ACIT, Bangalore V. M/s Prestige Estates Projects Pvt. Ltd., Bangalore

ITA 802/BANG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0635 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHA PRAKASH CITIDR
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Business income; Depreciation; Question of law
• Section: 43B; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.572/BANG/2012 ASSESSMENT YEAR : 2008-09 PRESTIGE ESTATE PROJECTS LTD., THE FALCON HOUSE, NO.1, MAIN GUARD CROSS ROAD, BANGALORE 560 001. PAN : AABCP 8096K VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), BANGALORE. APPELLANT RESPONDENT ITA NO.802/BANG/2012 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), BANGALORE. VS. PRESTIGE ESTATE PROJECTS LTD., THE FALCON HOUSE, NO.1, MAIN GUARD CROSS ROAD, BANGALORE 560 001. PAN : AABCP 8096K APPELLANT RESPONDENT ASSESSEE BY : SHRI PADAMCHAND KHINCHA, C.A. REVENUE BY : SHRI HARSHA PRAKASH, CIT-I(DR) DATE OF HEARING : 07.02.2013 DATE OF PRONOUNCEMENT : 07.02.2013 ITA NO.572 & 802/BANG/2012 PAGE 2 OF 11 O R D E R PER BENCH ITA 572/12 IS AN APPEAL BY THE ASSESSEE, WHILE ITA 802/12 IS AN APPEAL BY THE REVENUE. 2. BOTH THESE APPEALS ARE DIRECTED AGAINST THE ORD ER DATED 28.03.2012 OF THE CIT(APPEALS)-VI, BANGALORE RELATING TO ASSES SMENT YEAR 2008-09. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS APP EAL IS WITH REGARD TO ACTION OF THE REVENUE AUTHORITIES IN DISALLOWING TH E CLAIM OF THE ASSESSEE FOR DEDUCTION WHILE COMPUTING TOTAL INCOME OF A SUM OF RS.2,50,18,816 PAID BY THE ASSESSEE TO BANGALORE MAHANAGARA PALIKE TOWA RDS COMPOUNDING FEES FOR REGULARIZATION OF CONSTRUCTION IN EXCESS O F SANCTIONED PLAN, WHICH ACCORDING TO THE ASSESSEE, WAS WITHIN THE CURABLE L IMITS. THE REVENUE AUTHORITIES DISALLOWED THE CLAIM OF THE ASSESSEE FO R DEDUCTION FOR THE REASON THAT THE CLAIM FELL WITHIN EXPLANATION TO SE CTION 37(1) OF THE ACT VIZ., EXPENSES INCURRED WHICH IS PROHIBITED BY LAW OR WHI CH IS AN OFFENCE. 4. BEFORE US, IT WAS FAIRLY ADMITTED BY THE PARTIES THAT SIMILAR ISSUE HAD BEEN CONSIDERED BY THE HONBLE ITAT IN ITA NO.962 & 1204/BANG/2011 IN ASSESSEES OWN CASE FOR THE AY 2007-08 AND THIS TRI BUNAL VIDE ORDER DATED 14.09.2012 UPHELD THE VIEW TAKEN BY THE REVENUE AUT HORITIES. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRI BUNAL :- 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY TH E ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF COMPOUNDIN G FEES OF RS.5,02,570/- PAID BY THE ASSESSEE TO B.M.P HOLDING IT TO BE PROHIBITED BY LAW AND THUS NOT ALLOWABLE. ITA NO.572 & 802/BANG/2012 PAGE 3 OF 11 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESEE FAIRLY ADMITTED THAT THIS ISSUE IS COVERED AGAINST THE ASSESEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02, 2003-04. THE COPY OF THE SAID ORDER IS FILED BEFORE US. 4. THE LEARNED DR ALSO CONFIRMED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE. 5. