M/s K.R.S. Enterprises Pvt. Ltd.,, Bangalore v. ACIT, Bangalore

ITA 1047/BANG/2009 | 2005-2006
Pronouncement Date: 27-04-2010 | Result: Dismissed

Appeal Details

RSA Number 104721114 RSA 2009
Bench Bangalore
Appeal Number ITA 1047/BANG/2009
Duration Of Justice 5 month(s) 15 day(s)
Appellant M/s K.R.S. Enterprises Pvt. Ltd.,, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-04-2010
Date Of Final Hearing 15-03-2012
Next Hearing Date 15-03-2012
Assessment Year 2005-2006
Appeal Filed On 12-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE DR. O.K NARAYANAN VICE PRESIDENT AND SMT. P MADHAVI DEVI JUDICIAL MEMBER ITA NO.1040 / BANG/2009 (AS ST. YEAR - 2005-06) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE. . APPELLANT VS. M/S K.R.S ENTERPRISES PVT. LTD. NO.337/1A 18 TH CROSS UPPER PALACE ORCHARDS SADASHIVANAGAR BANGALORE-560 080. . RESPONDENT ITA NO. 1047 /BANG/2009 (AS ST. YEAR - 2005-06) M/S K.R.S ENTERPRISES PVT. LTD. NO.337/1A 18 TH CROSS UPPER PALACE ORCHARDS SADASHIVANAGAR BANGALORE-560 080. . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE. . RESPONDENT REVENUE B BY : SMT. JACINTA ZIMIK VASHAI ADDL . COMMISSIONER OF INCOM E-TAX ASSESSEE BY : NONE ITA NO.1040 & 1047/B/09 2 O R D E R PER DR. O.K NARAYANAN VICE PRESIDENT THESE TWO APPEALS ARE CROSS-APPEALS FILED BY THE A SSESSEE AND THE REVENUE RESPECTIVELY. THE RELEVANT ASSESSMENT YEAR IS 2005-06. THESE CROSS-APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) - I AT BANGALORE DATED 28/08/2009 AND ARISE OUT OF THE ASS ESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX ACT 1961. 2. THE ASSESSEE IS A COMPANY AND STATES THAT THE PR INCIPAL ACTIVITY OF THE ASSESSEE IS DEALING IN REAL ESTATE. THE ASS ESSEE HAS LET OUT A BUILDING AT MILLERS ROAD BANGALORE PARTLY TO M/S N ETSCALER PVT. LTD. AND PARTLY TO M/S YODLEE INFOTECH PVT. LTD. 3. THE CONTENTION OF THE ASSESSEE WAS THAT ENTIRE I NCOME RECEIVED BY THE ASSESSEE OUT OF LETTING OUT OF THE PROPERTIE S ALONG WITH FURNITURE FITTINGS AND OTHER FACILITIES HAS TO BE TREATED AS INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY. THIS CONTENT ION WAS REJECTED BY THE CIT(A) BY RELYING ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF M/S SHAMBU INVESTMENTS PVT. LTD 263 ITR 143. THE CIT(A) FOUND THAT THE RECEIPTS AMOUNTING TO RS.14 5 9 333/- OBTAINED ITA NO.1040 & 1047/B/09 3 FROM M/S YODLEE INFOTECH PVT. LTD. SHOULD BE TREAT ED AS RENT FOR FURNITURE AND FIXTURES AND OTHER SERVICE CHARGES AN D THEREFORE SAID AMOUNT COULD NOT BE TREATED AS FORMING PART OF INC OME FROM HOUSE PROPERTY. THE CIT(A) DIRECTED THE ASSESSING OFFICE R TO TAX THE AMOUNT OF RS.14 59 333/- AS INCOME FROM OTHER SOURC ES. 4. THE REVENUE IS AGGRIEVED ON THE ABOVE RELIEF GRA NTED BY THE CIT(A). ACCORDING TO THE REVENUE THE AMOUNT OF RS .14 59 333/- SHOULD ALSO FORM PART OF INCOME FROM HOUSE PROPERTY . 5. THE GRIEVANCE OF THE ASSESSEE IS THAT THE LAND W AS TAKEN ON LEASE BY THE ASSESSEE FOR A PERIOD OF 12 YEARS AND THERE FORE ENTIRE EXPENSES INCURRED BY THE ASSESSEE ON THE BUILDING AND OTHER FACILITIES SHOULD BE TREATED AS REVENUE EXPENDITURE. THAT CONTENTION WAS NOT ACCEPTED BY THE CIT(A). 