ACIT RTG 19(2), MUMBAI v. BLUE DIAMOND CONSTRUCTIONS, MUMBAI

ITA 5424/MUM/2009 | 2004-2005
Pronouncement Date: 29-12-2010 | Result: Dismissed

Appeal Details

RSA Number 542419914 RSA 2009
Assessee PAN AAAFB3162E
Bench Mumbai
Appeal Number ITA 5424/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 29 day(s)
Appellant ACIT RTG 19(2), MUMBAI
Respondent BLUE DIAMOND CONSTRUCTIONS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-12-2010
Assessment Year 2004-2005
Appeal Filed On 30-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND SHRI R.S.PADVEKAR JUDICIAL MEMBER I.T.A.NO.5424 & 5425/MUM/2009 A.YRS. 2004-05 AND 2006-07 ASST. COMMISSIONER OF I.T. 19(2) MUMBAI. VS. M/S BLUE DIAMOND CONSTRUCTIONS SONA MOHOR BEHIND VAKOLA MUNICIPAL MARKET OFF. NEHRU ROAD SANTACRUZ (EAST) MUMBAI 400 054 PAN: AAAFB 3162 E (APPELLANT) (RESPONDENT) APPELLANT BY : MR. SHRAVAN KUMAR. RESPONDENT BY : MR. RAJAN R. VORA. O R D E R PER T.R.SOOD AM: THE APPEALS BY THE REVENUE ARE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. I.T.A.NO.5424/M/09 A.Y 2004-05 : IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW WHETHER THE LEARNED CIT[A] WAS JUSTIFIED IN HOLDING THE INCOME OF THE ASSESSEE AS INCOME FROM HOUSE PROPERT Y WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD ENTERED INTO A COMPOSITE AGREEMENT WITH THE LESSEES FOR PROVIDING PLACE AND OTHER SERVICES AS WELL. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT[A] ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO RESTORED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ORI GINAL ASSESSMENT WAS COMPLETED U/S.143[3] ON 30-8-05. LATER ON AN O RDER U/S.263 WAS PASSED IN RESPECT OF ISSUES OF INCOME FROM HOUSE PR OPERTY AND VALUATION OF CLOSING STOCK. ACCORDINGLY ASSESSMENT WAS TAKEN UP AGAIN 2 AND ADDITIONS WERE MADE IN PURSUANCE OF ORDER PASSE D U/S.263 OF THE ACT. 4. BEFORE US LD. DR RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE P OINTED OUT THAT ORDER U/S.263 WAS CHALLENGED BEFORE THE TRIBUNAL AN D THE SAME HAS BEEN QUASHED BY THE TRIBUNAL IN I.T.A.NO.3174/M/08 COPY OF WHICH HAS BEEN FILED AT PAGES 8 TO 12 OF THE PAPER BOOK. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE TRIBUNAL HAS ALREADY QUASHED THE ORDER PASSED U/S.263 IN I.T .A.NO.3172/M/08 AND THEREFORE ASSESSMENT MADE IN PURSUANCE OF THE REVISION ORDER U/S.263 WOULD NOT SURVIVE. ACCORDINGLY WE CONFIRM THE ORDER OF THE LD. CIT. 7. IN THE RESULT REVENUES APPEAL IS DISMISSED. 8. I.T.A.NO.5425/M/09 A.Y 2006-07 : IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW WHETHER THE LEARNED CIT[A] WAS JUSTIFIED IN HO LDING THE INCOME OF THE ASSESSEE AS INCOME FROM HOUSE PRO PERTY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD ENTERED INTO A COMPOSITE AGREEMENT WITH THE LESSEES FOR PRO VIDING PLACE AND OTHER SERVICES AS WELL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW WHETHER THE LEARNED CIT[A] WAS JUSTIFIED IN AL LOWING THE CLAIM OF THE ASSESSEE ON THE ISSUE OF DEDUCTION OF MUNICIPAL TAXES ON THE PROPERTY AGAINST THE SERVICE CHARGES AS AGAINST THE ALLOWANCE OF THE SAME AGAINST RENT B Y THE AO WITHOUT APPRECIATING THE FACT THAT MUNICIPAL TAXES ARE ALLOWABLE U/S.23 AGAINST THE RENT RECEIVED. 