DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-6(1)(1), BANGALORE vs. M/S SILVER SOFTWARE PVT LTD, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE

BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER

ITA Nos. 2292 & 2293/Bang/2018 Assessment Year : 2013-14

M/s. Silver Software Pvt. Ltd., The Deputy Commissioner of No. 23 & 24, EPIP 1st Income Tax, vs. Phase, KIADB, Circle – 6 (1) (1), Whitefield, Bangalore. Bangalore – 560 066. PAN: AADCS6245H APPELLANT RESPONDENT Appellant by : Shri R.N. Siddappaji, Addl. CIT (DR) Respondent by : Smt. Rajeswari .S, CA Date of hearing : 29.11.2018 Date of Pronouncement : 30.11.2018 O R D E R Per Shri A.K. Garodia, Accountant Member Both these appeals are filed by the revenue for the same Assessment Year. Out of these two appeals, one appeal is arising in course of assessment proceedings completed by the AO on 30.03.2016 u/s. 143(3) of IT Act and the second appeal is arising in course of penalty proceedings u/s. 271(1)(c) of IT Act. These two appeals are directed against two separate orders of ld. CIT(A)- 6, Bangalore both dated 13.03.2018. Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. 2. The ld. DR of revenue supported the assessment order and the penalty order whereas the ld. AR of assessee supported these two orders of ld. CIT (A). He also submitted that the issue in quantum appeal is covered in favour of the assessee by the Tribunal order rendered in assessee’s own case for Assessment Years 2010-11 and 2011-12 in ITA Nos. 1642 & 1643/Bang/2014 dated 29.05.2015. He submitted a copy of this Tribunal order and drawn our attention to para no. 6.4.11 of this Tribunal order and pointed out that in this para, it was held by the Tribunal that in the facts of present case, the rental

ITA Nos. 2292 & 2293/Bang/2018 Page 2 of 3 income received by the assessee from leasing out of building properties would fall under the head ‘Income from Business’ and not ‘Income from House Property’ as held by the authorities below and after holding this, the appeal of the assessee in these two years are allowed by the Tribunal. Thereafter, he submitted that in the present year also, the only dispute in quantum appeal is this that whether the rental income received by the assessee on leasing out the same building property is taxable as ‘Income from Business’ as declared by the assessee or as ‘Income from House Property’ as assessed by the AO. He submitted that the facts are identical in the present year and therefore, in quantum appeal, the addition made by the AO in the present year is liable to be deleted by following this Tribunal order for Assessment Years 2010-11 and 2011-12 in assessee’s own case and once, the quantum addition is deleted, the penalty cannot survive. At this juncture, the bench made a specific query from the ld. DR of revenue as to whether there is any difference in facts in the present year and in reply, ld. DR of revenue could not point out any difference in facts. 3. We have considered the rival submissions. First of all, we reproduce para no. 6.4.11 from the Tribunal order in assessee’s own case for earlier two years i.e. Assessment Years 2010-11 and 2011-12. This para reads as under. “6.4.11 What emerges from the above discussion from para 6.1 to 6.4.10 of this order (supra), is that the question of whether the rental income derived by the assessee from letting out of property is to be treated as ‘Income from House property’ is essentially to be decided on the basis of the facts and circumstances of each particular case. The scheme of the Income Tax Act, 1961 contains 6 heads of income under which income can be categorized / classified. These heads of income are, in a sense, exclusive of one another and the income which falls under one head cannot be assigned to or taxed under another head. Therefore, the deciding factor is not the ownership of the land or the leases thereof, but the nature of the activity of the assessee and the nature of the operations in relation to them. In the case on hand, considering the nature of the assessee's dealings with the property, apart from letting them out and the manner and extent of its activities, inter alia, like providing of ward and watch, security, maintenance of common area and lighting thereof, fire safety, supply of water, providing lifts, installation of electrictransformers, generators, water tanks, etc. and as listed out at paras 6.4.1 and 6.4.2 of this order (supra); go to clearly establish that the entire activity is conducted in an organized manner to earn profits out of the investment made by the

ITA Nos. 2292 & 2293/Bang/2018 Page 3 of 3 assessee as a commercial venture. We are therefore of the considered opinion that the operations of the assessee in earning the rental income received from leasing out of the building properties would fall under the head ‘Income from Business’ and not ‘Income from House Property’ as held by the authorities below and consequently allow the assessee's appeal.”

Order pronounced in the open court on the date mentioned on the caption page.

Sd/- Sd/- (LALIET KUMAR) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, the 30th November, 2018. /MS/ Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order

Assistant Registrar, Income Tax Appellate Tribunal, Bangalore.