IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `D' : NEW DELHI)
BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND
SHRI K.G. BANSAL, ACCOUNTANT MEMBER
ITA No.5051/Del./2011
(Assessment Year : 2006-07)
JMD Buildcon Pvt. Ltd., Vs. DCIT, Cen. Circle 18,
6, U.G.F. Devika Tower, New Delhi.
Nehru Place,
New Delhi.
(PAN/GIR No.AAACJ9988M)
(Appellant) (Respondent)
Assessee by : Shri R.S. Singhvi, Adv.
Revenue by : Shri Vikas K. Suryawanshi, Sr.DR
ORDER
PER U.B.S. BEDI: JM
This appeal of the assessee is directed against the order passed by the CIT(A)-III,
New Delhi dated 3.10.2011 relevant to assessment year 2006-07 whereby assessee has
challenged action of CIT(A) in not accepting the claim of the assessee that property
income including licence fee and parking rent is to be considered under the head "income
from house property and not under the head "income from other sources".
2. Assessee in this case has raised various grounds, but vide application dated
29.5.2012 has submitted modified grounds which read as under:
"1. That on the facts and circumstances of the case, the CIT(A) was not
justified in not accepting claim of the assessee that property income
including licence fee and parking rent is to be considered under the head
`income from house property' and not under the head `income from other
sources'.
2. That orders of the lower authorities are not justified on facts and same are
bad in law."
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(A.Y. : 2006-07)
3. Assessing Officer held in the assessment as under:
"The assessee company was incorporated on 26.11.2001 and is engaged in the
business of real estate development. During the year under consideration, the
company declared a closing stock of Rs.2,48,50,696/-.
The assessee company in its statement of income has shown a sum of
Rs.46,79,104/- including licence fee of Rs.1,65,250/- under the head income from
house property and also claimed deduction u/s 24(1) amounting to Rs.14,03,731/-.
The assessee company has furnished the details of the rental income as under:
I. Rental income Rs.44,16,004/-
II. Parking Rent Rs.97,850/-
III. Licence Fees Rs.1,65,250/-
On verification of the details in respect of rental income of Rs.44,16,005/- it is
found that the included income received from various telecommunication and
cable network operators like instant cable, Huawei, Protel etc. on account of
installation of towers/antennas terrace of IMD Pacific Square, Gurgaon. In
respect of income from licence fee of Rs.1,65,250/-, it is found that it includes
income received from Enkay Coffee Day and Touchtel for installation of coffee
counter in the lobby and a small space in the basement respectively. Apart form
these, income of Rs.97,850/- has been received on account of parking rent. The
assessee company is a company formed with the specific objective of building
promoting and developing real estate. Therefore, the source of all of the above
income derived from antenna/towers, small kiosks and parking space etc. is stock-
in-trade of the assessee company and accordingly, liable to be taxed under the
head profits or gains of business and not under the head income from house
property. Thus, the income earned by the assessee amounting to Rs.46,79,104/- is
in the nature of business income and therefore, not to be treated as income from
house property. Hence, the deduction u/s 24(1) of the IT Act, @ 30% is not
allowed against the income of Rs.46,79,104/-."
2. Assessee took up the matter in appeal and strongly pleaded that assessee is
engaged in the business of real estate development and for the assessment year 2006-07
filed return declaring income of Rs.1,98,52,830/- on 30.1.2006. The said gross total
income included a sum of Rs.46,79,104/- under the head property income. During the
course of assessment proceedings the Assessing Officer opined that the said income from
property is includible as business income accordingly he came to the conclusion as per
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(A.Y. : 2006-07)
last para. of the assessment order that the property income so derived from
antenna/tower/small kiosks and parking space etc. is stock and trade of the assessee
company and accordingly liable to be taxed under the head of profits or gains of business
and not under the head income from house property. This conclusion of the Assessing
Officer resulted in disallowance of the expenditure of Rs.14,03,731/- which had been
claimed under section 24 of the I.T. Act @ 30% and it was contended that company
showing the same income from house property and the same has been accepted in all
years except the year under consideration and since, the income is clearly rental income
and the deduction claimed by the assessee u/s 24(1) is correct and rightly claimed as
these were rental income. So, it was pleaded for allowing the appeal.
3. CIT(A) while considering, but not accepting the plea of the assessee and placing
reliance on the decision of Hon'ble Calcutta High Court in case of Mukherjee Estate P.
