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Income Tax Appellate Tribunal, ‘A‘ BENCH
आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No.1814/Mum/2020 for A.Y.2012-13 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-34, Mumbai in appeal No.CIT(A)-34/ITO-22(2)(3)/IT-10451/2015-16 dated 07/02/2020 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 23/03/2015 by the ld. Income Tax Officer 22(2)(3), Mumbai (hereinafter referred to as ld. AO).
At the outset we find that the appeal is time barred by 167 days. We find that assessee has filed a delay condonation petition explaining the fact that due to Covid-19 pandemic lockdown was imposed from
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24/03/2020 and by placing reliance on the Government of India of notification No.218979 dated 31/03/2020 in Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020 (No.2 of 2020) dated 31/3/2020 as per Clause 3(1)(b) extending the time limit specified in Income Tax Act which falls during the period from 20th day of March 2020 to 29th June 2020 for the purpose of filing appeal, till 30/06/2020 or such other date as the Central Government by notification specify in this behalf. Subsequently, the Government vide Notification No.35/2020 dated 24/06/2020, has extended the said time limit up to 31/03/2021. In view of the same, we are inclined to condone the delay of 167 days in filing the appeal of the assessee and admit the appeal for adjudication.
The assessee has raised the following grounds:- “1) The Learned C.I.T.(A), (hereinafter called C.I.T. (A)) erred in passing the order dated 07th February, 2020 (hereinafter referred to as the 'impugned order') without appreciating the facts of the case and the relevant legal provisions. 2) The C.I.T. (A) erred on facts in confirming the order of the Learned I.T.O.-22(2) (3) (hereinafter called the A.O.) in treating separately the rental income from let out property of Rs. 34,54,199 under the head "Income from House Property" and rent income from furniture of Rs. 23,02,799 under the head " Income from Other Sources". 3) The C.I.T. (A) erred on facts in confirming the order of the A.O. in assessing the reimbursement of maintenance charges from the tenant of Rs. 4,66,802 under the head " Income from Other Sources". 4) The C.I.T. (A) erred on facts in confirming the order of the A.O. in not appreciating that the Appellant trust has been showing the entire income under the head "Income from House Property" since financial year 2009- 10. This method of accounting has been consistently followed by the Appellant and the same has been accepted by the Department. 5) The C.I.T. (A) erred on facts in confirming the order of the A.O. in not appreciating the material available on record and has not given proper opportunity of being heard. Therefore, impugned order is liable to be set aside on this ground alone.
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6) The Appellant craves leave to add / alter/amend/modify and or cancel any of the above Grounds of appeal.
We have heard rival submissions and perused the materials available on record. We find that assessee has filed the return of income for A.Y.2012-13 on 04/04/2013 declaring total income at Rs. Nil. During the year under consideration, the assessee had earned income from house property and income from other sources. The ld. AO observed that assessee had declared rental income of Rs.57,56,998/-. On perusal of leave and license agreement dated 15/04/2009, it was found that the assessee trust had let out the premises at Meena Apartment, 82, Hill Road, Bandra (W), Mumbai – 400 050 along with furniture, fixtures and decoration, Air conditioning etc., to State Bank of Patiala. As per the said agreement, the rent for premises and rent for furniture and fixtures have been separately bifurcated by the assessee. The aggregate rent declared by the assessee of Rs.57,56,998/- was shown under the head „income from house property‟ and after claiming 30% standard deduction thereon, the assessee offered remaining amount as taxable income under the head „house property‟. The ld. AO observed that the rent for premises totaling to Rs.34,54,199/- would be allowed to be taxed under the head „income from house property‟ and 30% standard deduction would be allowed thereon. However, in respect of rent received for furniture and fixtures etc., totaling to Rs.23,02,799/- the ld. AO observed that standard deduction @30% would not be eligible as the same would get taxed under the head „income from other sources‟.
4.1. It was pointed out by the assessee before the ld. CIT(A), that the total rent has been bifurcated into rent for premises and hire charges for furniture and fixtures only for the purpose of enabling property tax
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charged by MCGM at a lower amount. There was absolutely no intention to defraud the income tax department in this regard. The furniture provided is attached with the property and cannot be removed without damaging the wall or the floor. It was also pointed out that without the furniture, the rent cannot be of this much amount as agreed upon between the parties. The ld. CIT(A) however, disregarded the entire contentions of the assessee and upheld the action of the ld. AO. Aggrieved, the assessee is in appeal before us.
4.2. The ld. AR before us stated that similar treatment was done by the assessee in the past and also in the future and the same has been accepted by the Revenue in scrutiny assessment for the A.Yrs. 2010-11, 2016-17 and 2018-19 vide orders u/s.143(3) of the Act dated 19/03/2014 (page 135 of the paper book), u/s.143(3) of the Act dated 26/12/2018 (page 136 of the paper book) and u/s.143(3) of the Act dated 25/03/2021 (page 138 of the paper book) respectively. She also pointed out that the ld. CIT(A) had made a factually incorrect observation that separate payments were made by the tenant (i.e. State Bank of Patiala) for rent of premises and hire charges for furniture and fixtures. She clarified that the total rental of Rs.4,62,409.50 had been paid by the State Bank of Patiala as rent by single payment after due deduction of tax at source in terms of Section 194I of the Act. Hence even the lessee bank treated the said payment as rent only. She also drew our attention to the definition of rent given in Section 194I of the Act to state that rent means by “whatever name called”. Hence, in view of the treatment by the lessee bank by treating the total rent as composite payment and in view of the principle of consistency in respect of this stand taken by the assessee being accepted by the Revenue in earlier years in subsequent years, she prayed for deletion of the additions made by the ld. AO and confirmed by the ld.
