASSESSEE COMPANY HAS A CQUIRED PLOT OF LAND FROM MIDC ON LEAVE AND LICENSE BASIS, THE ASSESSEE COMPANY IS NOT THE OWNER OF THE PLOT AND HENCE RENT INCOME RECEIVED FOR THE SAME SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE COMPANY SUBMITTE D THAT THE A.O. HAS TOTALLY MISDIRECTED HERSELF IN REACHING THE CONCLUS ION THAT THE RENTAL INCOME IS TAXABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE ASSESSEE COMPANY SUBMITTED THAT THE QUERY RAISED BY THE A.O., THAT T HE PLOT IS ACQUIRED ON LEAVE AND LICENSE BASIS, ITSELF IS WRONG. IT CAN BE SEEN FROM THE LEASE DEEDS THAT THE PLOT IS, NOT ACQUIRED ON LEAVE AND LICENSE BASIS, B UT IT IS ACTUALLY ACQUIRED ON A LONG TERM LEASE BASIS (I.E. 95 YEARS). MOREOVER F OR THE PURPOSE OF TAXATION OF PROPERTY INCOME, UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', OWNERS ARE DEFINED UNDER SEC 27(IIIB) OF THE ACT WHEREBY IT IS STIPULATED THAT A PERSON WHO ACQUIRES ANY RIGHTS (EXCLUDING ANY RIGHTS BY WA Y OF A LEASE FROM MONTH TO MONTH OR FOR A PERIOD NOT EXCEEDING ONE YEAR) IN OR WITH RESPECT TO ANY BUILDING OR PART THEREOF, BY VIRTUE OF ANY SUCH TRA NSACTION AS IS REFERRED TO IN CLAUSE (F) OF SECTION 269UA OF THE ACT, SHALL BE DE EMED TO BE THE OWNER OF THAT BUILDING OR PART THEREOF AND CLAUSE (F) OF SECTION 269UA OF THE ACT STATES THAT IN RELATION TO ANY IMMOVABLE PROPERTY REFERRED TO I N SUB-CLAUSE (I) OF CLAUSE (D), MEANS TRANSFER OF SUCH PROPERTY BY WAY OF SALE OR EXCHANGE OR LEASE FOR A TERM OF NOT LESS THAN TWELVE YEARS & INCLUDES ALLOW ING THE POSSESSION OF SUCH PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER O F PROPERTY ACT, 1882 (4 OF 1882). THE ASSESSEE COMPANY SUBMITTED THAT IT HAS T AKEN THE IMMOVABLE PROPERTY (PLOT) ON LEASE FOR A PERIOD OF 95 YEARS. AS PER THE PROVISIONS OF SECTION 27(IIIB) READ WITH CLAUSE (F) OF SECTION 26 9UA OF THE ACT, WHERE THE PERIOD OF LEASE IS NOT LESS THAN 12 YEARS, THE ASSE SSEE COMPANY IS CONSIDERED TO BE THE DEEMED OWNER OF THE PROPERTY AND ACCORDIN GLY RENTAL INCOME EARNED ITA 7656/MUM/2013 6 BY IT SHOULD BE TREATED AS INCOME FROM HOUSE PROPER TY, HENCE, ASSESSEE COMPANY IS THE RIGHTFUL OWNER OF THE PROPERTY AND T HE RENTAL INCOME RECEIVED AGAINST THE LEASE OF THE PROPERTY SHOULD BE TAXED U NDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE COMPANY SUBMITTE D THAT AGREEMENT TO LEASE DATED 26.02.2004 WAS ENTERED BY THE PROMOTER- DIRECTOR OF THE ASSESSEE COMPANY , MR NARANDAS AMRATLAL SEJPAL WITH MIDC AS A PROMOTER OF THE PROPOSED COMPANY AND LATER ON FRESH LEASE AGREEMENT IS ENTERED INTO BY THE ASSESSEE COMPANY WITH MIDC ON 11.10.2007 RATIFYING THE AGREEMENT TO LEASE DATED 26.02.2004 , WHEREIN THE ASSESSEE COMPANY IS SHOWN THE LESSEE AND THE PROMOTER-DIRECTOR OF THE ASSESSEE COMPANY , MR NARANDAS AMRATLAL SEJPAL IS SHOWN AS THE CONFIRMING PARTY. THUS, THE ASSESSE E COMPANY CONTENDED THAT THE ALL THE RIGHTS IN RESPECT OF THE PLOT OF L AND IS TRANSFERRED IN FAVOUR OF THE ASSESSEE COMPANY. THE DOCUMENTS SUBMITTED CLEAR LY REVEALS THAT THE ASSESSEE COMPANY IS THE OWNER