Case Law Details

Case Name : Citi Centre Premises Co-Op. Society Ltd. Vs ITO (ITAT Mumbai)
Appeal Number : ITA No. 3029/Mum/2018, 3030/Mum/2018
Date of Judgement/Order : 01/02/2019
Related Assessment Year : 2013-14 and 2014-15
Courts : All ITAT (7439) ITAT Mumbai (2135)

Citi Centre Premises Co-Op. Society Ltd. Vs ITO (ITAT Mumbai)

The issue in dispute in that case as per the Para reproduced from the Tribunal’s order above is regarding rent received from Reliance Telecom and in that case also, the assessee claimed a deduction u/s. 24 (a) of Rs. 1.65 Lakhs being 30% of such rental amount of Rs. 5.50 Lakhs. AO disallowed the same by holding that if income is liable to be taxed as income from other sources and not under the head Income from House Property. He made disallowance of the claim for deduction u/s. 24 (a) of the Act. Aggrieved, assessee carried the matter in appeal before the CIT(A). He did not succeed and assessee again carried the matter before the Tribunal. The Tribunal at Para 6 of its order as reproduced above, followed another order of the Tribunal rendered in the case of Sharda Chambers Premises Co. Op. Society Ltd., Vs. ITO in ITA No. 1234/Mum/2008, dt. 01-09-2009 and decided the issue in favour of the assessee and held that income from letting out of the terrace has to be assessed under the head ‘income from house property’ subject to deduction u/s. 24 of the Act as against income from other sources as assessed by the AO. Since in the present case, the facts in dispute are identical and no difference in facts could be pointed out by the Ld. DR of the Revenue, respectfully following this order of the Tribunal, I decide the issue in favour of the assessee. Respective Grounds are allowed.

FULL TEXT OF THE ITAT JUDGEMENT

Both these appeals are filed by the assessee, which are directed against the combined order of the Ld. Commissioner of Income Tax (Appeals)-42, Mumbai, dated 28-02-2018, for the AYs. 2013-14 & 2014-15. Since the facts and issues involved in these appeals are common and identical, both these appeals were heard together and are being disposed by way of this common order for the sake of convenience.

2. The grounds raised by the assessee for the AY. 2013-14 are as under:

“The appellant prefers the following Appeal against the order dated 28/02/2018 of the Commissioner of income Tax (Appeals)-42, Mumbai, (hereinafter referred to as “The GT (A)”] passed under section 250(6) of the income Tax Act, 1961 (“The Act”). Each of the grounds is in alternative and without prejudice to other.

1.0: On facts and in law and in the circumstances of the case. Hon’ble CIT (A) erred in confirming the disallowance of deduction of Rs. 641,749 (correct amount – Rs. 652,712) u/s 24(a) of the Income Tax Act, 1961 by disregarding the fact that rental income received by a co-operative society for letting out the building terrace and permitting erection and installing of cell phone towers thereon in the building owned by the society is properly assessable only under the heading ‘Income from House Property’ and as such statutory deduction under section 24(a) is legitimately permissible.

1.1: On facts and in law, Hon’ble CIT (A) failed to appreciate that the assesses society being owner of the building, rental income received by the assesses – society for letting out the building terrace and permitting erection and installing of cell phone towers thereon in the building cannot be assessed as Income from other sources.

The Appellant craves leave to add to, alter, amend or delete all or any of the aforesaid grounds of appeal.

3. The grounds raised by the assessee for the AY. 2014-15 are as under:

“The appellant prefers the following Appeal against the order dated 28/02/2018 of the Commissioner of Income Tax (Appeals]-42, Mumbai, {hereinafter referred to as “The CIT (A)”] passed under section 250(6) of the Income Tax Act, 1961 (“The Act”). Each of the grounds is in alternative and without prejudice to other.

1.0: On facts and in law and in the circumstances of the case, Hon’ble CIT (A) was not justified in confirming the disallowance of deduction of Rs. 497,730 (in fact correct amount of disallowance is only Rs. 497,730 being the amount of deduction u/s 24(a) claimed by the appellant and not Rs. 641,749 as erroneously recorded by the CIT(A)) claimed by the appellant u/s 24(a) of the Income Tax Act, 1961 by disregarding the fact that rental income received by a co-operative society for letting out the building terrace and permitting erection and installing of cell phone towers thereon in the building owned by the society is properly assessable only under the heading ‘Income from House Property and as such statutory deduction under section 24(a) is legitimately permissible,

1.1: On facts and in law, Hon’ble CIT (A) failed to appreciate that the assesses society being owner of the building, rental income received by the assessee – society for letting out the building terrace and permitting erection and installing of cell phone towers thereon in the building cannot be assessed as Income from other sources.

The Appellant craves leave to add to, alter, amend or delete all or any of the aforesaid grounds of appeal”.

4. At the outset, it was submitted by the Ld. AR of the assessee that in Para 4.2 of the assessment order for the AY. 2013-14, it is noted by the AO that for assessing an income earned in respect of a property as an income from house property, the property in question should be fit for habitation. He also observed that an open plot/ terrace cannot be termed as house property as it is the common amenity for use of Members of society and cannot be used for habitation. He submitted that on this basis, AO held that the income from letting out the terrace is not assessable under the head ‘income from house property’ and he taxed the same as ‘income from other sources’ and disallowed the claim for deduction u/s. 24(a) of the Income Tax Act (Act) in both the years. He submitted that this issue is squarely covered in favour of the assessee by the order of the Tribunal in the case of Matru Ashish Co-operative Housing Society Ltd., Vs. ITO [27 taxguru.in 169] (Mumbai-Trib). He submitted a copy of the Tribunal order.