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS AND THE RELEVANT MATERIALS ON REC ORD, WE FIND THAT THE TRIBUNAL AT PARA 3.16 TO 3.18 HAS HELD AS UNDER : 3.16 THE ISSUE BEFORE US HAS BEEN CONSIDERED BY TH E KARNATAKA HIGH COURT IN THE CASE OF MAMTA ENTERPRIS ES (SUPRA). THE QUESTION OF LAW REFERRED TO THE JURIS DICTIONAL HIGH COURT WAS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLATE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT THE PAYMENT OF THE COMPOUNDING FEES IS NOT A PENALTY FOR INFRACTION OF LAW AND HENCE ALLOWABLE. AT PAGE 361, THE HONBLE HIGH COURT HAS REFERRED TO THE ORDER ISSUED IN THE CASE OF MAMTA ENTERPRISES. IN THE IN STANT CASE ALSO, THE ORDER WHICH HAS BEEN ISSUED BY THE COMMIS SIONER WHILE GRANTING OCCUPANCY CERTIFICATE, IS THAT THE A SSESSEE HAS PAID THE COMPOUNDING FINE. BEFORE THE HONBLE HIGH COURT IT WAS CONTENDED BY THE APPELLANTS COUNSEL THAT CONST RUCTION OF A BUILDING IN VIOLATION OF THE SANCTIONED PLAN CANN OT BE TREATED AS A VIOLATION OF A SERIOUS NATURE, WHICH I S PROHIBITED BY LAW OR AMOUNTING TO COMMISSION OF AN OFFENCE. T HE HONBLE JURISDICTIONAL HIGH COURT AFTER OBSERVING A S UNDER HELD THAT BYELAWS EMPOWER THE COMMISSIONER TO COMPOUND THE VIOLATION OR DEVIATION OF THE SANCTIONED PLAN BY A PERSON WHO CONSTRUCTS A BUILDING:- HAVING ELABORATELY HEARD LEARNED COUNSEL APPEARING FOR THE PARTIES, WHILE WE FIND CONSIDERABLE FORCE I N THE SUBMISSION OF SRI SESHACHALA, WE ARE UNABLE TO ACCEDE TO THE SUBMISSION OF SRI KULKARNI. WE ARE UNABLE TO AGREE WITH THE SUBMISSION OF SRI KULKARNI THAT SINCE THE PROVISION IN CLAUSE (B) OF SECTION 4 83 OF THE CORPORATION ACT PERMITS COMPOUNDING OF THE OFFENCE, ONCE THE VIOLATION IS COMPOUNDED, THERE WA S NO OFFENCE COMMITTED IN THE EYE OF LAW; AND THE OFFENCE COMMITTED IS WIPED OUT. SECTION 300 OF THE CORPORATION ACT PROHIBITS COMMENCEMENT OF THE CONSTRUCTION OR RECONSTRUCTION OF A BUILDING, WITHO UT THERE BEING A PERMISSION GRANTED BY THE CORPORATION ITA NO.572 & 802/BANG/2012 PAGE 4 OF 11 FOR THE EXECUTION OF THE WORK. SECTION 303 OF THE SAID ACT SETS OUT THE GROUNDS ON WHICH APPROVAL OF A SITE FOR CONSTRUCTION OR RECONSTRUCTION OF A BUILDI NG MAY BE REFUSED BY THE COMMISSIONER. SINCE 308 OF THE ACT CONFERS POWER ON THE COMMISSIONER TO DIRECT ALTERATION OF CONSTRUCTION WORK COMMENCED BY THE OWNER OF A SITE. SECTION 321 OF THE ACT CONFERS POWER ON THE COMMISSIONER TO MAKE AN ORDER FOR DEMOLITION OF THE BUILDING AFTER COMPLYING WITH THE