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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI G.S. PANNU & SHRI PAWAN SINGH
The captioned appeal by the assessee is directed against the order of CIT(A)-3, Mumbai dated 31.01.2017 pertaining to the Assessment Year 2012- 13, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 12.03.2015 u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
In its appeal, assessee has raised the following Grounds of appeal :-
“(1) On the facts and circumstances of the case and in law, the CIT(A) erred in rejecting the additional ground raised by the Appellant holding that the decision of the Supreme Court in the case of Chennai Properties and Investments Ltd 372 ITR 673 and Rayala Corporation Ltd. 386 ITR 500 are not applicable in the case of the Appellant.
(2) On the facts and circumstances of the case and in law, the Profits and gains from lease/leave and license of the premises ought to be assessed as Business Income.
(3) On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance of deduction of brokerage and commission expenses incurred on renting of House Property of Rs.9,68,212/-.
(4) On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance of water charges of Rs.1,78,516/-.
(5) On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of interest u/s 234B.”
As a perusal of the abovestated Grounds of appeal would reveal, the substantive dispute relates to the taxability of income earned by the assessee by way of lease/leave and licence of the premises. As per the assessee, such receipts are assessable as ‘Business Income’ following the ratio of the judgment of the Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. vs CIT, 373 ITR 673 (SC) and M/s. Rayala Corporation Pvt. Ltd. vs ACIT, 386 ITR 500 (SC), whereas the stand of the Revenue is that the same is liable to be assessed under the head ‘Income from House Property’.
4. On this aspect, the learned representative for the assessee pointed out that the CIT(A) dismissed the plea of the assessee primarily on the ground that assessee had itself declared such income under the head ‘Income from House Property’. The learned representative pointed out that similar situation prevailed with the Tribunal in the case of the assessee for Assessment Years 2004-05 and 2005-06, wherein assessee had raised the issue of assessability of such income as ‘Business Income’ based on the judgment of the Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. (supra) and the assessee had not raised such plea before the lower authorities in those two years. The Tribunal in a combined order for six assessment years 2004-05 to 2009-10 vide 1515, 7924, 7925, 7926/Mum/2011 and 858/Mum/2013 dated 25.01.2017 admitted such plea and remanded the matter back to the file of the Assessing Officer. It has also been pointed out that for other assessment years too, the Tribunal found it fit to restore the matter to the file of the Assessing Officer for adjudication afresh. It was, therefore, contended that in view of the said precedent in assessee’s own case, the aspect relating to assessability of income earned by way of lease/leave and licence of the premises be restored to the file of the Assessing Officer for adjudication on its merits.
The ld. DR appearing for the Revenue has not controverted the factual matrix brought out by the learned representative, but reiterated the stand taken by the Assessing Officer in the assessment order.
We have carefully considered the rival submissions. In the instant case, it is factually emerging that before the Assessing Officer, assessee did not raise the plea for assessing the lease/leave and licence receipts under the head ‘Business Income’ and such plea was raised for the first time before the CIT(A). The plea was raised ostensibly based on the judgment of the Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. (supra). In somewhat similar circumstances, in Assessment Years 2004- 05 and 2005-06, the Tribunal admitted such fresh plea and restored the issue to the file of the Assessing Officer for fresh adjudication. Presently, the position is that right from Assessment Years 2004-05 to 2009-10 the issue regarding assessability of lease/leave and licence receipts has been restored by the Tribunal to the file of the Assessing Officer to be decided afresh keeping in mind the judgment of the Hon'ble Supreme Court in the case of Chennai Properties and Investment Ltd. (supra). In this background, in the instant year too, we find that it is imperative to adopt a similar approach so as to maintain consistency. As a consequence, following the precedent in assessee’s own case, we restore the matter back to the file of the Assessing Officer to decide the assessability of lease/leave and licence receipts keeping in mind the directions of the Tribunal in its order dated 25.01.2017 (supra).
So far as the issues raised in Grounds of appeal nos. 3 and 4 relating to expenditure by way of brokerage and commission of Rs.9,68,212/- and water charges of Rs.1,78,516/- are concerned, their determination would be dependent on the view taken on the aforesaid preliminary issue relating to the head of income under which the lease/leave and licence receipts are to be taxed. As a consequence, the said Grounds are also restored back to the file of the Assessing Officer who shall consider them after deciding the preliminary issue as aforesaid.
8. The last Ground relates to the levy of interest u/s 234B of the Act, which is consequential in nature and does not require any adjudication.
In the result, appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 4th April, 2018.