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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
O R D E R भहावीय ससिंह, उऩाध्मऺ के द्वाया / PER MAHAVIR SINGH, VP: These appeals of assessee are arising out of the orders of the Commissioner of Income Tax (Appeals)]-44, Mumbai, [in short CIT(A)], in
The only issue in these three appeals of Revenue is as regards to the order of CIT(A) reversing the order of the Assessing Officer by treating the income as income from house property instead of business income assessed by the Assessing Officer. In all three years, the grounds are exactly identically worded except the quantum and the grounds has raised in Assessment Year 2013-14 reads as under:-
“On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in allowing the claim of assessee to treat rental income of Rs.26,18,30,324/- as income from House Property instead of Business income as assessed by the Assessing Officer, without appreciating the fact that rental income was received from the business asset of unsold flats shown as stock in trade. The Ld. CIT(A) also failed to appreciate the fact that the assessee has included rental income in arriving at its gross sales appearing in its building and construction account and thereby arriving at the gross profit which in turn taken to the Profit & Loss account to arrive at Net Profit.
At the outset, the learned Counsel for the assessee stated that the issue whether the rental is to be assessed from income from house property or it is to be assessed as income from other sources has already been considered by the co-ordinate Benches of this ITAT in assessee’s own case for Assessment Year 2010-11 to 2012-13 in identical facts in order dated 24.08.2016 for Assessment Years 2012-13 and 2011-12 in ITA No. 1466/Mum/2017 and ITA No. 3565/Mum/2016 vide order dated 01.03.2019. The learned Counsel for the assessee stated that the assessee is engaged in the business of construction and development and earned income from units leased out to certain parties and such leasing is done for allowing tenures, since the object of the assessee is to earn rental income. Therefore, the Assessing Officer has erred in considering income from house property as business income. The learned Counsel for the assessee stated that in the above “4. The contention of the assessee is that the assessee is in the business of construction and development of the property. Its main object is construction and the assessee leased out the unsold property on rent, therefore the rental income from the said property is liable to be trated as house rent income. In support of his claim, the learned representative of the assessee has placed reliance upon the law settled by Hon’ble Bombay High court in the case of Commissioner of Income Tax 12 Vs. M/s Sane & Doshi Enterprises on 9th April, 2015. On the other hand the learned representative of the department has placed reliance upon the order passed by the CIT(A) in question. It is not in disputed that the assessee has developed a shopping-cum-office complex in the name and style of M/s Hallmark Business Plaza in Bandra (East), Mumbai. He has let out the office place for rent to different entities and derived income from it. Besides this the assessee was also
The assessee also relied on the decision of Hon’ble High Court in the case of CIT vs. Gundecha builders (2019) 102 taxmann.com 27 (Bom), wherein it is held that rental income received from unsold property constructed by real estate developers is assessable to tax as income from house property. The relevant finding is as under:-
“3. Regarding Question no.(i):-
The respondent-assessee is engaged in the business of developing real estate projects. During the previous year relevant to the subject assessment year this respondent Being aggrieved with the order dated 30 December 2010, the respondent filed an appeal to the Commissioner of Income Tax (Appeals) (CIT(A)). By an order dated 25th March, 2011 the CIT(A) allowed the appeal holding that the rental income received by the respondent has to be classified as income from house property. Thus, 30% deduction on account of repairs and maintenance be allowed. Being aggrieved with the order dated 25th March, 2011, the appellant- revenue filed an appeal to the Tribunal. By the impugned order dated 19th February, 2014 the Tribunal holds that the dispute stands squarely covered by the decision of the Supreme Court in Sambhu Investment (P.) Ltd. V. CIT (2003) 263 ITR 143/129 Taxmann 70.
However, Mr. Pinto in support of the appeal points out that after the above decision the issue now stands concluded in favour of the Revenue b ythe decision of the Supreme Court in Chennai Properties & Investment Ltd. V. CIT In the present facts it is undisputed that the respondent assessee is in the business of development of real estate projects and letting of property is not the business of the respondent-assessee. In both the decisions relied upon by Mr. Pinto i.e. Chennai Properties & Investment Ltd. (supra) and Rayala Corpn (P.) Ltd. (supra), the Supreme Court on facts found that the appellate was in the business of letting out its property on lease and earning rent there from. Clearly it is not so in this case. Further, Ms. Khan the learned counsel appearing for the respondent-assessee invites our attention to the decision of this court in CIT v. Sane & Doshi Enterprises (2015) 377 ITR 165/ 232 Taxman 452/58 Taxmann.com 111 shdfdin on identical facts this court has taken a view that rental income received from unsold portion of the property constructed by real estate developers is assessable to tax as income from house property.
In view of the above, the question as proposed does not given rise to any substantial question of law. Thus, not entertained. ”