NARENDRA PAL GUPTA,MUMBAI vs. ASST CIT CEN CIR 30, MUMBAI

We heard the parties and perused the record. The facts relating to the case are set out in brief. The assessee had let out a building to M/s East India Hotels Ltd. The assessee had entered into two separate lease agreements viz., one agreement for lease of premises and another agreement for leasing of furniture. The assessee had received lease rent of Rs.1,35,98,750/- each under those agreements. The assessee offered both the lease rental incomes under the head “Income from House Property”. However, the AO assessed the income of Rs.1.35 crores received for leasing of furniture as “Income from Other Sources” and the same was also confirmed by the ld.CIT(A).

The ld. AR submitted that the assessee had actually let out entire premises in bare condition and, in fact, no furniture and fixture was actually let out. He submitted that the list of furniture and fixtures given in the second lease agreement are mere amenities attached with the premises. The ld. AR submitted that the assessee had entered into two separate agreements in order to avoid problems of municipal taxes. Accordingly, the ld.AR submitted that the assessee had received the lease rent under both the agreements towards letting out of the building only. The ld. AR submitted that the Hon’ble Hyderabad Bench of the Tribunal in the case of DCIT v/s G Raghuram (2010) 134 TTJ (Hyd) 87 has held that the amenities are not separate assets such as plant and machinery and hence income received towards amenities is also required to be assessed under the head “Income From House Property”. He submitted that an identical view has also been taken by the Mumbai Bench of the Tribunal in the case of Unique Construction and Developers V/s ACIT in its order dated 24.7.2013 passed in ITA No.1397/Mum/2012 (AY-2008-09). He further submitted that an identical issue was also considered in the case of assessee’s spouse named Mrs. Manju Gupta in ITA No.4432/Mum/2013, dated 26.3.2015 and it was decided in favour of the assessee by following the decision rendered by the Hyderabad Bench of the Tribunal in the case of G Raghuram(supra).

On the contrary, the ld. DR submitted that the decision rendered by the Hyderabad Bench of the Tribunal in the case of G Raghuram (supra) was relating to the amenities and not to furnitures and fixtures. Accordingly, he submitted that the said decision could not be placed reliance by the assessee. He submitted that, in the case of Mrs.Manju Gupta (supra), the Co-ordinate Bench has followed the decision rendered by the Hyderabad Bench of the Tribunal in the case of G Raghuram (supra). The ld. DR further submitted that the assessee has entered into an agreement for letting out furniture and fixture and hence, the ld.CIT(A) was justified in confirming the order of the AO.

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.

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”.

In the result, the appeal filed by the assessee is allowed. Pronounced accordingly on 3rd Feb , 2016. घोषणध खुरे न्मधमधरम भें ददनधंकः 3rd Feb 2016 को की गई । (PAWAN SINGH) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER भुंफई Mumbai: 3rd Feb , 2016. व.नन.स./ SRL , Sr. PS आदेश की प्रतिलऱपप अग्रेपिि/Copy of the Order forwarded to : अऩीरधथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned 3. आमकय आमुक्त / CIT concerned 4. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई /

DR, ITAT, Mumbai concerned गधर्ा पधईर / Guard file. 6. आदेशधनुसधय/ BY ORDER,सहधमक ऩंजीकधय (Asstt.