S V ASSOCIATES,MUMBAI V. ITO - 22(3)(1), MUMBAI

ITA 162/MUM/2025

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SV Associates appealed against the order passed by the National Faceless Appeal Centre (NFAC) / CIT(A), which disallowed certain claimed expenses and added them to the income for the assessment year 2015-16. The primary contention was that the income derived from leasing properties was business income, not property income, and thus should not be taxed under the head 'income from house property'. The tribunal noted that the CIT(A) had treated the income as 'income from house property', granting a standard deduction under section 24(a), which is applicable exclusively to such income. The tribunal found that the revenue authorities had not adequately considered the factual matrix and the legal arguments presented by the assessee, particularly the nature of the agreements with Bata India Ltd and Reliance Media Works, which were business agreements and not tenancy agreements.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779158 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2015-2016
• Appeal Filed On: 09-01-2025
• Other Referred Cases: Chennai Properties & Investment Ltd Vs CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: ANIL MASAND VIRTUALLY APPEARED
• Section: 147; 144

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “H-SMC” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER I.T.A. No. 162/Mum/2025 Assessment Year: 2015-16 SV Associates 101, Gulshan CHSL, Junction of 14th A Road, & C.D Marg, Khar (W) Maharashtra PAN – AAAFS6665F Vs ITO – 22(3)(1) Piramal Chamber, Lower Parel, Mumbai – 400012. (Appellant) (Respondent) Assessee by Shri Anil Masand (Virtually appeared) Revenue by Shri Pravin Salunkhe, Sr. DR Date of Hearing 11.08.2025 Date of Pronouncement 13.10.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.: The present appeal has been filed by the assessee challenging the impugned order dt. 13.11.2024 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2015-16. 2. As per the facts of the present case, the assessee had claimed huge expenses in various heads. Since the assessee did not respond to the notices issued by the AO during the assessment proceedings, therefore expenses claimed were disallowed and additions to the income were Printed from counselvise.com 2 ITA No. 162/Mum/2025 SV Associates, Mumbai. made vide order of assessment u/s 147 r.w.s 144 of the Act. 3. During the appellate proceedings, it was specifically pleaded by the assessee that the main object of business of the firm is to let out premises for commercial use as is evident from the partnership agreements. And during the year under consideration, the assessee had given one of the premises to Bata India Ltd on Joint Retail Venture. As per the agreement with Bata India it is clearly mentioned in clause 1.5 that \"the subject matter is Joint Retail Venture Business and there is no intention of whatsoever nature to create tenancy, sub tenancy of the premises\" 4. The assessee is being owners of Big Cinemas have entered into a Conducting Agreement with Reliance Media Works for conducting and managing the theatre on monthly conducting charges as is mentioned in clause \"B\" and \"C\" of the conducting agreement. 5. It was submitted that the essence of the agreements was business agreement and not tenancy agreement, thus the income derived from the same is income from business and profession and not property income. In this regard reliance is placed upon the decision in the case of Chennai Properties & Investment Ltd Vs CIT, in civil appeal No. 4491–4493 of 2004 decided on 9 April 2015 by Hon’ble Supreme Court wherein it was held that if main objects of the assessee is to won, develop and letting out properties, Printed from counselvise.com 3 ITA No. 162/Mum/2025 SV Associates, Mumbai. then rental income derived from said activities is assessable under the head “income from business”. 6. From the orders of Ld. CIT(A) we noticed that the revenue authorities proceeded on the presumption that the income earned by the assessee is in the nature of ‘income from house property’ as Ld. CIT(A) while deciding the appeal granted 30% standard deduction on the income earned. In our view, such a reduction is available under section 24(a) of the Act, which applies exclusively to income taxable under the head income from house property. 7. Since the assessee firm is engaged in the business of leasing/subleasing and the income earned is a direct result of its business operations. However, this aspect has not been dealt with by the revenue authorities. We are of the view that it was the statutory duty of the revenue authority to have considered the factual aspect after analysing the documents placed on record by the assessee. 8. Be that as it may, in our view, the interest of justice would be met in case the issues between the parties are decided on merits, after considering every factual aspect of the case, thus, keeping in view the above factual position, the present appeal of the assessee is restored to the file of Ld. CIT(A) for deciding it afresh on merits keeping in view the facts of the present case and also the applicability of the decision of Hon’ble Supreme Court in the case of Printed from counselvise.com 4 ITA No. 162/Mum/2025 SV Associates, Mumbai. Chennai Properties & Investment Ltd (supra). Needless to mention after providing opportunity of hearing to both the parties. 9. Before parting we make it clear that our decision to restore the matter back to the file of Ld. CAT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the Ld. CIT(A) independently in accordance with law. 10. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 13/10/2025 Sd/- Sd Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai: Dated: 13/10/2025 KRK, Sr. PS. Printed from counselvise.com 5 ITA No. 162/Mum/2025 SV Associates, Mumbai. Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "