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Income Tax Appellate Tribunal, MUMBAI BENCH “ H”, MUMBAI
Before: SHRI PRAMOD KUMAR, VICE- & SHRI VIKAS AWASTHY
These appeals by the assessee are directed against the order of Commissioner of Income Tax(Appeals)-52, Mumbai [in short 'the CIT(A)’] for the assessment years 2012-13 and 2013-14, respectively. Both the impugned orders are of even date i.e. 08/10/2021. The Revenue has filed cross appeal in for the assessment year 2013-14.
Since, these appeals are arising from same set of facts, these appeals are taken up together for adjudication and are decided by this composite order.
The assessee in appeal has assailed the order of CIT(A) by raising following grounds:
“ Ground No.1 On facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not considering lease rentals income earned by the appellant as taxable under the head Income from Business & Profession. The appellant prays that the lease rentals be assessed to tax under the head Income from Business & Profession.
Ground No. 2: On facts and circumstances of the case and in law, if in case your Honours decides ground no. 1 in favour of the appellant then, the appellant humbly prays before your Honours that depreciation on assets pertaining to IT Park should be computed from the year in which appellant had offered income under the head Income from Business & Profession.”
(A.Y. 2012-13) ITA NO.2285/MUM/2021(A.Y. 2013-14) ITA NO.2517/MUM/2021(A.Y. 2013-14)
Shri Madhur Agrawal appearing on behalf of the assessee narrating 4. facts of the case submitted that the assessee is engaged in the business of real estate development, hospitality, etc. A search action under section 132 of the Income Tax Act, 1961 [in short ‘the Act’] was carried out at the premises of K. Reheja Group on 30/11/2017. Consequent to search action assessment under section 143(3) r.w.s. 153A of the Act was completed vide order dated 28/12/2019.
The ld.Counsel for the assessee submitted that in the original return of income the assessee had offered income from renting of premises along with other amenities under the head “Income from House Property”. In assessment proceedings consequent to search action, the assessee placing reliance on CBDT Circular No.16/2017 dated 25/04/2017 offered to tax rental income under the head “Business Income”. The Assessing Officer disallowed assessee’s claim. The assessee carried the issue in appeal before the CIT(A). The CIT(A) upheld the findings of Assessing Officer and dismissed the appeal of assessee. Hence, the present appeal. The ld.Counsel for the assessee submitted that the assessee wants to offer income from renting of premises and amenities under the head “Income from Business Profession”, instead of “Income from House Propeprty” in line with CBDT Circular No.16/2017 (supra).
Per contra, Shri Salil Mishra representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld.Departmental Representative submitted that once the assessee had offered income under the head “ Income from House Property” in the return of income and the assessment on the said return has been (A.Y. 2012-13) ITA NO.2285/MUM/2021(A.Y. 2013-14) ITA NO.2517/MUM/2021(A.Y. 2013-14)
completed, the assessee cannot thereafter change the stand to offer income under different head.
We have heard the submissions made by rival sides and have examined the orders of authorities below. The short issue before us for adjudication is; Whether the assessee can change head of income in the assessment proceedings consequent to search action, where there is no pending assessment?
The undisputed facts are: The assessee earned rental income from the IT Park. The said premises was let out along with amenities. The assessee offered rental income from the said premises under the head “ Income from House Property” in the return of income filed under section 139(5) of the Act and thereafter return of income filed in response to notice under section 148 of the Act. Consequent to search action, notice under section 153A of the Act was issued to the assessee. In response to said notice the assessee filed return of income declaring rental income from IT Park under the head “ Income from Business and Profession”. It is pertinent to mention here that on the date of search the assessment under section 147 of the Act had concluded and there were no pending assessment at the time search. Once the assessee has offered rental income under the head “ Income from House Property” and the assessment was concluded, the assessee cannot change head of income after conclusion of assessment. In the instant case there was no pending assessment for the impugned assessment year at the time of search, the assessee cannot be allowed to change head of income or make fresh claim in assessment proceedings under section 153A of the Act. We find no merit in ground No.1 of the appeal, hence, dismissed.
