ACIT, CIRCLE-26(1), NEW DELHI vs. VARIETY SERVICES NOIDA P.LTD, NEW DELHI

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ITA 6461/DEL/2018Status: DisposedITAT Delhi18 October 2022AY 2014-153 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the income received by the assessee from lease rentals for installation of telecom towers should be treated as profits and gains of business or profession, considering the company's main objects and relevant Supreme Court judgments.

What were the facts?

The assessee company declared income from installation of telecom sites and providing infrastructure. The Assessing Officer (AO) treated license fee and rent received from cellular operators as income from house property, while the assessee claimed it as business income. The CIT(A) agreed with the assessee.

What were the issues?

Whether rental receipts from telecom tower installations constitute income from house property or business income, and whether related expenses are allowable as business expenditure.

Which sections of the Income-tax Act were involved?

Chapter IV-D

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(5)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

Hearing: 04.08.2022Pronounced: 18.10.2022

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the Revenue against the order of ld. CIT(A)-9, New Delhi dated 18.07.2018.

2.

Following grounds have been raised by the Revenue:

“1. Whether on the facts and under the circumstances of the case, the ld. CIT(A) has erred in holding that income from license fee and rent aggregating to Rs.4,08,22,842/- is income from business and not from house property without appreciating the justification of AO in the assessment order and judgment of Hon’ble Apex Court in Raj Dadakar & Associates Vs. ACIT, CC-46(2017) 394 ITR 592 (SC).

2. Whether on the facts and under the circumstances of the case, the ld. CIT(A) has erred in relying on the principle of consistency and on the judgment of Hon’ble Apex Court in the case of Radhasoami Satsang without appreciating the judgment of Hon’ble

2 Variety Services Noida P. Ltd. Delhi High Court in M/s Krishakbharati Cooperative Ltd. (2012) 23 taxman.com 265 (Delhi) and judgment of Hon’ble Apex Court in Distributors (Boaroda) (P) Ltd. Vs. Union of India (1985) 155 ITR 120/22 Tax 49 (SC).

3. Whether on the facts and under the circumstances of the case, the ld. CIT(A) has erred in treating the rental receipts as income from “business or profession” and allowing the expenses of Rs.23,500/- as business expenditure.”

3.

The assessee filed return of income on 30.11.2014 declaring income of Rs.40,62,400/-. The assessee derived income from installation of telecom sites for the cellular operators and providing infrastructures for banking activities. The AO treated the income received from the Cellular operators as income from house property as against the business income claimed by the Assessee. The ld CIT(A) held that the receipts from monies from rent, telecom companies, ATM etc are necessarily be assessed under Chapter IV-D of the Income Tax Act as income from business or profession.

4.

Aggrieved the revenue filed before us.

5.

Heard the arguments of both the parties and perused the material available on record.

6.

We have gone through the main objects of the company which include purchase lease exchange or otherwise land building etc which proves that the Assessee is in the business of leasing. The Assessee has been providing infrastructure to telecom operators by the way of leasing cellular towers to various companies like Bharti Cellular, Idea, Vodaphone etc. The Assessee has also claimed the generator running expenses, repair and maintenances charges, site security expenses and 3 Variety Services Noida P. Ltd. other electricity charges against these receipts. We have gone through the judgment of Hon’ble Supreme Court in the case of CIT Vs. National Storage Pvt. Ltd 66 ITR 596 with relevance to taxation of income under Chapter IV-D of the IT Act and also the judgment of the Hon’ble Apex Court in the case of Chennai Properties and Investment Ltd 231 Taxmann 336. Keeping in view the ratio laid down by the Hon’ble Apex Court in these two judgments, we have no hesitation to hold that the income received by the Assessee by the way of “lease rentals” from installation of telecom towers from the cellular operators be treated as “Profits and gains of business or profession”.

7.

In the result, appeal of the revenue is dismissed. Order Pronounced in the Open Court on 18/10/2022.

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