The ACIT, Central Circle-2, RAJKOT-GUJARAT V. Smt. Devbai Veljibhai Pindoria, Bhuj

ITSSA 59/RJT/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7926 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDE
• Assessee Lawyers: J C RANPURA
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI D.K. TYAGI (JM) AND SHRI A.L. GEHLOT (A M) I.T(SS).A. NO.59/RJT/2010 (ASSESSMENT YEAR 2004-05) ACIT, CENT.CIR.2 VS SMT. DEVBAI VELJIBHAI PINDOR IA RAJKOT C/O SAGAR GUEST HOUSE STATION ROAD, BHUJ PAN : AEOPP7873C (APPELLANT) (RESPONDENT) DATE OF HEARING : 28-09-2011 DATE OF PRONOUNCEMENT : 11-11-2011 APPELLANT BY : SHRI YOGESH PANDE RESPONDENT BY: SHRI JC RANPURA O R D E R PER BENCH THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-IV, AHMEDABAD DATED 16-03-2010 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE FIRST GROUND IS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DIRECTING THE A.O. TO TAX THE RENTAL INCOME OF RS.1,00,800 UNDER THE HEAD INCOME FROM HOUSE PROPE RTY AND TO ALLOW STATUTORY DEDUCTIONS AGAINST THE INCOME FROM HOUSE PROPERTY. 3. A SEARCH ACTION U/S 132 OF THE I.T. ACT WAS CARR IED OUT AT THE PREMISES OF HUSBAND OF THE ASSESSEE ON 11-10-2006. THE ASSESSE E HAS UNDERTAKEN DEVELOPMENT OF ONE COMMERCIAL COMPLEX KNOWN AS MEE RA MARKET. PART OF THE COMPLEX CONTAINING VARIOUS SHOPS WAS SOLD OUT DURIN G THE YEAR FOR WHICH THE ASSESSEE HAD OFFERED SHORT TERM CAPITAL GAIN. HOWE VER, THE ASSESSEE HAD ALSO IT(SS)A NO.59/RJT/2010 2 SHOWN GODOWN RENT OF RS.47,000 AND RENT FROM MEERA MARKET AT RS.8,29,000. FURTHER IT WAS NOTICED BY THE ASSESSING OFFICER THA T THE ASSESSEE HAD RECEIPTS FROM BHARATI AIRTEL LTD FOR ALLOWING STATIONING OF ITS SIGNAL TOWER ON THE TERRACE OF THE BUILDING. IT WAS ALSO NOTICED THAT THE ASSESSE E ALSO HAD RECEIPTS FROM LETTING OUT SOME PORTION OF THE TERRACE OF THE COMPLEX FOR PARTY AND FUNCTIONS. THE ASSESSEE DECLARED THE SAID RENTAL INCOME FROM MEER A MARKET AS INCOME FROM HOUSE PROPERTY AND ACCORDINGLY CLAIMED STANDARD DE DUCTION AND INTEREST. THE ASSESSING OFFICER TREATED THE SAID INCOME AS INCOM E FROM OTHER SOURCES AND WITHDREW STANDARD DEDUCTION AND INTEREST CLAIMED BY THE ASSESSEE. ON APPEAL THE CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND ALLOWED THE CLAIM BY OBSERVING AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. COUNSEL AND THE FACTS OF THE CASE. I HAVE ALSO GON E THROUGH THE COMPUTATION OF INCOME AND RENTAL INCOME ACCOUNT. T HE RENT OF RS.47,000/- IS FROM GODOWN AND RS.8,29,000/- IS FRO M RENT OF MEERA MARKET OUT OF WHICH RENT OF RS.1,00,800/- IS FROM B HARTI AIRTEL LTD. SINCE THE SPACE GIVEN TO BHARTI AIRTEL LTD IS PART AND PARCEL OF THE BUILDING, THE RENTAL INCOME RECEIVED FROM BHARTI AI RTEL LTD WILL ALSO BE ASSESSABLE AS INCOME FROM HOUSE PROPERTY. THIS VIEW IS SUPPORTED BY THE AFORESAID DECISION OF THE DELHI TR IBUNAL. CONSIDERING THE FACTS OF THE CASE, I AM OF THE VIEW THAT THE ASSESSING OFFICER HAD CHANGED THE HEAD OF INCOME FR OM INCOME FROM HOUSE PROPERTY TO INCOME FROM OTHER SOURCES ON SOME MIS- UNDERSTANDING. THERE IS NO ANY REASON TO TAX THE S HOP RENT AND RENT FROM BHARTI AIRTEL LTD AS INCOME FROM OTHER SO URCES. THE FINDING OF THE ASSESSING OFFICER WAS NOT IN ACCORDA NCE WITH LAW AND THE SAME IS DESERVED TO BE DISMISSED. IT IS HELD S O. THE ASSESSING OFFICER IS DIRECTED TO TAX THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND TO ALLOW ALL STATUTORY DED UCTIONS ALLOWABLE TO INCOME FROM HOUSE PROPERTY. THE THIRD GROUND OF APPEAL IS ACCORDINGLY ALLOWED. IT(SS)A NO.59/RJT/2010 3 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES. THE