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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)
The appeal filed by the assessee is directed against the order dated 12.8.2016 passed by the learned CIT(A)-12, Mumbai and it relates to A.Y. 2012-13. The solitary issue urged in this appeal is whether lease rental income received by the assessee is assessable under the head income from house property or under the head income from business.
The assessee received rental income of ` 16,80,000/- from two properties held by it. The assessee declared the same as its business receipts. However, the Assessing Officer assessed the same under the head “income from house property”. The learned CIT(A) also confirmed the order passed by the Assessing Officer and hence the assessee has filed this appeal before the Tribunal.
At the time of hearing learned AR submitted that the assessee company was formed with objective of acquiring lands and buildings, developing and managing them, realizing rents and profits from them etc. In this regard, he
2 Distinct Developers Pvt. Ltd. invited my attention to the main object of the assessee-company which reads as under :-
“To carry on business of acquiring lands and buildings, developing and managing them, realizing rents and profits from them and constructing buildings, factories, shopping centers, road and other structures and also buying, selling and leasing, bungalows, flats, room, factories, offices, shops, godowns, open plots, buildings and other structures and also carry on business of builders and contractors.”
Accordingly, by placing reliance on the following decisions rendered by Hon'ble Supreme Court, the learned AR submitted that the rental income received by it should be assessed under the head “income from business” :-
(a) Chennai Properties and Investments Ltd. (2015) 373 ITR 673 (b) Rayala Corporation Pvt. Ltd. Vs. ACIT (2016) 386 ITR 500
Learned AR further submitted that an identical issue was considered by the Coordinate Bench in the case of ACIT Vs. M/s. Stellar Developer Pvt. Ltd. (2015) 68 SOT 34 and the same has been decided in favour of the assessee. Learned AR submitted that the assessee does not have any other income except rental income. Learned AR also submitted that the learned CIT(A) has considered the identical issue in favour of the assessee in assessee’s own case in A.Y. 2011-12 and he has accepted the contention of the assessee by following the decision rendered by Hon'ble Supreme Court in Chennai Properties and Investments Ltd. (supra). Accordingly, he submitted that the rental income should be assessed under the head “business income” as per decision rendered by Hon'ble Supreme Court in the above said case.
On the contrary, learned Departmental Representative submitted that the Assessing Officer had assessed the rental income under the head “income from House property” in A.Y. 2010-11 and the same has been confirmed by the learned CIT(A) vide his order dated 30.10.2013. The assessee has accepted the said decision of the learned CIT(A) by not filing the appeal before the Tribunal.
3 Distinct Developers Pvt. Ltd.
In the rejoinder, learned AR submitted that the assessee did not prefer the appeal challenging the order passed by the learned CIT(A) in A.Y. 2010-11 as the tax effect involved therein was minimal. He submitted that the Ld CIT(A) has decided an identical issue in favour of the assessee in AY 2011-12.
Having heard the rival submissions, I am of the view that there is merit in the contentions of the assessee, as the assessee-company has been formed with the objective of acquiring and developing lands and buildings, realizing rent etc. The claim of the assessee is supported by the decisions of Hon'ble Supreme Cour, referred supra. Accordingly, I set aside the order passed by the learned CIT(A) and direct the Assessing Officer to assess the rental income under the head “income from business".
In the result, appeal filed by the assessee is allowed. 8.
Order has been pronounced in the Court on 3.5.2017.