Revenue appeal dismissed, ITAT upholds CIT(A) decision on house property income & business loss set-off

The appeal filed by the revenue was dismissed with no order as to cost. The ITAT upheld the CIT(A)'s decision regarding the deletion of house property income and disallowance of set-off of brought forward business loss. The grounds raised by the revenue were dismissed as they did not require specific adjudication.

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Issues Involved:
1. Deletion of addition of Rs. 5,09,27,464/- house property income determined by the AO against the income/loss shown as business income by the assessee.
2. Reliance on the decision of the Apex Court in the case of M/s Chennai Properties and Investments, and whether the facts of the assessee company are distinguishable from that case.
3. Disallowance of the set-off of brought forward business loss of Rs. 7,47,711/- of A.Y. 2010-11 & 2013-14 claimed by the appellant.
4. Request to set aside the order of the Ld. CIT(A) and restore that of the A.O.
5. General grounds for amending or adding grounds of appeal.

Issue-wise Detailed Analysis:

Ground No. 1 & 2:

These grounds are interconnected and relate to the deletion of the addition of Rs. 5,09,27,464/- house property income determined by the AO against the income/loss shown as business income by the assessee. The Ld. AR for the assessee argued that these grounds are covered by the order of Hon’ble ITAT in ITA No. 1180/Mum2017 for AY 2013-14 in the assessee’s own case, where an identical ground was decided on merits. The Ld. DR agreed that the issue is covered in favor of the assessee.

The ITAT examined the material and found that the identical ground had been decided by the Coordinate Bench of Hon’ble ITAT in ITA No. 1180/Mum2017 for AY 2013-14. The CIT(A) had treated the income from lease as business income based on the decision of the Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd. Vs. CIT (2015) 56 Taxmann.com 456 (SC) and Shambhu Investment P. Ltd. Vs. CIT 263 ITR 143 (SC). The CIT(A) noted that the assessee company was in the business of building and leasing premises of special nature, and the income should be treated as business income, not as income from house property.

The ITAT also noted that in the assessee’s own case for AY 2010-11, ITA No. 261/M/2016, the income from lease and service charges was treated as business income. The ITAT upheld the CIT(A)’s decision, stating that the CIT(A) had rightly allowed the claim of the assessee and considered the income from leave and license charges and service charges as income from business. Accordingly, these grounds raised by the revenue were dismissed.

Ground No. 3:

This ground relates to the disallowance of the set-off of brought forward business loss of Rs. 7,47,711/- of A.Y. 2010-11 & 2013-14 claimed by the assessee. The AO had disallowed the set-off, treating the business income as NIL since the income was considered under the head ‘Income from House Property’.

The CIT(A) noted that the amount of Rs. 7,47,711/- represents the credit available u/s 115JAA of the Income-tax Act, 1961, and the disallowance made by the AO was incorrect. The CIT(A) directed the AO to give credit for the said amount u/s 115JAA of the Income-tax Act, 1961. The ITAT upheld the CIT(A)’s decision, finding no reason to interfere with the findings recorded by the CIT(A). This ground raised by the revenue was dismissed.

Ground No. 4 & 5:

These grounds raised by the revenue are general in nature and do not require specific adjudication.

Conclusion:

In the net result, the appeal filed by the revenue was dismissed with no order as to cost. The order was pronounced in the open court on 16th Jan, 2019.

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