NARENDRAPAL GUPTA,MUMBAI vs. ASST CIT CEN CIR 30, MUMBAI

ITA 6634/MUM/2014Status: DisposedITAT Mumbai08 June 2016AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the lease rentals received for furniture and fixtures, which were in the nature of amenities attached to the building, should be assessed under the head 'Income from House Property'. This decision followed a previous ruling in the assessee's own case for the preceding assessment year.

What were the facts?

The assessee treated lease rentals received for furniture as 'income from house property'. The AO and CIT(A) treated it as 'income from other sources' based on Section 56(2)(ii) of the Income Tax Act.

What were the issues?

Whether lease rentals for furniture and fixtures, when considered as amenities attached to a property, should be taxed as 'income from house property' or 'income from other sources'.

Which sections of the Income-tax Act were involved?

Section 56(2)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: Shri Mahavir Singh & Shri Rajesh Kumar

For Appellant: Shri J P Bairagra

For Respondent: Shri Sanjeev Jain

Hearing: 30.05.2016Pronounced: 08.06.2016

O R D E R Per Mahavir Singh, Judicial Member

This appeal by assessee is arising out of the order of the CIT(A) – 39, Mumbai, in appeal No.CIT(A)-39/IT-178/2013-14 dated 15.01.2014. The assessment was framed by the ACIT Cen. Cir 30, Mumbai, for A.Y. 2011-12 vide his order dated 31.12.2013 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

The only issue in this appeal of the assessee is against the order of the CIT(A) confirming the action of the AO in treating lease rentals received for furniture as taxable under the head ‘income from other sources’ instead of income declared by the assessee as ‘income from house property.’

We have heard the rival contentions and have gone though the facts and circumstances of the case. We find from the case records that the AO assessed the income declared by the assessee from lease rentals received for furniture as ‘income from other source’ as against declared by the assessee as ‘income from house property’. Aggrieved the assessee preferred appeal before the CIT(A), who just by following earlier years decision confirmed the action of the AO vide para 3 & 4 of his order, which read as under:

“3. The only ground raised in the appeal is with regard to the action of the AO in bringing to tax the rental income from lease of furniture and fixtures under the head ‘Income from other sources’. This issue has been dealt with by me for the immediately preceding year, in order No.CIT(A)39/AC.CC.30/IT-67/2012-13 dated 11.03.2013, wherein it has been held as under:- “I have perused the two Agreements produced by the appellant. It is seen that one Agreement had been entered into for Lease of Furniture and Fixtures dated 19.04.2008. As per the said Agreement, the appellant/owner gave on hire furniture, fixtures, electrical items, a list of whch has been set out as per the Schedule appended to the Agreement. As per Sec.56(2)(ii), the income from machinery, plant or furniture let out on hire, is chargeable under income from other sources. Hence, furniture and fixture as spelt out in the separate Furniture and Fixtures Hire Agreement has been leased out and hence, as per law, is assessable under the head “Other Sources”. Hence, I decline to interfere with the action of the A.O.”

4. There is no difference in the facts for the impugned year and hence, I am of the view that no interference with the finding of the earlier year is warranted. The action of the A.O is confirmed.” Aggrieved against the action of the CIT(A), the assessee came in second appeal before the Tribunal.

At the outset, the learned counsel for the assessee fairly stated that the issue is covered in favour of the assessee and against the revenue by the Tribunal’s decision in the assessee’s own case for the immediately preceding year i.e. A.Y. 2010 -11 in dated 03.02.2016, wherein the Tribunal has treated the income as ‘income from house property’ by observing as under:

“6. Having heard the rival contentions, we are of the view that there is merit in the contentions of the assessee. It is a well settled proposition of law that substance will prevail over the form. We have noticed that the assessee has entered into two separate agreements while leasing out the premises, viz., one for leasing out the premises and another one for leasing out furniture and fixtures. The lease agreement entered for leasing out the furniture and fixtures contains a list of items covered by it. A perusal of the said list would show that they are amenities attached with the building only. For the sake of convenience, we extract below the list of items which have been named as “furniture and fixtures”: “i. Two lockable single Wardrobes in every room; ii. Modular Kitchen in Kitchen; iii. Water Purifier (with 24 months warranty); iv. Sliding covering Niche Areas in each Bedroom; v. Intercom system; vi. Installation of Safety grills on all windows in the said building; vii. Provision of one-liter hot water instant Geyser in Bathrooms (with 24 months warranty); viii.Tube lights and fans; ix. Plaster of paris work done in the flats; x. Stilt Car Parking spaces : 9 (nine )Nos.; xi. Open car parking spaces: 60 (sixty) Nos. xii. 24 hrs Security Guards presence at the compound’s main gate, at the ground floor lobby entrance the building and in the car parking areas. There would be 3 guards of M/s Trig……Ltd working 8 hours shift each at the entrance of lobby of the building….” A careful perusal of the details given above would show that they are in the nature of amenities only and hence, in our view the decision rendered by the Hon’ble Hyderabad Bench of the Tribunal in the case of G Raghuram (supra) shall squarely apply to the facts of the present case. In addition to the above, we notice that the Co-ordinate Benches of the Tribunal has also taken identical views in the case of Unique Construction and Developers (supra) and also in the case of Mrs. Manju Gupta (supra). Accordingly, we are of the view that the lease rent received by the assessee for the building as well as furniture and fixtures, which are in the form of amenities only, should be assessed as income under the head “Income from House Property”.

Accordingly, we set aside the order of ld. CIT(A) and direct the AO to assess the entire lease rental income received under both the agreements as income under the head “Income From House Property”.

Respectfully following the Tribunal decision in the assessee’s own case for the immediately preceding year, we allow the case of the assessee.

In the result, the assessee’s appeal is allowed.

Order pronounced in the open court on this day of 8th June 2016.

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