BAKUL INVESTMENTS P.LTD,MUMBAI vs. ITO 2(1)(1), MUMBAI

अपीलाथीकीओरसे/ Appellant by : Shri KiritKamdar, AR प्रत्यथीकीओरसे/Respondentby : Shri T. A. Khan, DR सुनवाईकीतारीख/ : 05/10/2018 Date of Hearing घोषणाकीतारीख / : 31/10/2018 Date of Pronouncement आदेश / O R D E R Per Shri Sandeep Gosain, Judicial Member: These two appealsfiled by the assessee as well as revenueare against the order of Commissioner of Income Tax(Appeals)-4, Mumbai dated 07.10.15 for AY2012-13. Since all the issuesinvolved in these two appeals are 2. common, therefore, they have been clubbed, heard together and a consolidated order is being passed for the sake of convenience and brevity.

1. In confirming the reclassification of income from leave and license fees on sub-tenancy as 'Income from house property instead of Profits and gains of business or profession' and consequently disallowing administrative and other operating expenses of Rs 32,22.056 and depreciation expense of Rs 1,55.956 incurred wholly and exclusively for the purpose of business of the Appellant.

2. Without prejudice to Ground No. 1, erred in not allowing a deduction of the lease rental expenses amounting to Rs 22.596 from the annual letting value of the property where the income from leave and license fees on sub-letting of the property is reclassified as Income from house property'.

3. Without prejudice to Ground No. 1, erred in not allowing a deduction for the expenses amounting to Rs 22,16.808 statutorily incurred by the Appellant.

4. Without prejudice to Ground No. 1, erred in directing the assessing officer to verify the facts of payment of Rs 4,20.000 by the appellant to the lessor relying on the order of his predecessor instead of treating it as reimbursement of third party maintenance charges and accordingly not in the nature of income.

5. Erred in levying the consequential interest under sections 234B and 234C of the Act.

The Appellant craves leave to add, alter, vary, omit, substitute or amend the grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Honourable Income Tax Appellate Tribunal to decide this appeal according to law.

4. As per the facts of the present case, the assessee is a private limited company. The return of income was filed for the year under consideration on 28.09.12 declaring total income at Rs. 19,33,920. Subsequently, the case of assessee was selected for scrutiny and after serving statutory notices and seeking reply of assessee, the AO passed assessment order u/s 143(3) thereby making additions in respect of ‘Income from House property and others sources’.

Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee. Aggrieved by the order of Ld. CIT(A), both i.e. assesseeas well as the revenue have filed their respective appeals before us. However at present we are dealing with the appeal filed by the assesseeon the grounds mentioned herein above. Ground No. 1 5. Thisgroundraised by the assessee relates to challenging the order of Ld. CIT(A)in confirming the reclassification of income from leave and license fees on sub-tenancy as 'Income from house property instead of Profits and gains of business or profession' and consequently disallowing administrative and other operating expenses of Rs 32,22,056 and depreciation expense of Rs 1,55,956 incurred wholly and exclusively for the purpose of business of the assessee.

(2015) 373 ITR 673 (SC).

3.3. I have considered the findings of the Assessing Officer as well as rivalsubmission of the appellant, carefully. I find that this issue has been decided by my Ld. predecessor against the appellant which is in under :- 5.2.1. Having carefully and dispassionately considered rival submissions, it is noted that the present appellant has claimed administrative expenses of Rs50,45,342/- and depreciation of Rs.1,47,494/- treating the lease rental income under the head 'Income from Business & Profession. My learnedpredecessors as well as AOs have been consistently assessing lease rental income from the impugned house properties at MadhuKirnj under the head Income from house Property' The issue of taxability of the said lease rental Income under the head Income from House Property" has been consistently decided against the appellant from A.Ys.2005-06 till this year and it has been decided that such lease rental income is correctly taxable under the head "Income from House Property". I agree with my learned predecessor's view that lease rental income from the house properties is correctly assessable under the head Income from House Properfy'. Once, the income is assessed under the head "income from House Property' corollary expenses are deductible only u/s.24 of the Act, which have been correctly allowed by the Assessing Officer and the appellant has not disputed such deduction u1s,24 of the Act There is no provision of allowing depreciation or administrative expenses while assessing income under the head 'income from House Property' Therefore. the Assessing Officer's action of disallowing administrative expenses and depreciation while assessing income under the head Income from House Property' is confirmed.

