TaxTMI 
TaxTMI 
2018 (4) TMI 389
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....n not giving effect to the decision of the Hon. ITAT (Mumbai) for A.Y. 2003-04 correctly. 4. The learned CIT (Appeal) has erred in superseding the Hon. ITAT (Mumbai) by freshly adjudicating an issue which had been already decided by the Hon. ITAT (Mumbai). 5. The learned Assessing Officer has erred in initiating penalty proceedings in a case which has been highly litigated up to the Hon. Supreme Court. 3. Brief facts of the case are as under: The assessee company had taken a property named "Wilson House" on lease from Mr.Dwarkadas Jankidas Sanghvi and Vimla Dwarkadas Sanghvi. The lease agreement in this case was signed on 25.2.2002 for 50 years. The Building located at Andheri, CST No.631, consisted of ground floor and 4 upper floors, measuring 16000 Sq.ft. Subsequently, the assessee company, sub let part of the premises to M/s.Indica Research Ltd and M/s.HPL Global Pvt.Ltd. The assessee company also let out some part of the premises to M/s.Mahendra & Mahendra, HDFC Bank Ltd. and M/s.Rincel Technologies. In case of M/s,Indica Research Ltd. and M/s.HPL Global Ltd. The assessee, in addition to receiving lease rent from lease premises, also received service cha....
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.... income for assessing income from different sources and it is a settled legal position that in case the income falls under a particular head, the same has to be assessed under that head and only when the income does not fall under any specific head, it could be assessed as income from other sources. There is a specific head i.e income from house property which has been provided in the Act to assess the rental income from any building or land apartment there to owned by a person. Since the assessee is deemed owner of the property and had received rental income, the same has been rightly held assessable as income from house property. It is not a case of commercial exploitation of the property in which case it could be assessed as income from business. The assessee has simply sub leased the property to enjoy the rental income. It is also not a case of organized activities of taking properties on lease and letting out. The assessee had taken on lease one building which had been subleased to tenants and, therefore, the rental income has to be assessed as income from house property. We accordingly uphold the decision of authorities below to assess the rental income as income from house p....
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....y has to be assessed only in respect of bonafide letting out value of land and building. In case, in addition to the land and building the assessee has also received certain income from services rendered, said income has to be separated and had to be assessed as income from other sources or income from business depending upon the nature of services rendered, This view is supported by the judgment of Hon'ble High court of Kolkata in case of Kanak Investment Pvt Ltd. (95 ITR 419). The same view has been taken by the Hon'ble High court of Madras in case of A.R. complex Vs. I TO (supra). The judgment of Hon'ble Supreme Court in case of Karnani properties Ltd. (supra) also supports this view. In the present case, the assessee had only rendered certain services and there is no organized activity with a view to earn such income. Income from services, therefore, in our view, on the facts of the case has to be assessed as income from other sources and all expenses incurred by the assessee for earning of such income has to be allowed as deduction u/s. 57 of the Income tax act. However, if any expenditure in relation to services also includes expenses on repair and maintenance of ....
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....tention of the assessee that the law declared by the Supreme Court is the law of the land and the same is binding on all subordinate Courts including the Tribunal. Further, the Supreme Court in the case of Chennai Properties & Investments Ltd. (supra) has held that from the facts snd circumstances of the case before them, an irresistible conclusion was that the letting of the property was in fact the business of the assessee. However, the facts of the case of 'Chennai Properties & Investment Ltd.' (supra) were entirely different as that of the case of the assessee. In case of Chennai Properties & Investments Ltd, (supra) in the' memorandum of association of the appellant company, it was mentioned that the main object of the appellant company was to acquire and hold the property and to let out those properties as well as make advance upon the securities and lands and buildings or other properties or any interest therein. The Supreme Court emphasized that holding the aforesaid properties and earning income by letting out those properties was the main objective of the company. Thus, Supreme Court treated the income of the assessee in that case as 'business inc....
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....see. The premises in question have been taken on lease by the assessee and further subletted. In the case in hand it is neither the object nor the business activity of the assessee company to take on lease and sub let the properties The Tribunal, as the facts were available before it, has given a categorical factual finding. There is no mistake apparent on record in this case as the said case law is not applicable because the factual finding given by the Tribunal is contrary to the facts of the cases before the Supreme Court as relied upon by the assessee. The Tribunal, vide impugned order, has not only considered the submissions of the assessee but has given a categorical finding on all of the issues which were raised before the Tribunal by the assessee. It is well settled that the power of rectification under section 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent; mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. The Tribunal, under such circumstan....
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....f the l.T.Act. This very order is the subject matter of the appeal. Now the dispute is confined to allowance of expenses against the income received as a service charges ana has been assessed under the head "Income From Other Sources." 7.3 As discussed in the earlier para, the Hon'ble Supreme Court, in the case of M/s.Raj Dadarkar & Associates 81(2017) Taxmann.Com.193(Supreme Court) has held that leave & license fee as well as service charges should be taxed under the head "House property Income". The Hon'ble Supreme Court concurred with the finding of Tribunal in that case that service charges are inseparable from the basic charges of rent and the same cannot be taxed under any other head. The relevant portion is quoted below: "17. In the instant case, therefore, it is to be seen as to whether the activity in question was in the nature of business by which it could be said that income received by the appellant was to be treated as income from the business. Before us, apart from relying upon the aforesaid clause in the partnership deed to show objective, the learned counsel for the appellant has not produced or referred to any material. On the other hand, ....
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....owance of expenses against service charges, which has been assessed under "Income from other sources." 7.5 All the grounds of appeal are related to allowance of expenses against the service charges which has been assessed as income from other sources. The Hon'ble Tribunal has drawn a boundary and the AO has strictly confined himself within the boundary. It was a categorical direction of the Hon'ble ITAT that income should be assessed as income from other sources and all the expenses incurred by the appellant has to be allowed under the provisions of section 57 of the Act only. The Hon'ble Tribunal has further gone to the extent that if any expenditure in relation to service charges also includes expenses on repair and maintenance of the portion of building let out, such expenses have to be excluded as these are already covered in the statutory allowances u/s.24 of the Act, while computing the House property income. Thus, the AO was duty bound to examine the claim of expenses under the provisions of section 57 of tie Act Precisely, section 57(iii) is very categorical when it stipulates: "any other expenditure (not being in the nature of capital expendit....
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.... Commissioner of Income Tax (Appeals) which showed that the authorities below have followed the above ITAT order fully for assessment year 2016- 17: 7.5 All the grounds of appeal are related to allowance of expenses against the service charges which has been assessed as income from other sources. The Hon'ble Tribunal has drawn a boundary and the AO has strictly confined himself within the boundary. It was a categorical direction of the Hon'ble ITAT that income should be assessed as income from other sources and all the expenses incurred by the appellant has to be allowed under the provisions of section 57 of the Act only. The Hon'ble Tribunal has further gone to the extent that if any expenditure in relation to service charges also includes expenses on repair and maintenance of the portion of building let out, such expenses have to be excluded as these are already covered in the statutory allowances u/s.24 of the Act, while computing the House property income. Thus, the AO was duty bound to examine the claim of expenses under the provisions of section 57 of the Act. Precisely, section 57(iii) is very categorical when it stipulates : "any other expendit....