PROCEDURE SET OUT IN THE SAID PROVISION, IF HE IS SATISFIED THAT THE CONSTRUCTION OR RECONSTRUCTION O F A BUILDING HAS BEEN COMMENCED WITHOUT OBTAINING THE PERMISSION OR BEING CARRIED ON OR HAS BEEN COMPLETED OTHERWISE THAN IN ACCORDANCE WITH THE PLANS OR PARTICULARS ON WHICH SUCH PERMISSION OR ORDER WAS BASED. SECTION 436 OF THE ACT, AMONG OTHER THINGS, PROVIDES THAT IF THE CONSTRUCTION OR RECONSTRUCTION OF ANY BUILDING IS COMMENCED WITHOUT THE PERMISSION OF THE COMMISSIONER; OR IS CARRIED O N OR COMPLETED OTHERWISE THAN IN ACCORDANCE WITH THE PARTICULARS ON WHICH SUCH PERMISSION WAS BASED ; OR IS CARRIED ON OR COMPLETED IN CONTRAVENTION OF ANY LAWFUL ORDER OR BREACH OF ANY PROVISION OF THE ACT OR ANY RULE OR BYELAW MADE UNDER IT, OR OF ANY DIRECTI ON OR REQUISITION LAWFULLY GIVEN OR MADE, THE OWNER OF THE BUILDING WHO PUTS UP SUCH CONSTRUCTION SHALL BE LIABLE ON CONVICTION TO PAY A FINE PRESCRIBED UNDER THE SAID PROVISION. HOWEVER, CLAUSE (B) OF SECTION 483 OF THE CORPORATION ACT EMPOWERS THE COMMISSIONER TO COMPOUND ANY OFFENCE COMMITTED IN BREACH OF THE PROVISIONS OF THE ACT, RULES, BYEL AWS OR REGULATIONS WHICH MAY BY RULES MADE BY THE GOVERNMENT BE DECLARED COMPOUNDABLE. THEREFORE, FROM THE SCHEME OF THE SEVERAL PROVISIONS IN THE AC T REFERRED TO ABOVE, IT IS CLEAR THAT NOBODY CAN PUT UP ANY NEW CONSTRUCTION OR PROCEED TO RECONSTRUCT THE EXISTING BUILDING WITHOUT THERE BEING A SANCTIONED PLAN OR PERMISSION GRANTED BY THE COMMISSIONER ON THAT BEHALF, THE PUTTING UP ANY CONSTRUCTION WITHOU T THERE BEING A SANCTIONED PLAN IS MADE AN OFFENCE UNDER THE ACT AND IT IS TREATED AS AN ACT PROHIBITE D BY LAW. NO DOUBT, AS NOTICED BY US EARLIER, CLAUSE (B) OF SECTION 483 OF THE CORPORATION ACT EMPOWERS THE COMMISSIONER TO COMPOUND THE OFFENCE. BYELAW 5.6 FRAMED BY THE CORPORATION IN EXERCISE OF THE POWER CONFERRED UNDER IT UNDER SECTION 428 OF THE ACT ENABLES THE COMMISSIONER TO SET OUT THE CIRCUMSTANCES UNDER WHICH HE COULD COMPOUND AN OFFENCE. IT IS USEFUL TO REFER TO THE SAID BYELAW WHICH READS AS HEREUNDER: 5.6.1 WHETHER ANY CONSTRUCTION IS IN VIOLATION/DEVIATION OF THE SANCTIONED PLAN, THE COMMISSIONER MAY, IF HE CONSIDERS THAT THE VIOLATION/DEVIATIONS ARE MINOR VIZ., ONLY WHEN THE DEVIATIONS/VIOLATIONS IS WITHIN 5% OF (1) THE MINIMUM SET BACK TO BE LEFT AROUND THE BUILDING ITA NO.572 & 802/BANG/2012 PAGE 5 OF 11 (2) THE MAXIMUM PLOT COVERAGE (3) PERMISSIBLE FLOOR AREA RATIO AND MAXIMUM HEIGHT OF THE BUILDING AND THAT THE DEMOLITION UNDER CHAPTER XV OF THE ACT IS NOT FEASIBLE WITHOUT AFFECTING THE STRUCTURAL STABILITY, THEN HE MAY REGULARIZE SUCH VIOLATIONS/DEVIATIONS BY SANCTIONING OF A MODIFIED PLAN WITH A LEVY OF A SUITABLE FEE TO BE