M/S Y.S. AND CO-OWNERS vs. INCOME TAX OFFICER ETC.

ITA No

IN THE M/s Y. S. & C The Income T CORAM: H

Present: SANJEEV P

appeal was a proposed in p i) A iii) p 2. owners purch the property out to PUNS rent receipts . 20 of 2008 E HIGH COURT OF PUNJAB AT CHANDIGARH Co-owners

Versus Tax Officer and others HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN Mr. Akshay Bhan, Senior Advoc Mr. Shantanu Bansal, Advocate Mr. Yugank Goyal, Advocate, fo

Mr. Urvashi Dhugga, Senior Sta Ms. Samdisha Kaur, Advocate f

PRAKASH SHARMA, J. The present appeal has been p admitted for considering question para 8 of the appeal, as under:- Whether in the facts and circum Tax Appellate Tribunal was ju rental income received by the having definite share in the p AOP? Whether plinths constructed b within the meaning of Section 2 the purpose of assessment of property? The back drop of this appeal is hased property in their names ha and thereafter constructed godow SUP and Punjab Ware Housing from these agencies were issued -1- B AND HARYANA H ITA No. 20 of 2008 (O&M) Date of Decision : 09.09.2024

… Appellant

…Respondents

NJEEV PRAKASH SHARMA NJAY VASHISTH cate assisted by and for the appellant. anding counsel for the Income Tax Department. preferred by the Assessee. The ns (i) and (iii), which have been mstances of the case, the Income ustified while holding that the appellant and other co-owners property was an income of the by the appellant are buildings 26 of Income Tax Act, 1961 for income as income from house that the appellant and other co- aving specified shares jointly in wns and plinths which were rent g Corporation, Chandigarh. The d jointly and the amount of rent

) 4

e n e e s e s r e - n t e t VARINDER SINGH 2024.09.20 09:36 I attest to the accuracy and authencity of this order/judgment

ITA No

was also dep initiated proc income of A. 3. rent was bei relied upon S The Assessin assessment o of ` 9,28,120 4. (Appeals), w holding that in the hands Act, as the Depreciation Gurdeep Sin purchase of (Appeals), ho income recei the same as u to be not fall income from 5. Amritsar. Th its order dat income of th . 20 of 2008 posited in one bank account. T ceedings to assess the income o .O.P. (Association of Persons). The appellant submitted object ing earned by the co-owners as Section 26 of the Income Tax A ng Officer, however, rejected order under Section 144 of the A 0/- on 27.12.2005. Feeling aggrieved, the appella who vide his order dated 17.03.2 income received from Governm of the co-owners in terms of the constructed godowns falls in n was also allowed on the plinths ngh. The addition of ` 4,46,800/ land and construction of go owever, upheld the order of the A ived as rent from open plinths under the head income from othe ling within the definition of ’bu m house property. The Revenue challenged the or he appellant also filed cross objec ted 25.05.2007 held the incom he AOP. However, the submi -2- Thus, the income tax authority f rent received by co-owners as tions stating that income from s per their specified shares and Act, 1961 (for short, ‘the Act’). the objections and passed the Act making additions to the tune ant preferred an appeal to CIT 2006, partly allowed the appeal ment Agencies has to be assessed e provisions of Section 26 of the n the definition of (building). s by relying on ITO, Mansa Vs. /- on account of investments for odowns was deleted. The CIT Assessing Officer in treating the as income of the AOP entering er sources and treating the plinth uilding’ and cannot be termed as rder in appeal before the ITAT, ctions whereafter the ITAT vide me received by the appellant as ssion of the revenue allowing y s m d . e e T l d e .

r T e g h s , e s g VARINDER SINGH 2024.09.20 09:36 I attest to the accuracy and authencity of this order/judgment

ITA No

depreciation deduction @ appellant we explore the r provisions of attracted. 6. co-owners ha ITRs, there w 7. passed by th applicable to 8. 9. Companies j landlord and loans were a Y.S. & Co-ow was to be t Tribunal has f . 20 of 2008 on the cost of plinths was r @ 10% on the cost of plinths. Th ere also rejected. Further the As ental income on the total income f Section 167B(2)(i) i.e. levy o Learned counsel for the appella ave reflected their share of rent was no occasion to treat the same Learned counsel for the appella he Supreme Court as relied up the facts of the case. We have carefully gone through As noticed above, the rent was jointly in the hands of co-own the amount was also being depo also raised for construction of th wners. In view thereof, it is factu aken by the Revenue against given a factual finding as under “16. In the present case actions have been taken by the through the bank was raised deposited in the name of the A entered into in the status of A filed before us, have been file appeal itself the assessee has pu -3- rejected entitling appellant the he cross-objections raised by the ssessing Officer was directed to e of the members to see whether of tax at the maximum rate was ant has submitted that once the tal income in their independent e as income of the APO. ant has submitted that judgment on by the ITAT would not be h the record. being paid by the Government ners treating them as a single osited in the single account. The he godowns in the name of M/s ually not disputed that the action the assessee as an AOP. The :- e, it is seen the undisputedly, all e assessee as an AOP. The loan d as an AOP. The rent was AOP. The agreement itself was AOP. Even the cross objections ed by the AOP. In the present ut in appearance as respondent, e e o r s e t t e t e e s n e l n s s s t

