MACHINERY & SPARES,MUMBAI vs. JT CIT 23(1), MUMBAI

2 Machinery & Spares 3. The assessee before us is a partnership firm engaged in the business of trading of workshop machinery, accessories etc. It transpires that the assessee was occupying office premises at Fort, Mumbai which it subleased to ICICI Bank. The question arose as to whether the income from subletting was assessable under the head “income from house property” or “income from other sources”. In the instant assessment year the A.O., following the decision in earlier assessment years starting from assessment year 2005-06, took the stand that since the assessee was not owner of the property, the income from sub-letting was to be assessed under the head “income from other sources”. Consequently, the deduction claimed by the assessee under Section 24 was disallowed. The ld. CIT(A) has differed with the A.O. and instead upheld the plea of the assessee that the impugned rental income was assessable under the head “income from house property”.

At the time of hearing, it was a common ground between the parties that in A.Y. 2005-06 the issue came up before the Tribunal and vide ITA No. 3008/Mum/2008 dated 09-10-2009 the issue was decided in favour of the assessee. The following discussion in the order dated 09-10-2009 (supra) of the Tribunal is relevant:- “We have considered the rival submissions. We find that the assessee is in possession of the premises for the last 40 years. The premises were with M/s Bharat Import and Exports as tenant and this firm was dissolved vide dissolution of the partnership made on 3-4-1958. Thereafter the tenancy right in the premises were received by the assessee. The owners of the property M/s. Vrindavan Lal Goverdhan Lal have allowed the assessee firm to create sub-tenancy with the regard to the premises and has given their premises for creating the sub-tenancy in favour of ICICI Bank, Ltd. for a period of 15 years on certain terms and conditions as detailed in their letter dated 24/11/2000 addressed to the assessee, copy thereof filed in the compilation before us. In these facts of the case we find that the assessee become a deemed owner· in accordance with provision of section 27(iiib) r.w.s. 269UA(f)(i) of the Act. There is no material on record to suggest that the letter dated 24/11/2000 of M/s. Vrindavan Lal Goverdhan Lal is not genuine. The fact that the agreement for letting out the premise s to ICICI Bank Ltd is for a period of 15 years, clinches the issue in favour of the assessee as they become the deemed owner under the provision of section 27(iiib) r.w.s. 269 UA (f)(i) of the Act and accordingly is entitled to deduction as provided u/s 24(a) of the Act. The decision of the Mumbai Tribunal in 8 SOT 441 and Calcutta Tribunal in 89 ITD 199 covers the issue in this case in favour of the assessee and accordingly we hold that there is no mistake in the order of CIT(A) in holding that the assessee is the deemed owner of the premises u/s 27(iiib) of the Act and the order of the CIT(A) is confirmed and the grounds of appeal of the revenue are dismissed.”