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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
.. Shri Kyuri Desai, AR Assessee by Revenue by .. Shri Suman Kumar, DR .. Date of hearing 01-03-2017 Date of pronouncement .. 01-03-2017 O R D E R PER MAHAVIR SINGH, JM:
In these two appeals one by the assessee and another by the Revenue are arising out of the same order of CIT(A)-9, Mumbai, in appeal No. CIT(A)- 9/DCIT-5(2)/263/2012-13 dated 04-03-2014. The Assessment was framed by DCIT Circle-5(2), Mumbai for the A.Y. 2010-11 vide order dated 22-02-2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee in AY 2010-11 is as regards to the order of CIT(A) whether the license fee / compensation earned by assessee be taxed under the head profits and gains of business instead under the head income from house property. At the outset, the ITA No.2488 & 3844/Mum/2014 National Reality P Ltd.; AY.10-11 learned Counsel for the assessee filed a copy of Tribunal order in for the AY 2009-10 order dated 29-06-2016, wherein Tribunal has remanded the matter back to the file of the AO vide Para 4 as under: -
“4. According to issue no.1 &2 the claim of the assessee is that the compensation for amenities is business income and cannot be treated as rental income. On appraisal of order of the Income Tax Appellate Tribunal in the assessee’s own case for the A.Y.2005-06, the contention of the assessee has been declined and the compensation for amenities has been treated as rental income. The said orders also speak that the matter of controversy is pending before Hon’ble Bombay High Court for disposal. The Hon’ble Tribunal has decided the matter of controversy on the basis of Calcutta High Court, in case titled as Commissioner of Income Tax Vs. Shambhu Investment Pvt. Ltd. [2001] 249 ITR 47. The representative of the assessee has argued that the matter of controversy has now been adjudicated by the Hon’ble Supreme Case in case of Chennai Properties & Investment Ltd. Vs. CIT [2015] 373 ITR 0673 (SC). However, on the other hand the learned departmental representative has refuted the said contentions. In the instant case the assessee filed the return of income by declaring the rental income from house property to the tune of Rs.12,73,37,632/-. The assessee also received the compensation from amenities to the tune of Rs.1,24,08,780/-. However, the said income has been claimed by the assessee as business income. The Hon’ble Supreme Court has observed in the above mentioned case i.e. Chennai Properties & Investment Ltd. (Supra) that where in the terms of memorandum of association, the main object of the company is to acquire the property and to earn the income by letting out the property, the said income was brought to tax as business income not as income from house property. In view of the said circumstances we are of the view that the matter of controversy is required to be re-examined / verified afresh in & 3844/Mum/2014 National Reality P Ltd.; AY.10-11 view of the observations of the Hon’ble Supreme Court in the case of Chennai Properties & Investment Ltd. (Supra). Accordingly, we set aside the finding of the learned CIT(A) on this issue and remand the case to the Assessing Officer to reconsider the matter of controversy in view of the guidelines contained in the judgment of Hon’ble Supreme Court in the case of Chennai Properties & Investment Ltd. (Supra). The Assessing Officer would provide the reasonable and proper opportunity to the assessee before passing the order in the interest of justice”
Similarly, in for the AY 2011-12 Tribunal has followed the order of Tribunal vide order dated 16-12-2016 and remanded the matter back to the file of the AO vide Para 4.2 as under: - “4.2 Following the aforesaid decision of the Coordinate Bench of the Tribunal in the assessee’s own case in ITA No. 5839/Mum/2012 dated 29.06.2016 for A.Y. 2009-10, we too are of the view that the matter of controversy is required to be re-examined/verified afresh in view of the observations of the Hon'ble Apex Court in the case of Chennai Properties & Investment Ltd. (2015) 373 ITR 673 (SC). In this view of the matter we set aside the finding of the learned CIT(A) on this issue and restore this matter to the file of the AO to reconsider the matter of controversy in the light of the guidelines laid down in the judgement of the Hon'ble Apex Court in the case of Chennai Properties & Investment Ltd. (supra), after affording the assessee adequate opportunity of being heard and to file details/ submissions in this regard.”
Respectfully following the above Tribunal decision in assessee’s own case in earlier years. We restore this matter back to the file of the AO exactly on same reasons. The appeal of assessee is allowed for statistical purpose.
Coming to the Revenue’s appeal in for AY 2010-11, the only issue is as regards to the assessment of long term capital loss. For this Revenue has raised following ground: - Page 3 of 5 & 3844/Mum/2014 National Reality P Ltd.; AY.10-11 “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to allow Long Term Capital Loss amounting to Rs. 2,70,08,674/- on sale of furniture and fixtures even though assessee was not in a position to furnish evidence of purchase of furniture and fixtures even before the Ld. CIT(A).”
5. At the outset, it is noticed that in the above two years Tribunal has already directed that this is consequential issue and hence, this ground will be decided after the adjudication of the first issue of assessee’s appeal. We find that the Tribunal in for the AY 2011-12 order dated 16-12- 2016 has taken a similar view vide Para 4.3 as under: - “4.3 The other grounds are related to the finding of the AO while deciding the matter of controversy on adjudication of issue raised in grounds No. 1 and 2 as decided above and those grounds would be consequential to the findings thereon. In these circumstances, we accordingly also set aside and restore these issues/grounds to the file of the AO to consider/adjudicate the same afresh in the light of the decision taken by him while deciding the issues at No. 1 & 2. We hold and direct accordingly.”
Respectfully following the same, we restore this issue of the appeal back to the file of the AO.
In the result, both the appeals i.e. of the Revenue and of the assessee are set aside in the file of the AO. Order pronounced in the open court on 01-03-2017.