OF THE PLOT OF LAND A ND THE BUILDING THEREON. THE CIT(A) AFTER CAREFULLY CONSIDERED THE SUBMISSI ON OF THE ASSESSEE COMPANY AND THE ASSESSMENT ORDER HELD THAT ONE OF THE PROMO TER DIRECTOR OF THE COMPANY SHRI NARANDAS AMRATLAL SEJPAL HAD ACQUIRED A PLOT OF LAND FROM MIDC ON LEAVE AND LICENSE BASIS VIDE AGREEMENT DATE D 26-02-2004 FOR 95 YEARS EVEN BEFORE THE ASSESSEE COMPANY WAS INCORPOR ATED. HOWEVER, SUBSEQUENT TO THE INCORPORATION OF THE ASSESSEE COM PANY, A FRESH LEASE AGREEMENT WAS ENTERED INTO IN THE NAME OF THE ASSES SEE COMPANY WITH MIDC ON 11-10-2007. THE ASSESSEE COMPANY HAD CONSTRUCTE D A FACTORY BUILDING ON THE ABOVE LEASEHOLD PLOT OF LAND ALLOTTED. THE A.O .S CONTENTION WAS THAT THE ASSESSEE COMPANY WAS NOT THE OWNER OF THE LAND AND HENCE INCOME ARISING OUT OF LETTING OUT OF THE BUILDING COULD NOT BE TRE ATED UNDER INCOME FROM HOUSE PROPERTY. THE CIT(A) HELD THAT OWNERSHIP IS THE CRITERIA FOR ASSESSING THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPER TY . HOWEVER, THE INCOME FROM PROPERTY IS ASSESSABLE IN THE HANDS OF THE TAXPAYER AS INCOME FROM HOUSE PROPERTY WHO IS NOT THE LEGAL OWNER BY VIRTUE OF SECTION 27 OF THE ITA 7656/MUM/2013 7 ACT WHICH, INTER-ALIA, STIPULATES THAT A PERSON WHO ACQUIRES ANY RIGHTS IN OR WITH RESPECT TO ANY BUILDING OR PART THEREOF, FOR A PERIOD OF 12 YEARS OR MORE BY VIRTUE OF ANY TRANSACTION REFERRED TO U/S 269UA( F) OF THE ACT SHALL BE DEEMED TO BE THE OWNER OF THAT BUILDING OR PART THE REOF. IN THE LIGHT OF THESE CLAUSES, THE CIT(A) HELD THAT THE LEASE OF LAND IS FOR 95 YEARS AND SINCE IT EXCEEDS 12 YEARS, THE ASSESSEE COMPANY CAN BE TREAT ED AS THE DEEMED OWNER OF THE LAND. FROM THE BALANCE SHEET OF THE ASSESSE E COMPANY, THE CIT(A) NOTICED THAT THE OPENING VALUE OF THE BUILDING AS O N 1-4-2007 WAS SHOWN AS RS. 40,97,816/- AND AFTER MAKING ADDITIONS, THE VAL UE AS ON 31-03-2008 WAS RS. 79,15,607/- AND SUBSEQUENTLY THERE WERE NO ADDI TION MADE DURING ASSESSMENT YEARS 2009-10 AND 2010-11. THUS, THERE IS NO DOUBT THAT THE ASSESSEE COMPANY IS OWNER OF THE BUILDING. THE CIT (A) ACCORDINGLY VIDE ORDERS DATED 21.10.2013 HELD THAT ASSESSEE COMPANY IS THE OWNER OF THE FACTORY BUILDING AND IT IS ALSO A DEEMED OWNER OF T HE LAND AND THE RENT RECEIVED HAS TO BE ASSESSED AS INCOME FROM HOUSE P ROPERTY AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. 6. AGGRIEVED BY THE ORDERS DATED 21.10.2013 OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. D.R. SUBMITTED THAT THE CIT(A) WAS NOT C ORRECT IN BRINGING TO TAX, THE RENTAL INCOME OF THE ASSESSEE COMPANY UNDE R THE HEAD INCOME FROM HOUSE PROPERTY RATHER THE SAME IS CORRECTLY BROUGH T TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES BY THE AO. THE LD. DR R ELIED UPON THE ORDERS OF THE A.O.. 8. THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITT ED THAT A PLOT OF LAND BEARING NO. A-812, IN THE TRANS THANE CREEK INDUSTR IAL AREA WITHIN THE VILLAGE LIMIT OF BORIVALI AND WITHIN THE LIMITS OF NAVI MUMBAI MUNICIPAL CORPORATION , THANE DISTRICT WAS ACQUIRED FROM MID C ON