Income Tax Appellate Tribunal - Mumbai
Ito 3(1)(2), Mumbai vs Brindaban Builders P.Ltd, Mumbai on 2 November, 2018
ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 आयकर अपीलीय अिधकरण "बी"
ायपीठ मुंबई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI माननीय ी महावीर िसं ह, ाियक सद एवं माननीय ी मनोज कुमार अ वाल, ले खा सद के सम ।
BEFORE HON'BLE SHRI MAHAVIR SINGH, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./I.T.A. No.630/Mum/2017 (िनधा रणवष / Assessment Year: 2009-10) Income Tax Officer-3(1)(2) Br in d ab an Bu il d e r s P riv at e L t d Room No.666, 6 t h Floor 4 t h Floor, Raheja Corner of बनाम/ Main Avenue of N.P.Road, M.K. Road, Aaykar Bhavan Mumbai-400 020 Vs. Santacruz (W ) Mumbai-400 049 थायीले खासं . /जीआइआरसं . /PAN/GIR No. AAACB-1815-B (अपीलाथ /Appellant) : ( !थ / Respondent) & आयकरअपीलसं./I.T.A. No.631/Mum/2017 (िनधा रणवष / Assessment Year: 2012-13) Income Tax Officer-3(1)(2) Br in d ab an Bu il d e r s P riv at e L t d Room No.666, 6 t h Floor 4 t h Floor, Raheja Corner of बनाम/ Main Avenue of N.P.Road, M.K. Road, Aaykar Bhavan Mumbai-400 020 Vs. Santacruz (W ) Mumbai-400 049 थायीले खासं . /जीआइआरसं . /PAN/GIR No. AAACB-1815-B (अपीलाथ /Appellant) : ( !थ / Respondent) & आयकरअपीलसं./I.T.A. No.633/Mum/2017 (िनधा रणवष / Assessment Year: 2013-14) Income Tax Officer-3(1)(2) Br in d ab an Bu il d e r s P riv at e L t d Room No.666, 6 t h Floor 4 t h Floor, Raheja Corner of बनाम/ Main Avenue of N.P.Road, M.K. Road, Aaykar Bhavan Mumbai-400 020 Vs. Santacruz (W ) Mumbai-400 049 थायीले खासं . /जीआइआरसं . /PAN/GIR No. AAACB-1815-B (अपीलाथ /Appellant) : ( !थ / Respondent) 2 ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 Assessee by : Sunil K. Ramni & Vinay Sinha, Ld. ARs Revenue by : D.G. Pansari, Ld. DR सुनवाई की तारीख/ : 18/10/2018 Date of Hearing घोषणा की तारीख / : 02/11/2018 Date of Pronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeals by revenue for Assessment Years [AY] 2009-10, 2012-13 & 2013-14 agitate the separate orders of first appellate authority. Since common issues are involved, we dispose-off the same by way of this common order for the sake of convenience & brevity. First we take up ITA No. 630/Mum/2017 which contest the order of Ld. Commissioner of Income-Tax (Appeals)-20 [CIT(A)], Mumbai, Appeal No.CIT(A)-20/ITO-12(1)(3)/IT-09/2015-16 dated 28/10/2016 by raising following grounds of appeal:-
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of Rs.69,93,703/- made under the head "Income from House Property" by determining the annual value of the office premises situated at Raheja Centre, Nriman Point at Rs.1,23,19,210/- u/s.23(1)(a) of the I.T.Act, 1961.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of Rs.63,93,703/- relying on the decision of the Hon'ble ITAT for A.Y. 2008-09 in assessee's own case without appreciating the fact that issue of determination of annual value of the property u/s.23(1)(a) was not a subject matter of appeal before the Hon'ble ITAT for A.Y. 2008-09.
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of Rs.63,93,703/- without appreciating the fact that the AO had elaborately brought out the facts at para 5.5 of the assessment order for instant year wherein it was clearly stated that the facts in the cast of assessee involved for the A.Y. 2008-09 are clearly distinguishable and therefore 3 ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 decision of the Hon'ble ITAT for A.Y.2008-09 cannot be applied for the year under consideration?.
4. "The appellant prays that the order of the CIT(Appeals) on the above grounds be set aside and that of the Assessing Officer restored."
5. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
The assessment for impugned AY was framed by Ld. Income Tax Officer-12(1)(3), Mumbai [AO] u/s 143(3) read with section 147 vide order dated 10/03/2015 wherein the income of the assessee was assessed at Rs.64.33 Lacs after certain additions as against returned income of Rs.0.36 Lacs filed by the assessee on 25/09/2009 which was processed u/s 143(1). During impugned AY, the assessee being resident corporate entity was engaged in construction activity. The assessee was subjected to reassessment proceedings vide issuance of notice u/s 148 dated 31/03/2014.
