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Facts
The assessee, a cooperative housing society, filed its return of income declaring rental income. The Assessing Officer treated rental receipts from cellular companies as "Income from House Property" and a receipt of Rs. 5,77,284/- from CNIL as "Income from Other Sources". The CIT(A) upheld the addition from cellular companies but directed the CNIL receipt to be treated as "Income from House Property".
Held
The Tribunal held that the income received from CNIL should be assessed under the head "Income from House Property" as directed by the CIT(A), provided it was already offered by the assessee under that head. The Tribunal directed the Assessing Officer to verify and ensure no double addition was made.
Key Issues
Whether the receipt of Rs. 5,77,284/- from CNIL is to be assessed as "Income from House Property" or "Income from Other Sources", and whether treating it as "Income from House Property" would lead to double taxation.
Sections Cited
143(2), 24(a), 143(3)
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 28.08.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 1, Visakhapatnam [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds:
1. On the facts and in the circumstances of the case, the learned 1. On the facts and in the circumstances of the case, the learned 1. On the facts and in the circumstances of the case, the learned Addl. JCIT(A), Visakhapatnam, erred in directing the Assessing Addl. JCIT(A), Visakhapatnam, erred in directing the Assessing Addl. JCIT(A), Visakhapatnam, erred in directing the Assessing Officer Officer that that the t he income income received received from from Chennai Chennai Network Network Infrastructure Ltd (CNIL) amounting to Rs. 5,77,284/ Infrastructure Ltd (CNIL) amounting to Rs. 5,77,284/ Infrastructure Ltd (CNIL) amounting to Rs. 5,77,284/- to be assessed under the head "Income from House Property" instead of assessed under the head "Income from House Property" instead of assessed under the head "Income from House Property" instead of "Income from other sources" particularly when the said income was "Income from other sources" particularly when the said income was "Income from other sources" particularly when the said income was already included in the "I already included in the "Income from House Property" without ncome from House Property" without appreciating that it would amount of double addition. Therefore the appreciating that it would amount of double addition. Therefore the appreciating that it would amount of double addition. Therefore the said income should be deleted while computing the total income. said income should be deleted while computing the total income. said income should be deleted while computing the total income.
2. On the facts and in the circumstances of the case, the said On the facts and in the circumstances of the case, the said On the facts and in the circumstances of the case, the said learned Commissioner of In learned Commissioner of Income tax erred not considering the come tax erred not considering the addition of Rs. 4,55,786/ addition of Rs. 4,55,786/- under the head "Income from House under the head "Income from House Property" particularly the said ground was wrongly withdrawn by Property" particularly the said ground was wrongly withdrawn by Property" particularly the said ground was wrongly withdrawn by Authorized Representative without appreciating that the said rent Authorized Representative without appreciating that the said rent Authorized Representative without appreciating that the said rent was reversed in early year on was reversed in early year on February 24,2012 and thus it did not February 24,2012 and thus it did not belong to this assessment year. belong to this assessment year.
Briefly stated, the facts of the case are that the assessee filed Briefly stated, the facts of the case are that the assessee filed Briefly stated, the facts of the case are that the assessee filed its return of income for the year under consideration on its return of income for the year under consideration on its return of income for the year under consideration on 01.10.2018, declaring a total income of ₹23,59,890/ 01.10.2018, declaring a total income of 23,59,890/–, which primarily comprised rental income. The return was selected for primarily comprised rental income. The return was selected for primarily comprised rental income. The return was selected for scrutiny and a notice under section 143(2) of the Income-tax Act, scrutiny and a notice under section 143(2) of the Income scrutiny and a notice under section 143(2) of the Income 1961 (hereinafter referred to as “the Act”) was issued on 02.09.2018 1961 (hereinafter referred to as “the Act”) was issued on 02.09.2018 1961 (hereinafter referred to as “the Act”) was issued on 02.09.2018 and duly served upon the assessee. and duly served upon the assessee.
