ITO 8(2)(3), MUMBAI vs. NISTHA MALL MANAGEMENT CO. P . LTD, MUMBAI

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ITA 2743/MUM/2013Status: DisposedITAT Mumbai29 February 2016AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that rental income from the mall is business income, following a previous decision. However, it held that interest on income-tax refund is assessable under Section 56, not as business income.

What were the facts?

The Revenue appealed against the CIT(A)'s order which allowed the assessee's claim that rental income from a mall is business income, not income from house property. The assessee also claimed interest on income-tax refund as business income.

What were the issues?

The primary issue was the head of income under which rental income from a mall should be taxed. Another issue was whether interest on income-tax refund is business income.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 56

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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI JOGINDER SINGH, JM & SHRI SANJAY ARORA, AM

For Appellant: Shri Randhir Gupta, Shri Nishit Gandhi
For Respondent: Shri Nishit Gandhi

O R D E R Per Sanjay Arora, A. M.: This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-17, Mumbai (‘CIT(A)’ for short) dated 14.1.2013, allowing the Assessee’s appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2009-10 vide order dated 30.11.2011.

2.

The principal issue arising in this appeal, agitated per its’ first four grounds, is in respect of the head of income under which the rental income for allowing the user

1.

(A.Y. 2009-10) ITO vs. Nishta Mall Management Co. Pvt. Ltd. of house property is to be brought to tax. While the assessee, a company in the business of owning and maintaining Malls, i.e., composite shopping and business complexes, claims it to be business income, the Revenue’s stand is of the same being from the exploitation of house property, for which the Act prescribes a separate head of income, i.e., ‘Income from house property’ (Chapter IV-C), and is accordingly to be taxed under the said head. At the very outset, it was submitted by the ld. Authorized Representative (AR), the assessee’s counsel, that the assessee’s case is squarely covered by the decision by the Tribunal in its’ own case for A.Y. 2006-07 (in dated 30/10/2015), adducing a copy thereof. The tribunal, following the decision by the Hon’ble Apex Court in Chennai Properties and Investment Ltd. v. CIT [2015] 373 ITR 673 (SC), has allowed the assessee’s claim. There is no change in the facts and circumstances of the case, so that the said decision would have clear application for the current year as well.

3.

We have perused the said order by the tribunal, wherein, it, examining the nature of the income as well as the judicial authority on the subject, has decided by issuing definite findings of fact, holding the nature of the said income to be in the nature of business income, so that the assessee would stand to be allowed all the expenses incurred in relation to the promotion of the upkeep of the Mall. Reference for the purpose may be made to paras 2 to 5 of the said order (copy on record), which we have perused. The ld. Departmental Representative (DR) could not bring to our notice any change in the facts and circumstances with reference to the preceding year. Under the circumstances, we therefore have no hesitation in allowing the assessee’s claim. We decide accordingly.

4.

The only other issue arising in this appeal is per its Ground 5, which, again, relates to the head of income under which the income by way of interest on income- tax refund is to be assessed, the assessee claiming it to be a business receipt. The ld.

(A.Y. 2009-10) ITO vs. Nishta Mall Management Co. Pvt. Ltd. CIT(A) has allowed the assessee’s claim holding that the said interest had a direct and a proximate nexus with the appellants’ business. We find no basis for the said finding. Income-tax is a levy on income, from whatever source derived. Business, as such, is only a source of income from which income could be earned. The assessee does not have any business relationship with the Revenue nor could it therefore be said that the excess tax deposit, on which the refund arises, stands made in the course of the business. Going by the assessee’s stand, the interest paid to the Revenue, for the delay in deposit of tax or other levy under the Act would qualify as a business expenditure, a wholly unmaintainable proposition, rejected by the Apex Court, as in the cases of Bharat Commerce & Industries Ltd. v. Union of India [1998] 230 ITR 733 (SC) and East India Pharmaceutical Works vs. CIT [1997] 224 ITR 627 (SC). Why, income-tax itself would stand to qualify as a deductible business expense. The assessee’s case is wholly without merit, so that the said income would only be assessable u/s.

56.

We decide accordingly.

5.

In the result, the Revenue’s appeal is partly allowed. प�रणामतः राज�व क� अपील आं�शक �वीकृत क� जाती है । Order pronounced in the open court on February 29, 2016 Sd/- Sd/- (Joginder Singh) (Sanjay Arora) �या�यक सद�य / Judicial Member लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 29.02.2016 व.�न.स./Roshani, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3.

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