5. DR for the Revenue supported the order(s) of the Ld. CIT (A).

6. I have considered the rival submissions. First of all, I reproduce the relevant Para of the Tribunal’s order rendered in the case of Matru Ashish Co-operative Housing Society Ltd., Vs. ITO (supra), herein below for ready reference:

“3. Briefly stated facts of the case are that the assessee is a Cooperative housing society, filed return declaring an income of Rs. 6,53,990/-. During the course of assessment it was interalia observed by the Assessing Officer that the assessee has shown an amount of Rs. 5.50 lacs as rent received from Reliance Telecom and after deducting an amount of Rs.1.65 lacs being deduction u/s.24(a) of the Income tax Act, 1961(the Act) @ 30% from the above amount, the assessee has shown an amount of Rs. 3,85,000/- as income from house property. On being asked it was submitted by the assessee that since the above amount represented rent received for allowing Reliance Telecom to use portion of the terrace, the same was rent received from letting out property, and hence, the same was liable to be taxed as income from house property u/s.22 of the Act as terrace constitutes an integral part of the building as referred to u/s.22 of the Act. However, the Assessing Officer following the appellate order for the Assessment Year 2003-04 treated the receipt of Rs. 5.50 lacs as income from other sources and disallowed the claim of Rs.1.65 lacs u/s.24(a) of the Act and accordingly completed the assessment at an income of Rs. 25,21,440/-, vide order dated 22.11.2006 passed u/s.143(3) of the Act. On appeal, the ld. CIT(A) for the same reasons while following the appellate order for the Assessment Year 2003-04, upheld the addition made by the Assessing Officer.

4. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us taking following sole ground of appeal:-

“1. The CIT(A) has erred in confirming that the rent received for allowing the use of terrace area under the head ‘Income from other sources’ instead of under the head ‘Income from house property’ and accordingly disallowed Rs. 1,65,000/- being 30% of rent received as expenses u/s.24(a) of the Income tax Act, 1961.”

5. At the time of hearing the ld. DR supports the order of the Assessing Officer and the ld. CIT(A).

6. Having carefully heard the submission of the ld. DR and perusing the material available on record we find that the facts are not in dispute. We further find that the issue is covered against the revenue and in favour of the assessee by the orders of the Tribunal. In the case of Sharda Chamber Premises vs. ITO in ITA No.1234/M/08 dated 1.9.2009 for Assessment Year 2003-04 in which JM was one of the party, on the similar facts, the Tribunal after considering the decision in ITO vs. Cuffe Parade Sainara Premises Co-operative Society Ltd. 7225/Mum/05 dated 28th April, 2008 for Assessment Year 2002-03 and also the decision in the case of S. Sohan vs. ITO (1986) 16 ITD 272 supra has held vide Para 6 and 7 of its order dated 1.9.2009 as under :

“6. We have carefully considered the submissions of the rival parties and perused the material available on record. We find merit in the plea of the ld. Counsel for the assessee that in the case of M/s. Dalamal House Commercial Complex-Premises Co-operative Society Ltd., the Tribunal while admitting the additional ground being a legal issue has also held that the letting out of the terrace, erection of antenna and income derived from letting out has to be taxed as ‘income from house property’ and not as ‘income from other sources’. The Tribunal while deciding the issue has followed the order of the Tribunal in the case of M/s. Cuffe Parade Sainara Premises Co-op. Society Ltd. supra.

7. In the absence of any distinguishing feature brought on record by the revenue we, respectfully following the order of the Tribunal (supra), and keeping in view the consistency while admitting the additional ground taken by the assessee hold that the letting out of terrace has to be assessed under the head ‘income from house property’ as against ‘income from other sources’ assessed by the Assessing Officer and also allow deduction provided u/s.24 of the Act and accordingly the additional ground taken by the assessee is allowed.”

Respectfully following the order of the Tribunal supra, we are of the view that the letting out of the terrace has to be assessed under the head income from house property subject to deduction u/s.24 of the Act as against income from other sources assessed by the Assessing Officer. We hold and order accordingly. The ground taken by the assessee is, therefore, allowed”.

6.1. The issue in dispute in that case as per the Para reproduced from the Tribunal’s order above is regarding rent received from Reliance Telecom and in that case also, the assessee claimed a deduction u/s. 24 (a) of Rs. 1.65 Lakhs being 30% of such rental amount of Rs. 5.50 Lakhs. AO disallowed the same by holding that if income is liable to be taxed as income from other sources and not under the head Income from House Property. He made disallowance of the claim for deduction u/s. 24 (a) of the Act. Aggrieved, assessee carried the matter in appeal before the CIT(A). He did not succeed and assessee again carried the matter before the Tribunal. The Tribunal at Para 6 of its order as reproduced above, followed another order of the Tribunal rendered in the case of Sharda Chambers Premises Co. Op. Society Ltd., Vs. ITO in ITA No. 1234/Mum/2008, dt. 01-09-2009 and decided the issue in favour of the assessee and held that income from letting out of the terrace has to be assessed under the head ‘income from house property’ subject to deduction u/s. 24 of the Act as against income from other sources as assessed by the AO. Since in the present case, the facts in dispute are identical and no difference in facts could be pointed out by the Ld. DR of the Revenue, respectfully following this order of the Tribunal, I decide the issue in favour of the assessee. Respective Grounds are allowed.

7. In the result, both the appeals of the assessee are allowed.

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