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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ NEW DLEHI
Before: SHRI N.K. CHOUDHRY & DR. B.R.R. KUMAR
PER N.K. CHOUDHRY, J.M.
This appeal has been preferred by the Revenue Department against the order dated 01.03.2019, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)- 35, New Delhi (in short “Ld. Commissioner”), u/s. 250(6) of the Income- tax Act, 1961 (in short ‘the Act’) for the assessment year 2012- 13.
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The brief facts, relevant for adjudication of the instant appeal, are that the Assessee firm owned a land admeasuring 2.304 Hectares (5.688 acres) at DLF City Phase-II Square & Nestle House, from which rental income of Rs.43,86,62,911/- has been shown and deduction @ 30% in accordance to the provision of section 24(a) of the Act has been claimed. Therefore, the Assessee was to show cause on dated 01.12.2014, which was replied by the Assessee vide letter dated 29.12.2014, in which the Assessee made elaborate submissions in support of its claim.
2.1 By considering the reply of the Assessee and the relevant provisions of law, the Assessing Officer disallowed the amount of Rs.13,15,98,873/- which was claimed as deduction u/s. 24(a) of the Act instead of showing as income from business by the Assessee, by holding as under :
“4.1 As regard the chargeability of income in accordance to provision of section 22 of the Income-tax Act, 1961 under the head income from house property, there are few aspects which should be fulfilled for taxing the income under this particular head. Those are; assessee should be owner & the property should consist of building or land's appurtenant. In the instant case, M/s DLF Commercial Developers Ltd. after taking approval of the competent authority constructed a multistoried building on a plot of land named as 'DLF Square', DLF City, Phase-II, Gurgaon consisting of office with basement for parking and services in accordance to the building plan. The assessee has admittedly acquired right in the
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property and the income earned on leasing of space, car parking and also providing of services has been shown under the head house property. Both the amount i.e. monthly rent of the super built up area and also the other charges have been included in the rental income on which deduction U/s 24(a) of the Income-tax Act, 1961 has been claimed. Thus, in the case of assessee, the rental income shown by it is a composite amount which includes the other charges and also maintenance/service charges. Both the amount i.e. monthly rent of the super built up area and also the car parking charges have been included in the rental income on which deduction U/s 24(a) of the Income-tax Act, 1961 has been claimed. It will also be relevant to point out that the assessee firm was constituted for the purpose of earning income from business of letting out of property and as such, the income earned from 'letting business' is a part of trading operation. I found support in my view from the following decision of Hon'ble Apex Court which is squarely applicable on the facts of the case:-
Where there is a letting out of premises and collection of rents, the assessment of income as property income may be correct, but not so where the letting or sub-letting is part of a trading operation. In the latter case, it would be a trading receipt. A company formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, cannot be treated as landowner but has to be treated as trader. In deciding whether a company dealt with its properties as owner, one must see not to the form which it gave to the transaction but to the substance of the matter - Karanpura Development Co. Ltd. v. CIT[1962]44ITR 362 (SC).
4.2 In view of the above, the income of the assessee shown under the head house property is being assessed as income from business and the deduction claimed U/s 24(a) of the Income-tax
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Act, 1961 amounting to Rs. 13,15,98,873/- is being disallowed. I am satisfied that assessee has concealed particulars/submitted inaccurate particulars of his income and penalty proceedings u/s 271(l)(c) are being initiated separately in this regard.”
2.2 The Assessing Officer also made other additions which are not in challenge before us, hence, we are not quoting the same.