QUESTION FOR CONSIDERATION IS WHETHER THE INCOME RECEIVED FR OM BHARTI AIRTEL FOR THE TERRACE GIVEN BY THE ASSESSEE FOR INSTALLATION OF THE TOWER IS RENTAL INCOME OR INCOME FROM OTHER SOURCES. THE CIT(A) ACCEPTED THE ASSESS EES CLAIM THAT IT IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY FOLLOWING THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF NEW DELHI HOTELS L TD VS ITO 42 TTJ (DEL) 36 WHEREIN IT WAS HELD THAT HIRING OF ROOF, BASEMENT, ETC. FOR COOLING TOWER AND CAR PARKING IS LETTING OUT OF PROPERTY AS THE ROOF IS V ERY MUCH THE PROPERTY AS THE FLOOR AND INCOME IS ASSESSABLE AS INCOME FROM HOUSE PROP ERTY. BEFORE US, THE LD.DR RELIED UPON THE JUDGMENT OF CALCUTTA HIGH COU RT IN THE CASE OF MUKHERJI ESTATES PVT LTD VS CIT 244 ITR 1 (CAL) WHEREIN IT W AS HELD THAT RECEIPTS FOR PERMITTING SOME COMPANIES TO DISPLAY THEIR BOARD ON THE HOARDING COULD NOT BE TAKEN AS INCOME FROM HOUSE PROPERTY AS THE HOARDI NGS COULD NOT BE TREATED AS PART OF THE BUILDING. IN THE CASE UNDER CONSIDERAT ION WE FIND THAT ON IDENTICAL SET OF FACTS, THE ITAT, DELHI BENCH IN THE CASE OF NEW DELHI HOTELS LTD VS ITO (SUPRA) HELD THAT COOLING TOWER AND CAR PARKING IS AKIN TO LETTING OUT PROPERTY AS THE ROOF IS VERY MUCH A PROPERTY AS THE FLOOR. THE REFORE, INCOME IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. IN THE CASE UNDER CO NSIDERATION THE ASSESSEE ALLOWED BHARTI AIRTEL TO CONSTRUCT A TOWER ON THE R OOF OF THE BUILDING AND SOME PORTION OF THE ROOF WAS ALSO LET OUT FOR A ROOM TO INSTALL THE PLANT AND MACHINERY FOR CONTROLLING THE TOWER. AS PER CLAUSE 6(F) OF T HE AGREEMENT THE LICENCEE WAS PERMITTED TO USE AND ENJOY THE SAID PREMISES PEACEF ULLY AND QUIETLY. THE JUDGMENT CITED BY THE LD.DR IS DISTINGUISHABLE ON F ACTS AS IN THAT CASE THE INCOME IT(SS)A NO.59/RJT/2010 4 WAS ONLY FOR DISPLAYING A TOWER ON THE HOARDINGS WH EREAS IN THE CASE UNDER CONSIDERATION SOME PART OF THE ROOF OF THE BUILDING WAS GIVEN ON RENT. THE FACTS OF THE CASE ARE IDENTICAL TO THE FACTS IN THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF NEW DELHI HOTELS LTD VS ITO (SUPRA). TO MAINTAIN T HE CONSISTENCY WE FOLLOW THE ORDER OF ITAT DELHI BENCH AND IN THE LIGHT OF THAT FACT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE ORDER OF CIT(A) IS CONFIRMED. 5. THE SECOND GROUND OF APPEAL IS IN RESPECT OF DIS ALLOWANCE OF INTEREST EXPENSES OF RS. 7,22,477. THE ASSESSING OFFICER IS SILENT ON THE ISSUE. HOWEVER, THE CIT(A) RECORDED THE FACT THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS. 7,22,477 BEING INTEREST PAID ON FUNDS OBTAINED FOR CONSTRUCTION / ACQUIRING OF THE PROPERTY I.E. MEERA MARKET. THE ASSESSING OFFICE R DID NOT DISPUTE THE PAYMENT OF INTEREST. THE CIT(A) HELD THAT THE FUNDS WERE U TILIZED FOR CONSTRUCTION / ACQUISITION OF THE PROPERTY. THEREFORE, THE INTERE ST IS ALLOWABLE U/S 24 OF THE ACT. 6. AFTER HEARING THE LD.REPRESENTATIVES OF THE PART IES, WE FIND THAT THE DEPARTMENT DID NOT POINT OUT ANY CONTRARY FACT TO T HE FINDING OF THE CIT(A) NOR THE SAME IS AVAILABLE ON RECORD. IN THE LIGHT OF THE F ACTS RECORDED BY THE CIT(A) WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. THE ORDER OF CIT(A) IS CONFIRMED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON -11-2011. SD/- SD/- (D.K. TYAGI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : NOVEMBER, 2011 PK/- ORDER PRONOUNCED IN OPEN COURT ON 11-11-2011 SD/- SD/- JM AM IT(SS)A NO.59/RJT/2010 5 COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV, AHMEDABAD 4. THE CIT, CENTRAL-II, AHMEDABAD 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT