HIGHRISE PROPERTIES P. LTD, MUUMBAI v. DCIT 3(1), MUMBAI

ITA 7003/MUM/2008 | 2005-2006
Pronouncement Date: 19-03-2010 | Result: Allowed

Appeal Details

RSA Number 700319914 RSA 2008
Bench Mumbai
Appeal Number ITA 7003/MUM/2008
Duration Of Justice 1 year(s) 3 month(s) 9 day(s)
Appellant HIGHRISE PROPERTIES P. LTD, MUUMBAI
Respondent DCIT 3(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 19-03-2010
Date Of Final Hearing 30-12-2009
Next Hearing Date 30-12-2009
Assessment Year 2005-2006
Appeal Filed On 10-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI A.L. GEHL OT (AM) ITA NO.7003/MUM/2008 ASSESSMENT YEAR : 2005-06 M/S. HIGHRISE PROPERTIES PVT. LTD. 181 MAKER TOWER E CUFFE PARADE MUMBAI-400 005. ..( APPELLANT ) P.A. NO. (AAACH 3914 R) VS. DY. COMMISSIONER OF INCOME TAX CIRCLE - 3(1) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHR I MANISH SANGHVI RESPONDENT BY : SHRI V IKRAM GAUR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 11.9.2008 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS AS BUILDERS AND DEVELOPER OF P ROPERTIES. APART FROM THIS THE ASSESSEE ALSO DERIVES INCOME FROM HOU SE PROPERTY CAPITAL GAIN AND OTHER SOURCES. THE ASSESSEE DU RING THE ITA NO.7003/M/08 A.Y:05-06 2 YEAR RECEIVED REFUND OF MUNICIPAL TAXES OF RS.72 95 313/- WHICH HE ADDED TO THE RENT RECEIVED AND CLAIMED 30% AS DEDUCTION U/S.24. IT WAS SUBMITTED THAT THE MUNICIPAL CORPORATION HAD INCR EASED THE TAXES @ RS.18/- PER SQ.FT. FROM RS.6/- WHICH WAS PAID BY THE A SSESSEE CLAIMED DURING THE YEAR OF PAYMENT. THE ASSESSEE FILED A CASE AGAINST THE MUNICIPAL CORPORATION AND THE COURT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE RESULTING IN REFUND OF RS.72 95 313/-. THE ASSESSEE OFFERED THE SAME TO TAX AS UNDER: RENT RECEIVED RS.36 87 821 MUNICIPAL TAXES RECOVED RS.72 95 313 RS.1 09 83 134 LESS: MUNICIPAL TAXES PAID RS.15 48 180 RS.94 34 954 LESS: 30% DEDUCTION U/S.24 RS.28 20 487 ANNUAL VALUE RS.66 04 487 THE ASSESSING OFFICER AFTER CAREFULLY CONSIDERING THE ISSUE ASSESSED THE REFUND OF MUNICIPAL TAXES OF RS.72 95 313/- AS INCOME FR OM OTHER SOURCES AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.1 09 03 960/- VIDE ORDER DT 4.12.2007 PASSED U/S.143 (3) OF THE IT ACT 1961 ( THE ACT). ON APPEAL THE LD. CIT(A) WHIL E AGREEING WITH THE VIEW OF THE AO THAT THE REFUND OF MUNICIPAL TAX IS AN INCOME WHICH IS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES CONFIRMED THE ADDITION MADE BY AO AND DISMISSED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT(A) TH E ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE ACT ION OF THE AO IN ITA NO.7003/M/08 A.Y:05-06 3 TREATING THE REFUND OF MUNICIPAL TAX AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LD. CIT(A) FURTHER SUBMITS THAT THE ASSESSEE IN GOOD FAITH HAD OFFE RED THE REFUND OF MUNICIPAL TAXES UNDER THE HEAD INCOME FROM HOUSE PROPERTY THEREFORE THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE AO IN ASSESSING THE SAME AS INCOME FROM OTHER SOURCES. THE RELIAN CE WAS ALSO PLACED IN CIT VS. INDIA AUTOMOBILES (1960) LTD. (2 001) 251 ITR 117(CAL.) AND COMMISSIONER OF INCOME-TAX V. D.P. SA NDU BROS. CHEMBUR P. LTD.(2005) 273 ITR 1(SC). 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE AO AND THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS SHOWN THE RECEIPT OF REFUND OF MUNICIPAL TAXES UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOW EVER THE SAME WAS ASSESSED BY AO AS INCOME FROM OTHER SOURCES . 7. IN CIT VS. INDIA AUTOMOBILES (1960) LTD.(SUPRA) IT HAS BEEN HELD (PAGE 117 HEADNOTE) AS UNDER : ITA NO.7003/M/08 A.Y:05-06 4 HELD THAT THERE WAS NO PROVISION FOR TAXING THE A MOUNT OF RELIEF OBTAINED IN PAYMENT OF CORPORATION TAX ON HOUSE PROPERTY IN THE SUBSEQUENT YEARS AND THAT LACUNA H AD BEEN FILLED UP BY AN AMENDMENT IN 1985. THE BENEFIT TO WHICH THE ASSESSEE WAS ENTITLED UNDER THE LAW WHICH EXISTED ON THE DATE THE LIABILITY ACCRUED COULD NO T BE TAKEN AWAY BY SUBSEQUENT AMENDMENT UNLESS THERE WA S AN AMENDMENT MADE IN THE PROVISIONS OF THE ACT TO TAX THE AMOUNT OF RELIEF WHICH THE ASSESSEE SUBSEQUENTL Y GOT IN THE LITIGATION ON ACCOUNT OF TAX LIABILITY WITH RETROSPECTIVE EFFECT. THE AMOUNT OF RELIEF COULD NO T BE TAXED AS INCOME. 8. IN CIT VS. D.P. SANDU BROS. CHEMBUR P. LTD. (SUPRA ) IT HAS BEEN HELD [AT PAGE-2 OF HEADNOTE (IV) ] : ........A TENANCY RIGHT IS A CAPITAL ASSET AND IT S SURRENDER WOULD ATTRACT SECTION 45 AND THE GAINS DERIVED WOUL D BE ASSESSABLE IF AT ALL ONLY UNDER THE HEAD CAPITAL GAINS. THAT BEING SO IT CANNOT BE TREATED AS A CASUAL AND NON- RECURRING RECEIPT UNDER SECTION 10(3) AND BE SUBJEC TED TO TAX UNDER SECTION 56. IF THE INCOME CANNOT BE TAXE D UNDER SECTION 45 IT CANNOT BE TAXED AT ALL. 9. APPLYING THE RATIO OF THE ABOVE DECISIONS TO THE FA CTS OF THE PRESENT CASE WE FIND THAT THERE IS NO DISPUTE THAT THE A MENDED LAW WILL APPLY IN THE PRESENT CASE WHEREIN IT HAS BEEN PROVIDED THAT THE LIABILITY OF MUNICIPAL TAXES CAN BE ALLOWED ON ACTUAL PAYMENT BASIS. THIS BEING SO AND KEEPING IN VIEW THAT THE ASSESSEE HAS SHOWN MUNICIPAL TAXES RECOVERY UNDER THE INCOME FROM HOUSE PROPERTY AND ALSO KEEPING IN VIEW THAT SECTIONS 22 TO 27 CONSTITUTE A SEPARATE CODE OF COMPUTATION OF THE INCOME FROM THE HOUSE PROPERTY A ND THERE IS NO PROVISION UNDER THE ACT THAT THE SAME CAN BE TAXED UN DER THE HEAD ITA NO.7003/M/08 A.Y:05-06 5 INCOME FROM OTHER SOURCES WE ARE OF THE VIEW THAT TH E LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ORDER OF THE AO IN TREATING THE REFUND OF MUNICIPAL TAXES AS INCOME FROM OTHER SOURCES A ND ACCORDINGLY THE SAME IS DELETED. THE GROUNDS TAKEN BY T HE ASSESSEE ARE THEREFORE ALLOWED. 10. IN THE RESULT THE ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.3.2010. SD/- SD/- (A.L. GEHLOT) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 19.3.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. ITA NO.7003/M/08 A.Y:05-06 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 12.3.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 15.3.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 19.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 23.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER