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Income Tax Appellate Tribunal, “C” Bench, Mumbai
Before: Shri Shamim Yahya (AM) & Shri Amarjit Singh (JM)
Per Shamim Yahya (AM) :- These are appeals by the Revenue against respective orders of learned CIT(A) for A.Y. 2014-15 & 2015-16. Since the issues are common, these are being disposed of by this common order.
Common grounds of appeal :- 1. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred while treating the business receipts (rental income) as income from House Property ignoring the vital facts that the assessee is a developer and has been filing audit report u/s 44AB of the I.T.Act which applies only for a person carrying on business or profession"? 2. "Whether on the facts and in. circumstances of the case, the Ld.CIT(A) was right in directing the assessing officer to assess the rental income as well as service charges under the head "Income from House Property" instead of "Business Income"?
The assessee company is engaged in the business of Property Development. During the year under consideration, the assessee has received rental income and service charges, and treated the entire receipts as 'Income
2 M/s. Pristine Developers Pvt. Ltd. from House Property' and accordingly, claimed property tax, standard deduction u/s. 24(a) and interest expenses.
At the outset, learned Counsel of the assessee submitted that the issue is covered in favour of the assessee by a series of ITAT order in assessee’s own case. Per contra, learned Departmental Representative did not dispute the above proposition.
5. For the sake reference we are referring the facts and figures of A.Y. 2014-15. We note that the Assessing Officer has made the addition by concluding as under :- “In view of the above discussion, the claim of the assessee of treating service charges and rental receipts as House Property Income is hereby rejected. Following the precedent of stand of the revenue correctly taken in earlier assessment years i.e. A.Y. 2009-10, 2011-12 & 2012-13, I treat the business activity of the assessee as commercial activity and accordingly, the entire receipts are treated as business receipts taxable under the head of "Income from Business'. As regards further submission made by the assessee on 31.10.2014 that the Hon’ble ITAT vide Order in dated 27.08.2014 for A.Y. 2009-10 has dismissed the appeal filed by the revenue on this issue, it needs to mentioned that the issue is not yet reached finality as the Department has prayed before the Hon'ble Bombay High Court by filing appeal on 16.02.2015.”
Learned CIT(A) has deleted the same by holding as under :- “I have considered the submission made by the appellant and the reasons recorded by the AO. It is seen that the issue under consideration is a recurring one and it is covered in favour of the appellant by the decision of Hon’ble Tribunal in the case of the appellant for A.Y. 2009-10 and 2010-11. It is also covered in favour of the appellant by the decision of my Id. Predecessor in the case of the appellant for A.Y. 2011-12 and 2012-13. Since there is no change in the facts of the case during the previous year under consideration, respectfully following these decisions, it is held that the appellant was justified in returning its entire income from renting out of units in the corporate park under the head "Income from House Property". The AO is directed to assess the income accordingly.”
3 M/s. Pristine Developers Pvt. Ltd.
We find that ITAT in assessee’s own case has decided the issue in assessee’s favour. The Tribunal in order dated 20.11.2019 for A.Y. 2013-14 has held as under :-
“5. We have heard the submissions, perused the orders of the authorities below and the decision of the Coordinate Bench in assessee’s own case. We find that identical issue has been decided by the Tribunal in dated 27.08.2014, ITA.No. 4417/Mum/2014 dated 25.02.2016 for the A.Y. 2009-10, A.Y. 2010-11 and in ITA.Nos. 2102 & 2111/Mum/2017 dated 31.08.2018 for the A.Ys. 2011-12 & 2012-13 in favour of the assessee, wherein it has been held that rental income as well as service charges received by the assessee are assessable under the head “income from house property”. The Tribunal in its order dated 31.08.2018 held as under: -
“3. We begin with the AY 2011-12. Briefly stated, facts of the case are that, the assessee-company is engaged in the business of property development. Some of the units in its corporate park were leased out during the relevant previous year and rental income and service charges were received in lieu thereof. The assessee had treated the entire receipt as “Income from house property” and claimed statutory deduction u/s. 24 of the Act. While the rental receipt was Rs.2.44 crore, the amount of service charges received was Rs.16.38 crore. The Assessing Officer (AO) proceeded to treat the entire receipt as business receipt taxable under the head “Income from business or profession”. The AO has clarified the issue at paragraph 6 on page -3 of the assessment order dated 17/12/2013 that this is a recurring issue wherein similar additions were made in AYs 2009- 10 and 2010-11. At paragraph 6.2.1 on page-10 and 11, the AO has stated that he had followed the stand taken by the revenue in the two preceding AYs and accordingly subjected to tax the entire receipts of the assessee on account of renting out of the corporate park units under the head “Income from business or profession”.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). It is observed by the ld. CIT(A) that the same issue has been decided by the ITAT in assessee’s own case for AY 2010-11, by following the earlier order of the Co-ordinate Bench of the Tribunal for AY 2009-10. Following the ratio laid down by the Tribunal in assessee’s own case for AYs 2009-10 and 2010- 11, the ld. CIT(A) held that the assessee was justified in returning the entire income from renting out of the units in the corporate park under the head “Income from house property”.
Before us, the ld. DR submits that the AO has rightly treated the business activity of the assessee as commercial activity and accordingly brought to tax the entire receipts taxable under the head “Income from business”.
4 M/s. Pristine Developers Pvt. Ltd.
6. On the other hand the ld. counsel of the assessee relies on the order of the Tribunal in assessee’s own case for AYs 2009-10 and 2010-11 and therefore supports the order of the ld. CIT(A).
We have heard the rival submissions and perused the relevant materials on record. We find that the same issue arose before the ITAT “C” Bench, Mumbai in assessee’s own case for AY 2009-10 (ITA No.3379/M/2013 dtd. 27/08/2014) and AY 2010-11 (ITA No.4417/M/2014 dtd. 25/02/2016). It would be relevant to mention here that the Tribunal agreed with the order of the ld. CIT(A) directing the AO to assess the rental income as well as service charges receipts under the head “Income from house property”. Facts being identical, we follow the above order of the Co-ordinate Bench and confirm the order of the ld. CIT(A).
6. Facts being identical, respectfully following the said decision we uphold the order of the Ld.CIT(A) on this issue and reject the grounds raised by the Revenue.”
7. Since facts are identical, respectfully following the precedent as above, we uphold the order of learned CIT(A).
In the result, both the appeals of Revenue are dismissed.
Order has been pronounced in the Court on 2.3.2020.