(A.Y. 2012-13) ITA NO.2285/MUM/2021(A.Y. 2013-14) ITA NO.2517/MUM/2021(A.Y. 2013-14)
The ground No.2 raised in the appeal is consequential to ground No.1 of appeal. Since, we have dismissed ground No.1 of appeal, ground No.2 of the appeal is also dismissed.
In the result, appeal by the assessee is dismissed. & 2517/Mum/2021- A.Y.2013-14:
The assessee in appeal has raised identical ground as was raised in assessment year 2012-13. Both sides are unanimous in stating that the facts germane to the grounds are identical to the facts in assessment year 2012-13, therefore, the submissions made in assessment year 2012-13 would equally apply to the current assessment year.
We find that in the return of income filed under section 139(1) of the Act the assessee had offered income from lease rental under the head “income from house property”. The scrutiny assessment under section 143(3) of the Act was completed on 26/12/2016 accepting lease rental income offered under the head “ income from house property”. Subsequently, notice under section 148 of the Act was issued. In response to the said notice, the assessee filed return of income. On the date of search assessment under section 148 was pending, hence, the said assessment proceedings were abated. In response to the notice under section 153A the assessee changed the head of income in respect of lease rental income and offered the same to tax under the head “ income from business and profession”. The rule of consistency demands that once the assessee has offered rental income under the head “ income from house property”, the assessee cannot be allowed to change the (A.Y. 2012-13) ITA NO.2285/MUM/2021(A.Y. 2013-14) ITA NO.2517/MUM/2021(A.Y. 2013-14)
head of income to suit its own convenience and offer the same income under different head i.e. “Income from Business or Profession”. The assessee in the impugned assessment year in the original return of income had offered lease rental income to tax under the head “Income from House Property”. The same was accepted by the Assessing Officer. In assessment proceedings arising out of search action, the assessee cannot change its stand. We find no infirmity in the impugned order hence, the findings of CIT(A) on this issue are upheld and the appeal of the assessee is dismissed being devoid of any merit.
The Revenue in cross appeal has assailed the order of CIT(A) on solitary ground. The same reads as under:
"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.1,98,02,126/- made by the Assessing Officer on account of notional income as income from house property in respect of unsold units, held by the assessee as its stock in trade without appreciating the decision of the Hon'ble Delhi High Court in the case of CIT vs Ansal Housing Finance & Leasing Company Ltd. 354 ITR 180." 13. The ld.Counsel for the assessee submits that identical issue had come up before the Tribunal in assessee's own case in assessment year 2015-16. The Tribunal deleted the addition. The facts in the impugned assessment year are identical.
The ld.Departmental Representative vehemently defended the addition made by Assessing Officer in respect of notional rental income in respect of unsold units.
Both sides heard. The Assessing Officer made addition on account of deemed rental income from unsold units reflected as closing stock and made addition of Rs. 1,98,02,126/-. In the first appellate proceedings the CIT(A)
(A.Y. 2012-13) ITA NO.2285/MUM/2021(A.Y. 2013-14) ITA NO.2517/MUM/2021(A.Y. 2013-14) deleted the addition by placing reliance on various decisions of the Tribunal. We find that identical issue had come up before the Tribunal in assessee's own case in for assessment year 2015-16. The Co-ordinate Bench, following the decision rendered in the case of M/s. Osho Developers vs. ACIT in ITA No.2372 & 1860/Mum/2019 dated 03/11/2020 deleted the addition. No contrary decision has been brought to the notice of Bench by the Revenue. The only decision on the basis on which notional rental income has been added by the Assessing Officer is the decision of Hon’ble Delhi High Court in the case of CIT vs. Ansal Housing Finance & Leasing Company Ltd. 354 ITR 180. In the case of M/s. Osho Developers vs. ACIT(supra), the Tribunal has taken note of the said decision and thereafter, following the contrary view in the case of Neha Builders, 296 ITR 661(Guj) decided the issue in favour of the assessee. Respectfully following the decision of Co-ordinate Bench in assessee’s own case, the solitary ground raised by the Revenue in appeal is dismissed.
To sum up, appeals by the assessee for assessment years 2012-13 and 2013-14 and cross appeal of the Revenue for assessment year 2013- are dismissed.