6. WHEN THESE APPEALS WERE CALLED ON FOR HEARING N OBODY WAS PRESENT FOR THE ASSESSEE. WHEN THIS APPEAL WAS POS TED FOR HEARING ON 30/03/2010 NOBODY WAS PRESENT FOR THE ASSESSE IN S PITE OF NOTICE. THEREAFTER NOTICE WAS AGAIN ISSUED BY REGISTERED P OST AND SERVED ON THE ASSESSEE FIXING THE DATE OF HEARING I.E ON 26 TH APR 2010. NOBODY ITA NO.1040 & 1047/B/09 4 APPEARED ON BEHALF OF THE ASSESSEE AND NO REPRESENT ATION WAS MADE. THEREFORE WE PROCEED TO DISPOSE OF THE APPEALS EXP ARTE QUA THE ASSESSEE. 7. WE HEARD SMT. JACINTA VASHAI ZIMIK THE LEARNED ADDITIONAL COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E. 8. FIRST WE WILL CONSIDER THE APPEAL FILED BY THE R EVENUE. 9. THE CIT(A) IN HIS ORDER HAS GIVEN THE DETAILS OF THE ARTICLES AND ITEMS PROVIDED BY THE ASSESSEE TO THE TENANT AGAIN ST CHARGING OF MAINTENANCE/SERVICE CHARGES. THESE ITEMS ARE CABIN ELECTRICAL/UPS ROOM SERVER ROOM AND OTHER DIFFERENT UNITS IN THE WORK PLACE DIFFERENT TYPES OF CHAIRS NETWORKING CABLES ELECT RIFICATION PUBLIC ADDRESSING SYSTEM WITH CHANNEL MUSIC FIRE ALARM SY STEM DIESEL GENERATOR POWER BACK UP ETC. WHEN WE HAVE GONE THR OUGH ALL THESE ITEMS WE FIND THAT THESE ITEMS ARE VERY ESSENTIAL FOR ANY BUILDING MADE FOR LETTING OUT. THE DIESEL GENERATOR POWER B ACK UP IS AN INTEGRAL PART OF ANY FUNCTIONAL BUILDING NOW A DAYS . FIRE ALARM SYSTEM IS STATUTORILY MANDATORY. NO BUILDING COULD BE LET OUT WITHOUT ELECTRIFICATION. ALL OTHER ITEMS ARE SPECIFICALLY MADE OUT ON THE ITA NO.1040 & 1047/B/09 5 SPECIFICATION OF THE ASSESSEE TO FORM PART AND PARC EL OF THE LET OUT PROPERTY. THE AIR-CONDITIONING CANNOT BE DISASSOCI ATED FROM BUILDING ITSELF. THE ONLY THING IS THAT THE ASSESSEE HAS MA DE VALUE ADDITION TO THE LET OUT PROPERTY IN THE NATURE OF FURNISHED PR OPERTY. FURNISHED PROPERTY DOES NOT CEASE TO BE HOUSE PROPERTY. INCO ME ARISING FROM SUCH FURNISHED PROPERTY IS ESSENTIALLY INCOME FROM HOUSE PROPERTY. THEREFORE THE CIT(A) HAS ERRED IN GIVING A RELIEF OF RS.14 59 333/- TO THE ASSESSEE. THE SAID ORDER IS SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER IS RESTORED. 10. THE REVENUE IS SUCCESSFUL IN ITS APPEAL. 11. REGARDING THE GROUND RAISED BY THE ASSESSEE IN ITS APPEAL WE FIND THAT THE CIT(A) IS JUSTIFIED IN OBSERVING THA T THE EXACT DATE OF TRANSFER OF LEASE PROPERTY IS CONTINGENT AND THERE FORE IT CANNOT BE HELD THAT THE ASSESSEE SURRENDERS THE PROPERTY WITH ALL THE RIGHTS AND PRIVILEGES ON EXPIRY OF THE INITIAL LEASING PERIOD OF 12 YEARS. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSE E. THE APPEAL FILED BY THE ASSESSEE IS LIABLE TO BE DISMISSED. ITA NO.1040 & 1047/B/09 6 12. IN RESULT THE APPEAL FILED BY THE REVENUE IS A LLOWED AND THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY THE 27TH DAY OF APRIL 2010 AT BANGALORE. SD/- SD/- (P MADHAVI DEVI) ( DR . O.K NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF ITAT NEW DELHI. BY ORD ER ASST. REGISTRAR ITAT BANGALORE.