9. GROUND NO.1 : AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSESSEE WAS IN RECEIPT OF SOME COMPENSATION FROM L ETTING OUT OF ITS 3 UNITS IN COMMERCIAL COMPLEX KNOWN AS DIAMOND SQUARE . THE INCOME WAS RETURNED AS INCOME FROM HOUSE PROPERTY IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F SHAMBHU INVESTMENTS PVT. LTD. VS. CIT 262 ITR 143. HOWEVER AO WAS OF THE VIEW THAT SINCE ASSESSEE WAS ALSO CARRYING SOME BUS INESS OF PROVIDING SERVICES TO SUCH TENANTS THE INCOME WAS ASSESSED A S INCOME FROM OTHER SOURCES. 10. ON APPEAL THE LD. CIT[A] HELD THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVEST MENTS PVT. LTD. [SUPRA] AS WELL AS THE DECISION OF THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF MANGLA HOMES PVT. LTD. VS. ITO 15 DTR 1 10 INCOME IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPE RTY. 11. BEFORE US LD. DR RELIED ON THE ORDER OF THE AO . 12. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE T RIBUNAL IN THE ASSESSEES OWN CASE WHILE PASSING AN ORDER AGAINST THE ORDER U/S.263 BECAUSE TRIBUNAL HAS ADJUDICATED AND HELD THAT THE COMPENSATION RECEIVED FROM TENANTS WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIN D THAT WHILE ADJUDICATING THE APPEAL AGAINST THE ORDER U/S.263 I N I.T.A.NO. 3172/M/08 THE TRIBUNAL VIDE PARA-3 HELD AS UNDER: 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS A QUERY WAS RAISED BY THE ASSESSING OFF ICER ON THIS ISSUE 4 WHICH WAS REPLIED BY THE ASSESSEE STATING THE NATUR E OF INCOME BY FURNISHING THE COPY OF THE AGREEMENT. THE ASSESSING OFFICER HAS DISCUSSED THIS ASPECT IN A PRECISE MANNER ON PAGE 2 OF THE ASSESSMENT ORDER BY MENTIONING THAT THE DETAILS WERE FURNISHED AND VERIFIED BY HIM. AFTER EXAMINING THIS ISSUE HE ACCEPTED THE ASS ESSEES CLAIM THAT THE RENTAL INCOME WAS CHARGEABLE TO TAX UNDER THE H EAD INCOME FROM HOUSE PROPERTY AS DEPICTED BY THE ASSESSEE. NOW THE QUESTION IS WHETHER THE VIEW TAKEN BY THE ASSESSING OFFICER CAN BE MADE THE SUBJECT MATTER OF REVISION U/S.263 OF THE ACT. THE HON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. [ SUPRA] AFFIRMED JUDGMENT OF THE HON'BLE CALCUTTA HIGH COURT IN CIT VS. SHAMBHU INVESTMENT PVT. LTD. REPORTED IN 249 ITR 47 IN WHIC H THE ASSESSEE LET OUT PORTION OF THE PREMISES TO THE OCCUPANT AS FURN ISHED OFFICE ON MONTHLY RENTAL WHICH WAS INCLUSIVE OF ALL CHARGES. THE HON'BLE SUPREME COURT HELD THAT SUCH INCOME WOULD FALL UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. THE FACTS OF THE INSTAN T CASE ARE SIMILAR TO THOSE CONSIDERED BY THE HON'BLE SUPREME COURT INASM UCH AS THE PRESENT ASSESSEE HAS ALSO RECEIVED INTEREST FREE SE CURITY DEPOSIT FROM THE LESSEE TO THE TUNE OF ` `` ` .35 LAKHS. THE HON'BLE BOMBAY HIGH COURT IN MANGALA HOMES PRIVATE LIMITED. VS. ITO 2008-TIOL -440-HIGH COURT-MUM-IT UPHELD THE TRIBUNALS VIEW BY WHICH TH E ASSESSEE CARRYING ON THE BUSINESS OF DEALING AND INVESTING I N PROPERTIES ETC. LEASED OUT FLAT ON RENT AND ITS CLAIM FOR TREATING THE RENTAL INCOME AS BUSINESS INCOME WAS REPELLED BY THE TRIBUNAL BY HOL DING SUCH INCOME WILL FALL UNDER THE HEAD INCOME FROM HOUSE PROPERT Y. IN VIEW OF THE FOREGOING DISCUSSION WE ARE SATISFIED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IN ASSESSING THE