Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal by the assessee is arising out of the order of CIT(A)-13, Mumbai, in appeal No. CIT(A)-13/ITO-7(1)(3)/407/2007-08 dated 22-03-2010. The Assessment was framed by ITO ward 7(1)(3), Mumbai for the A.Y. 2007-08 vide order dated 14-03-2013 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) in confirming the action of the AO in treating the income under the head income from other sources instead of treating it as income from house property as returned by the assessee for the reason that assessee is not deemed legal owner in term of proviso of clause (iiia) of Section 27 of the Act. For this assesse has raised following grounds: -
“1. On the facts and circumstances of the case and in law, the Commissioner of income Tax (Appeals)-13, Mumbai ("the CIT (A)") erred in confirming the action of the Deputy commissioner of Income Tax -7 (1), Mumbai
Normandy Development (P) Ltd. ("the A.O.") of treating the income of Rs. 43,77,500/- as income under the head "Income from Other Sources" instead of treating it as "Income from House Property" as returned by the Appellant on the alleged ground that the assessee is not the deemed or legal owner of the property.
In doing so, he erred in not applying the provisions of clause (iiia) of Section 27 which deal with deemed ownership.
3. He failed to appreciate and ought to have held that the Appellant had purchased the property from the Printers India vide a Memorandum of Understanding dated March 25, 2006 and therefore, was the undisputed owner of the same.
4. The Appellant, therefore, prays that it be held that the Appellant is the owner of the said property and hence the income should be assessed under the head "Income from House Property" instead of the head "Income from Other Source.”
At the outset both the parties agreed that the issue relevant to the head of income under which head of income is to be charged to Income Tax. For this learned Counsel for the assessee stated that the issue is clearly covered in favour of assessee by the decision of Hon'ble Bombay High Court in assessee’s own case in Income Tax Appeal No. 2431 of 2009 dated 07-01-2010, wherein Hon'ble Bombay High Court considered the issue in Para 4 as under: - “4. The submissions cannot be accepted Under Claus (iiib) of Section 27, a person who acquires any rights in or with respect to any building or part thereof, by virtue of a transaction as is referred to in clause(f) of Section 269UAis deemed to be the owner of a building or part thereof. However, the bracketed portion of clause (iiib) excludes certain transactions; these being the acquisition of rights under a lease which operates from month to Page 2 of 4
Normandy Development (P) Ltd. month or for a period not exceeding one year. Hence, where the acquisition of rights under a lease is otherwise than by way of a lease from month to month or is fora period in excess of one year the exclusion will not apply. If the contention of the revenue Were to be accepted, the bracketed portion of clause (iiib) of Section 27 would cease to have any significance. In the present case, the lease was admittedly for a. period of ten years and would therefore, not fall within the exception carved óut by clause (iiib) of Section 27.”
Further, similarly all along Tribunal in assessment years 1998-1999,1999- 2000, 2000-2001, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006 & 2006-2007 has considered in favour of assessee and Revenue in assessment year 2008-09 and 2009-10 while assessing income under section 143(3) of the Act accepted this position. The Tribunal in a consolidated order of these years in for assessment year 1998-99 and others vide order dated 09-07-2010 has considered the issue vide para 10 as under: -
“10. At the time of hearing before us, the ld. Representatives of both the sides have agreed that the issue relating to the head of income under which rental income is chargeable to tax- nosy stands squarely covered by the decision of Hon'ble Bombay High Court in assessee's own case for A.Y. 2001-02 rendered by their judgment dated 7.1.20 10 passed in I.T. Appeal No. 2431 of 2009 wherein it has been held that the lease between the assessee company and MIs Prince India being for a period of 10 years, the case of the assessee would not fail within the exception carved out by. clause (iiib) of section 27 and the assessee thus was deemed owner of the said property. The Hon'ble jurisdictional High Court thus upheld the decision of the Tribunal homing that the rental income received by the assessee from sub-lease of the said property is chargeable to tax under the head
Normandy Development (P) Ltd. "income from house property". Respectfully following the said decision of the Hon'ble jurisdictional High Court in assessee's own case for A.Y. 2001-02, we set aside the impugned of der of the Id. CIT(A) on this issue and direct the A.O. to assessee the rental income received by the assessee under head "income from house property.”
Both the parties agreed that the facts are exactly identical and hence, respectfully following Hon'ble Bombay High Court and Tribunal order in other years in assessee’s own case, we allow the appeal of the assessee and orders of the lower authorities are set aside.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 28-02-2017.