2.1 During the course o During the course of scrutiny proceedings, the Assessing f scrutiny proceedings, the Assessing Officer observed that the assessee had received rental income by Officer observed that the assessee had received rental income by Officer observed that the assessee had received rental income by leasing its premises to various cellular companies for installation of leasing its premises to various cellular companies for installation of leasing its premises to various cellular companies for installation of telecommunication infrastructure. Owing to alleged absence of telecommunication infrastructure. Owing to alleged absence of telecommunication infrastructure. Owing to alleged absence of proper documentary e proper documentary evidence, the Assessing Officer treated such vidence, the Assessing Officer treated such receipts as income chargeable under the head “Income from house receipts as income chargeable under the head “Income from house receipts as income chargeable under the head “Income from house property” and determined the gross annual value at ₹6,51,129/–. property” and determined the gross annual value at property” and determined the gross annual value at After allowing the statutory deduction under section 24(a) at 30%, After allowing the statutory deduction under section 24(a) at 30%, After allowing the statutory deduction under section 24(a) at 30%,
Sharda Chambers Premises Sharda Chambers Premises Assessing Officer brought to tax a sum of icer brought to tax a sum of ₹4,55,786/ 4,55,786/– under the head “Income from house property”. the head “Income from house property”.
2.2 The Assessing Officer further noticed that the assessee had The Assessing Officer further noticed that the assessee had The Assessing Officer further noticed that the assessee had received an amount of ₹5,77,284/– from Chennai Network received an amount of from Chennai Network Infrastructure Limited (CNIL). According to the assessee, CNIL had Infrastructure Limited (CNIL). According to the assessee, CNIL had Infrastructure Limited (CNIL). According to the assessee, CNIL had acquired the infrastructure business of Aircel Limited, to whom the acquired the infrastructure business of Aircel Limited, to whom the acquired the infrastructure business of Aircel Limited, to whom the assessee had originally granted a licence for use of its premises for assessee had originally granted a licence for use of its premises for assessee had originally granted a licence for use of its premises for installation of telecommunication equipment. The Assessing Officer, ecommunication equipment. The Assessing Officer, ecommunication equipment. The Assessing Officer, however, held that the licence agreement did not contain any clause however, held that the licence agreement did not contain any clause however, held that the licence agreement did not contain any clause permitting creation of a sub permitting creation of a sub-tenancy and, in the absence of a direct tenancy and, in the absence of a direct agreement with CNIL, treated the said receipt as income chargeable agreement with CNIL, treated the said receipt as income chargeable agreement with CNIL, treated the said receipt as income chargeable under the head “Income from other sources”. The assessment was er the head “Income from other sources”. The assessment was er the head “Income from other sources”. The assessment was accordingly completed under section 143(3) of the Act. accordingly completed under section 143(3) of the Act. accordingly completed under section 143(3) of the Act.
In appeal, the learned Commissioner of Income In appeal, the learned Commissioner of Income In appeal, the learned Commissioner of Income-tax (Appeals) upheld the action of the Assessing Officer in taxing the rental upheld the action of the Assessing Officer in taxing the rental upheld the action of the Assessing Officer in taxing the rental receipts from cellular companies under the head “Income from cellular companies under the head “Income from cellular companies under the head “Income from house property”. However, in respect of the amount received from house property”. However, in respect of the amount received from house property”. However, in respect of the amount received from CNIL, the learned CIT(A) accepted the assessee’s contention and CNIL, the learned CIT(A) accepted the assessee’s contention and CNIL, the learned CIT(A) accepted the assessee’s contention and directed the Assessing Officer to treat the said receipt as income directed the Assessing Officer to treat the said receipt as income directed the Assessing Officer to treat the said receipt as income from house property. roperty.
Before us, the assessee, in Ground No. 1, contended that in Before us, the assessee, in Ground No. 1, contended that in Before us, the assessee, in Ground No. 1, contended that in view of the clear direction of the learned CIT(A) to treat the licence view of the clear direction of the learned CIT(A) to treat the licence view of the clear direction of the learned CIT(A) to treat the licence fee received from CNIL as income from house property, the fee received from CNIL as income from house property, the fee received from CNIL as income from house property, the Sharda Chambers Premises Sharda Chambers Premises Assessing Officer has, in effect, subjected the same income to tax Assessing Officer has, in effect, subjected the same in Assessing Officer has, in effect, subjected the same in twice. It was submitted that the said income had already been twice. It was submitted that the said income had already been twice. It was submitted that the said income had already been offered under the head “Income from house property” and, offered under the head “Income from house property” and, offered under the head “Income from house property” and, therefore, any further addition would result in impermissible double therefore, any further addition would result in impermissible double therefore, any further addition would result in impermissible double taxation. Ground No. 2, relating to the addition of taxation. Ground No. 2, relating to the addition of ₹4,5 4,55,786/–, was not pressed by the assessee. not pressed by the assessee.
