VUMMIDI BARATH,CHENNAI vs. ITO, CHENNAI

आदेश / O R D E R

i. The Ld.CIT(A) has erred in upholding the order of the Ld.AO, who had disallowed Rs.1,36,416/- towards Leave Travel Allowance (LTC). ii. The Ld.CIT(A) has erred in upholding the order of the Ld.AO, who had assessed the lease rent of Rs.2,59,200/- under the head ‘income from other sources’ instead of ‘income from house property’ and thereby denied the benefit of deduction U/s.24 of the Act.

During the course of scrutiny assessment proceedings, it was observed by the Ld.AO that the assessee had received Leave Travel Concession of Rs.1,70,520/- with respect to himself, father, mother and brother. Since, Section 10(5) of the Act provided that the LTC can be claimed against the parents, brothers and sisters of the assessee only if they are wholly dependent on the assessee and in the case of the assessee it was found that they were not dependent on the assessee, the Ld.AO allowed only 1/5th of the total amount of Rs.1,70,520/- received as LTC which worked to Rs.34,104/- and disallowed the balance amount of Rs.1,36,416/- and added to the income of the assessee. On appeal also the Ld.CIT(A) confirmed the order of the Ld.AO agreeing with her view.

4.1 Before us, the Ld.AR argued stating that the assessee’s relatives were wholly dependent on the assessee and therefore the Revenue had grossly done injustice by disallowing the claim of the assessee. The Ld.DR on the other hand relied on the orders of the Revenue authorities and further pleaded by stating that the assessee had not brought anything on record to prove that the assessee’s relatives were dependent on him.

4.2 I have heard the rival submissions and carefully perused the materials available on record. The assessee had categorically stated before the Ld. Revenue Authorities that his parents and siblings were wholly dependent on him. Thus the onus has shifted on the Revenue to prove otherwise. However, the Revenue has not bothered to verify the claim of the assessee but simply made addition under the premises that the assessee’s parents and siblings are not wholly dependent on the assessee. Considering the facts and circumstance of the case, I’m of the view that the addition made by the Revenue authorities are not warranted and therefore I hereby direct the Ld.AO to delete the addition made towards Leave Travel Allowance of Rs.1,36,416/-.

Nevertheless, it should be noted that -the building belonging to the appellant 'is a commercial cum residential complex. Hence, the Income from letting out a small portion of the terrace for 'putting up of antenna pole at the roof top/top storey for transmission purpose as required for cellular services', cannot be construed.vas 'Income from House property', From this angle, the stand taken by the Assessing Officer' that the lease of roof does' not contribute to the annual value of property consisting of buildings or 'land appurtenant thereto, within the meaning of sec, 22 of the Act, is logical and tenable. At the same time, the lease rent also does not strictly fall- under 'Income from Business' of the appellant.

As outlined in the 'Law of Income Tax' by Shri Sampath Ivengar, "Where a receipt which does not fall strictly under the head Income from Property, but at the same time, such receipt is not Income from Business, it has necessarily to be assessed as Income from Other sources".

In conclusion, the Assessing Officer was justified in treating the lease rent from letting out of the roof for erection of the telecommunication tower, as ‘Income from other sources’. The same is hence upheld.”

5.1 Before us, the Ld.AR produced the lease rental agreement dated 27.12.2000 and argued stating that the assessee had not only leased out the terrace for erecting towers but had also leased out a room in the terrace of 120 sq.ft. The Ld.AR further relied in the decision of the Delhi Bench of the Tribunal in the case Manpreet Singh v. ITO reported in 38 ITR (Trib) 0055 (Delhi), wherein on the identical issue it was held that such income should be assessed under the head ‘income from house property’. Hence, it was pleaded that in the case of the assessee also the lease rental received from renting the terrace along with the room on the terrace should be assessed under the head ‘income from house property’. The Ld.DR vehemently argued in support of the orders of the Ld.Revenue authorities and requested for confirming the same.

5.2 I have heard the rival submissions and carefully perused the materials available on record. The lease agreement entered by the assessee with M/s. RPG Cellular Services Ltd dated 27.12.2000 specifies the schedule of property let out as under: “Schedule A : Part of the premises in the Commercial cum Residential Complex known as BBC Villa, Situated at Old Door No.33, Prakasam Salai, Broadway, Chennai – 600 108, having a covered room space of approximately 120 Sq.Ft. at the Terrace, Open space in the terrace measuring 200 Sq.Ft. and 120 Sq.Ft. for installing the generator.”

From the above it is evident that the assessee had not only rented out the terrace but also 120 sq.ft. of covered space. Further, the Delhi Benches of the Tribunal in the decision cited supra has categorically held as follows: “As long as the rent was for the space, terrace and roof space in this case and which space is certainly a part of the building, the rent can only be taxed as ‘income from house property’. In view of the above discussions, and as the rent received by the assessee for use of space, by Bharti Airtel Limimted, in a building, or part thereof, owned by the assessee, it was viewed that the rent so received must be taken into account in computation of annual value to be taxed under the head “income from house property”. Accordingly, as learned counsel for the assessee rightly contends, the deduction under 8 section 24(a) was admissible on the facts of the present case. We, therefore, reverse the stand of the authorities below and uphold the stand of the assessee. The Assessing Officer was accordingly, directed to delete the impugned disallowance. In the result, the appeal was allowed.”

Since the facts of the case of the assessee is identical to the case decided by the Delhi Bench of the Tribunal, following the decision of the Delhi Bench of the Tribunal, I hereby direct the Ld.AO to treat the lease rent received by the assessee for letting out the terrace along with the covered space as ‘income from house property’.

Order pronounced on the 17th August , 2017.