IN INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. No.729/Bang/2014 (Assessment Year : 2006-07) M/s. Mysore Intercontinental Hotels Vs. Asst. Commissioner of Income Pvt. Ltd., Tax, No.190, Sankey Road, Circle 12(1), Bangalore. Sadashivanagar, Bangalore-560 080 PAN AABCM 4229P Appellant Respondent. Appellant By : Shri C. Ramesh, C.A. Respondent By : Shri G. Ramesha, JCIT (D.R) Date of Hearing : 8.9.2015. Date of Pronouncement : 7.10.2015. O R D E R Per Shri Jason P. Boaz, A.M. : This appeal by assessee is directed against order of Commissioner of Income Tax (Appeals)-III, Bangalore dt.14.2.2014 for Assessment Year 2006-07. 2. facts of case, briefly, are as under :- 2.1 assessee, company engaged in construction and provision of infrastructure for I.T. Parks, hotels, commercial complexes and to provide facilities and amenities for these properties, filed its return for Assessment Year 2006-07 on 13.11.2006 declaring 2 ITA No.729/Bang/2014 income of Rs.4,77,82,518. return was processed under Section 143(1) of Income Tax Act, 1961 (in short 'the Act') and case was subsequently taken up for scrutiny. assessment was completed under Section 143(3) of Act vide order dt.22.12.2008; wherein income received from letting out of building/property shown as business income was treated and held to be income from house property by Assessing Officer, following same finding in order of assessment for Assessment Year 2004-05. 3.1 On appeal for earlier Assessment Years 2004-05 and 2005-06, learned CIT (Appeals) VI, Bangalore disposed off assessee's appeal by way of common order dt.2.9.2008, wherein it was held that gross revenue of assessee is to be bifurcated on basis of quantum of investment on infrastructure and building and was accordingly to be assessed under heads business income and income from house property respectively. In this order, learned CIT (Appeals) fixed following percentages of gross revenue to be assessed under head business and house property . S.No. Asst. Year Revenue to be considered Revenue to be considered under Head Business Income under Head Income form House Property . 1. 2004-05 60% 40% 2. 2005-06 75% 25% 3.2 Aggrieved by orders of CIT (Appeals) VI, Bangalore for Assessment Years 2004-05, 2005-06 dt.2.9.2008, both assessee and revenue went in appeal 3 ITA No.729/Bang/2014 before Tribunal. co-ordinate bench of this Tribunal vide its orders in ITA Nos.1344 & 1345(Bang)/2008 and ITA Nos.1411 & 1412/Bang/2008 dt.23.6.2009 upheld orders of learned CIT (Appeals) and dismissed both assessee's and revenue s appeals. 3.3 Both Revenue and assessee went in further appeal before Hon'ble High Court of Karnataka. Hon'ble High Court by way of its order in CIT & Another V Mysore International Hotels (P) Ltd. (2010) 322 ITR 116 (Kar) dismissed Revenue s appeal for Assessment Year 2004-05 at admission stage itself. assessee's appeal for Assessment Year 2004-05 was disposed off by Hon'ble High Court vide order in ITA No.727 of 2009 dt.15.11.2014 as under :- ORDER i) Appeal is allowed. ii) Impugned orders passed by appellate authorities are hereby set aside. rental income shall be treated as income from business i.e. profits and gains from business under Section 28 of Income Tax Act. 4.1 For Assessment Year 2006-07 also, assessee being aggrieved by order of assessment dt.22.12.2008, preferred appeal before CIT (Appeals) III, Bangalore. learned CIT (Appeals), following orders of co-ordinate bench of this Tribunal for Assessment Year 2004-05 and 2005-06 in ITA Nos.1344 & 1345(Bang)/2008 and ITA Nos.1411 & 1412/Bang/2008 dt.23.6.2009, allowed partial relief to assessee; holding 4 ITA No.729/Bang/2014 that 75% of revenue for Assessment Year 2006-07 is to be assessed under head Business Income and remaining 25% was to be assessed under head Income from House Property. 5. Aggrieved by order of CIT (Appeals) III, Bangalore for Assessment Year 2006-07 dt.14.2.2014, assessee has preferred this appeal raising following grounds :- 1. order of learned CIT (Appeals) is opposed for facts of case and law applicable to case. 2. learned CIT (Appeals) erred in holding that gross receipt accounted for by appellant under head business represents partly towards building, assessable under head House Property , and balance under head business. 