Mahima Real Estate P Ltd., Jaipur vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 34/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2009-10

Assistant Commissioner cuke M/s Mahima Real Estate Pvt. Ltd., of Income tax, Central Vs. 8, Nlhil Apartment, 670, Adarsh Circle-2, Jaipur. Nagar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCM 4491 N vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT). fu/kZkfjrh dh vksj ls@ Assessee by : Shri Sanjay Jhawar (Adv.)

lquokbZ dh rkjh[k@ Date of Hearing : 25/03/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30/04/2015

vkns'k@ ORDER

PER: R.P. TOLANI, J.M.

This is an appeal filed by the revenue against the order dated

26/10/2012 by the learned CIT(A), (Central), Jaipur for A.Y. 2009-10

The effective grounds of appeal are as under:

"1. On the facts and in the circumstances of the case the ld. CIT(A), Central, Jaipur has erred in holding that the entire rental income amounting to Rs. 5,32,16,,527/- has to be taxed as income from house property, though such 2 ITA 34/JP/2013_ ACIT Vs. Mahima Real Estate P Ltd.

income was derived from letting out of the roof of the building to occupiers of the building for installation of V- Sets, Antennas etc. and letting out of parapets and walls of buildings for advertisements, signages and hoardings also;

2. On the facts and in the circumstances of the case the ld.

CIT(A), Central, Jaipur has erred in holding that receipts of Rs. 1,27,23,849/-, included in the total rental receipt of Rs. 5,32,16,527/- has to be taxed as income from house property. The ld CIT(A) has collected the breakup of the components included in the rental receipt, but he has not given any separate reason as to how the said receipt of Rs. 1,27,23,849/- also has the characteristic of income defined in section 22 of the I.T. Act, 1961;

3. On the facts and in the circumstances of the case, the ld CIT(A), Central, Jaipur has erred in holding that the receipts of Rs. 4,04,92,678/- against the letting out of closed area has to be taxed as Income from House Property without bringing on record the detailed breakup of such receipt and without ascertaining as to whether such receipts include any receipt other than receipts from renting of house property as defined in section 22 of the I.T. Act, 1961."

2. The ld. D.R. is heard. The ld. Counsel for the assessee at the

outset contends that the issue in question is squarely covered in favour

of the assessee by the Hon'ble ITAT's judgment in ITA No. 313/JP/2011

and ITA No. 312/JP/2011 for A.Y. 2006-07 and ITA No. 818/JP/2011 3 ITA 34/JP/2013_ ACIT Vs. Mahima Real Estate P Ltd.

and ITA 819/JP/2011 for A.Y. 2007-08 in assessee's own case. The

Hon'ble ITAT has held as under:-

"3. Identical issue was involved for assessment year 2006-07 i.e. immediately preceding year. In that year also the claim of the assessee that the income from letting/renting of various shops/space was shown as 'Income from house property' but was not accepted by both the lower authorities. On second appeal before the Tribunal, this issue was decided in favour of the assessee. Therefore, without going into detail further, following the order of immediately preceding year in case of both the assessees, we allow these grounds in favour of the assessee. For the sake of clarification, the finding of the Tribunal given in case of these two assessees by a consolidated order given in ITA No. 313/JP/2011 and 312/JP/2011 for assessment year 2006-07 vide order dated 09.01.2012 at pages 9 to 11 are as under :-

"After considering the submissions and perusing the material on record, `we find that assessee deserves to succeed in the grounds raised here before the Tribunal. It is seen that the assessee has developed the commercial complex and has sold to various parties. Some of the shops and space of business was let out by the assessee and the receipts on account of rental were shown as Income from House property. It is not the case of the department that assessee charging the rent on account of allowing various facilities. A specific space has been given on rent or shop has been given on rent and rent has been shown as rental income. There are certain other facilities which are obtained from private agencies i.e. lift charges. These lift charges are contributed by all the tenants individually and there was no claim of the assessee on this account. It is not even the claim of the department that assessee collected lift charges and then paid to the lift operator. These expenses are of

4 ITA 34/JP/2013_ ACIT Vs. Mahima Real Estate P Ltd.

individual and individually had been met by various parties. The assessee is owner of the portion which has been let out by it. Therefore, in our considered view, the AO was not justified in treating the rental income as Income from business.

9. Section 22 has application to property consisting of any buildings or lands appurtenant thereto. If the constituent building etc. are not occupied by the owner then for the purpose of any business carried on by him, the profits of which are chargeable to income-tax. Otherwise the rent charges by assessee on the property rented by assessee are chargeable under the head Income from house property. In case of PVG Raju, 66 ITR 122 (AP), the Hon'ble Andhra Pradesh High Court has held that letting out the building such as shops, godown etc. is assessable under this section as Income from house property.

10. In case of East India Housing and Land Development Trust, 42 ITR 49 (SC), the Hon'ble Supreme Court has held that even if the company set up with the object of buying and developing landed properties and promoting and developing markets, purchased a piece of land and built thereon a market consisting of shops and stalls etc. which it had let out and earned income thereby the income was to be assessed as Income from house property and not from business.

11. Similarly in case of Chugandas & Co., 55 ITR 17 (SC), the Hon'ble Supreme Court has held that income is assessable as Income from house property. In this case it was held that in case of companies building spaces which were let out were traded as its fixed asset before letting out to tenants. There is no letting out of property temporarily or for a short period and therefore there is no reason to assess any part of rental income from property as business income.

5 ITA 34/JP/2013_ ACIT Vs. Mahima Real Estate P Ltd.

12. In the present case undisputedly the properties are not rented out temporarily or for a short period and, therefore, in our considered view, there was no reason to hold that this is a business income and not income from house property. Accordingly, we hold that AO and ld. CIT (A) were not justified in holding that income of the building was income from business and not from house property. Accordingly, we allow the ground of the assessee and the AO is directed to allow deduction as per provisions of law applicable under the head Income from house property.

13. Similar facts are involved in case of other assessee i.e. M/s. Mahima Real Estate Pvt. Ltd. who is 50% owner of the same land, and we have already allowed the issue in favour of the assessee while disposing the appeal in case of M/s. Vibhuti Financial Services Pvt. Ltd. Therefore, on the same basis, we allow the ground in favour of the assessee and direct the AO to treat the income as income from house property against business income as held by AO. The AO is directed to allow statutory deduction under section 24(a) of the Act as per provisions of law."

Since facts are identical for the year under consideration also, therefore, following the order of Tribunal as stated above, we allow the claim of the assessee.

3. We have heard the rival contentions of both the parties and

perused the material available on the record. In our considered view,

the issue in question i.e. rental income amounting to Rs. 5,32,16,,527/-

has to be taxed as income from house property, though such income

was derived from letting out of the roof top of the building to occupiers 6 ITA 34/JP/2013_ ACIT Vs. Mahima Real Estate P Ltd.

of the building for installation of V-Sets, Antennas etc. and letting out of

parapets and walls of buildings for advertisements, signages and

hoardings also is to be treated as income from house property and not

as business income. By respectfully following the order of the

Coordinate Bench in assessee's own case for A.Y. 2006-07 and 2007-08,

we hold accordingly.

4. In the result, revenue's appeal is dismissed.

Order pronounced in the open court on 30/04/2015.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P.Tolani) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 30th April, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the Order forwarded to:

1. vihykFkhZ@The Appellant- The ACIT, Central Circle-2 Jaipur.

2. izR;FkhZ@ The Respondent- M/s Mahima Real Estate Pvt. Ltd., Jaipur

3. vk;dj vk;qDr@ CIT-

4. vk;dj vk;qDr¼vihy½@The CIT(A)-

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 34/JP/2013) vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar