AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 1289
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....ards giving credit of taxes paid by Alt Property Private Limited towards such income. c) Without prejudice to the above grounds of appeal, the Ld CIT (A) has erred in estimating the Alt Property Limited share of income @ 30% for the various services rendered by the said company to the tenant. The said proportion may kindly be revised considering the expenses incurred by the said company for the provision of the various services and addition if any may please be restricted to certain percentage of the profits earned in totality." 2. Briefly stated relevant facts of the case are that the assessee owns 50% share in a building named „Munshi Manor‟, which was called „Gandhi Mansion‟ earlier, and the other 50% share is owned by the assessee‟s uncle. The said property has Ground plus 4 floors (G + 4). The ground and the second floors were let out to Ashoka Guest House, a proprietorship concern. The first and third floors were let out to Sanjay Munshi (HUF). Fourth floor was let out to Ravikanth Munshi. The said Ashoka Gust House, Sanjay Munshi HUF and Ravikanth Munshi subleased the respective premises to a private limited company named M/s. Alt Property P....
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.... 55 lakhs (page 199 of the paper book is relevant in this regard). Considering the fact that the assessee is the part ownership of the said Gandhi Mansion and his family members were roped in to have a collusive understanding and arrangement for ultimate purpose of earning huge income out of the said property and avoid paying proportionate taxes by entering into a collusive arrangement and legal quagmire. AO also noticed that the said company earned income from South African Consulate by letting out the property in which case such property is outside the ambit of Maharashtra Rent Control Act, 1999. Accordingly, the income earned by the company M/s. Alt Property Pvt Ltd is considered as the ALV of the property and ignored the municipal rateable values before reassign the 50% of Rs. 59.90 lakhs as ALV of the said property to the extent of its share. The assessment for the AYs 2008-09; 2009-10; 2010-11 and 2011-12 were also assessed / re-assessed or pending for assessments. Ld AR submitted that the assessments for the AYs 2008- 09 and 2011-12 are finalised in the lines mentioned above for the earlier AY 2007-08 and the matters are pending for adjudication before the Division Bench of ....
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.... in approving the AO‟s contention that the income earned by M/s. Alt Property Pvt Ltd constitutes "rent" in the hands of the assessee to the extent of his share in the property. In the process, CIT (A) ignored the business income of M/s. Alt Property Pvt Ltd and the independent existence of that person-company. A sum of Rs. 59.90 lakhs earned by the company constitutes „business income‟ in essence and the same was treated as „income from house property‟ in the hands of the assessee. Without prejudice, Ld Counsel for the assessee submitted that he has no objection for taxing the same in the re-assessment as done by the AO / CIT (A). However, Ld AR objected to the failure of the AO in giving credit to the taxes by M/s. Alt Property Pvt Ltd on the sum, which is now taxed in the hands of the assessee as „income from house property‟. Further, Ld Counsel for the assessee also mentioned without prejudice that the CIT (A) erred in granting deduction of increased percentage of 30% towards expenses, when the expenses claimed are genuine. Ld Counsel for the assessee argued for further increase. Further, Ld Counsel for the assessee submitted that the r....
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....or the assessee also argued for the exemption of the property from the ambit of Maharashtra Rent Control Act, 1999, in the case of tenancy of South African Consulate. 5. Per contra, Ld DR for the Revenue argued stating that there is an arrangement involving assessee‟s mother and HUF and the assessee‟s private limited company ie M/s. Alt Property Pvt Ltd. This arrangement has the effect of playing with the provisions of the Act with ultimate aim of avoiding paying taxes on the real ALV of the property in question ie Munshi Manor. The documents signed among the parties are created and the arrangement constitutes "self-serving documents". It is the responsibility of the Revenue to delve into the original intention of the assessee and its arrangements. It is only the responsibility of the AO to bring out the real rental value (ALV) of the Munshi Manor for tax purposes as per the provisions of section 23(1)(a) of the Act. However, conceded to the fact that the assessee deserves to the tax credit paid by the company M/s. Alt Property Pvt Ltd, which substantially owned by the assessee. The original rent arrangement by the assessee, with Ashoka Gust House, Sanjay Munshi HUF an....
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....al value of the buildings without any disturbances. Details are already discussed in the portion of the order meant for arguments of the Ld Counsels. Disturbing the claims of the assessee in the year under consideration is not appreciated as the facts and the property in question are one and the same. (ii) Income of the APPL:- Assessee incorporated the said company validly and legally and entered into a valid lease agreement with all the stakeholders of the property and started a business centre for exploiting the said property for business based on the principles laid down for the same. The business income earned by the company out of the said principles cannot constitute the intrinsic rental value of the said Mansion. In our view, the rental value of the building is conceptually different from that of the building when the same is used for commercial profits. Commercial profits of the company cannot be equated with the rental value - ALV of the property alone. It has the element of profit motive of the businessman and the skilled employees of any organization. It has human element involving decisions of the management / employer and individuals. Rental value of the property is n....