JESAL CO OP HSG SOCIETY LTD,MUMBAI vs. ITO WD 24(2)(2), MUMBAI

In this appeal, although the assessee has raised multiple Grounds of appeal, but the substantive dispute revolves around the action of the Assessing

In brief, the relevant facts are that the appellant is a Co-operative Housing Society and in the course of assessment proceedings the Assessing Officer noted that assessee had shown, inter-alia, rental income – Rs.9,93,110/- and Rs.4,56,000/- as service charges, totalling to Rs.14,49,110/- as received from M/s.Viom Network Ltd. The Assessing Officer also noticed that assessee had claimed certain expenditure against the ‘service charges income’ on the ground that such income was income from other sources. According to the Assessing Officer, it was a rental income and therefore, it was to be taxed under the head ‘income from house property’ and accordingly, after allowing the statutory allowances under section 24 of the Act, he assessed income from house property at Rs. 14,49,110/-and after allowing basic deduction of Rs.50,000/-, he assessed the total income at Rs.9,64,377/-. The CIT(A) has also affirmed the stand of the Assessing Officer by noticing that where the income is from renting of space to host the antennas on the terrace / roof space, and which space is certainly a part of the building, the rent can only be taxed as ‘income from house property’.

Before me, the Ld.Representative for the assessee has pointed out that the assessee does not dispute that the income earned from allowing use of the building premises is assessable as ‘income under the head house property’, but in the present case, relevant facts have not been appropriately appreciated. Firstly, it pointed out that assessee had received a sum of Rs.15.00 lacs from M/s.Viom Network Ltd. in terms of two concurrent agreements dated 26/02/2011. In terms of a leave and licence agreement, assessee received a sum of Rs.4,50,000/- for allowing the space for putting the antenna and (Assessment Year 2012-13 another sum of Rs.4,50,000/- in terms of service agreement of even date, which was earned for providing various services mentioned therein. The Ld.Representative for the assessee pointed out that so far as income from the leave and licence agreement is concerned, assessee had no objection, if the same is assessed as income under the head ‘income from house property’. So however, the amount received in terms of service agreement is concderned, the same is assessable under the head ‘income from other sources’ after allowing the relevant expenses. The Ld.Representative for the assessee pointed out to the salient features of the two agreements in this regard and prayed that since relevant facts have not been culled out at the level of the lower authorities, the matter may be set-aside to the file of Assessing Officer for appropriate decision.

The plea of the assessee for remanding the matter back to the file of the Assessing Officer has not been seriously opposed by the Ld. Departmental Representative, who has otherwise reiterated the stand of the Assessing Officer.

Having considered the rival submissions and after perusing the relevant agreements, in terms of which assessee had received the impugned amounts, it is quite clear that a part of the amount has been received on account of rental arrangement for the space and partly it is for rendering services. In fact, the Assessing Officer in para- 3 of his order has noted that assessee has credited in its Income & Expenditure Account, inter-alia, by two separate entries namely rental income and service charges. Be that as it may, I agree with the plea of the assessee that the facts which are appropriate to decide the controversy as to under which head of income the respective incomes are taxable, do not emerge from the orders of the lower authorities. Therefore, in (Assessment Year 2012-13 the interest of justice and fair play, I deem it fit and proper to set-aside the order of CIT(A) and restore the matter to the file of Assessing Officer, who shall cull out appropriate facts and, thereafter decide the controversy as per law. Needless to say, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard in support of its stand and only thereafter, he shall pass an order on the aforesaid aspect as per law.

In the result, the appeal of the assessee is partly allowed for statistical purposes.