LICENSE BASIS BY THE ITA 7656/MUM/2013 8 PROMOTER-DIRECTOR OF THE ASSESSEE COMPANY MR NARAND AS AMRATLAL SEJPAL BEING PROMOTER OF PROPOSED COMPANY , VIDE AGREEMENT DATED 26.02.2004 FOR TERM OF 95 YEARS WHICH WAS LATER ON ASSIGNED TO THE ASSESSEE COMPANY AFTER ITS INCORPORATION VIDE LEASE AGREEMENT DATED 11.10 .2007 BETWEEN MIDC AND THE ASSESSEE COMPANY WHEREBY THE PROMOTER-DIRECTOR OF THE ASSESSEE COMPANY MR. NARANDAS AMRATLAL SEJPAL WAS THE CONFIR MING PARTY, THE SAID AGREEMENTS ARE PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL AT PAGE 12-37 AND 42-65. THE LEASE IS NOW GRANTED BY MIDC IN FAVO UR OF THE ASSESSEE COMPANY WHO IS LESSEE OF THE SAID PLOT FOR A PERIOD OF 95 YEARS VIDE LEASE AGREEMENT DATED 11-10-2007 WHICH IS PLACED AT PAPER BOOK, PAGE 42-65. THE ASSIGNMENT OF INTEREST OF THE PROMOTER-DIRECTOR OF THE ASSESSEE COMPANY NAMELY MR. NARANDAS AMRATLAL SEJPAL IN FAVOUR OF TH E ASSESSEE COMPANY WAS APPROVED BY MIDC VIDE APPROVAL DATED 22.3.2007 WHIC H IS ALSO PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL PAGE 38-39. THE BUILDING THERE-ON THE SAID PLOT WAS CONSTRUCTED BY THE ASSESSEE COMPANY AND TH E SAID PLOT ALONG WITH BUILDING THERE-ON IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND THE AUDITED ACCOUNTS FILED WITH THE REV ENUE , OUR ATTENTION WAS DRAWN TO THE AUDITED BALANCE SHEET OF THE ASSESSEE COMPANY WHICH IS PLACED AT PAPER BOOK PAGE 1-7, WHEREBY THE FIXED ASSETS CO NSISTING OF LAND AND BUILDING ALONG WITH ELECTRICAL INSTALLATIONS, AND L IFT IS APPEARING AT GROSS VALUE OF RS.1,00,07,574/- AS AT 31.03.2010 WHILE THERE AR E NO ADDITIONS IN FIXED ASSETS DURING FINANCIAL YEAR 2009-10 AND NO DEPRECI ATION IS CLAIMED BY THE ASSESSEE COMPANY . THE SAID PREMISES CONSISTING OF LAND AND BUILDING WAS GIVEN ON LEAVE AND LICENSE BASIS TO OMNITECH INFOSO LUTIONS PVT. LTD. BY THE ASSESSEE COMPANY VIDE LEAVE AND LICENSE AGREEMENT 1 0.12.2007. THE ASSESSEE COMPANY HAS PLACED ON RECORD THE COPY OF L EAVE AND LICENSE AGREEMENT DATED 10-12-2007 ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND M/S OMNITECH INFOSOLUTIONS LTD. WHEREBY IT WAS AG REED BY THE LICENSEE TO PAY LICENSE FEE PER MONTH FOR TAKING ON THE SAID PR EMISES ON LEAVE AND LICENSE BASIS WHICH IS PLACED IN PAPER BOOK PAGES 66 TO 96. THE LD. COUNSEL ITA 7656/MUM/2013 9 SUBMITTED THAT THE ASSESSEE COMPANY ACQUIRED THE PL OT OF LAND FOR A LONG PERIOD I.E. 95 YEARS FROM THE MIDC AND THE ASSESSEE COMPANY IS THE DEEMED OWNER OF THIS PLOT BY VIRTUE OF SECTION 27(IIIB) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THE ASSESSEE COMPAN Y IS THE OWNER OF THE FACTORY BUILDING AND IT IS ALSO A DEEMED OWNER OF T HE LAND AND THE RENT RECEIVED HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT INCOME UNDER THE HEAD INCOME FROM OTHER SOURCE S. THE LD. COUNSEL OF THE ASSESSEE COMPANY SUBMITTED THAT THIS LEAVE AND LICENSE AGREEMENT DATED 10.12.2007 IS MERELY AN AGREEMENT TO GIVE THE RIGHT TO USE AND OCCUPY ON LEAVE AND LICENSE BASIS THE SAID PREMISES TO THE LI CENSEE WHILE NO SERVICES ARE PROVIDED