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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: SHRI JOGINDER SAINGH & SHRI ASHWANI TANEJA
Date of hearing : 05-05-2016 Date of order : 18-05-2016
O R D E R Per ASHWANI TANEJA, AM
This appeal has been filed by the assessee against the order of the Commissioner of Income-tax (Appeals) (hereinafter called “CIT(A)”) dated 03- 01-2014 for the assessment year 2011-12 raising the following grounds of appeal:
“1. On the fact and in the circumstances of the case and in law, the 1
CIT(A) erred in holding that amount of' 44,66,0391- is chargeable as " income from House Property" and not as "income from business".
2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in not appreciating that the income was from exploitation of commercial assets because of temporary lull in business which is chargeable as income from business and not income from House property.
3. On the facts and circumstances of the case and in law, the CIT (A) erred in holding that the expenditure of 36,47,2461 - is not allowable as business expenditure as there is no business activity carried on during the year.
4. Without prejudice, the CIT(A) erred In not allowing the expenditure of '36,47,246/- under the head "income from other sources" as these are expenditure essential for running of the company.
5. CIT(A) erred in holding disallowed u/s 14A r.w rule 8D of Rs.23,07,4351 - after considering allowance @30% under Income from house property..”
During the course of hearing it has been stated at the very outset by the ld.counsel of the assessee that issues involved in the present appeal stand covered with the decision of the Tribunal in assessee’s own case for A.Y. 2009- 10 in order dated 17-02-2016. Copy of the decision has been placed on record.
On the other hand, the Ld. Departmental Representative for the Revenue has relied upon the orders of lower authorities.
4. We have gone through the facts of this case as well as copy of order of the Tribunal for A.Y. 2009-10 in assessee’s own case and find that all the grounds in the present appeal are covered with the said order and we dispose of the same in the following manner:
Grounds 1 to 4 : In these grounds, the main issue to be decided is whether the lease rental received by the assessee to be assessed under the head “Income from House Property” or under the head “Business Income” as declared by the assessee in its return. Identical issue on this very income arose in A.Y. 2009-10. Relevant para of the order of the Tribunal for A.Y. 2009-10 is reproduced hereunder:-
“3.2 At the outset, the Ld. AR for the assessee submitted that the issues raised in grounds 1 to 4(supra) are squarely covered by the decision of the co-ordinate bench of this tribunal in the assessee's own case for Asst.year 2007-08, wherein the same issue of whether the income from leave rentals received by the assessee was to be assessed under the head 'business income' as declared by the assessee or 'Income from house property' as held by the authorities below was considered. The co-ordinate bench in its order in dt. 16/12/2015 has held that in view of the facts and circumstances of the case, as the assessee is not in the business of letting out of its assets for earning business income, the Assessing Officer is directed to assessee the said income as 'Income from other Sources'. The operative portion at para 3 of the order of the Co- ordinate bench for Asst. year 2007-08(supra) is extracted hereunder:-
“We have considered rival contentions and found that the assessee company was acting as shipping agent of Himalya express up to F. Y.2001-02. During the F. Y. 2002-03 agency 3 was terminated and company received compensation of Rs. 1.96 crore which was offered to tax. Having failed in its efforts to revive business and left with staff along with all peripherals like furniture, fixture, computers, cabins, cubical etc. the company leased out four premises to various licenses on leave and license along with various furniture, fixture and equipment, details of which have been incorporated in para 3.3 at page 2 of the CIT(A)'s order. Letting out of premises along with equipment and furniture & fixture was inseparable from each other. Premises along with equipment and furniture & fixture were leased out so that employees of the company can be paid and administrative expenses can be met while company explores possibility of reviving its agency business with other carriers. From the record we found that claim of the assessee for treating such income as income from business or profession is confirmed by the IT department itself during the assessment of earlier year i.e. 2006-07. Copy of order u/ s 143(3) along with copy of balance sheet and profit & loss account was also placed on record. Keeping in view the totality of facts and circumstances of the case vis-a-uis the fact that assessee is not in a business of letting out its assets for earning business income, we direct the Assessing Officer to assess the income as (income from other sources'.
3.3 Following the aforesaid order of the co-ordinate bench in dt. 16/12/2015 for Asst. year 2007-08 in the assessee's own case, we direct the Assessing Officer to assess the assessee's lease income from letting out of its assets as 'Income from other sources'. Ground~ to 4 of this appeal are disposed off as indicated above.”
No distinction on facts has been made before us. Thus, we direct the Assessing Officer to follow the order of A.Y. 2009-10 and assess lease income as “Income from other sources” and also allow the expenses accordingly. The Assessing Officer is directed to follow the order of Tribunal for assessment year 2009-10.
Ground 5. In this ground, the assessee has raised the issue of disallowance u/s 14A r.w. rule 8D for Rs.23,07,435. It has been unanimously submitted by both the parties that similar issue was involved in A.Y. 2009-10 wherein the Tribunal has decided the issue as under :-
“We have heard both the Ld. AR for the assessee and the Ld. DR for the revenue in the matter and perused and carefully considered the material on record. It appears from a perusal of the impugned order of assessment that no disallowance u/s 14A L w. Rule 8D was made while computing the taxable income of the assessee in view of the fact that the assessee's income from lease rentals was brought to tax by the Assessing Officer under the head ' Income from House Property' and not 'Business Income' as claimed by the assessee. The Assessing Officer however worked out disallowance u/s 14A r. w. Rule 80 at Rs. 13,60,082/- which he states will come into effect in the event that on appeal any expenditure be allowed as deduction. In the light of the fact that we have followed the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Asst. year 2007- 08(supra) in holding that the assessee's income from lease rentals be assessed under the head ' Income from other Sources'; which would imply allowing of permissible deductions of expenditure, if any and the assessee's claim for exemption of dividend income u/s 10(34) of the Act being restored to the file of the Assessing Officer for fresh examination, it would be necessary and in the fitness of things that the Assessing Officer's computation of deduction u/s u/s 14A r.w. Rule 80, which would now come into play, to be also examined afresh by the Assessing Officer and adjudicated upon after affording the assessee adequate opportunity of being heard and to file details submissions in this regard. It is accordingly ordered. Consequently, ground is treated as allowed for statistical purpose.”
It is noted from the above said order of the Tribunal that the issue of disallowance u/s 14A has been sent back to the file of the Assessing Officer for fresh adjudication. The facts in this year too, undisputedly, remain as well. Therefore, this issue is sent back to the file of the Assessing Officer and the Assessing Officer is directed to follow the directions given by this Tribunal for A.Y. 2009-10.
As a result, appeal is partly allowed.
Order pronounced in the court on 18th My, 2016.