PALM COURT BUILDINGS P.LTD,MUMBAI vs. ITO 1(2)(4), MUMBAI

13/04/2016 सुनवाई क� तार�ख / Date of Hearing : 29/04/2016 आदेश क� तार�ख /Date of Order: आदेश / O R D E R Per Ashwani Taneja (Accountant Member): This appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), Mumbai-2 {(in short ‘CIT(A)’}, dated 22.02.2013 passed against

2 Palm Court B. P. Ltd. assessment order u/s 143(3) dated 30.12.2010 for the Assessment Year 2008-09 on the following grounds: “1.1. The Commissioner of Income tax (Appeals) - 2, Mumbai, ["Ld. CIT (A)"] erred confirming the action of the assessing officer ["the A.O."] in computing the compensation income of Rs. 32,94,300/- under the head 'Income from House Property' instead of computing the same under the head 'Profits and Gains of Business'. 1.2. It is submitted that, in the facts and circumstances of the case, and in law, no such action was called for, 1.3. The appellant prays that the income of Rs. 32,94,300/- be computed under the head Profits and Gains of Business'. 2.1. Without prejudice to the generality of the above ground, it is submitted that, in any case, the Ld. CIT (A) erred confirming the action of the A.O. in computing the compensation derived from Tata Tea Ltd. under the head 'Income from house property' instead of computing the same under the head 'Profits and Gains of Business'. 2.2. Without prejudice to the above, the Ld. CIT (A) erred in confirming the action of the A.O. in treating the compensation received from Tata Tea Ltd. under the head 'income from House Property' instead of computing the same under the head 'Income from other sources'. WITHOUT PREJUDICE TO THE ABOVE: 3.1 The Ld. CIT (A) erred in confirming the action of the A.O. in not bifurcating the compensation income between the income that is liable to be taxed under the head 'Income from house property' and the income that is liable to be taxed under the head 'Income from other sources'. 3.2 It is submitted that, in the facts and circumstances of the case, and in law, the compensation income, if not liable to be taxed as business income, was required to be appropriately bifurcated between house property income and income from other sources. WITHOUT PREJUDICE TO THE ABOVE: 4.

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4.1 The A.O. erred in not computing the income under the head 'Income from house property' in accordance with law. WITHOUT PREJUDICE TO THE ABOVE: 5.1 The Ld. CIT (A) erred in confirming the action of the A.O. in not allowing the establishment expenses and other similar expenses incurred by the appellant as business expenses or business loss under the head "Profits and Gains of Business".

3.1. It is noted from the facts borne out from the orders of the lower authorities that during the year, the assessee company was engaged in earning income from rent from various tenants of its property known as Palm Court situated at 152, M.K. Mumbai. The assessee showed the said income in its return of income under the head of ‘income from business’. The AO conducted the proceedings in detail and assessed the said income from house property.

3.2. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A) wherein no relief was given and order of the AO was upheld and appeal of the assessee was rejected.

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3.3. Being aggrieved the assessee filed an appeal before the Tribunal.

3.4. During the course of hearing before us, Ld. Counsel of the assessee submitted at the very outset that facts of assessee’s business have not been properly appreciated by the lower authorities. Our attention was drawn on the various pages as contained in the Memorandum of Association of the assessee company to argue that assessee was engaged in the business of management of estate. He placed reliance upon the recent judgment of Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd V/s CIT (2015) 373 ITR 673 (SC) and submitted that case of the assessee was squarely covered with the judgment of Hon’ble Supreme Court.

3.5. Per contra, the Ld. DR submitted that the facts of the case of the assessee need to be examined, in view of the guidelines given by the Hon’ble Supreme Court in the aforesaid judgment. He also placed reliance upon the judgment of Hon’ble Supreme Court in the case of Shambhu Investment (P) Ltd. Vs. CIT 263 ITR 143 (SC).

3.6. We have gone through the orders of the lower authorities as well as order of Supreme Court. In our view, this appeal needs to be sent back to the file of the AO for proper verification of facts in view of judgment of Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd. (supra). Thus, we send this appeal along with all the grounds 5 Palm Court B. P. Ltd. raised before us back to the file of the AO who shall give adequate opportunity of hearing to the assessee before passing a fresh order. The assessee shall submit details and evidences as may be required by the AO as per law. The AO shall verify the facts of the business of the assessee in the light of the judgments of Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd. (supra) and decide these grounds afresh. The assessee is free to raise all legal and factual issues before the AO. Thus, with these directions, these grounds are sent back to the file of the AO and may be treated as allowed for statistical purposes.

Order pronounced in the open court on 29th April, 2016.

Sd/- Sd/- (Joginder Singh) (Ashwani Taneja) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER मुंबई Mumbai; �दनांक Dated 29/04/2016 ctàxÄ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

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