BY THE ASSESSEE COMPANY TO THE LICENSEE AP ART FROM RIGHT TO USE AND OCCUPY THE SAID PREMISES. WITH RESPECT TO THE LIFTS AND ELECTRICAL INSTALLATIONS IN THE FACTORY BUILDING GIVEN ON LEAVE AND LICENSE BASIS ALONG WITH THE PREMISES , IT IS SUBMITTED THAT THE LIFT AND ELECTR ICAL INSTALLATIONS ARE AMENITIES , WHICH ARE NECESSARY FOR THE USE AND ENJ OYMENT OF BUILDING AND HENCE PART OF THE BUILDING AND CANNOT BE SEPARATELY ASSESSED AND CHARGED TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES RATH ER THE SAME IS ALSO CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. TO SUPPORT THE CONTENTION, HE RELIED UPON THE FOLLOWING DECISI ONS:- 1. HONBLE KERALA HIGH COURT DECISION IN THE CASE O F DR. P.A. VARGHESE V. CIT [1971] 80 ITR 180 (KER.) 2. HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF H OTEL ARTI DELUX (P.) LTD. V. ACIT, [2014] 50 TAXMANN.COM 422 & 3. MADRAS TRIBUNAL DECISION IN THE CASE OF ACIT V. SMT. FARIDA BEGUM TAZUDEEN, [1997] 63 ITD 298 (MAD) 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON . WE HAVE OBSERVED THAT THE PLOT OF LAND BEARING NO. A-812, IN THE TRANS TH ANE CREEK INDUSTRIAL AREA WITHIN THE VILLAGE LIMIT OF BORIVALI AND WITHIN THE LIMITS OF NAVI MUMBAI MUNICIPAL CORPORATION , THANE DISTRICT WAS ACQUIRE D FROM MIDC ON LICENSE ITA 7656/MUM/2013 10 BASIS BY THE PROMOTER-DIRECTOR OF THE ASSESSEE COMP ANY MR NARANDAS AMRATLAL SEJPAL AS BEING PROMOTER OF PROPOSED COMP ANY , VIDE AGREEMENT DATED 26.02.2004 FOR A TERM OF 95 YEARS WITH MIDC W HICH WAS LATER ON ASSIGNED TO THE ASSESSEE COMPANY AFTER ITS INCORPOR ATION VIDE LEASE AGREEMENT DATED 11.10.2007 BETWEEN MIDC AND THE ASS ESSEE COMPANY WHEREBY THE PROMOTER-DIRECTOR OF THE ASSESSEE COMPA NY MR. NARANDAS AMRATLAL SEJPAL WAS THE CONFIRMING PARTY, THE SAID AGREEMENTS ARE PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL AT PAGE 12-37 AN D 42-65. THE LEASE IS THEREAFTER GRANTED BY MIDC IN FAVOUR OF THE ASSESSE E COMPANY WHO IS LESSEE OF THE SAID PLOT FOR A PERIOD OF 95 YEARS VIDE LEAS E AGREEMENT DATED 11-10- 2007 WHICH IS PLACED AT PAPER BOOK, PAGE 42-65. THE ASSIGNMENT OF INTEREST OF THE PROMOTER-DIRECTOR OF THE ASSESSEE COMPANY NA MELY MR. NARANDAS AMRATLAL SEJPAL IN FAVOUR OF THE ASSESSEE COMPANY W AS APPROVED BY MIDC VIDE APPROVAL LETTER DATED 22.3.2007 WHICH IS PLACE D IN PAPER BOOK FILED WITH THE TRIBUNAL PAGE 38-39. THE BUILDING THEREON THE S AID PLOT ALONG WITH THE PLOT IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND THE AUDITED BALANCE SHEET FILED WITH THE REVENUE AN D ALSO FILED IN THE PAPER BOOK FILED BEFORE US, WHICH IS PLACED AT PAPER BOOK PAGE 1-7, WHEREBY THE FIXED ASSETS CONSISTING OF LAND AND BUILDING ALONG WITH ELECTRICAL INSTALLATIONS, AND LIFT IS APPEARING AT GROSS VALUE OF RS.1,00,07,574/- AS AT 31.03.2010 WHILE THERE ARE NO ADDITIONS IN FIXED AS SETS DURING FINANCIAL YEAR 2009-10 AND NO DEPRECIATION IS CLAIMED BY THE ASSES SEE COMPANY AS IT IS STATED THAT THERE ARE NO BUSINESS USER OF THE SAID ASSETS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR APART FROM GIV ING ON LEAVE AND LICENSE BASIS TO OMNITECH INFOSOLUTIONS LTD.