PRESCRIBED. THE COMMISSIONER SHALL COME TO SUCH CONCLUSION ONLY AFTER RECORDING DETAILED REASONS FOR THE SAME. VIOLATIONS/ DEVIATIONS UNDER THE PROVISION SHALL NOT INCLUDE THE BUILDINGS WHICH ARE CONSTRUCTED WITHOUT OBTAINING ANY SANCTIONED PLAN WHATSOEVER AND ALSO THE VIOLATIONS/ DEVIATIONS WHICH ARE MADE INSPITE OF THE SAME BEING SPECIFICALLY DELETED OR REJECTED IN THE SANCTIONED PLAN. THE BYELAWS REFERRED TO ABOVE, READ ALONG WITH CLAUSE (B) OF SECTION 483, EMPOWERS THE COMMISSIONER TO COMPOUND THE VIOLATION OR DEVIATION OF THE SANCTIONED PLAN DONE BY A PERSON WHO CONSTRUCTS A BUILDING. AFTER HOLDING THAT THE AMOUNT PAID IS COMPOUNDING OF AN OFFENCE, THE HONBLE JURISDICTIONAL HIGH COUR T HELD THAT SUCH AN EXPENDITURE IS NOT TO BE DEEMED T O HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE CAN BE MADE IN RESPECT OF SUCH AN EXPENDITURE. THUS, THE DECISION OF JURISDICTIONAL HIGH COURT IS SQUARELY APPLICABLE IN THE INSTANT CASE. 3.17 THE HONBLE M.P. HIGH COURT IN THE CASE OF NATIONAL TEXTILE CORPORATION LTD. V CIT 286 ITR 496 HAD AN OCCASION TO CONSIDER AS TO WHETHER THE TRIBUNAL COU LD COMMENT ON THE DECISION OF THE HIGH COURT AND HAVIN G DONE SO, WHETHER JUDICIAL PROPRIETARY PERMITTED THE TRIB UNAL TO IGNORE THE DECISION AND TAKE ITS OWN VIEW ARE QUEST ION OF LAW WHICH HAVE TO BE REFERRED TO THE HIGH COURT. WHILE ALLOWING THE MATTER TO BE REFERRED, THE HONBLE MP HIGH COUR T OBSERVED AT PAGE 498 AS UNDER:- IN OUR CONSIDERED OPINION THE MANNER IN WHICH THE TRIBUNAL HAS DEALT WITH THE ISSUE SO FAR AS PRECEDE NTS OF JUDICIAL PROPRIETY IN FOLLOWING DECISIONS OF THE HIGH COURT ARE CONCERNED, THE SAME SHOULD HAVE BEEN REFERRED TO THIS COURT FOR EXAMINATION. IT IS, IN OUR HUMBLE OPINION, ON ISSUE WHICH THE HIGH COURT ALONE HAS TO DECIDE AND NOT FOR THE TRIBUNAL TO DECIDE. WE HAVE OUR OWN RESERVATIONS AS TO WHETHER THE TRIBUNAL COULD MAKE A COMMENT ON THE DECISION OF THE HIGH COURT AND HAVING DONE SO, WHETHER JUDICIAL PROPRIETY PERMITTED THE TRIBUNAL TO IGNORE THE DECISION AND TAKE ITS OWN VIEW. ALL THESE ISSUES N EED ITA NO.572 & 802/BANG/2012 PAGE 6 OF 11 TO BE DECIDED BY THE HIGH COURT IN A REFERENCE UNDE R SECTION 256(1) IBID. 3.18 HENCE, WHEN A SIMILAR ISSUE HAS BEEN DECIDED B Y THE JURISDICTIONAL HIGH COURT, THEN THAT DECISION I S BINDING ON US AND THAT IS TO BE FOLLOWED IN ORDER TO ABIDE WIT H THE JUDICIAL DISCIPLINE. HENCE, WE HOLD THAT THE AMOUNTS PAID A S COMPOUNDING FINE FOR REGULARIZATION OF VIOLATION/ D EVIATION ARE NOT ALLOWABLE EXPENDITURE. WE ALSO UPHOLD THE FIND ING OF THE LEARNED CIT(A) THAT IN CASE THE COMPOUNDING FINE/PE NALTY PAID FOR REGULARIZATION OF VIOLATION/DEVIATION IS ULTIMA TELY HELD AS FEES THEN PROVISION OF SECTION 43B WILL BE APPLICAB LE AND THE AMOUNT WILL BE DEDUCTIBLE AS PER THE PROVISIONS OF SECTION 43B. THIS DISPOSES OF APPEAL FOR THE ASSESSMENT YE AR 2001- 02. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH WHICH IS IN THE CONSONANCE WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT, THIS APPEAL OF THE ASSES SEE IS DISMISSED. 5. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF THE CIT(APPEALS) A ND DISMISS THE APPEAL BY THE ASSESSEE. 6. AS FAR AS THE APPEAL OF THE REVENUE IS CONCERNED , THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPEAL IS AS TO WHETHE R THE CIT(APPEALS) WAS RIGHT IN ASSESSING THE RENTAL RECEIPTS FROM FORUM M ALL AND EVA MALL UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION AS AGAINST THE CASE OF THE AO THAT THE SAID RECEIPTS SHOULD BE ASSESSED UN DER THE HEAD INCOME FROM HOUSE PROPERTY. IT WAS FAIRLY CONCEDED BY TH E PARTIES BEFORE US THAT THIS ISSUE WAS ALSO CONSIDERED BY THE TRIBUNAL IN A SSESSEES OWN CASE FOR THE A.Y. 2007-08 IN ITA NO.962 & 1024/BANG/2011 ( SUPRA ) AND ON AN IDENTICAL ISSUE, IT WAS HELD AS FOLLOWS:- ITA NO.572 & 802/BANG/2012 PAGE 7 OF 11 7. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN GIVING RELIEF TO THE ASSESSEE BY RAISING THE FOLLOWING GROUNDS: I. THE LD. CIT(A) ERRED IN DELETING THE ADDITION T HE ADDITION MADE ON PROTECTIVE BASIS AS INCOME FROM OTHER SOURC ES. II. THE LD. CIT(A) ERRED IN DIRECTING THE AO TO AS SESS THE RENTAL RECEIPT FROM FORUM MALL AND EVA MALL AS INCOME FROM PROFITS AND GAINS FROM BUSINESS/PROFESSIONS AND THE CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE SAMPLE AGREEMENT IN R ESPECT OF THE RENTAL RECEIPT CLEARLY ESTABLISHES A TYPICAL LA ND LORD TENANT RELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND TENAN TS AND THEREFORE THE INCOME RECEIVED AS RENTAL RECEIPTS SH OULD BE TREATED AS INCOME FROM HOUSE PROPERTY ONLY. III) THE LD. CIT(A) ERRED IN DIRECTING THE AO TO AS SESS THE HIRE CHARGES IN RESPECT OF FIT-OUTS THAT WERE LAID OUT T O TENANTS AS INCOME FROM OTHER SOURCES. IV) FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING THE ORDERS OF LD. CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED. 8. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A CHART SHOWING THAT ALL THE ISSUES ARE C OVERED BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS. 9. THE LEARNED DR ALSO CONFIRMED THE SAME. 10. AS REGARDS ADDITION ON PROTECTIVE BASIS IS CON CERNED, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2006- 07. THE TRIBUNAL AT PARA 12.1 OF ITS ORDER HELD AS UNDER : (I) THE BRIEF CONTENTION OF THE REVENUE WAS THAT THE CI T(A) ERRED IN DELETING THE ADDITION OF RS.7.33 CRORES MA DE ON PROTECTIVE BASIS AS INCOME