ESSAR PROPERTIES PRIVATE LIMITED,MUMBAI vs. ACIT 6(2)(2), MUMBAI

आदेश / O R D E R

Per Manoj Kumar Aggarwal (Accountant Member)

. Since, the appeals arises out of common set of facts, we dispose-off both the appeals by this common order for the sake of convenience and brevity. First, we take up revenue’s appeal where the revenue has assailed the decision of Ld. CIT(A) qua treatment of certain lease income under the head ‘Business Income’ as against ‘Income from House Property’ and consequential allowance of rental expenditure / depreciation there-from and allowing set-off of unabsorbed depreciation of AY 1995-96 beyond eight years.

2. Briefly stated, the assessee, being resident corporate assessee, was subjected to an assessment u/s 143(3) vide Assessing Officer [AO] order dated 12/03/2013 wherein the total income of the assessee was determined at Rs.3,22,73,480/- after certain adjustments and disallowances as against returned income of Rs.‘Nil’ filed by the assessee on 14/10/2010. The assessee was engaged in the business of providing business center facilities, leasing of properties / Plant & machinery and investment in shares/properties/securities during impugned AY. During assessment proceedings, AO noted that the assessee earned rental income of Rs.533.16 Lacs which was reflected under the head ‘Business Income’, which in the opinion of AO, was taxable under the ITA No.2650 & 3747/Mum/2015 Essar Properties Limited Assessment Year 2010-11 head ‘Income from House property’. After hearing assessee’s contention and placing reliance on various judicial pronouncements and status of assessment in earlier years, AO treated the same under the head ‘Income from House Property’ against which the assessee was entitled for statutory deduction of 30% and property tax only. Further, the assessee’s claim of set-off of unabsorbed depreciation for AY 1995-96 was rejected on the premises that the same was not available beyond a period of eight years as per the law prevailing at the relevant time. Aggrieved, the assessee successfully carried both the matters before First Appellate Authority vide order dated 24/02/2015 where the Ld. CIT(A) placing reliance on the decision of its predecessor and Tribunal in assessee’s own case for earlier Assessment Years accepted the stand of assessee in treating rental income under the head ‘Business income’ and also directed AO to allow set-off of depreciation as per law after verifying earlier years record. Aggrieved, the revenue is in appeal before us.

3. At the outset, Ld. Counsel for Assessee [AR], Shri Vijay Mehta, drew out attention to various orders of Tribunal in assessee’s own case from AY 2005-06 to 2009- 10 to contend that the issue of taxability of rental income under the head ‘Business Income’ as per the contentions of the assessee has been accepted by the Tribunal in all these years. Further, the revenue’s appeal against Tribunal order for AY 2005-06 was dismissed by Hon’ble Bombay High Court in of 2011 judgment dated 28/02/2012 on the premises that no substantial question of law arose. The copies of relevant judicial pronouncements have been placed in the paper-book. The Ld. DR conceded the settled position and fairly stated that the issue stood covered in assessee’s favor in the wake of all these judicial pronouncements. This being the settled position, we dismiss Ground No. 1 of revenue’s appeal. Consequently, the assessee becomes entitled to claim the business expenditure as per law against the same, which results into dismissal of Ground No.2 of revenue’s appeal. Regarding the set-off of unabsorbed depreciation of AY 1995-96, the Ld. AR has placed reliance on the judgment of Hon’ble Gujarat High Court in the case of General Motors India P. Ltd. Vs DCIT [354 ITR 244 & 3747/Mum/2015 Essar Properties Limited Assessment Year 2010-11 23/08/2012] to contend that the set-off of unabsorbed depreciation has been allowed by the Gujarat High Court after considering the relevant statutory provisions of Section 32 as amended by the Finance Act, 2001 and CBDT Circular No. 14 of 2001 and moreover, Special Leave Petition [SLP] filed by the revenue against the said judgment has been dismissed by the Apex court. The revenue could neither controvert the same nor was able to bring any contrary judgment on record. Therefore, respectfully following the above judgments, we hold that the set-off of the unabsorbed depreciation was available to the assessee during the impugned AY and accordingly, dismiss Ground No.

Order pronounced in the open court on 17th April, 2017.