We have heard the rival submissions and carefully perused the We have heard the rival submissions and carefully perused the We have heard the rival submissions and carefully perused the material on record. The factual position relating to the receipt from material on record. The factual position relating to the receipt from material on record. The factual position relating to the receipt from CNIL has been elaborately discussed by the learned CIT(A) in CNIL has been elaborately discussed by the learned CIT(A) in CNIL has been elaborately discussed by the learned CIT(A) in paragraphs 6.2.1 and 6.2.2 of his order, for ready reference, same nd 6.2.2 of his order, for ready reference, same nd 6.2.2 of his order, for ready reference, same are reproduced as under: are reproduced as under:
“6.2.1 During the scrutiny proceedings, the AO observed that the 6.2.1 During the scrutiny proceedings, the AO observed that the 6.2.1 During the scrutiny proceedings, the AO observed that the assessee has received License fee from Chennai Network assessee has received License fee from Chennai Network assessee has received License fee from Chennai Network Infrastructure Limited (CNIL) amounting to Rs. 5,77,284/ Infrastructure Limited (CNIL) amounting to Rs. 5,77,284/ Infrastructure Limited (CNIL) amounting to Rs. 5,77,284/-. Further during the course of assessment proceedings it is observed that as during the course of assessment proceedings it is observed that as during the course of assessment proceedings it is observed that as per clause 14 of the license agreement entered with AIRCEL per clause 14 of the license agreement entered with AIRCEL per clause 14 of the license agreement entered with AIRCEL LIMITED further putative by CNIL, the Licensee has merely the right LIMITED further putative by CNIL, the Licensee has merely the right LIMITED further putative by CNIL, the Licensee has merely the right to use the Scheduled Property and install CMTE and other to use the Scheduled Property and install CMTE and other to use the Scheduled Property and install CMTE and other equipment's thereon. The AO opined that this agreement (the equipment's thereon. The AO opined that this agreement (the equipment's thereon. The AO opined that this agreement (the Licence to use the Scheduled Property) is not intended to and does Licence to use the Scheduled Property) is not intended to and does Licence to use the Scheduled Property) is not intended to and does not create any other right, title and interest in favour of the Licensee not create any other right, title and interest in favour of the Licensee not create any other right, title and interest in favour of the Licensee either that of a tenant, sub either that of a tenant, sub- tenant, joint or co-tenan tenant or lessee or sub-lessee or otherwise. As the assessee is receiving income from lessee or otherwise. As the assessee is receiving income from lessee or otherwise. As the assessee is receiving income from CNIL and no agreement with CNIL is submitted, AO held that the CNIL and no agreement with CNIL is submitted, AO held that the CNIL and no agreement with CNIL is submitted, AO held that the only head under which this income can be offered is Income from only head under which this income can be offered is Income from only head under which this income can be offered is Income from Other Sources. Other Sources. 6.2.2 The appellant raised a grou 6.2.2 The appellant raised a ground that the Ld. AO erred in nd that the Ld. AO erred in treating house property income of Rs. 5,77,284/ treating house property income of Rs. 5,77,284/- as income from as income from other sources. During the appellate proceedings, the appellant other sources. During the appellate proceedings, the appellant other sources. During the appellate proceedings, the appellant submitted that in the original agreements entered with AIRCEL Ltd, submitted that in the original agreements entered with AIRCEL Ltd, submitted that in the original agreements entered with AIRCEL Ltd, " as per company petition No. C.p " as per company petition No. C.p No 130,110 to 112 of 2010 No 130,110 to 112 of 2010 AIRCEL LTD sold its infrastructure business to Chennai network AIRCEL LTD sold its infrastructure business to Chennai network AIRCEL LTD sold its infrastructure business to Chennai network infrastructure limited". Hence, CNIL has got tenancy right and it is infrastructure limited". Hence, CNIL has got tenancy right and it is infrastructure limited". Hence, CNIL has got tenancy right and it is CNIL which has paid rent after deduction of TDS." By virtue of the CNIL which has paid rent after deduction of TDS." By virtue of the CNIL which has paid rent after deduction of TDS." By virtue of the Sharda Chambers Premises Sharda Chambers Premises aforesaid scheme the entire inf aforesaid scheme the entire infrastructure installed in the premises rastructure installed in the premises licensed to the Aircel Limited is owned by CNIL. The appellant licensed to the Aircel Limited is owned by CNIL. The appellant licensed to the Aircel Limited is owned by CNIL. The appellant further submitted that as per law, the tenancy rights can always be further submitted that as per law, the tenancy rights can always be further submitted that as per law, the tenancy rights can always be transferred and transferee gets all the rights, titles and interests of transferred and transferee gets all the rights, titles and interests of transferred and transferee gets all the rights, titles and interests of transferor. The