INCOME UNDER TH E HEAD INCOME FROM HOUSE PROPERTY ACCORDS WITH THAT OF THE HON'BLE SUP REME COURT AND THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORE-NOTE D CASES. AT ANY RATE IT CANNOT BE SAID TO BE ERRONEOUS WHICH COULD BE T HE SUBJECT MATTER OF REVISION. FROM THE ABOVE IT IS CLEAR THAT TRIBUNAL HAS ALREA DY HELD THAT COMPENSATION RECEIVED BY THE ASSESSEE IS TO BE ASSE SSED AS INCOME FROM HOUSE PROPERTY. THEREFORE FOLLOWING THIS ORDE R WE DECIDE THIS ISSUE AGAINST THE REVENUE. 14. GROUND NO.2 : AFTER HEARING BOTH THE PARTIES WE FIND THAT DURIN G ASSESSMENT PROCEEDINGS AO WAS OF THE VIEW THAT ASSE SSEE HAD CLAIMED DOUBLE DEDUCTION ON ACCOUNT OF MUNICIPAL TAXES BECA USE THE SAME 5 AMOUNT WAS CLAIMED WHILE DETERMINING THE OTHER INCO ME AS EXPENDITURE. 15. THE LD. CIT[A] DELETED THIS ADDITION BY OBSERVI NG THAT AO HAS WRONGLY ASSUMED THAT ASSESSEE HAS CLAIMED DOUBLE DE DUCTION. 16. BEFORE US LD. DR RELIED ON THE ORDER OF THE AO . 17. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE REFERRED TO PAGE- 7 OF THE PAPER BOOK AND POINTED OUT THAT ASSESSEE H AD SHOWN SEPARATELY INCOME FROM HOUSE PROPERTY AGAINST WHICH ONLY 30% DEDUCTION HAS BEEN CLAIMED. WHEREAS WHILE COMPUTING THE BUSINESS INCOME THIS RENTAL INCOME HAS BEEN REDUCED AND OTH ER INCOME HAS BEEN SHOWN DIRECTLY. THEREFORE WHAT HAS HAPPENED I S THAT MUNICIPAL TAXES WHICH WERE DEBITED TO THE PROFIT & LOSS ACCOU NT HAVE BEEN CLAIMED THROUGH BUSINESS INCOME AND NO SEPARATE DED UCTION HAS BEEN CLAIMED FROM MUNICIPAL TAXES WHILE CALCULATING THE INCOME FROM HOUSE PROPERTY. THIS WAS DONE BECAUSE ASSESSEE WAS RECEIV ING CERTAIN CHARGES FROM VARIOUS TENANTS TOWARDS NORMAL DAY-TO -DAY MAINTENANCE OF THE BUILDING AS WELL AS TOWARDS PAYMENT OF MUNIC IPAL TAXES. THE INCOME FROM SUCH CHARGES HAS BEEN COMPUTED AS INCOM E FROM BUSINESS AND MUNICIPAL TAXES HAVE ALSO BEEN DEBITED WHILE DOING SO. IN THIS REGARD HE REFERRED TO THE COPY OF THE PROFIT & LOSS ACCOUNT AT PAGE 23 OF THE PAPER BOOK. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSE SSEE. IN THE PROFIT & LOSS ACCOUNT LEASE RENT HAS BEEN RECORDED SEPARATEL Y AT 6 ` `` ` .2 82 23 700/- WHICH HAS BEEN DIRECTLY SHOWN IN THE COMPUTATION OF INCOME AS RENTAL INCOME AGAINST WHICH DEDUCTION U/S .24[A] AT 30% HAS BEEN CLAIMED. IN ADDITION TO THIS ASSESSEE HAS SHO WN COMPENSATION TOWARDS MAINTENANCE AND TAXES AT ` `` ` .69 80 400/-. ON THE DEBIT SIDE ASSESSEE HAS DEBITED ALL EXPENSES INCLUDING MUNICIP AL TAXES PAID WHATEVER IS THE PROFIT AND ALONG WITH THE PROFIT FR OM SILVER COIN PROJECT AND SILVER NOOK PROJECT PLUS CERTAIN OTHER CHARGES BUSINESS INCOME WAS SHOWN AT ` `` ` .67 96 034/-. THIS MEANS MUNICIPAL TAXES HAVE BEEN SHOWN AS EXPENDITURE ITEM ONLY AGAINST THE BUSINESS RECEIPT WHICH MAINLY CONSTITUTE THE COMPENSATION RECEIVED FROM TE NANTS REGARDING MAINTENANCE CHARGES AS WELL AS MUNICIPAL TAXES. THE REFORE IT IS CLEAR THAT DEDUCTION HAS BEEN CLAIMED ONLY AGAINST BUSINE SS INCOME. ACCORDINGLY WE FIND NOTHING WRONG IN THE ORDER OF THE LD. CIT[A] AND CONFIRM THE SAME. 19. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF DECEMBER 2010. SD/- SD/- (R.S.PADVEKAR) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 29 TH DECEMBER 2010. P/-* 7