FROM OTHER SOURCES. (II) ON A GLIMPSE OF THE IMPUGNED ASSESSMENT ORDER, WE F IND THAT THERE WAS NO DISCUSSION AT ALL IN THE BODY OF THE ORDER, HOWEVER, AS POINTED OUT BY THE CIT(A), IN THE COMPU TATION, IT WAS MENTIONED AS INCOME FROM OTHER SOURCES: INCOME ASSESSED IN THE A.Y 2005-06 ON PROTECTIVE BASIS AS DISCUSSED IN PARA RS.7,33,13,640. (III) THE BACKGROUND OF THE ISSUE, IN BRIEF, WAS THAT IN THE ASSESSMENT ORDER FOR THE AY 2005-06, AN ADDITION OF ITA NO.572 & 802/BANG/2012 PAGE 8 OF 11 RS.7,33,13,640/- TO THE BUSINESS INCOME WAS MADE AS ADMITTED BY THE ASSESSEE, ON THE PREMISE THAT THE A SSESSEE SHOULD HAVE FOLLOWED PERCENTAGE COMPLETION METHOD [ PCM] OF RECOGNIZING REVENUES IN RESPECT OF REAL ESTATE A CTIVITIES. WHEN THE ISSUE FINALLY REACHED BEFORE THE TRIBUNAL, THE HONBLE TRIBUNAL IN ITS FINDING CITED SUPRA DIRECTE D THE AO TO ACCEPT THE PROJECT COMPLETION METHOD OF ACCOUNTING FOR THE YEAR UNDER REFERENCE. (IV) EXTENSIVELY QUOTING THE HONBLE TRIBUNALS FINDING REFERRED SUPRA, THE LD. CIT(A) HAD, IN HIS IMPUGNED ORDER UN DER DISPUTE (FOR THE AY 2006-07), OBSERVED THUS 3.3..THUS, THE FINDING IS LIMITED TO ASSESSMENT YEAR 2005-06, HOWEVER, IN THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSING OFFICER HAS TREATED THAT INCOME OFFERED BY THE APPELLANT TO THE ABOVE EXTENT ON THE BASIS OF THE PROJECT COMPLETION METHOD UNDER THE HEAD INCOME FROM OTHER SOURCES ON PROTECTIVE BASIS. CONSIDERING THE FACT THAT THE SAID ADDITION HAS BEEN DELETED BY THE HONBLE ITAT IN ASSESSMENT YEAR 2005-06, THE INCOME HAS TO BE ASSESSED ON SUBSTANTIVE BASIS IN ASSESSMENT YEAR 2006- 07 AS OFFERED BY THE APPELLANT. AFTER DELETION OF THE INCOME BY THE ITAT, IN ASSESSMENT YEAR 2005-06, THERE IS NO QUESTION OF DOUBLE TAXATION IN THE ASSESSMENT YEAR 2006-07 WHERE THE APPELLANT HIMSELF (SIC) ITSELF OFFERED THE INCOME FOR TAXATION. IN VIEW OF THE ABOVE, REDUCTION OF INCOME OF RS.7,3 3,13,640/- UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR P ROFESSION IN THE COMPUTATION OF INCOME BY THE ASSESSING OFFIC ER DOES NOT ARISE. ONCE THE INCOME IS TAXED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION, THE INCOME AS SESSED UNDER THE HEAD INCOME FROM OTHER SOURCES ON PROTE CTIVE BASISIS HEREBY DELETED. (V) THE GAMUT OF THE ISSUE, TO OUR MIND, IS THAT WH EN THE AO RESTORED TO CONCLUDE THE IMPUGNED ORDER UNDER DISPUTE PRECISELY, ON 31.12.2008, THE ASSESSMENT OR DER FOR THE AY 2005-06 WAS UNDER APPEAL BEFORE THE HONBLE TRIBUNAL FOR ADJUDICATION WHICH MUST HAVE INFLUENCE D THE AO TO ADD THE INCOME OF RS.7.33 CRORES ASSESSED FOR THE AY 2005-06 ON A PROTECTIVE BASIS. IN THE ASSESSMEN T ORDER UNDER DISPUTE, WHILE ADDING A WHOPPING SUM OF RS.7.33 CROES AS INCOME FROM