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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI ANADEE NATH MISSHRA
ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:
This is an appeal by the Revenue against order dated 19.02.2019 of learned Commissioner of Income-Tax (Appeals)-35, New Delhi for the assessment year 2012-13.
Grounds raised by the revenue are as under:
Whether on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the additions to the tune of Rs.4,91,30,635/- made by the Assessing Officer by disallowing the deduction u/s. 24(a) of the Act.
2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in treating the rental income as business income, in view of the admitted objective of the assessee firm which has been constituted to carry on the business of setting up commercial complexes for sale or letting out and earning rental income there from and also the decision of the Hon’ble Apex Court in the case of Karanpura Development Co. Ltd. Vs. Commissioner of Income Tax, West Bengal [1962] 44 ITR 362 (SC), Chennai Properties and Investment Ltd. Vs. CIT [2015] 373 ITR 673 (SC) and Rayala Corporation Pvt. Ltd. Vs. ACIT [2016] 386 ITR 500 (SC) which are squarely applicable on the facts of the case reaffirming that income from letting out properties should be treated as “Business Income” and not as “Income from House Property”. 3. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the additions to the tune of Rs.4,91,30,635/- made by the Assessing Officer by disallowing the deduction u/s. 24(a) of the Act, by relying on the earlier orders, when the principle of res-judicata does not apply on Income Tax proceedings. 4. Whether the provisions of Sec. 22,23 and of the I.T. Act, 1961 are applicable in the case of Partnership Firm, which is not entitled to exercise any kind of option to get benefit of Self-Occupied Property as mentioned in Section 23(2), 23(3) and 23(4) of the I.T. Act, 1961, as available to the actual resident.”
As could be seen from grounds raised, the core issue arising for consideration in the present appeal is, whether the rental income earned by the assessee from letting out a commercial space is assessable under the head “income from house property” as claimed by the assessee or “business income” as held by the assessing officer.
Briefly, the facts are, assessee is a resident partnership firm. For the assessment year under dispute, assessee filed its return of income on 31.07.2012 declaring total income of Rs.12.74,70,070. In course of assessment proceedings, the assessing officer while verifying return of income filed by assessee noticed that assessee has received rental income of Rs.16,37,68,782 from letting out a commercial space in the name and style of “DLF Plaza Tower” and has claimed standard deduction of 30% against such income in terms with section 24(a) of the Income-Tax Act,1961. On verifying record, assessing officer found that similar claim made by the assessee in preceding assessment years i.e. assessment years 2008-09 to 2011-12 was not accepted by the assessing officer and the rental income was assessed as business income. Therefore, he issued a show cause notice to the assessee to explain why the rental income should not be assessed as business income. Though, assessee objected to the proposed action of the assessing officer, however, rejecting assessee’s claim, assessing officer assessed the rental income received by the assessee under the head “business and profession”. Consequently, he disallowed assessee’s claim of deduction under Section 24(a) of the Act. Against the assessment order so passed, assessee preferred an appeal before the learned Commissioner (Appeals). Having found that in the preceding assessment years identical issue has been decided in favour of the assessee by the first appellate authority and the Tribunal, learned Commissioner (Appeals) followed the same and allowed assessee’s claim of rental income to be assessed as income from house property.
We have heard Shri Ram Dhan Meena, learned Departmental Representative and Shri RS Singhvi, learned counsel for the assessee.
Learned counsel for the assessee has submitted before us that while deciding identical issue in assessee’s own case in assessment years 2008-09 to 2011-12, the Tribunal has upheld the decision of the first appellate authority in allowing assessee’s claim that the rental income received from letting out the commercial space has to be assessed as house property income. In support of such contention, he furnished the copies of the orders passed by the Tribunal in assessment years 2008- 09, 2009-10 and 2011-12.
Learned Departmental Representative having perused the orders of the Tribunal fairly agreed that the issue is squarely covered by the earlier decisions of the Tribunal. As could be seen from the facts on record, the issue whether rental income received by assessee is to be assessed as house property income or business income is a recurring issue between the parties from assessment years 2008-09 onwards. In fact, both the Assessing Officer as well as learned Commissioner (Appeals), while coming to their respective conclusions, have relied upon the decision taken by them in assessee’s own case in the preceding assessment years. It is observed, while deciding identical issue in assessee’s own case in assessment years 2008-09 and 2009-10 in the appeals filed by the revenue, the Tribunal in ITA Nos.
1265/Del/2012 and dated 15.10.2014 has held as under:
7. Having gone through the order of the authorities below, material available on record and the decisions relied upon, we
find that the facts in the case of M/s Neha Builders (P) Ltd. Vs. CIT(Supra) are distinguishable from the facts of the present case as in that case, the assessee therein had shown the property as stock- in- trade and except for the ground floor which had been let out by the assesssee, all other portions of the property constructed had been sold and the income was, therefore, assessable as business income in that case since, the property from the beginning was stock- in- trade whereas in the present case before us, the property has always been shown as capital fixed asset and not as stock- in- trade. Certain material facts submitted by the assessee has not been rebutted by the revenue. These facts are that the assessee is owner of the commercial premises i.e. DLF Square and Nestle House let out throughout the year, the assessee has always treated and shown this property as a fixed capital asset and not stock-in-trade units balance sheet, accepted by the department since inception; the tenants are deducting tax at source at the rate as specified in section 194-I of the Act and there is no change in facts and circumstances of the case as in the earlier years too the income from letting out has been returned and assessed under the head "income from house property". Before the Ld. CITA, the assessee has cited several decisions in support, out of which in the, decision of the Hon'ble Delhi High Court in the case of Scindia Potteries (P) Ltd. Vs. CIT(2002) 253 ITR 168 (Del), the assessee had derived rental income by letting out its godowns. It claimed that it should be treated as business income and not its income from house property. The ITO, however, found that the assessee was renting business of manufacturing Pottery till 1972 - 73, where after business was stopped and the godown were let out to another concern. As the godown has seized to be the business assets on account of closure of manufacturing business, it treated the income to be chargeable as income from the house property u/s 23 of the Act. It was noted that asset seized to be commercial assets and therefore, income was to be treated as income from house property. Ld. CIT(A) upheld the views of the Assessing Officer. The Tribunal hold that there was cessation of business and the department was right in its conclusion that income was taxable under the head "income from house property". The Hon'ble High Court approved the decision of the Tribunal.
8. Under almost similar facts in the case of ACIT Vs. Messers Atri Partners (Supra) an identical issue has been decided by the Tribunal in favour of the assessee. We, thus, find that there is no infirmity in the First Appellate Order accepting the claimed income as income from the house property and the claimed deduction u/s 24(1) of the Act. The same is upheld. The issue no. (A) is thus decided in favour of the assessee.”
Identical view was expressed by the Tribunal while deciding revenue’s appeal in assessment year 2011-12 vide order dated 14.06.2017 in ITA No.4380/Del/2014. Facts being identical in the impugned assessment year, respectfully following the consistent view of the Tribunal while deciding identical issue in assessee’s own case in assessment years 2008-09 to 2011-12, as discussed above, we uphold the decision of learned Commissioner (Appeals) on the issue.
Grounds raised by the revenue are dismissed.
In the result, appeal is dismissed.