3. learned CIT (Appeals) erred in directing that income be computed on same lines as directed by Hon'ble Tribunal in its order in ITA No.1344 & 1345/Bang/2008 dt.23.6.2009 for A.Ys 2004-05 & 2005-06. 4. learned CIT (Appeals) has failed to notice tht on giving effect to directions there would be enhancement in total income vis- -vis income assessed and under circumstances as provided under provisions of section 251(2) of Act, Hon'ble CIT (Appeals) should have provided opportunity of hearing before directing such enhancement and in absence of such opportunity order is bad in law. 5. order of CIT (Appeals) is in contravention of provisions of section 251(2) of Act. 6. learned CIT (Appeals) erred in not giving any directions on disallowance of maintenance cost ofRs.31,79,432 though issue was raised by specific ground of appeal. 7. learned CIT (Appeals) erred in not giving any directions on disallowance of maintenance cost of Rs.31,79,432 though issue was raised by specific ground of appeal. 8. learned CIT (Appeals) erred in not giving any directions on disallowance of processing charges ofRs.5,51,000 and bank charges ofRs.23,990 though issues were raised by specific ground of appeal. 5 ITA No.729/Bang/2014 9. appellant craves permission to add, delete or alter any of grounds at time of hearing. 6.1 sole issue raised in grounds of appeal at S.Nos.1 to 3 by assessee is that gross receipts/revenues received from renting out buildings ought to be assessed under head business income and not as partly under head business income and partly under head income from house property as held by learned CIT (Appeals) and decision of co-ordinate bench of Tribunal in ITA Nos.1344 & 1345(Bang)/2008 and ITA Nos.1411 & 1412/Bang/2008 dt.23.6.2009. Before us, learned Authorised Representative for assessee submitted that issue is now covered in favour of assessee by decision of Hon'ble High Court of Karnataka in assessee's own case for Assessment Year 2004-05 in ITA No.727/2009 dt.25.11.2014 allowing assessee's appeal and holding that rental income shall be treated as income from profits and gains of business . In view of this, it is prayed that assessee's appeal be allowed on merits. 6.2 We have heard both learned Authorised Representative for assessee and learned Departmental Representative for Revenue. We find that as submitted by learned Authorised Representative for assessee, Hon'ble High Court of Karnataka vide its order in ITA No.727 of 2009 dt.25.11.2014 in assessee's own case for Assessment Year 2004-05, on this very issue, has allowed assessee's appeal holding as under :- 6 ITA No.729/Bang/2014 ORDER i) Appeal is allowed. ii) Impugned orders passed by appellate authorities are hereby set aside. rental income shall be treated as income from business i.e. profits and gains from business under Section 28 of Income Tax Act. Respectfully following aforesaid decision of Hon'ble High Court of Karnataka in ITA No.727 of 2009 dt.25.11.2014 in assessee's own case for Assessment Year 2004-05, we hold and direct Assessing Officer to treat rental income of assessee from building/infrastructure as Income from Business and assess same accordingly. Consequently, assessee's grounds of appeal at S.Nos. 1 to 3 are allowed. 6.3 Consequent to our finding in respect of ground at S.Nos. 1 to 3 at para 6.2 of this order, allowing assessee's appeal, other grounds raised by assessee at S.Nos. 4to 9 would not require adjudication as they would be rendered infructuous and get disposed off automatically. 7. In result, assessee's appeal for Assessment Year 2006-07 is allowed. Order pronounced in open court on 7th October, 2015. Sd/- Sd/- (VIJAYPAL RAO) (JASON P BOAZ) Judicial Member Accountant Member *Reddy gp M/s. Mysore Intercontinental Hotels Pvt. Ltd. v. Asst. Commissioner of Income-tax, Circle 12(1), Bangalore