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01-03-2019, Ashapura Developers, Section 23, 22, Tribunal Mumbai

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2 weeks 5 days ago - 2 weeks 5 days ago #8733 by amit
Section - 23, 22
Order Date - 01-03-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - ACIT
Respondent - Ashapura Developers
Justice - SANDEEP GOSAIN, JM & RAJESH KUMAR, AM
Citation - 219Taxpundit163
Appeal No. - I.T.A. No.1466/Mum/2017
Asstt. Year - 2012-13

Order

PER : Sandeep Gosain

These two appeals filed by the revenue as well as assessee are against the order of Ld. CIT(A) – 44, dated 14.12.16 & 17.03.16 for AY 2012-13 & 2011-12 respectively.

2. Since all the issues involved in these two appeals are common, therefore, they have been clubbed heard together and a consolidated order is being passed for the sake of convenience and brevity.

ITA No. 1466/Mum/2017 (AY 2012-13)

3. First of all we take up revenue’s appeal in ITA No. 1466/Mum/2017 for assessment year 2012-13 as lead case. The ground of appeal are mentioned herein below:-

1. "On the facts and in the circumstances of the case, and in law, the Ld.CIT(A), erred in allowing the claim of assessee to treat rental income of Rs.34,13,95,611/- as income from House Property instead of Business Income as assessed by the AO, without appreciating the fact that rental income was received from the business asset of unsold flats shown as stock-in-trade. The Ld. CIT(A) also failed to appreciate the fact that the assessee has included rental income in arriving at its gross sales appearing in its building and construction account and thereby arriving at the gross profit which in turn taken to the Profit & Loss account to arrive at Net Profit."

2. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) failed to appreciate the decision of Hon’ble Apex Court dated 9th April 2015 in the case of Chennai Properties and Investments Ltd. Vs. CIT, Central-Ill, Tamil Nadu (2015) reported in 373 ITR 673, as reiterated in the case of M/s. Rayala Corporation Pvt. Ltd. Vs. ACIT (Civil Appeal No.6473 of 2016 dated 11.08.20146) has held that "if an assessee is having his house property and by way of business he is giving the property on rent and if he is receiving rent from the said property as his business income, the said income, even if in the nature of rent, should be treated as business income."

3. "The appellant prays that the order of the Id.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

4. "The appellant craves leaves to amend or alter any ground or add a new ground."

4. As per the facts of the present case are that the assessee filed its return of income on 30.09.2012 showing total income of Rs.29,62,86,490/-. The assessee is a firm engaged in the business of builders & developers. The only issue in both appeal is regarding the treatment of income from renting of immovable properties as income from business. The assessee firm had shown rental income of Rs 34,13,95,6117-. The assessee categorized this income as falling under the head of ‘Income from house property’. The assessee also claimed 30% deduction u/s 23 against such rental income. On the other hand, the AO stated
that the mere fact that income is attached to immovable property cannot be the sole criterion for taking it as income. The AO therefore treated the rental income as ‘income from business’ and allowed the deduction of only the property tax paid. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of

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