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CIT(A). Per contra, the ld. DR vehemently relied on the orders of the ld. CIT(A) and also argued that the assessee has in the leave and license agreement, specifically bifurcated the letting out of space as rent and letting out of furniture and fixtures as hire charges and both are totally different in nature. He also stated that in the assessments framed in earlier and subsequent years, the treatment of the assessee being accepted by the ld. AO would not prejudice the year under consideration in as much as those assessment years were framed under „limited scrutiny‟ and that the ld. AO could not have travelled beyond the scope of issues pointed out in limited scrutiny. To buttress this argument, the ld. AR made a statement from the Bar that even though there were assessments framed on limited scrutiny basis, still the department was at liberty to either reopen the case u/s.147 of the Act or revise the assessment by invoking revision jurisdiction u/s.263 of the Act, which was not done by the Revenue in the instant case in the hands of the assessee. Hence, the principle of consistency will certainly have to be adhered by the Revenue.
We have heard in detail both the sides and the aforesaid primary facts are not in dispute and hence, the same are not reiterated herein for the sake of brevity. It is a fact that assessee had received composite rent of Rs.4,62,409.50 from its tenant State Bank of Patiala for letting out of premises and letting out of furniture and fixtures etc., We find that the lessee bank had also treated the entire payment of rental and hire charges as the composite payment and had charged tax at source in terms of Section 194I of the Act. This aspect, in our considered opinion, is not a relevant consideration for the purpose of determination of taxability of rental under the head of income in the hands of the assessee. Hence, the arguments advanced by the ld. AR in this regard is hereby dismissed.
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5.1. However, going by the fact that for A.Y.2010-11, the ld. AO in the order giving effect to ld. CIT(A) order had accepted the stand of the assessee vide his order dated 19/03/2014. Similarly, he has accepted the stand of the assessee in the scrutiny assessments framed for A.Y.2016-17 and 2018-19 vide order u/s.143(3) of the Act dated 26/12/2018 and 28/03/2021 respectively. Hence, the rule of consistency would certainly have a role to play here and we find that assessee had been having the same stand by treating the entire rentals as income from house property and claiming 30% standard deduction thereon. There is absolutely no case of divergent of facts in the case of the assessee. Hence, applying the principle laid down by the Hon‟ble Supreme Court in the case of Radhasaomi Satsang reported in 193 ITR 321, when there are no divergent facts, the Revenue cannot take a divergent stand for one particular year ignoring the rule of consistency. In view of the aforesaid observations, the ground No.2 is allowed.
The ground No.3 raised by the assessee is only with regard to taxability of reimbursement of maintainence charges received from the tenant under the head „income from other sources‟.
6.1. We have heard rival submissions and perused the materials available on record. We find that assessee had made payment of Rs.4,45,266/- on 10/01/2012 towards the member‟s share of contribution for repairing of the entire society building. This payment was admittedly made by account payee cheque through regular banking channels by the assessee to the housing society. The assessee also paid a sum of Rs.21,536/- as its share of society maintenance on 24/01/2012 by account payee cheque. The total of these two payments worked out to
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Rs.4,46,802/-. Out of this, since the repairs cost paid to the society by the assessee need to be borne by the tenant i.e. State Bank of Patiala, the assessee got a sum of Rs.4,45,266/- reimbursed from State Bank of Patiala on 03/02/2012. In effect, the assessee claimed deduction on account of maintenance charges only to the extent of Rs.21,536/- as the same represents its share to be borne. Since, the assessee had merely got the reimbursement of maintenance charges paid by it to the society of Rs 4,45,266/- from its tenant State Bank of Patiala, there is no income element in it. Hence, the reimbursement received by the assessee cannot be sought to be taxed by the ld. AO under the head „income from other sources‟. Accordingly, the ground No.3 raised by the assessee is allowed.
Since, the relief is granted on merits to the assessee, we deem it fit not to adjudicate the additional grounds of appeal filed by the assessee vide letter dated 18/11/2021. Thus, the additional grounds are neither admitted nor taken up for adjudication and hence, they are left open.
The ground Nos.1,4,5 & 6 raised by the assessee are general in nature and does not require any adjudication.
In the result, appeal of the assessee is allowed. Order pronounced on 30/11 /2021 by way of proper mentioning in the notice board.
Sd/- Sd/- (AMARJIT SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 30/ 11 /2021 KARUNA, sr.ps
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Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. 6. //True Copy//
BY ORDER,
(Asstt. Registrar) ITAT, Mumbai