OTHER SOURCES THE AO S HOULD HAVE TAKEN PROPER CARE TO MENTION IN THE BODY OF TH E ORDER ITA NO.572 & 802/BANG/2012 PAGE 9 OF 11 THE REASON FOR TAXING THE SAID SUM EVEN ON A PROTE CTIVE BASIS. (VI) IN THE MEANWHILE, THE HONBLE TRIBUNAL IN IT S FINDING CITED SUPRA (ON 11.9.2009) DIRECTED THE AO TO ACCEP T THE PROJECT COMPLETION METHOD OF ACCOUNTING FOR THE YEA R UNDER REFERENCE. THUS, IN OUR CONSIDERED VIEW, THE TAXABILITY OF THE SUM OF RS.7,33,13,640/- HAD REACH ED A FINALITY ON A SPECIFIC DIRECTION OF THE HONBLE TRI BUNAL CITED ABOVE FOR THE AY 2005-06. THEREFORE, THE CIT (A) WAS JUSTIFIED IN HIS STAND ON THIS POINT. IT IS OR DERED ACCORDINGLY. 11. RESPECTFULLY FOLLOWING THE SAME, THIS GROUND O F APPEAL OF REVENUE IS DISMISSED. 12. COMING TO THE GROUND NO.3 RELATING TO TREATING THE RENTAL INCOME FROM FORUM MALL AND EVA MALL AS INCOME FROM PROFITS AND GAINS FROM BUSINESS, WE FIND THAT TRIBUNAL AT SUB PARA 2 TO PARA 12 HAS HELD AS UNDER : (I) THE REVENUES SUBMISSION WAS VERY BLUNT TO THE EFFE CT THAT THE CIT(A) ERRED IN DIRECTING THE AO TO ASSESS THE RENT AL RECEIPT FROM FORUM MALL AND EVA MALL AS INCOME FROM PROFITS AND GAINS FROM BUSINESS; AND THAT THE CIT(A) GROSSLY ERRED BY IGNO RING THE FACT THAT THE SAMPLE AGREEMENT IN RESPECT OF THE RENTAL RECEIPT CLEARLY ESTABLISHES A TYPICAL LANDLORD TENANT RELATIONSHI P BETWEEN THE ASSESSEE AND TENANTS AND, THEREFORE, THE INCOME REC EIVED AS RENTAL RECEIPTS SHOULD HAVE BEEN ORDERED TO BE TREA TED AS INCOME FROM HOUSE PROPERTY. (II) AT THE OUT-SET, WE WOULD LIKE TO POINT THAT AN IDEN TICAL ISSUE HAD CROPPED UP BEFORE THE HONBLE TRIBUNAL FOR THE AY 2005-06 IN THE ASSESSEES OWN CASE WHEREIN THE HONBLE TRIBUNA L HAD, AFTER HEARING THE ARGUMENTS OF RIVAL PARTIES, ANALYZING T HE ISSUE AT LENGTH, EXTENSIVELY QUOTING, CHIEFLY, THE RULINGS O F THE HONBLE APEX COURT AS WELL AS THE JURISDICTIONAL HONBLE HI GH COURT IN A NUMBER OF CASES ON A SIMILAR ISSUE, OBSERVED THUS 5.1 WE HAD DISCUSSED THIS ISSUE WHILE CONSIDERING THE RATIO OF LAW AS LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF SULTAN BROTHERS (SURPA). THE HONBLE A PEX COURT HAS HELD THAT THERE SHOULD BE NO CONSIDERATIO N OF PRIMARY AND SECONDARY LETTINGS IN CONSTRUCTING THE SECTION 12(4) OF 1922, WHICH HAS ANALOGY TO 56(III) OF I.T ACT OF 1961. IN THIS CASE, THE LETTING OF BUILDING IS ALONG WITH LETTING MACHINERY, PLANT OR FURNITURE REQUIRED FOR ANCILLARIES SERVICES AND, THEREFORE, WE HOLD THAT T HE ALTERNATIVE PLEA OF THE APPELLANT THAT IN CASE THE INCOME IS NOT TO BE ASSESSED UNDER THE HEAD INCOME FROM T HE ITA NO.572 & 802/BANG/2012 PAGE 10 OF 11 HOUSE PROPERTY THEN IT IS REQUIRED TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. THIS IS WITH OUT PREJUDICE TO OUR BASIC FINDING THAT IN THE INSTANT CASE, THE INCOME FROM MALL IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. (III) IN CONFORMITY WITH THE FINDING OF THE HONBLE TRIBU NAL REFERRED ABOVE, WE DIRECT THE AO TO ASSESS THE INCOME FROM M ALL UNDER THE HEAD INCOME FROM BUSINESS. IT IS ORDERED ACCORDI NGLY. 13. RESPECTFULLY FOLLOWING THE SAME, THIS GROUND O F APPEAL OF THE REVENUE IS ALSO REJECTED. 14. REGARDING GROUND NO.4, TREATING THE HIRE CHAR GES IN RESPECT OF FIT-OUTS THAT WERE LET OUT TO TENANTS AS INCOME FROM OTHER SOURCES. WE FIND THAT THIS ISSUE IS COVERED BY SUB PARA 3 OF PARA 12 OF ITAT ORDER WHICH IS AS UNDER : (I) NEVERTHELESS, THE REVENUES BRIEF SUBMISSION WA S THAT THE CIT(A) HAD GROSSLY ERRED IN DIRECTING THE AO TO ASS ESS THE HIRE CHARGES IN RESPECT OF FIT OUTS WHICH WERE LAID OUT TO TENANTS AS INCOME FROM OTHER SOURCES. (II) YET AGAIN, WE FIND A SOLACE FROM THE FINDING O F THE HONBLE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2005 -06 ON SIMILAR ISSUE WHEREIN THE HONBLE TRIBUNAL WAS PLEA SED TO OBSERVE THAT 6.1. THIS ISSUE HAS BEEN DECIDED BY THIS TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASST. YEAR 2004-05. T HE TRIBUNAL VIDE ORDERS DATED : 29 TH MAY, 2009 IN ITA NO.851/BANG/2008 VIDE PARA 14 OF THE ORDER HELD THAT THE FACTS AND CIRCUMSTANCES BROUGHT ON RECORD BY THE ASSESSING AU THORITIES AND THE LEARNED COUNSEL INDICATE THAT THE INTENTION OF THE ASSESSEE FOR RENDERING THE SAME AS INCOME FROM OTHE R SOURCES OUGHT NOT TO HAVE BEEN DISTURBED AS IN EARLIER YEAR S. HENCE, THE RECEIPTS ON LETTING OF IT IS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES ON THE BASIS OF THE DEC ISIONS OF THE TRIBUNAL IN THE EARLIER YEAR AND ALSO ON THE BA SIS OF HE PRINCIPAL OF CONSISTENCY. ONCE THE RENTAL INCOME O N LETTING OUT IS TAXED UNDER THE HEAD INCOME FROM OTHER SOUR CES DEPRECIATION. III) AS THE ISSUE BEFORE US IS SIMILAR WHICH HAS BE EN DECIDED BY THE HONBLE TRIBUNAL REFERRED SUPRA IN THE ASSESSEE S OWN CASE FOR THE PRECEDING ASSESSMENT YEAR, WE HAVE NO HESIT ATION IN DIRECTING THE AO TO TREAT THE HIRE CHARGES IN RESPE CT OF FIT-OUTS LET-OUT TO THE TENANTS AS INCOME FROM OTHER SOURCE S. IT IS ORDERED ACCORDINGLY. ITA NO.572 & 802/BANG/2012 PAGE 11 OF 11 15. RESPECTFULLY FOLLOWING THE SAME, THIS GROUND O F APPEAL IS ALSO REJECTED. 7. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL REFERRED TO ABOVE, WE DISMISS THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL. 8. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 07 TH DAY OF FEBRUARY, 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 07 TH FEBRUARY, 2013. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.