M/s. Baluwala Builders v. The Addl. CIT 19(2), Mumbai
[Citation -2016-LL-0921-85]

Citation 2016-LL-0921-85
Appellant Name M/s. Baluwala Builders
Respondent Name The Addl. CIT 19(2), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 21/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags income from house property • computation of income • income from business • rental income • lease rent
Bot Summary: The rental income so received was offered to tax under the head income from house property , whereas the Assessing Officer taxed the same as income under the head income from business. The CIT(A) has also, on merits, upheld the stand of the Assessing Officer in treating the rental income to be assessed as income from business. The facts in this case are exactly similar to the facts in the case of Shambhu Investment Pvt. Ltd. Vs. CIT 263 ITR 143(SC) decided by Hon ble Supreme Court, wherein the income from the property was held to be assessable as 4 ITA No. 2347/Mum/2015 income from house property. We are not in a position to uphold the orders of the AO. We hold that the lease income received on leasing out of the premises has to be considered under the head income from the house property. Since we hold that income was assessable as income from House property the AO has directed to exclude the income from fixtures and furniture etc. Which are not exactly income from house property to be considered as income from other sources and in doing so he has to allow necessary claim for depreciation, if any. Further, the income received on banner advertisement also should be considered as income from other sources or business as facts may decide after due examination.


IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA No. 2347/Mum/2015 (Assessment Year 2010-11) M/s. Baluwala Builders, C/o. Abbas Y. Baluwala, A-902, Aristo Sapphire, 2nd Hansabad Lane, Santacruz (W),Mumbai 400 054. PAN:AAAFB 4153D ...... Appellant Vs. Addl. CIT 19(2), 3rd Floor, Piramal Chambers, Lalbaug, Mumbai .... Respondent Appellant by : Shri Ramesh Iyer Respondent by : Shri Deepak Ripote Date of hearing : 21/07/2016 Date of pronouncement : 21 /09/2016 ORDER PER G.S.PANNU,A.M: captioned appeal filed by assessee pertaining to assessment year 2010-11 is directed against order passed by CIT(A)- 34 Mumbai dated 26/02/2015 which in turn arises out of order passed by Assessing Officer under section 143(3) of Income Tax Act, 1961 (in short Act ) dated 28/02/2013. 2 ITA No. 2347/Mum/2015 (Assessment Year 2010-11) 2. In this appeal, although assessee has raised multiple Grounds of appeal, but solitary dispute revolves around taxability of income received by assessee on letting out of its property. 3. In brief, relevant facts are that assessee is partnership firm engaged in business of builders and developers. assessee carried out redevelopment of SRA project at Sahara Village, Andheri East, which was completed in assessment year 2009-10. In course of such activity, assessee also constructed commercial complex called Sahara Classic , where portion was sold to outsiders and unsold portion was retained, which was let out to various parties. rental income so received was offered to tax under head income from house property , whereas Assessing Officer taxed same as income under head income from business . Notably, said stand of Assessing Officer was consistent with his stand in case of assessee for earlier assessment year 2008-09. appeal of assessee to CIT(A) has also been dismissed, against which assessee is in further appeal before Tribunal. 4. It was noted at time of hearing that one of reasons weighing with CIT(A) to dismiss appeal was non-appearance of assessee before him in spite of issuance of notices. CIT(A) has also, on merits, upheld stand of Assessing Officer in treating rental income to be assessed as income from business . 5. Before us, Ld. Representative for assessee pointed out that notice of hearing issued by CIT(A) could not be attended to since it was sent to address which was belonging to partner, who 3 ITA No. 2347/Mum/2015 (Assessment Year 2010-11) had died in December, 2013 i.e. after institution of appeal before CIT(A). Furthermore, it is pointed out that same issue has been addressed by Tribunal in case of assessee for assessment year 2008-09 vide ITA No.2023/Mum/2012 dated 17/04/2013. By referring to said decision, it is sought to be pointed out that Tribunal has upheld plea of assessee that income earned by renting of office premises was assessable as income from house property and so far as income from hiring of furniture and fixtures is cocnerned, same is liable to be treated as income from other sources . 6. Ld. Departmental Representative has not controverted aforesaid factual matrix brought out by Ld. Representative for assessee . 7. We have carefully considered rival submissions. precedent relied upon by assessee before us clearly covers controversy in question, and following discussion in order of Tribunal dated 17/04/2013(supra) is relevant: 7. We have considered issue and submissions made in this regard. Without going into legal principles relied upon by either party, fact is that assessee has developed project as part of slum rehabilitation project and had constructed some commercial offices along with residential premises. Out of commercial premises so constructed, Assessee retained some office space and only six of them have been leased on leave and license basis and in some cases along with certain fixtures and furniture as seen from agreements. There is no other activity undertaken by Assessee, so as to construe, as business proposition. facts in this case are exactly similar to facts in case of Shambhu Investment Pvt. Ltd. Vs. CIT 263 ITR 143(SC) decided by Hon ble Supreme Court, wherein income from property was held to be assessable as 4 ITA No. 2347/Mum/2015 (Assessment Year 2010-11) income from house property . This decision of Hon ble Supreme Court is in favour of assessee, whereas Ld. CIT(A) states in page 9 of order mentions that decision supports contentions of Revenue. We are of considered opinion that lease rent is assessable as income from house property only as assessee is owner of property and conditions of sections 22 do satisfy assessing same under House Property. issue of occupancy certificate, non completion of project are not relevant for assessing income in impugned assessment year. If those were to be taken as material, action of AO in bringing to tax part of income received on pending project also cannot upheld, as such, it may have to be set off to expenditure on project under head business. Not only that, while shifting income from head house property to business Assessing Officer failed to consider allowance of depreciation, interest and others expenditure relevant for considering computation under head Business . We cannot up hold contentions of revenue that leased rent on property has to be construed under head Business . It is also seen that income received from leasing of advertisement space was also considered as House Property which may be income from other sources, if not business. Therefore, we are not in position to uphold orders of AO. We hold that lease income received on leasing out of premises has to be considered under head income from house property . 8. In his anxiety to take it as business income, Assessing Officer brought entire receipt under one head and CIT(A) also confirmed same. Since we hold that income was assessable as income from House property AO has directed to exclude income from fixtures and furniture etc. which are not exactly income from house property to be considered as income from other sources and in doing so he has to allow necessary claim for depreciation, if any. Further, income received on banner advertisement also should be considered as income from other sources or business as facts may decide after due examination. To extent of computation of income under various heads, we restore issue to file of AO to do accordingly, after examination of facts and giving due opportunity to assessee. In view of aforesaid, we deem it fit and proper to set-aside order of CIT(A) and direct Assessing Officer to recompute income of assessee in terms of decision of Tribunal dated 5 ITA No. 2347/Mum/2015 (Assessment Year 2010-11) 17/04/2013(supra). As consequence, appeal of assessee is allowed, as above. 8. In result, appeal of assessee is allowed for statistical purposes, as above. Order pronounced in open court on 21/09/2016 Sd/- Sd/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 21/09/2016 Vm, Sr. PS Copy of Order forwarded to : 1. Appellant , 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai M/s. Baluwala Builders v. Addl. CIT 19(2), Mumbai
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