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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: S/SHRI R. C. SHARMA & AMARJIT SINGH]
आदेश / O R D E R
PER AMARJIT SINGH, JM:
This is an appeal filed by the Revenue against the order of the learned Commissioner of Income Tax (Appeals)-33, Mumbai [hereinafter referred to as the “CIT(A)”] dated 29-01-2014 passed in Assessment Year: 2008-09 appeal No.33/IT/237/12-13 pertaining to assessment year 2008-09. The Revenue has in this appeal raised the following three grounds:
1) Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in treating the lease rental income under the head ‘Income from House Property’ without appreciating that the A. O. has brought out the facts, which are discussed at length. On the basis of the terms of the agreement which very clearly show that the lease were given for the use of the land and lease has no use of existing structure which would have to be demolished and accordingly, treated the lease as income from other sources. 2) The learned CIT(A) ought to have noted that the aforesaid building occupied only a fraction of the land and therefore, this lease rent could not be considered as house property. 3) The learned CIT(A) ought to have noted that the lease rent was the value of the adjacent land and not the land on which this structure was situated.
In fact, these grounds relate to treating the lease rent received by the assessee for a sum of Rs.60,84,000/- by the Assessing Officer [hereinafter referred to as the ‘AO’] as income from house property on account of leasing/renting out a property to M/s. Sanvo Resorts Pvt. Ltd., Mumbai. The assessee claimed standard deduction u/s 24(a) of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] for a sum of Rs.18,25,200/- and offered a sum of Rs.42,58,800/- as net house property. The AO in his order passed u/s 143(3) of the Act treated the aforesaid income as ‘income from other sources’ for the reason that from the lease agreement it was revealed that the assessee was not interested in any of the existing structure on the land and the assessee was interested only for development of the land for which he was permitted as per the lease agreement. Thus, it is evident that the entire rent was paid for the land area only. Being aggrieved by the action of the AO, the assessee carried the matter in appeal before the learned CIT(A).
Assessment Year: 2008-09 3. The learned CIT(A) allowed the claim of the assessee by following the decision of the ITAT, Mumbai “D” Bench dated 22.05.2013 in the case of one of the co-owners of the said property i.e. Shri Dinesh M. Shah for assessment year 2008-09. The relevant portion of the observations of the learned CIT(A) is reproduced herein below:
“4.1 The appellant has given his property with other co-owners at Panvel on monthly rent of Rs.5,07,000/-. The A.O. brought the rent received for the use of building and the lands appurtenant thereto taxable under the head ‘income from other sources’. The AO noted that the decision rendered by the CIT(A), in the case of Shri Dinesh M. Shah, one of the co-owners of the impugned property, holding the rent received therefrom as ‘income from house property’ was contested by the department before the ITAT, Mumbai. Accordingly, he rejected appellant’s claim of income from house property. 4.2 In appeal proceedings, the ld. Counsel submitted that in the case of co-owners of the said property, rental income of the same property has been confirmed by the Hon’ble ITAT Mumbai in dated 22.05.2013 for A. Y. 2008-09 as income from house property. He accordingly pleaded for treating the rent as income from house property. I have considered the assessment order and the submissions made for the appellant. Respectfully following the decision of the Hon’ble jurisdictional ITAT in the case of Dinesh Shah, (supra), I direct the A. O. to assessee the rent received by the appellant from M/s. Sanvo Resort P. Ltd. as income from house property. This ground is allowed.”
Against the aforesaid order of the learned CIT(A), the Revenue is now in appeal before us.
At the time of hearing, before us, the learned DR supported the order of the AO and submitted that the learned CIT(A) has erred in treating the impugned income as ‘income from house property and prayed that the order of the AO be upheld by setting aside the order of the learned CIT(A).
On the other hand, the learned Counsel for the assessee reiterated his contentions raised before the learned CIT(A) and Assessment Year: 2008-09 further relied on the decisions of ITAT, Chennai Bench in the case of ACIT Vs T & R Welding Products (India) Ltd. [2010] 129 TTJ 250 (Chennai), ITAT, Delhi in the case of Sanjit Singh Rathee Vs ACIT [2002] 122 Taxman 202 and the order of the ITAT, Mumbai “D” Bench dated 22.05.2013 passed in – AY 2008-09 in the case of ACIT, Circle 23(2) Vs Shri Dinesh M. Shah [who is one of the co-owners of the property in question] and further contended that vastness of the land cannot be a criteria for treating an income as ‘income from other sources’. Consequently, the learned Counsel for the assessee submitted that the order of the learned CIT(A) be upheld.