2. During reassessment proceedings, it was noted that the assessee owned office premises having carpet area of 4280 Square Feets situated at 1205-1208, Raheja Chambers Premises Coop. Soc. Ltd., Nariman Point, Mumbai-21. In the Profit & Loss Account, the assessee has reported compensation received for use of the said office premises as Rs.7.50 Lacs as Business Income. The said compensation was stated to be received on account of usage of office premises, office equipments, garden area, electricity expenses, staff salary etc. from its group concerns namely M/s Seaside Properties Private Limited, M/s Globus Stores Private Limited & M/s Outlook Publishing (I) Private Limited. It was noted that there was no formal lease agreement with these concerns and the assessee merely recovered cost of services and 4 ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 amenities from the group concerns without charging any rent for use of office premises. The annual letting value of the premises was estimated by Ld. AO as Rs.91.33 Lacs, the computation of which has been given in para 5.7 of the quantum assessment order. The assessee defended the same, inter-alia, by submitting that the parties were not allotted any fixed area and only a part of the premises was being used by the other group concerns whereas balance area was being used by the assessee for its activities and therefore, charging notional rental income against the entire area was not justified. The attention was drawn to the favorable order of Tribunal in assessee's own case for AY 2008-09. However, not convinced, Ld. AO, distinguishing the issues of AY 2008-09, added notional rental income under the head Income from House Property after providing allowance for statutory deduction @30% u/s 24(a).
3. Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 28/10/2016 wherein Ld. CIT(A), relying upon Tribunal's order for AY 2008-09, concluded the matter in assessee's favor by observing as under:-
6. I have perused the assessment order and submissions made by the appellant in this regard. The only issue in the present appeal is whether the income from letting of the property is to be assessed as business income or income from house property. It is noted that the issue at hand is a recurring one which has been decided in the favour of the appellant by the Hon'ble ITAT Mumbai 'B' Bench vide its order dated 03-10-2012 in the ITA No.6902/Mum/2011. The Hon'ble Tribunal while allowing relief to the assessee on this issue had noted that the assessee was engaged in letting of premises with rendering of services and facilities and the entire activity of the assessee was such that the letting of the property was in the nature of business operations. It was held by the Hon'ble ITAT that the income received by the assessee was not only from letting out, but it is because of facilities and services rendered and so should be assessed under the head business income. Since the facts of the present case are identical to A.Y. 2008-09, it is noted that the directions of the Hon'ble ITAT in assessee's own case for A.Y. 2008-09 are applicable to the present case. In view of this discussion and respectfully following the judgment of the Hon'ble ITAT Mumbai for A.Y. 2008-09 the additions made by the AO cannot be 5 ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 sustained in appeal and are directed to be deleted. Accordingly, the ground nos. 1 to 7 of appeal are allowed.
Aggrieved, the revenue is in further appeal before us.
4. Rival contentions have been heard and perused. The arguments of Ld. AR rests on the fact that the issue, being recurring in nature, has already been delved upon and decided by the Tribunal in assessee's favor in other AYs, the copies of which have been placed on record. Per Contra, the Ld. DR has supported the stand of Ld. AO to contend that the reliance upon Tribunal's decision on other years was misplaced.
5. Upon careful consideration, we find that issue has already been delved upon by the Tribunal in assessee's own case for various other AYs, the details of which are as follows:-
No. Appeal No. Order dated AY
1. ITA No. 2953-54/Mum/2016 28/02/2018 2005-06, 2006-07
2. ITA No. 3453/Mum/2017 09/10/2017 2007-08
3. ITA No. 6902/Mum/2011 03/10/2012 2008-09
Upon perusal of latest order of the Tribunal ITA Nos.2953-54/Mum/2016 dated 28/02/2018, we find that the revenue was under appeal before the Tribunal with identical / similar grounds of appeal as raised in the present appeal. However, the Tribunal, relying upon the orders for earlier years, concurred with assessee's stand by observing as under:-
5.1 Notably, in the assessment order as per paras 5.1 and 5.2, the Assessing Officer has himself noted that assessee is providing varied nature of services and amenities, such as electricity, telephone, security, garden maintenance, office maintenance, staff services, etc. in respect of the use of office premises allowed to three of its group concerns namely M/s. Sea View Developers, M/s. Outlook Publishing(I) P Ltd. and M/s. Gokul Construction Co. Pvt. Ltd. The said factual observation by the Assessing Officer, clearly shows that the use of the premises have been allowed by the assessee not as a tenancy simpliciter but for composite services, which included use of premises. Be that as it may, the decision of the Tribunal dated 03/10/2012(supra), which has been relied upon by the CIT(A), 6 ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 continues to hold the field, inasmuch as, the same has not been altered by any higher authority. The said decision of the Tribunal has made the following discussion, which is relevant:-
5.We have heard the rival submissions and perused the material before us. In order to be taxed under section 22 of the Act, the conditions to be satisfied are (a) the property should consist of buildings or lands appurtenant thereto; (b) the assessee should be the owner; (c) the property should not be used by the owner for the purpose of any business carried on by him the profits of which are chargeable to income-tax. In order to determine whether rent is assessable as income from property or business income, what has to be seen is whether the asset is being exploited commercially by the letting out or whether it is being let out for the purpose of enjoying the rent. The distinction between the two is a narrow one and has to depend on certain facts peculiar to each case. The question whether a particular letting is business has to be decided in the circumstances of each case and in the setting and background of facts. There is no such thing as a natural commercial asset, because an asset becomes a commercial asset by the use to which it is put in business and not because of any inherent qualities. In the case under consideration income from the property in question was being assessed under the head business income for last so many years. Property-in-question, rented amenities like office equipment & Air Conditioner and for providing cleaning & security services terms and conditions of letting out were the same as of the earlier AYs.AO has not brought anything new on record to prove that there was something substantially different from the earlier years.