Ltd., 244 I.T.R. 01. CIT(A) opined that whatever additional income is derived over and
above the letting out of property on hire cannot be treated as property income merely
because of its nexus with such property, but concluded to hold that income of
Rs.46,79,104/- is not to be treated as income from house property. However, he was of
the considered view that these receipts should rightfully be taxed as income from other
sources and it was held accordingly while dismissing the appeal of the assessee subject to
the above finding.
4. Still aggrieved, assessee has come up in appeal and while reiterating the
submissions as made before lower authorities it was pleaded for allowing the claim of the
assessee as income earned by the assessee is from the property only if antenna are put up
these are on the property of the assessee and car parking and kiosks are also in the
premises. Therefore, there was no occasion for the authorities below to not accept the
contention of the assessee that income earned form antenna etc. is income from house
property. So, disallowance of 30% u/s 24 is unjustified and uncalled for. It was thus
pleaded for deletion of the impugned addition. Reliance was placed on ITAT, Indore
bench decision in J.C. Bansal vs. TRO (2010) 123 ITD 245 and Delhi High Court
decision in United Airlines vs. CIT (2006) 152 Taxman 516 (Del.) in relation to TDS u/s
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(A.Y. : 2006-07)
194-I of I.T. Act, 1961, which could be applied in support in case of the assessee. It was
also submitted that case of Mukherjee Estate (P.) Ltd. vs. CIT, 244 I.T.R. 01 (Cal.) is
rather in support of the assessee. which has been mis-interpreted by the CIT(A) to hold
the income to be income from other sources whereas it is income from house property. It
was pleaded for allowing the appeal of the assessee.
5. Ld.DR strongly supported the order of the authorities below and pleaded that
claim of the assessee for deduction of 30% u/s 24 by treating the income from house
property and putting up antenna, kiosks and parking space is nothing but income form
other sources. So, claim of the assessee has rightly been disallowed by the Assessing
Officer whose action has been further confirmed by CIT(A) though with variation about
treatment of the income under the head `income from other sources' than `business
income' by following Calcutta High Court decision which is direct on the point where
other decisions relied upon by Ld.Counsel are not on the point, but in relation to TDS u/s
194-I of the Act. Hence, not applicable. Therefore, it was pleaded for confirmation of
the impugned order. The assessee claimed such income as `income from house property'
and reduced such income by claiming deduction of 30% u/s 24 of the Act which claim of
the assessee was not accepted by the Assessing Officer, who treated such income as
business income and disallowed deduction u/s 24 @ 30% to make addition of this amount
and CIT(A) confirmed such action of the Assessing Officer, but treated such income as
`income from other sources' instead of `house property income' as claimed by the
assessee.
6. We have heard both the sides, considered the material on record as well as
precedent relied upon and find that the assessee in this case has received income from
various telecommunication and cable network operators like Instant Cable, Huawei,
Protel etc. on account of installation of towers/antennas terrace of JMD Pacific Square,
Gurgaon and claimed such income as income from house property and claimed deduction
u/s 24 of the Act to the extent of 30% of such income which claim was not allowed as
Assessing Officer treated it as `income from business' and in appeal CIT(A) has
maintained the disallowance made by the Assessing Officer but directed to treat the
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income as `income from other sources' while following decision of Calcutta High Court
in the case of Mukherjee Estate (P.) Ltd. vs. CIT (supra). The head notes of the said
decision read as under:
"Section 56 of I.T. Act, 1961 Income from other sources Assessable as
Assessee permitted some companies to display their boards on top of assessee's
building for advertisement purpose Whether income derived by assessee from
hoardings could be taken as income from house property on ground that boardings
were part of building Held, no Whether, therefore, such income was assessable
as income from other sources Held, yes.
Section 22 of the I.T. Act, 1961 Income from house property Assessable as
Whether, on facts stated under heading `Income from other sources Assessable
as', income of assessee from display of hoardings on top of its building could be
assessed as income from house property Held, no.
7. Since, the case law applied is direct on the point, the other decisions relied upon
by the Ld.Counsel for the assessee are neither relevant to the facts of the case nor on the
point at issue. Therefore, considering entirety of facts, circumstances and material on
record, we are inclined to agree with the conclusion as drawn by the CIT(A), whose
action is confirmed and appeal of the assessee being de void of any merits is dismissed.
8. As a result, the appeal of the assessee gets dismissed.
Order pronounced in open court on 18.07.2012.
Sd/- Sd/-
(K.G. BANSAL) (U.B.S. BEDI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, July 18,2012
SKB
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-III, New Delhi
5.CIT(ITAT), New Delhi.
AR/ITAT
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