transferor. The appellant also submitted that assessee is co appellant also submitted that assessee is co- operative housing society and it is not carrying over any business. operative housing society and it is not carrying over any business. operative housing society and it is not carrying over any business. The society owned building Sharda chambers and it maintains the The society owned building Sharda chambers and it maintains the The society owned building Sharda chambers and it maintains the building and manages the affairs of the society. Since, society building and manages the affairs of the society. Since, society building and manages the affairs of the society. Since, society owned a big te owned a big terrace and various companies approached to the rrace and various companies approached to the society for wireless business and for putting up antennas, the society for wireless business and for putting up antennas, the society for wireless business and for putting up antennas, the society earned rental income as an additional income of the society earned rental income as an additional income of the society earned rental income as an additional income of the society.” 5.1 It is evident from the said findings that CNIL stepped into the It is evident from the said findings that CNIL stepped into the It is evident from the said findings that CNIL stepped into the shoes of Aircel Limited pursuant to the transfer of its infrastructure Aircel Limited pursuant to the transfer of its infrastructure Aircel Limited pursuant to the transfer of its infrastructure business and that the receipts in question retained the character of business and that the receipts in question retained the character of business and that the receipts in question retained the character of rental income arising from the use of immovable property.As the rental income arising from the use of immovable property. rental income arising from the use of immovable property. facts are not disputed the Ld. CIT(A). facts are not disputed the Ld. CIT(A). The learned CIT(A), af The learned CIT(A), after considering the submissions and the undisputed facts, clearly held considering the submissions and the undisputed facts, clearly held considering the submissions and the undisputed facts, clearly held that the amount received from CNIL was assessable under the head that the amount received from CNIL was assessable under the head that the amount received from CNIL was assessable under the head “Income from house property” and not under the head “Income from “Income from house property” and not under the head “Income from “Income from house property” and not under the head “Income from other sources”. This direction is unambiguous. It is also noted that other sources”. This direction is unambiguous. It is al other sources”. This direction is unambiguous. It is al the assessee had placed on record its computation to demonstrate the assessee had placed on record its computation to demonstrate the assessee had placed on record its computation to demonstrate that the said income had already been offered to tax under the head that the said income had already been offered to tax under the head that the said income had already been offered to tax under the head “Income from house property”. “Income from house property”.
5.2 In these circumstances, we are of the considered view that if In these circumstances, we are of the considered view that if In these circumstances, we are of the considered view that if the income received from Chennai Network Infrastructure Limited ceived from Chennai Network Infrastructure Limited ceived from Chennai Network Infrastructure Limited has already been included by the assessee under the head “Income has already been included by the assessee under the head “Income has already been included by the assessee under the head “Income from house property”, no separate or further addition is warranted from house property”, no separate or further addition is warranted from house property”, no separate or further addition is warranted pursuant to the order of the learned CIT(A). We, therefore, direct the pursuant to the order of the learned CIT(A). We, therefore, direct the pursuant to the order of the learned CIT(A). We, therefore, direct the Sharda Chambers Premises Sharda Chambers Premises Assessing Officer to verify the computation of income and ensure sessing Officer to verify the computation of income and ensure sessing Officer to verify the computation of income and ensure that no double addition is made in respect of the same receipt. The that no double addition is made in respect of the same receipt. The that no double addition is made in respect of the same receipt. The Assessing officer may accordingly verify and give effect to the order Assessing officer may accordingly verify and give effect to the order Assessing officer may accordingly verify and give effect to the order of ld CIT(A) accordingly. of ld CIT(A) accordingly.
5.3 The ground No. 1 No. 1 of appeal of the assessee is accordingly the assessee is accordingly allowed. The ground No. 2 has not been pressed by the assessee allowed. The ground No. 2 has not been pressed by the assessee allowed. The ground No. 2 has not been pressed by the assessee and therefore, same is dismissed as infructuous. and therefore, same is dismissed as infructuous.
In the result, the appeal of the assessee is partly allowed. In the result, the appeal of the assessee is partly allowed. In the result, the appeal of the assessee is partly allowed.