Global Perspectives Ltd., Gurgaon V. DCIT, Circle-1(1), Gurgaon

ITA 7800/DEL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6780 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 27-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 7800 / DEL/ 2017 ASSESSMENT YEAR:2014-15 M/S GLOBAL PERSPECTIVES LIMITED L-BLOCK, UNITECH HOUSE, SOUTH CITY-1, GURGAON (HR) ASSESSMENT YEAR: 2014- 15 DCIT, CIRCLE - 1(1) , GURGAON (HR) TAN/PAN: AAACG2857J (APP ELL ANT) (RESPONDENT) A PP ELL ANT BY: SH. SALIL AGGARWAL, ADV & SH. SHAILESH GUPTA, CA RESPONDENT BY: SH. SURENDER PAL, SR. DR DATE OF HEARING: 25 09 2018 DATE OF PRONOUNCEMENT: 21 12 201 8 O R D E R AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 27.10.2017 PASSED BY LD. CIT(A)-1, GURGAON FOR THE QUANTUM OF ASSESSMENT PAS SED UNDER SECTION 274 FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE IS MAINLY AGGRIEVED BY DISALLOWANCE OF STA NDARD DEDUCTION OF RS. 1,20,42,749/- UNDER SECTION 24(1) BY RE- CHARACTERIZING THE INCOME FROM HOUSE PROPERTY AS BU SINESS INCOME. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS EARNING INCOME FROM RENT FROM A BUILDING LEASED OUT TO ITS ITA NO. 7800/DEL/2017 2 HOLDING COMPANY AND SISTER CONCERN IS INTO BUSINESS OF REAL ESTATE BUSINESS AND RELATED ACTIVITIES. THE ASSESSE E HAS SHOWN THE RENTAL INCOME AS INCOME FROM HOUSE PROPER TY. THE AO HAS TREATED THE SAID INCOME AS BUSINESS INCOME A FTER APPLYING THE RATIO OF THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENT LIMITED VS. CIT 2 015 373 ITR 673 AND THEREAFTER DISALLOWED THE STANDARD DEDUCTION CLAIMED UNDER SECTION 24(1). THE LEARNED CIT(A) TOO HAS CONFIRMED THE SAID ADDITION. HE HAS HELD THAT THE A NCILLARY OBJECTS OF THE ASSESSEE WAS TO LEASE OUT BUSINESS C ENTRES, COMMERCIAL COMPLEX, RESIDENTIAL COMPLEX, SHOPPING A RCADES ETC., AND THEREFORE, THE CONTENTION OF THE ASSESSEE IS THAT ITS OBJECTS DOES NOT INCLUDE GIVING THE PROPERTY ON REN T IS FACTUALLY INCORRECT. 3. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT IN THE EARLIER YEARS, THE INCOME SHOWN FROM THE HOUSE PROP ERTY HAS BEEN ACCEPTED BY THE AO AND ASSESSMENT PASSED UNDER SECTION 143(3) AND THEREFORE, AS A MATTER OF CONSIS TENCY DIFFERENT VIEW COULD NOT HAVE BEEN TAKEN. IN SUPPOR T, HE GAVE US THE FOLLOWING CHART:- S. NO. ASSESSMENT YEAR AMOUNT OF RENT (INR) STATUS OF ASSESSMENT 1. 2007-08 87,26,630 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 2. 2008-09 3,49,06,518 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 3. 2009-10 3,49,06,518 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 4. 2010-11 3,49,06,518 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 5. 2011-12 3,49,06,518 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) ITA NO. 7800/DEL/2017 3 6. 2012-13 3,49,06,518 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 7. 2013-14 3,62,15,513 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 8. 2014-15 4,01,42,496 IMPUGNED AY, TAXED AS BUSINESS INCOME 9. 2015-16 4,01,42,496 ALLOWED AS HOUSE PROPERTY INCOME U/S 143(3) 4. APART FROM THAT, HE SUBMITTED THAT NOW THE DECIS ION OF CHENNAI PROPERTIES (SUPRA) AND RAYLA CORPORATION PVT. LTD., VS. ACIT 2016 72 TAXMANN.COM 149 HAS NOW BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF RAJ DARDARKAR & ASSOCIATES VS. ACIT REPORTED IN 394 ITR 592, WHEREIN THE HONBLE SUPREME COURT ON AN INCOME FROM LEASE OF SH OPS HELD TO BE RENTAL INCOME ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON THE OTHER HAND, LEARNED DR STRONGLY RELIED UPON THE ORDER OF THE AO AND CIT(A). 5. FROM THE FACTS AS DISCUSSED ABOVE AND THE MATERI AL REFERRED TO BEFORE US, IT IS SEEN THAT THE ASSESSEE ALL THROUGHOUT HAS BEEN SHOWING RENTAL INCOME FROM A BU ILDING LEASED OUT TO ITS SISTER CONCERNED AS INCOME FROM H OUSE PROPERTY AND SUCH A INCOME HAS ALREADY BEEN ASSESSE D IN ALL THE EARLIER YEARS BY THE AO AND THE SCRUTINY PROCEE DINGS UNDER SECTION 143(3). NO MATERIAL FACTS OR CIRCUMST ANCES WHICH ARE DIFFERENT FROM THE EARLIER YEARS HAVE BEE N BROUGHT ON RECORD EITHER BY THE AO OR LEARNED CIT (A) AND T HEREFORE PRINCIPLE OF CONSISTENCY HAS TO BE FOLLOWED. THE SO LE BASIS FOR TREATING THE RENTAL INCOME AS BUSINESS INCOME IS ON ACCOUNT OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CAS E OF CHENNAI PROPERTIES AND RAYLA CORPORATION PVT. LTD. THESE TWO ITA NO. 7800/DEL/2017 4 JUDGMENTS HAVE NOW BEEN CONSIDERED BY THE HONBLE S UPREME COURT IN THE CASE OF RAJ DARDARKAR & ASSOCIATES (SUPRA), WHEREIN THE HONBLE SUPREME COURT HELD THAT MERE OB JECT CLAUSE WOULD NOT BE THE DETERMINING FACTOR AND OBSE RVED THAT, WHETHER THE INCOME IS TO BE TREATED AS INCOME FROM BUSINESS AND THE SAME HAS TO BE EXAMINED ON THE FACTS OF THE EACH CASE AND THE ACTIVITIES CARRIED THERETO. NO FACTS H AVE BEEN BROUGHT ON RECORD THAT THE ASSESSEE WAS CARRYING OU T ANY SYSTEMATIC ACTIVITY OF EXPORTING COMMERCIAL ASSET F OR EARNING OF INCOME ALBEIT IT IS A CASE OF PURE LEASE OF PREM ISES FOR RENTAL INCOME. 5. ACCORDINGLY, I HOLD THAT RENTAL INCOME RECEIVED BY THE ASSESSEE FROM THE LEASE OF THE PREMISES IS TO BE AS SESSED AS INCOME FROM HOUSE PROPERTY AND ACCORDINGLY THE ASSE SSEE IS LIABLE FOR DEDUCTION OF @ 30% UNDER SECTION 24(1). APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21ST D ECEMBER, 2018 . SD/ - [AMIT SHUKLA] JUDICIAL MEMBER DATED: 21 ST DEC, 2018 SH COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ITA NO. 7800/DEL/2017 5 ASSISTANT REGISTRAR DATE 1. DRAFT DICTATED ON 21.12.2018 2. DRAFT PLACED BEFORE AUTHOR 21.12.2018 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 09.01.2019 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.