The Assessee being aggrieved, also challenged the addition under consideration as well, before the ld. Commissioner, who vide para 4.3 of the impugned order, allowed the ground related to the disallowance under consideration by observing as under :
FINDINGS: Ground no.2 4.2.3.1. The appellant firm has filed its return of income for the AY 2012-2013 declaring a total income at Rs. 31,13,25,095/- comprising Income from House Property Rs. 30,70,64,038/-, Short Term Capital Gains at Rs. 1,42,61,567 after set off short term capital loss for the A. Y. 2010-11 amounting to Rs. 43,372/-, Long Term Capital Loss at Rs. 20,81,580/- to be carried forward for set off in subsequent years u/s 74(2) and Income from Other Sources at Rs. 42,61,057/-. The appellant also has dividend income amounting to Rs. 6,33,13,782/- claimed exempt u/s 10(34)/(35) of the Act. The appellant firm owns a land admeasuring 2.304 hectares (i.e. 5.688 acres) at DLF City Phase-I in Distt. Gurgaon, Haryana and has developed a commercial space under the name of 'DLF Plaza Tower' from which rental income of Rs. 43,86,62,911/- has been shown and deduction @ 30% in accordance to provision of section 24(a) of the Income-tax Act, 1961 has been claimed. The reveals that in A.Y. 2008-09, 2009-10, 2010-11 and 2011-12 the income of appellant has been assessed under the head income from business as against rental income shown by the appellant firm. The assessment has been completed at a total income of Rs. 44,29,23,968/-. The A.O. has assessed the rental income Rs.
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43,86,62,911/- under the head "Business Income" as against "Income From House Property" disclosed by the appellant, and thereby disallowed claim of deduction u/s 24(1) of the Act of Rs. 13,15,98,873/-. The AO has stated that the appellant firm was constituted for the purpose of earning income from business of letting out of property and as such, the income earned from 'letting business' is a part of trading operation. Therefore the AO held that the income of the appellant shown under the head house property is being assessed as income from business and the deduction claimed U/s 24(a) of the Income-tax Act, 1961 amounting to Rs. 13,15,98,873/- was disallowed by the AO.
4.2.3.2. The AR has submitted that the department has been assessing the said income under the head "Income from house Property", in the earlier years, except in the assessment year 2008- 2009 ,2009-10, 2010-11 and 2011-12, whereby, income from letting out had been assessed as "Business Income", but the Ld CIT(A), vide orders dated 23.12.2011, 30.11.2012, 25.11.2013 & 21.05.2014, in appeal no 289/2010-2011, 341/2011-12, 230/2012-13 & 75/2013-14 for the A. Y. 2008-09, 2009-10, 2010- 11 8t 2011-12 has held that Income from letting out, is to be assessed under the head "Income From House Property" and not under the head "Business Income".
The AR has also stated that the Hon’ble Income Tax Appellate Tribunal, Delhi Bench vide Consolidated Order dated 12.12.2014 in departmental appeal no. 1127/Del/2012 & 694/Del/2013 for the A.Y. 2008-09 & 2009-10 has upheld the order of the CIT(A), thereby, dismissing the departmental appeal.
4.2.3.4. The submissions of the appellant have been considered and the decisions in the appellant's own case for the different years have been perused. Therefore, maintaining judicial discipline and respectfully following the decision of Hon'ble
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ITAT and the Ld. CIT(A) for the years mentioned in the para 4.2.3.3., the appeal on ground No. 2 is allowed.”
We observe that the ld. Commissioner before coming to the
conclusion, not only examined the assessment orders passed in
the previous assessment years, but also the appellate orders
passed by different ld. Commissioners (Appeals) for the
assessment years 2008-09, 2009-10, 2010-11 and 2011-12.
The ld. Commissioner has also taken into consideration the order dated 12.12.2014 in Departmental Appeals No. 1127/Del/2012 and 694/Del/2013 for the A.Yrs. 2008-09 and 2009-10, whereby the Hon’ble Tribunal upheld the deletion of the same addition/disallowance.
Since the facts and circumstances involved in the instant appeal are exactly similar to the cases pertaining to A.Yrs. 2008- 09, 2009-10, 2010-11 and 2011-12 and even otherwise, the parties have not shown any distinguishable facts, therefore, we are inclined not to interfere in the conclusion drawn by the ld. Commissioner for deletion of the addition/disallowance under consideration as the decision of the Ld. Commissioner does not suffers from impropriety or perversity. Consequently, the appeal filed by the Revenue is liable to be dismissed.
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In the result, the appeal filed by the Revenue Department
stands dismissed.
Order pronounced in the open court on 30.01.2023.
Sd/- Sd/- (DR. BRR KUMAR) (N.K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER
*aks/-