We have heard the rival contentions and perused the materials on record. We find that this issue has been decided by ITAT, Mumbai “D” Bench vide order dated 22-05-2013 – for AY 2008-09 in one of the co-owners of the property in question viz. Shri Dinesh M. Shah by observing in Para 2.4 as under:-
“2.4 We have heard the rival submissions and perused the material on record. It is observed that from the copy of relevant rent agreement, that only two plot nos. reflected in 10th Schedule and 11th Schedule are having RCC structure. The assessee along with others thus has become co-owners of a bigger place of land which is in fact by joining all these plots which all are next to each other. The assessee has purchased along with others the non agricultural plots from various different parties. Out of these few are only plots whereas two plots are with RCC structure on the same. The details of these schedules i.e. 10th and 11th foming part of the lease rent agreement are given as under: THE TENTH SCHEDULE HEREINABOVE REFERRED TO Plv3-05344-2006 “All that piece or parcel of Non-agricultural land or grounds situated lying and being village-kolkhe, Tal. Panvel, Dist. Raigad within the limits of Grampanchayat Kolkhe, Panchayat Samiti Panvel as follows:
Assessment Year: 2008-09 Gut/Survey No. Area Assessment H A P Rs. Rs. 94/1D NA Old 0 94 1 188 20 Survey 94/1B(2)
Including RCC, structure ground + fist floor Bunglaw half constructed of 200 sq. mts. AND BOUNDED ON FOUR SIDES AS FOLLOWS:
EAST Gut No.94/1Bounary WEST Gut No.95/1 Boundary SOUTH Gut No.94/1 Boundary NORTH National Highway (N.H.48)
THE ELEVENTH SCHEDULE HEREINABOVE REFERRED TO: Plv3-4600-2006
1) All that piece or parcel of Non-agricultural land or grounds and hereditaments bearing Gut/Survey No.95, Hissa No.1, totally admeasuring 20000 Sq. mts. (out of area admeasuring 38960 Sq. mts.), Assessment Rs.604.80 Paise, situated lying and being village-Kolkhe, Tal. Panvel, Dist. Raigad within the limits of Grampanchayat Kolkhe, Panchayat Samiti Panve.
2) Four R. C. C. frame structures with cement sheet roof and one residential premises having five rooms which are recorded in the record of Grampanchayat Kolkhe Assessment a under:
Milkat No. Area (Sq. mts.) 237 Godown 464.68 238 Godown 464.68 239 Godown 464.68 240 Godown 278.81
In the 11th schedule of agreement there are four RCC old structure and one existing residential structure with 5 bedrooms with total area of 1858.72 sq. mtr. Shown. Total area of the big plot which is 106920 sq. mtrs. When compared with built up part is disproportionate as there is very small area in form of RCC structure.
The land being appurtenant to building, though disproportionately big, still during the year the nature of income having been derived from a big plot of land with some godowns on it which is undisputedly asset with share of appellant in it has to be assessed as “Income from House Property”.
It is pertinent to state that the Chennai ITAT in the case of ACIT V T & R Welding Products (India) Ltd has held in a similar set of facts when
Assessment Year: 2008-09 major portion of the leased out property is a land and the lease agreement permits the lessee to build permanent structure therein, the lease income has to be assessed under the head ‘income from house property’. Also, the Delhi ITAT in the case of Sanjit Sing Rathee Vs. ACIT has held that vastness of the land cannot be the criterion for allowing or disallowing the claim of deduction for repairs under sectin24(1)(i) of the Act. Considering the factual matrix of the case of the assessee in toto and the position of law, we are of the considered view the impugned lease receipt is ‘income from house property’ as the conditions of section 22 of the Act is fulfilled. In view of that matter, we do not find any infirmity in the decision of the Ld. CIT(A) and the same is upheld. Accordingly Grounds No.1 & 2 are dismissed.”
The facts of the present assessee’s case being exactly similar to the facts of the co-owner of the property in question i.e. Shri Dinesh M. Shah as aforesaid, and since, no contrary decision being pointed out by the learned DR at the time of hearing before us, we do not find any reason not to follow the aforesaid decision of the Coordinate Bench. Accordingly, we uphold the decision of the learned CIT(A) and dismiss all the grounds of appeal raised by the Revenue.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court at the time of hearing on 28th October, 2015