(LICENSEE). THE SAID PREMISES CONSISTING OF LAND AND BUILDING WAS GIVEN ON LEAVE AND LICENS E BASIS BY THE ASSESSEE COMPANY (LICENSOR ) TO OMNITECH INFOSOLUTIONS LTD. (LICENSEE ). THE ASSESSEE COMPANY HAS PLACED ON RECORD THE COPY OF LEAVE AND LICENSE AGREEMENT DATED 10-12-2007 ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND M/S OMNITECH INFOSOLUTIONS LTD. WHEREBY IT WAS AGREED BY THE LICENSEE TO PAY ITA 7656/MUM/2013 11 LICENSE FEE PER MONTH TO THE LICENSOR I.E. THE ASSE SSEE COMPANY FOR TAKING ON THE SAID PREMISES FOR USE AND OCCUPATION BY THE LIC ENSEE FROM THE LICENSOR , WHICH ARE PLACED IN PAPER BOOK FILED WITH TRIBUNAL AT PAGES 66 TO 96. WE HAVE CAREFULLY GONE THROUGH THE CLAUSE(S) OF THE LE AVE AND LICENSE AGREEMENT DATED 10.12.2007 AND WE HAVE OBSERVED THAT THE SAID AGREEMENT IS JUST LIKE ANY OTHER RENT SIMPLICITOR AGREEMENT WHEREBY THE AS SESSEE COMPANY HAS GIVEN IN CONSIDERATION OF LICENSE FEE , ITS PREMISE S FOR OCCUPATION AND USE BY THE LICENSEE WITHOUT PROVIDING ANY OTHER SERVICES S UCH AS SECRETARIAL, SECURITY, MAINTENANCE ETC. AND IN OUR CONSIDERED VIEW THE LIC ENSE FEE INCOME RECEIVED BY THE ASSSESSEE COMPANY SHALL FALL FOR CHARGEABILI TY OF TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE COM PANY ACQUIRED THE PLOT OF LAND FOR A LONG PERIOD I.E. 95 YEARS FROM THE MI DC AND THE ASSESSEE COMPANY IS THE DEEMED OWNER OF THIS PLOT BY VIRTUE OF SECTION 27(IIIB) OF THE ACT READ WITH SECTION 269UA(F) OF THE ACT. THE ASS ESSEE COMPANY IS THE OWNER OF THE FACTORY BUILDING AND IT IS ALSO A DEEMED OWN ER OF THE LAND AND THE LICENSEE FEE INCOME RECEIVED HAS TO BE ASSESSED UND ER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. WITH RESPECT TO THE LIFTS AND ELECTRICAL INSTALLATIONS I N THE FACTORY BUILDING GIVEN ON LEAVE AND LICENSE ALONG WITH THE PREMISES CONSISTIN G OF LAND AND BUILDING , THE LIFT AND ELECTRICAL INSTALLATIONS ARE AMENITIES , W HICH ARE NECESSARY FOR THE USE AND ENJOYMENT OF THE BUILDING AND HENCE PART OF THE BUILDING AND CANNOT BE SEPARATELY ASSESSED AND CHARGED TO TAX UNDER THE HE AD INCOME FROM OTHER SOURCES RATHER THE SAME IS ALSO CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN OUR CONSIDERED VIEW, THE CIT(A) HAS RIGHTLY HELD THAT INCOME FROM LICENSE FEE ARISING FROM LEAVE AND LICENSE AGREEMENT ENTERE D INTO BY THE ASSESSEE COMPANY WITH OMNITECH INFOSOLUTIONS LIMITED DATED 1 0.12.2007 IS CHARGEABLE TO TAX AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES AND WE FIND NO INFIRMITY ITA 7656/MUM/2013 12 IN THE ORDERS DATED 21.10.2013 OF THE CIT(A) IN ALL OWING THE APPEAL OF THE ASSESSEE COMPANY AND WE UPHOLD THE ORDERS OF THE CI T(A). WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA N0. 7656/MUM/2013 FOR THE ASSESSMENT YEAR 2010-11 IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON IST FEBRUAR Y, 2016. # $% &' 01-02-2016 ( ) SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 01-02-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI