Case Law Details
Sharda Chambers Premises Co-Op Society Ltd Vs ACIT (ITAT Mumbai)
The Mumbai Bench of the ITAT partly allowed the assessee’s appeal for AY 2013-14 in the case of Sharda Chambers Premises Co-operative Society Ltd., holding that the same rental/licence fee income cannot be taxed twice under different heads.
The assessee, a co-operative housing society, had earned licence fee by permitting cellular companies to install telecom infrastructure on its premises. A sum of ₹5.77 lakh received from Chennai Network Infrastructure Ltd. (CNIL) was initially treated by the Assessing Officer as “Income from Other Sources”, while other similar receipts were assessed under “Income from House Property”. On appeal, the CIT(A) accepted the assessee’s contention that CNIL had stepped into the shoes of Aircel Ltd. pursuant to transfer of infrastructure business and directed the AO to treat CNIL receipts also as income from house property.
Before the ITAT, the assessee demonstrated that the CNIL receipt had already been included in its computation under the head “Income from House Property”, and that giving effect to the CIT(A)’s direction without verification would result in impermissible double addition. The Tribunal accepted this contention and held that once income is already offered and assessed under the correct head, no further addition can be made merely due to change of head.
Accordingly, the ITAT directed the Assessing Officer to verify the computation and ensure that no double taxation is made in respect of the CNIL receipt. The second ground relating to another addition was not pressed and was dismissed. The appeal was thus partly allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against order dated 28.08.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 1, Visakhapatnam [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds:
1. On the facts and in the circumstances of the case, the learned Addl. JCIT(A), Visakhapatnam, erred in directing the Assessing Officer that the income received from Chennai Network Infrastructure Ltd (CNIL) amounting to Rs. 5,77,284/ – to be assessed under the head “Income from House Property” instead of “Income from other sources” particularly when the said income was already included in the “Income from House Property” without appreciating that it would amount of double addition. Therefore the said income should be deleted while computing the total income.
2. On the facts and in the circumstances of the case, the said learned Commissioner of Income tax erred not considering the addition of Rs. 4,55,786/ – under the head “Income from House Property” particularly the said ground was wrongly withdrawn by Authorized Representative without appreciating that the said rent was reversed in early year on February 24,2012 and thus it did not belong to this assessment year.
2. Briefly stated, the facts of the case are that the assessee filed its return of income for the year under consideration on 01.10.2018, declaring a total income of ₹23,59,890/ –, which primarily comprised rental income. The return was selected for scrutiny and a notice under section 143(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was issued on 02.09.2018 and duly served upon the assessee.
2.1 During the course o f scrutiny proceedings, the Assessing Officer observed that the assessee had received rental income by leasing its premises to various cellular companies for installation of telecommunication infrastructure. Owing to alleged absence of proper documentary evidence, the Assessing Officer treated such receipts as income chargeable under the head “Income from house property” and determined the gross annual value at ₹6,51,129/–. After allowing the statutory deduction under section 24(a) at 30%, the Assessing Officer brought to tax a sum of ₹4,55,786/ – under the head “Income from house property”.
2.2 The Assessing Officer further noticed that the assessee had received an amount of ₹5,77,284/– from Chennai Network Infrastructure Limited (CNIL). According to the assessee, CNIL had acquired the infrastructure business of Aircel Limited, to whom the assessee had originally granted a licence for use of its premises for installation of telecommunication equipment. The Assessing Officer, however, held that the licence agreement did not contain any clause permitting creation of a sub-tenancy and, in the absence of a direct agreement with CNIL, treated the said receipt as income chargeable under the head “Income from other sources”. The assessment was accordingly completed under section 143(3) of the Act.
3. In appeal, the learned Commissioner of Income-tax (Appeals) upheld the action of the Assessing Officer in taxing the rental receipts from cellular companies under the head “Income from house property”. However, in respect of the amount received from CNIL, the learned CIT(A) accepted the assessee’s contention and directed the Assessing Officer to treat the said receipt as income from house p
4. Before us, the assessee, in Ground No. 1, contended that in view of the clear direction of the learned CIT(A) to treat the licence fee received from CNIL as income from house property, the Assessing Officer has, in effect, subjected the same income to tax twice. It was submitted that the said income had already been offered under the head “Income from house property” and, therefore, any further addition would result in impermissible double taxation. Ground No. 2, relating to the addition of ₹4,5 5,786/–, was not pressed by the assessee.
5. We have heard the rival submissions and carefully perused the material on record. The factual position relating to the receipt from CNIL has been elaborately discussed by the learned CIT(A) in paragraphs 6.2.1 and 6.2.2 of his order, for ready reference, same are reproduced as under:
“6.2.1 During the scrutiny proceedings, the AO observed that the assessee has received License fee from Chennai Network Infrastructure Limited (CNIL) amounting to Rs. 5,77,284/ -. Further during the course of assessment proceedings it is observed that as per clause 14 of the license agreement entered with AIRCEL LIMITED further putative by CNIL, the Licensee has merely the right to use the Scheduled Property and install CMTE and other equipment’s thereon. The AO opined that this agreement (the Licence to use the Scheduled Property) is not intended to and does not create any other right, title and interest in favour of the Licensee either that of a tenant, sub– tenant, joint or co-tenant or lessee or sub-lessee or otherwise. As the assessee is receiving income from CNIL and no agreement with CNIL is submitted, AO held that the only head under which this income can be offered is Income from Other Sources.
6.2.2 The appellant raised a ground that the Ld. AO erred in treating house property income of Rs. 5,77,284/ – as income from other sources. During the appellate proceedings, the appellant submitted that in the original agreements entered with AIRCEL Ltd, ” as per company petition No. C.p No 130,110 to 112 of 2010 AIRCEL LTD sold its infrastructure business to Chennai network infrastructure limited”. Hence, CNIL has got tenancy right and it is CNIL which has paid rent after deduction of TDS.” By virtue of the aforesaid scheme the entire infrastructure installed in the premises licensed to the Aircel Limited is owned by CNIL. The appellant further submitted that as per law, the tenancy rights can always be transferred and transferee gets all the rights, titles and interests of transferor. The appellant also submitted that assessee is co–operative housing society and it is not carrying over any business. The society owned building Sharda chambers and it maintains the building and manages the affairs of the society. Since, society owned a big terrace and various companies approached to the society for wireless business and for putting up antennas, the society earned rental income as an additional income of the society.”
5.1 It is evident from the said findings that CNIL stepped into the shoes of Aircel Limited pursuant to the transfer of its infrastructure business and that the receipts in question retained the character of rental income arising from the use of immovable property. As the facts are not disputed the Ld. CIT(A). The learned CIT(A), after considering the submissions and the undisputed facts, clearly held that the amount received from CNIL was assessable under the head “Income from house property” and not under the head “Income from other sources”. This direction is unambiguous. It is also noted that the assessee had placed on record its computation to demonstrate that the said income had already been offered to tax under the head “Income from house property”.
5.2 In these circumstances, we are of the considered view that if the income received from Chennai Network Infrastructure Limited has already been included by the assessee under the head “Income from house property”, no separate or further addition is warranted pursuant to the order of the learned CIT(A). We, therefore, direct the Assessing Officer to verify the computation of income and ensure that no double addition is made in respect of the same receipt. The Assessing officer may accordingly verify and give effect to the order of ld CIT(A) accordingly.
5.3 The ground No. 1 of appeal of the assessee is accordingly allowed. The ground No. 2 has not been pressed by the assessee and therefore, same is dismissed as infructuous.
6. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on 23/01/2026.
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