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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
The captioned appeals filed by the Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-13 [in short ‘CIT(A)’], Mumbai and arise out of the assessment orders u/s 143(3) of the Income Tax Act 1961, (the ‘Act’). As common issues are involved, we are proceeding to dispose them off through a consolidated order.
The grounds of appeal
in both the appeals are same and they read as under:- That Ld. CIT(A) has erred on facts and in law in directing the Assessing
1. Officer to treat rental income and service charges received as 'Income from House Property' instead of 'Business Income' as treated by Assessing Officer without appreciating the legal and factual matrix as clearly brought out by the Assessing Officer. & 2111/MUM/2017 M/s. Pristine Developers Pvt.Ltd.
2. That Ld. CIT(A) has erred on facts and in law in not appreciating the fact that the assessee is developer and it has developed the said property for sale of commercial units. Therefore, the rental income earned and service charges received are required to be treated as business income.
3. That Ld. CIT(A) has erred on facts and in law in not appreciating the fact that the basic Intention of the assessee to offer the Income under the head ‘Income from House Property' is to reduce tax liability on sale of commercial unit by offering the same under the head 'Capital Gains.’
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. 2