×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
Asstt. Year - 1990-91 to 1992-93, 1994-95, 1998-99, 2000-01 to 2003-04
PER : MAHAVIR SINGH, JM
1. The grievance of the assessee in all the aforesaid appeals for several Assessment Years is common. It is accepted position that adjudication in any one year would equally apply to all the other years since impugned order is common order for all the years which has been passed by Ld. Commissioner of Income-Tax (Appeals)-10, Mumbai [CIT(A)] on 06/07/2018. This is third round of appeal before Tribunal.
2. The matter in the first round travelled up-to the level of Hon’ble Supreme Court wherein the Hon’ble Court remanded the matter to Tribunal to render definite finding of fact about the pre-requisites of Section 269UA(f)(i) read with explanation thereto. In the context of said section, it was also observed by Hon’ble Court that for computing the period of twelve years, it was not necessary that initial terms of lease must be of twelve years, but if the lease provides for extension of lease and such lease has been extended by a further term or terms and the aggregate of such terms is not less than twelve years, it is deemed to be a transfer of immoveable property and such transferee is deemed to be owner of such immoveable property u/s 27(iiib . Therefore, the matter was remanded back to Tribunal which was adjudicated in the second round vide order dated 28/10/2016. Vide said order, the matter was remitted back to the file of Ld.AO with certain directions. However, in setaside proceedings, the assessee’s claim was not accepted by revenue authorities and hence the present appeal before us. The grounds raised by the assessee reads as under: -
Being aggrieved by the order dated 06.07.2018 passed by the learned Commissioner of Income Tax (Appeals)-l0, Mumbai. ["Ld. CIT(A)"] u/s 250 of the Income-tax Act,1961 ("Act"), your appellant prefers this appeal, among others, on the following grounds of appeal, each of which is without prejudice to, and independent of, the other:
1. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in rejecting the appellant's contention that the rental income of Rs.6,29,047/- received by the appellant from sub-letting of the "Kantilal House" premises to Bank of Baroda, is not taxable either u/s.22 or u/s.56 of the Act.
2. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in holding that the appellant is a deemed owner of the aforesaid premises u/s.27(iiib) read with Section 269UA(f)(i) of the Act, and is not a 'monthly tenant' as claimed by the appellant; and consequently, the Ld. CIT(A) erred in holding that the aforesaid rental income is taxable u/s.22 of the Act as 'income from house property'. In view of above, the appellant respectfully prays that the Ld. AO be directed not to assess the aforesaid rental income, the same being not chargeable to tax.
3. At the outset, the facts as well as controversy, as crystallized by the Tribunal in second round, vide order dated 28/10/2016 could be extracted in thefollowing manner: - These bunch of appeals filed by the assessee and one by the Department arise out of separate orders of the learned Commissioner (Appeals), Mumbai, pertaining to assessment years 1990–91, 1991–92, 1992–93, 1994–95, 1998–99, 2000–01, 2001–02, 2002–03 and 2003–04.
2. The core common issue arising for consideration in the aforesaid appeals is, whether the lease rental received by the assessee from a house property named as “Kantilal House” at Opera House Road, Mumbai, is to be assessed under the head “Income From Business” as claimed by the assessee or under the head Income From House Property” as claimed by the Revenue. Since the facts involved in all these appeals are more or less common, for the sake of convenience, we will discuss the facts as involved in appeal being ITA no.6550/Mum. /1995, for assessment year 1991–92, which is taken as a lead appeal.
3. Brief facts are, the assessee a company is regularly filing its return of income and is assessed to tax In the course of assessment proceedings for the assessment year 1991–92, the Assessing Officer while examining the Profit & Loss account of the assessee noticed that the assessee has declared a loss of Rs. 11,52,199, under the head “lease rentals”. On verifying the details submitted by the assessee, the Assessing Officer found that in the relevant previous year, the assessee had received lease rentals as under:–
4. The Assessing Officer called upon the assessee to explain why the lease rentals received from leasing out the properties owned by the assessee should not be treated as “Income From House Property”. In response, it was submitted by the assessee that in assessment year 1985–86, the learned Commissioner (Appeals) has accepted assessee’s claim of business income in respect of Kantilal House property let out to Bank of Baroda. It was further submitted, the same reasoning of the learned Commissioner (Appeals) would equally apply to the other properties from which the assessee derived rental income. As far as lease rental received from Kantilal House property is concerned, the Assessing Officer while completing the assessment did not disturb the assessee’s claim. However, in respect of other two properties viz. at Shanker Gali, Kandivali (West) and Bangwada Gate, Station Road, Patan, the Assessing Officer treated the lease rental income received by the assessee as “Income From House Property”. Being aggrieved of the aforesaid decision of the Assessing Officer, assessee preferred appeal before the first appellate authority.
5. The learned Commissioner (Appeals), after considering the submissions of the assessee and in the context of facts and material on record, agreed with the Assessing Officer’s decision in assessing the rental income from Shankar Gali property and Bhagwada Road property as income under the head “House Property” As far as rental income received from Kantilal House property, the learned Commissioner (Appeals) differing with the view expressed by his predecessor–in–office in assessee’s own case for assessment year 1985–86, held that the rental income derived from letting out to Bank of Baroda also has to be assessed under the head “Income From House Property”. While coming to such conclusion, the learned Commissioner (Appeals) observed that the assessee had been the tenant of the said property for a long period exceeding 12 years, therefore, the assessee has to be treated as deemed owner of the property under section 27(iiib). He observed, leasing / letting out of properties is not the business of assessee. Therefore, the income derived from lease rentals has to be treated as “Income From House Property”. He observed, the contention of the assessee that letting out of the p ope ty to the bank is for the purpose of assessee’s business is not a valid argument. Relying upon certain judicial precedents, the learned Commissioner (Appeals) finally concluded that lease rentals received by the assessee including the lease rentals received from Kantilal House is to be treated as “Income From House Property”. Being aggrieved of the aforesaid decision of the first appellate authority, assessee filed appeal before the Tribunal.
6. The Tribunal in a common order passed for the assessment year 1990–91, 1991–92, 1992–93 and 1993–94, vide order dated 3rd November 2003, in ITA no.6549/Bom./1995 and others, disposed off the appeals filed by the assessee. While dealing with the issue pertaining to the treatment of lease rental income from Kantilal House, whether income from business or income from house property, which is the issue in dispute in the present appeals, the Tribunal in Para–10, of the order, though, agreed that the assessee was not the owner of the house property, however, taking note of the fact that the assessee has taken