ASHAPURA DEVELOPERS,MUMBAI vs. JCIT -RANGE 25(1), MUMBAI

However, the assessee has take the number of grounds in his appeal but the sole ground which is in dispute is that the rental income received by the assessee is liable to be treated as income from house property or income from business. The assessee filed the return of income declaring total income to the tune of Rs.14,52,84,405/- on 14.10.2010. The return of income was processed u/s.143(1) of the Income Tax Act, 1961 ( in short “the Act”). Thereafter, the case was selected for scrutiny. It came into notice that the assessee firm has shown the rental income to the tune of Rs.8,34,46,573/- and claimed 30% deduction u/s.23 of the Act. The assessee has developed a shopping-cum-office complex in the name and style of M/s.Hallmark Business Plaza in Bandra (East), Mumbai. Apart from letting out office space he was deriving rent from it, the appellant also maintained the complex and also earned income from various 3 A.Y. 2010-11 activities linked to the complex like parking charges, amenities charges, mobile charges etc. The Assessing Officer was of the view that the assessee was letting out the property used for business, therefore, the same was not liable to be treated as income from house property but as business income. Therefore, the lease income was treated as bussiness income and Assessing Officer assessed the income to the tune of Rs.15,99,62,580/-. Feeling aggrieved the assessee has filed the present appeal before the CIT(A) who confirmed the order of the Assessing Officer, hence the assessee has filed the present appeal before us.

The contention of the assessee is that the assessee is in the business of construction and development of the property. Its main object is construction and the assessee leased out the unsold property on rent, therefore the rental income from the said property is liable to be treated as house rent income. In support of his claim, the learned representative of the assessee has placed reliance upon the law settled by Hon’ble Bombay High Court in case of Commissioner of Income Tax 12 Vs. M/s. Sane & Doshi Enterprises on 9 April, 2015. On the other hand the learned representative of the department has placed reliance upon the order passed by the CIT(A) in question. It is not in disputed that the assessee has developed a shopping-cum-office complex in the name and style of M/s.Hallmark Business Plaza in Bandra (East), Mumbai. He has let out the office place for rent to 4 A.Y. 2010-11 different entities and derived income from it. Beside this the assessee was also doing the maintenance of complex and also earning income from various activities linked to the complex like parking charges, amenities charges, mobile charges etc. In brief the assessee had let out the property and was rendering the services attributable to the complex. Since the Assessing Officer was of the view that the assessee was commercially exploiting his shops cum office complex, therefore the income of the assessee is liable to be treated as business income. Hence the Assessing Officer declined the contention of the assessee and treated the income from business income despite income from house property. Undoubtedly the learned CIT(A) has confirmed the same. The learned representative of the assessee has relied upon the law settled by the Hon’ble Bombay High Court in case of Commissioner of Income Tax 12 Vs. V/s. Sane & Doshi Enterprises decided on 9 April, 2015. Now it is to be seen whether the facts of the case is identical to the facts of this case or not. The said order perused which speaks that the assessee was engaged in the real estate business and constructed a complex viz. May Fair Tower. It is stated to be a partnership firm registered under the Indian Partnership Act, 1932. He has also shown the rental income but the authority treated the same as income from business. Therefore, the matter went up to the Jurisdictional High Court and the Hon’ble High Court in the case cited above decided the matter in favour of the assessee. The facts and circumstances of this case is quite similar to the facts and 5 A.Y. 2010-11 circumstances of the present case. In both the cases the assessee have constructed commercial complex and rented out the unsold shops / offices on lease. In case of the Hon’ble Bombay High Court, Commissioner of Income Tax 12 Vs. M/s. Sane & Doshi Enterprises decided on 9 April, 2015,the income of the assessee was treated as income from house property. Finding identical facts and circumstances of the present case, we are of the view that in the present case the law is quite applicable and the income of the assessee is liable to be treated as income from the house property and accordingly he would be entitled exemption u/s.22 of the Act. hence in view of the above said law we set aside the finding of the CIT(A) in question and direct the Assessing Officer to re-assess the income of the assessee in view of the observation made above.

In the result, the appeal filed by the assessee is hereby Allowed for statistical purpose.