5.1.In our opinion, where the income received is not from the bare letting of the tenement or from the letting accompanied by incidental services or facilities, but the subject hired out is a complex one and the income obtained is not so much because of the bare letting of the tenement but because of the facilities and services rendered, the operations involved in such letting of the property is of the nature of business or trading operations and the income derived is of the nature of business or trading operations. As the income received by the assessee-company is not only from letting out, but it is because of facilities and services rendered, as discussed in paragraph 5,so in our opinion same should be assessed under the head Business Income. Following the decisions of Karnani Properties(supra),Grounds no.1-8 are decided in favour of the assessee-company
6. Quite clearly, the Tribunal came to a finding that the income received by the assessee was not from letting of the tenement or from the letting accompanied by incidental services or facilities, but the subject hiring was a complex one and the income obtained was more for facilities and services provided, therefore, it went on to hold that the income derived there-from is in the nature of business income. At the time of hearing, the Ld. Representative for the assessee pointed out that subsequently for assessment year 2007-08 also the Tribunal vide its order in ITA No. 3453/Mum/2017 & CO.No.203/Mum/2017 dated 09/10/2017 has upheld the assessment of hiring income as income from business, following the decision of the Tribunal dated 03/10/2012(supra).
7. At the time of hearing, a statement was also made at Bar that right from assessment years 1985-86 and upto 2004-05, similar income has been accepted by the Department to be assessable as business income. For the said reason and also in view of the precedents noted above, which continue to hold the field, in our view, the CIT(A) made no mistake in treating the hiring income earned from the office 7 ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 premises situated at Raheja Chambers, Nariman Point, Mumbai as business income. Thus, on this aspect Revenue has to fail.
8. Before parting, we may refer to some of the points agitated by the Revenue in the afore-noted Grounds of appeal. Firstly, it is canvassed that the facts involved for 2008-09 are distinguishable from the facts in the instant assessment year, and a reference is made to the discussion in para 5.5 of the assessment order. We have perused the same and find that there are no distinguishable features, inasmuch as, it is not in dispute that the transaction involving the use of property at Raheja Chambers is one and the same in both the years. In assessment year 2008-09 also, what was the subject matter of assessment was the income derived by the assessee from leasing of the office premises in Raheja Chambers, Nariman Point, which is the position in this year too. As in the assessment year 2008-09, in this year too the assessee declared income from the leasing as business income, and the Assessing Officer differed and assessed it as income from 'house property'.
Therefore, we find no reason to uphold the stand of the Revenue as manifested in the Grounds of appeal.
8.1 Considering the aforesaid, in our view, the CIT(A) made no mistake in directing the assessment of such income as 'business income', which is hereby affirmed. In the result, appeal of the Revenue is dismissed.
We find that the revenue has raised identical worded grounds of appeal in the present appeal. Therefore, since a view has already been taken by the Tribunal on similar facts and circumstances, respectfully following the binding judicial precedent, we confirm the stand of first appellate authority. The appeal stands dismissed.
ITA Nos. 631 & 633/Mum/2017, AYs 2012-13, 2013-14
6. In both these years, the revenue is similarly aggrieved and is under appeal before us with identical worded grounds of appeal. Facts and circumstances being pari-materia the same, taking the same view, we dismiss both these appeals also.
Conclusion
7. All the appeals stands dismissed.
8ITA.Nos.630,631 & 633/Mum/2017 Brindaban Builders Private Limited Assessment Years-2009-10, 2012-13 & 2013-14 Order pronounced in the open court on 2nd November, 2018.
Sd/- Sd/-
(Mahavir Singh) (Manoj Kumar Aggarwal)
याियक सद य / Judicial Member लेखा सद य / Accountant Member
मुंबई Mumbai; दनांक Dated
Sr.PS:-Thirumalesh/Jv,Sr.PS
आदेशक ितिलिपअ
ेिषत/Copy of the Order forwarded to :
1. अपीलाथ /
The Appellant
2.
यथ /
The Respondent
3. आयकरआयु (अपील) / The CIT(A)
4. आयकरआयु / CIT- concerned
5. िवभागीय
ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai
6. गाड फाईल / Guard File आदेशानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai