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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI G.S.PANNU
The captioned appeal of the assessee is directed against the order passed by CIT(A)-12, Mumbai dated 11/11/2014, pertaining to the assessment year 2010-11, which in turn has arisen from the order passed by the Assessing Officer dated 07/02/2013 under section 143(3) of the Income Tax Act, 1961 ( in short ‘the Act’). 2. In this appeal assessee has raised the following Grounds of appeal:- “ On the facts and in the circumstances of the case the learned Dy, Commissioner of Income Tax Officer, Range 6(2), Mumbai (DCIT):
1. Rent received- Income from Business or House Property:
,(A. Y : 2010-11) erred in relating the incidental rent income under the head house property without appreciating the fact that the main business activity of the appellant is to acquire properties, develop the same and give them on rent is the main object as per Memorandum of Association of the company and further the assets are held as stock in trade; 2. Compensation –Income from Business or Other sources: erred in treating the incidental compensation received for early vacation of premises under the head Other Sources without appreciating the fact that the main business activity of the appellant is to acquire properties, develop the same and give them on rent is the main object as per Memorandum of Association of the company and further the assets are held as stock in trade; 3. Disallowance of Business loss: Erred in considering no business activity carried on by the appellant as the rental income is considered under the head house property and compensation under the head Other sources and thereby not allowing any expenditure under the head business income; 4. Disallowances of expenditure for increase of Authorized Capital Erred in disallowing the expenditure incurred on increase of authorized capital, without appreciating the fact that the same is revenue in nature.”
The issue raised in Ground of appeal No.1, relates to the assessability of rental income of Rs.10.00 lacs earned by the assessee in respect of the property let out. The appellant had treated it as an income assessable under the head ‘income from business and profession’, whereas the Assessing Officer taxed it under the head ‘income from house property’. The said action of the Assessing Officer has been confirmed by CIT(A).
Before me it was a common point between the parties that identical issue came up before the Tribunal in assessee’s own case for assessment year 2008-09, wherein the Tribunal vide its order in ITA
,(A. Y : 2010-11) No.6216/Mum/2013 dated 4/11/2015 has set-aside the matter to the file of the Assessing Officer for a decision afresh, in the light of the Hon'ble Supreme Court’s decision in the case of Chennai Properties & Investments Ltd.,373 ITR 673(SC). It was therefore, contended that in this year too, the matter may be remanded back to the file of Assessing Officer, to be decided afresh in the light of aforesaid precedent. As a consequence, the order of the CIT(A) is set-aside and the Assessing Officer is directed to decide the issue afresh in the light of the Tribunal’s order dated 4/11/2015(supra).
The issue in second Ground of appeal relates to the taxability of an amount received by the assessee as compensation from the lessee of the property for non-compliance with the terms of lease agreement. The Assessing Officer treated the said sum as assessable under the head ‘income from other sources’ as against assessee’s claim of such income being assessable under the head ‘income from business and profession’.
5.1 At the time of hearing, Ld. Representative for the assessee submitted that the determination of the said dispute would be impacted by the decision in the issue raised in Ground of appeal No.1 also. Apart there from, the Ld. Representative for the assessee submitted that the assessee wishes to raise an additional point of law, which is to the effect that the said compensation was a capital receipt not chargeable to tax. Ld. Representative for the assessee submitted that in view of the decision to remand back the issue in Grounds of appeal No.1, , this Ground may also be remanded back , to be decided
,(A. Y : 2010-11) again, including the additional point of law that the assessee wishes to canvass. 5.2 The Ld. Departmental Representative has not opposed the plea of the assessee. Accordingly, consequent to the decision in Grounds of appeal
No.1, the assessability of the compensation from lessee for non- adherence to the terms of lease agreement is also remanded back to the file of Assessing Officer, to be decided afresh in accordance with law. The assessee shall be at liberty to put-forth any claim in support of its stand, which shall be dealt with by the Assessing Officer in accordance with law. This Ground of appeal of the assessee succeeds for statistical purposes.
6. In Ground of appeal No.3, the issue arise from the action of the Assessing Officer in treating the rental income under the head ‘house property’ and thereby not allowing any expenditure under the head ‘business income’. This Ground is also remanded to the file of Assessing Officer to be decided afresh in accordance with law.
The last Ground of appeal relating to disallowance of expenditure incurred on increase in authorized capital was not pressed and accordingly the same is dismissed as not pressed.
In the result, appeal of the assessee is partly allowed, as above. [[ Order pronounced in the open court on 29/06/2016.