VARINDER SINGH 2024.09.20 09:36 I attest to the accuracy and authencity of this order/judgment

ITA No

The order passed by the CIT (A received individually on the spe d regarding purchase of land. T e and AOP has jointly received t the law and all of them were c ITO vs Ch. Atchaiah (1996) 21 if the members of an AOP have uld not be barred to assess such elates to AOP. The relevant extr below:- “Section 4 extracted hereinabov charged on the total income expression "person" is defined definition merely says that exp alia a firm and an Associati individuals whether incorporate the present Act which empower him an option to tax either the members individually or for th partners individually. If it is th Persons in law, Association of the members of the Associatio individually in respect of the Persons. Consideration of the in in this scheme. When Section 4 levy of income tax on the tot necessary means the person wh respect of that total income acco levied on that person, whether a -4- s accorded to it by the A.O. vide Appeals) treating the same to be ecified shares is solely based on There is no defined share to the the income. There is no division co-landlords of each rented out 8 ITR 239, the Apex Court held e been assessed individually, the income in the hands of AOP if racts of Ch. Atchaiah (supra) is ve says that income tax shall be e "of every person" and the in clause (31) of Section 2. The pression "person" includes inter ion of Persons or a body of ed or not. There are no words in r the Income Tax Officer or give e Association of Persons or its at matter to tax the firm or its he income of the Association of Persons alone has to be taxed; on of Persons cannot be taxed income of the Association of nterest of Revenue has no place 4(1) of the present Act speaks of tal income of every person, it ho is liable to pay income tax in ording to law. The tax has to be an individual, Hindu Undivided e e n e n t d e f s e e e r f n e s s f ; d f e f t n e d VARINDER SINGH 2024.09.20 09:36 I attest to the accuracy and authencity of this order/judgment

ITA No

I I The decision being that of accordingly, 11. appellant wou letting out the 12. under:-

Dictionary i projecting co

Laxicon, 5th above the sur 13. level, cannot . 20 of 2008 Family, Company, Firm, Assoc authority or an artificial juridic that if income of A is taxed legitimately aggrieved but th exonerated of his liability on th he is sought to be taxed in resp lawfully taxable in his hands, th has taxed very same income cannot be taxed with respect to not only logical but is consisten In this connection, it may be Parliament wanted to provide Income Tax Officer, it has provi n taken by the ITAT, therefore, o f AOP does not warrant any inte answered in favour of the Reven The second question whether uld be treated as a building and w e plinth to be treated as a house p We have to understand the defi Plinth as defined in Webste s a slablike member beneath ourse of stones at the base of a w Plinth level as per P. Raman Edition (2017) means “the lev rrounding ground.” Thus, if a land where construct t be treated to be a house prop -5- ciation of Persons/BOP, a local cal person. From this, it follows in the hands of B, A may be at does not mean that B is hat account. B cannot say, when pect of the total income which is hat since the Income Tax Officer in the hands of A, he himself o the said total income. This is nt with the provisions of the Act. e pointed out that where the an option, a discretion, to the ided so expressly.” on the issue of the rental income erference and question no.(i) is, nue. the plinth constructed by the whether the income received for property. inition of plinths which reads as er’s Encyclopedic Unabridged base of a column or pier, a all; earth table. natha Aiyar’s Advanced Law vel of the floor of building just tion has been made upto plinth perty and is open land with the l s e s n s r f s

e e e , e r s d a w t h e VARINDER SINGH 2024.09.20 09:36 I attest to the accuracy and authencity of this order/judgment

ITA No

outlining co constructed a and walls to manner be sa 14. construction because con circumstance definition of allowed and meaning of S in favour of t ITAT on this 15. the ITAT. Th 16. 17.

09.09.2024 vs Whether spea Whether repo

. 20 of 2008 onstruction on which further w and thereafter a roof shall be c complete a building. Constructio aid to be construction of a buildin In fact a plinth and an area surr has been done would be a land nstruction on the plinth can es, it can be treated a plinth, the f a building. The depreciation, d would not be entitled for tr Section 26 of the Act. The said the Revenue. We, accordingly, s s aspect. The cross-objections of the app he appeal is accordingly dismisse All pending applications shall st No costs.

(SANJ

aking/reasoned

ortable

-6- walls and columns would be onstructed on the said columns on of plinth, therefore, can in no ng. rounded by the plinth, where no not appurtenant to the building be done separately. In no erefore, to be falling within the therefore, could not have been reating as building within the question is, therefore, answered set aside the observations of the pellant were rightly rejected by ed. tand disposed of. JEEV PRAKASH SHARMA)

JUDGE (SANJAY VASHISHT)

JUDGE Yes/No Yes/No

e s o o g o e n e d e y VARINDER SINGH 2024.09.20 09:36 I attest to the accuracy and authencity of this order/judgment