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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
ुनवाई की तारीख / Date of hearing: 18.10.2018 घोषणा की तारीख / Date of pronouncement : 29.10.2018 AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
These cross appeals are arising out of the order of Commissioner of Income Tax (Appeals)-36, Mumbai [in short CIT(A)], in appeal No. CIT(A)- 31/IT-51/DCIT-20(2)/14-15 & CIT(A)-36/IT-578/ACIT-24(3)/15-16 even order date 28.10.2016. The Assessments were framed by the Asst. Commissioner of Income Tax & Dy. Commissioner of Income Tax, Circle- 24(3), Mumbai (in short ‘ACIT’ & ‘DCIT’/ AO’) for the A.Y. 2013-14 & 2011- 12 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
These two appeals by Revenue is against the order of CIT(A) directing the AO to treat the rent from building as well as service & amenity charges to consider as income from House property as against assessed by AO as income from other sources. In both the years, the facts are exactly identical and hence, the facts and grounds we will take from AY 2011-12. The grounds raised
by Revenue reads as under: -
1. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in directing that the rent for use
ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 of building as well as service & amenity charges has to be considered as "Income from House Property" whereas the assessee is providing completely separable services not deriving their worth from the building."
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not relying on the decision of the 5-Judge Bench of Supreme Court in the case of Sultan Brothers (P Ltd. Vs. Commissioner of Income-tax (1964) 51 [ER 353 (SC) wherein it is held that even if letting of building & services /amenities is inseparable, the entire rent is chargeable as "Income from Other Sources" and not as "Income from House Property.”
At the outset, the learned Counsel for the assessee stated that the issue is recurring and Tribunal in assessee’s own case has considered the income from maintenance and amenities charges as income from house property for AY 2008-09 and 2009-10. The CIT(A) followed the earlier years decision and treated the income from maintenance and amenities as income from house property by observing in Para 5.6 and 5.6.1 as under:-
“5.6. In the instant case, the following facilities which were provided by builder were further provided to lessees were as under; I. Separate Electricity meter
ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 ii. Water connection to the said premises and water tanks for supply in common areas. iii. Elevators within the building iv. Free Passage within the building v. Staircases within the building vi. Electric Pumps and water lines for common use vii. Access to common parking viii. Power Connection with a separate meter for the same ix. To permit fitting of outdoor AC Units x. Monitor functioning of lightning systems in the common areas, viz, outside the said building xi. To monitor the space surrounding the premises and maintain the same in suitable and proper condition so as to enable the Licensee to have free and uninterrupted access to the said premises including ingress and egress. xii. To provide common facilities and amenities in the said building to the Licensee.
ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 xiii. To provide maintenance, lightning, security and upkeep for the common areas of the building. xiv. To provide DG Backup for the common areas. xv. Façade cleaning xvi. Management of CCTV and Security services in the Common Areas etc.
5.6.1. In this case, the appellant has received certain amount towards different amenities provided to different tenants and such amenities are incidental services which are inseparable original services i.e. renting of immovable property. Such services are an integral part of rental services. Further the lessee could not have used the premises lent on hire/ leave and license basis had such facilities (referred to as amenities in Amenities Agreement) were not provided by the lessor company to lessees. They are not in the nature of additional services or top- up services. Amenities part takes the character of house properly related services only and therefore taxable as House Property Income" only. Moreover, all the amenities including 'Management Facilities like Gym/Business Centre/ Temple' provided by the appellant were amenities provided by the builder to the lessor.
ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 They were part of the building/ premises received by the lessor, i.e. Appellant. Such amenities were common amenities and lessor had allowed lessees to use such common facilities on letting out of such property. Common facilities cannot be considered as additional services. The facts of the case laws relied upon by the assessing officer are distinguishable from the facts of the assessee. In both the cases nature of ownership is tenancy. The case of M/s Tarapore & Co [2002] refers to service charges which are separable from letting out of property and not amenities charges as in the case of the appellant. Further the case Attukal Shopping complex [2002], the issue was regarding proving of various services which were separable from letting out of property which is not the case of the appellant. Further, the cases are not from the Jurisdictional courts and dates back 2002. Much water has flown since then. Considering the totality of the facts and the other the case of Shambhu Investment (P) Ltd. Vs. CIT (2003) 263 ITR 143 (SC) and the decisions of Jurisdiction High court and ITAT, Mumbai Bench it is seen that no clinching evidence was brought out by the AO in support of his arguments. Appellant has in subsequent years i.e. 2015 has entered into a single rent agreement incorporating all the amenities. Keeping in mind above principles laid down in the judicial pronouncements, I am of the ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 view, that in the facts and circumstances of the present case, the rent for use of building as well as maintenance/amenity charges has to be considered as Income From House Property. Ground No. 4 becomes infructuous as ground No.1 to 3 are allowed.”
The learned Counsel for the assessee before us, filed copy of Tribunals order in the case of ACIT vs. H&M Housing Finance & Leasing P. Ltd. for AYs 2005-06 & 2006-07 in & 822/Mum/2010 vide order dated 15.06.2011, wherein the issue was decided against Revenue by observing in Para 8 as under: - “8. We have heard submissions of ld. D.R, who relied on the order of the Assessing Officer. We are of the view that the order of the CIT(A) does not call for any interference. As can been seen from the agreement for providing amenities (the details of which are set out in the earlier paragraph) they are part and parcel of property and forms part of use of the building by the assessee. The amenities cannot be let out without the letting out of the space. Thus the amenities are part and parcel of the premises let out. Therefore, the right to use the amenities and the compensation paid, therefore, cannot partake a character of income from other sources. In the case of Bhaktawar Constructions Pvt. Ltd., 162 ITR 452 (Bom) it has been held that where the buildings were let to tenants under lease
ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 agreement and the tenants were provided with AC facilities there was no letting of AC plant separately. Similarly, in the case JK Investors Bombay Ltd., for A.Y 2000-01 the Tribunal had to consider the receipt of maintenance charges whether will form part of the income from house property. The Hon’ble Tribunal held that the mere splitting of rent is not decisive of the issue and each case has to be decided in the light of the facts and circumstances of each case. Keeping in mind above principles laid down in the judicial pronouncements, we are of the view, that in the facts and circumstances of the present case, the rent for use of building as well as maintenance/amenity charges has to be considered as income from house property. We, therefore, do not find any infirmity in the order of the CIT(A). Consequently the same is confirmed and these appeals by the revenue are dismissed.”
Respectfully following the Tribunal order in the case of H&M Housing Finance & Leasing P. Ltd. (supra), we confirm the order of CIT(A) and dismissed the appeal of Revenue.
Similar is the fact in for AY 2013-14 is also dismissed.
ITAs no.41&42/Mum/2017, Cos no. 90&91/Mum/2018 7. As regards to the CO of the assessee, which is supportive of the order of CIT(A) and hence, the same has become infructuous and dismissed.
In the result, both, the cross objections of assessee and the appeals of Revenue are dismissed.
Order pronounced in the open court on 29-10-2018. AadoSa kI GaaoYaNaa Kulao mao idnaMk 29-10-2018 kao kI ga[- .