52.2. Secondly, this issue is also covered by appellate orders for the earlier A. Ys.2005-06 to 2010-11 against the appellant in its own case. For ready reference, relevant paragraph no.54 of Appeal No.CIT(A)-4/IT-107 / AC1T2(1)/2012-13 doted 1501.2014 may be reproduced from Appeal Order of the appellant for A. Y.2010-1 1 as under:-

"5.4. Ground No. 5:

5-4-1 Ground of Appeal

NoS is also covered by the decision of my learned predecessor in the appellant's own case for A. Y,2009-l0 decided vide appeal no.CIT(A)-4/1T-81/ITO.2(l)(l)/2011- 12 dated 14.09.2012 wherein he has decided the ground nO.5 vide para nO.9 which may be extracted as under:-

9. The facts of the case are that assessee claimed certain expenses against income from house property which have been disallowed by the A. 0., which has been disputed by the assessee In the present ground. The issue relating to taxability of income under the head income from house property has already been decided and it has been held against Grounds NO.1 to 4 a above that the income is taxable under the head incomefrom house property, therefore, the expenses are allowable only u/s 24, which have been rightly allowed by the A.O. and, therefore, any other expenses claimed against the rental income have been rightly disallowed by the A.O. Hence, the g round of appeal is rejected"

5.4.2 Since the appellant and the disputed issue and the facts and circumstances are identical, therefore, respectfully following the decision of my Id. predecessor and upholding the rule of judicial consistency, the matter is treated as a covered matter and therefore, ground of appeal nos is not allowed. 5.2.3 in view of the above and also in accordance with Rule official consistency, Ground of1p peal No.1 of the present appeal is not allowed.

We find that the identical ground has already been decided by the Coordinate Bench of Hon’ble ITAT in & others for AY 2001-2002 to 2010-11 in assessee’s own case. The operative portion of the order of Hon’ble ITAT contained in para no. 6, which is reproduced below:- 6. After hearing both the parties and on perusal of the order of the revenue authorities as as well as the cited precedents as well as the relevant material placed before us, On hearing both the parties and the arguments put forth by both the Ld. Representatives on both the above mentioned issues (first and third issues) in the assessee’sapapeals for the AYs under consideration, we are of the opinion that the and the third issues relating to the correct head of income should be remanded to the file of the AO to decide them afresh in the light of the above mentioned judgment of the Apex Court (supra). We order accordingly. AO shall grant a reasonable opportunity of being heard to the assessee as per the set principles of natural justice. Accordingly, relevant grounds raised in the assessee’s appeals are allowed for statistical purposes.

After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and Hon’ble ITAT as mentioned above in assessee’s own case, we find that the identical issues have already been decided by the Hon’ble ITAT in assessee’s own case for AY 2001-02 to 2010- 11 in & others. Therefore,respectfullyfollowing the decision of the Coordinate Bench of Hon’ble ITAT and in order to maintain judicial consistency, we apply the same findings in the present case which are applicable mutatis mutandis in the present case and in view of the above findings, we restore back to the file of the AO for examining afresh and thereafter pass afresh order of assessment.Resultantly, this ground raised by the assessee isallowed for statistical purposes. Ground No. 2 to 4.

9. Since we have already decided ground no. 1 on merits, therefore these grounds becomes infructuous.

Ground No. 5. 10. This ground has not been pressed by Ld. AR, therefore this ground becomes infructuous.