TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 331
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....ntal income were shown in its accounts. 2. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." ITA No. 6414/Del/2015(Revenue's appeal) AY: 2011-12 1. That the Ld.CIT(A) erred in law and on facts in deleting the addition of Rs. 12,18,10,152/- on protective basis, made on account of lease rental income ignoring the fact that the assessee company was not legal owner of the property which lease rental income were shown in its accounts. 2. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." ITA No. 6767/Del/2015 (Assessee's appeal) AY: 2010-11 " On the facts and circumstances of the case the learned CIT (A) has erred:- 1. In not accepting the lease rentals received from retail spaces of Ambience Hotels and Resorts Pvt. Ltd. (AHRL) and offered for taxation in its hands under an agreement in lieu of interest free deposit of Rs. 7....
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....greement given to ADIPL unfettered rights to let-out and manage its retail spaces and to receive and appropriate to its own account all receipts and receivables from the leasing of its retail spaces in lieu of interest free deposit of Rs. 75 crores received from it, which it needed for completion of its Hotel Project. 3. In not recognizing that section 60 is not applicable, if the income is derived not from transfer of assets but by reason of the right to manage and carry on business. 4. In ignoring the legal effect of the agreement entered into by the company with ADIPL in the ordinary course of business giving it right to manage its assets and carry on the business of leasing. The agreement is bona fide and unambiguous and creates certain legal rights and obligations which have been acted upon. 5. In disregarding the terms and conditions of the said agreement which gave right to ADIPL to exploit its assets against a consideration for a limited duration which has not been found to be false or collusive. 6. In confirming the disallowance of Rs. 5,56,000/- u/s 14A r.w. Rule 8D(2)(iii) made by the Assessing Officer when no direct or indirect expenditure has been incurred A by....
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.... standard deduction of 30% amounting to Rs.32,673,254/-claimed by assessee in its returned income. 3. Aggrieved by addition made by Ld.AO assessee preferred appeal before Ld.CIT (A), observed that the lease rentals cannot be assessed under head, 'Income from House Property', as assessee is not legal owner, and it can be assessed under head, 'Income from Business or Profession', as assessee is in business of leasing of properties. Ld.CIT(A) held that business expenses incurred thereto by assessee were required to be allowed from said lease income, as these expenses were added back to assessee to its income. 4. Aggrieved by order of Ld.CIT (A) revenue is in appeal before us now. 5. Ld.CIT DR placed reliance upon order of Ld.AO. He submitted that arrangement has been entered into by assessee with its sister concern, wherein right to receive rental income from retail shop and retail spaces have been given to assessee, against which assessee paid interest-free deposit of Rs. 75 lakhs. Ld.CIT DR strongly objected to arrangement of such kind by placing reliance upon section 60 of the Act, wherein without transfer of assets, income arising therefrom will be chargeable in the hands of tr....
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....rst Party may refund the said interest-free deposit by giving a one year notice in writing, at any time after the initial period of three years. However, the tenure of this agreement shall not exceed 10 years and First Party shall refund the said refundable security deposit to the Second Party and simultaneously the Second Party shall surrender its rights for sub-letting and managing the Said Space to the First Party. 3. That this agreement shall be deemed to be effective from the date of this Agreement or the date of the Agreement for Taking Possession for Fit Out(s) entered into with tenants/occupants of the various retail spaces comprising the Said Space or any part thereof by the First Party, whichever is earlier. 4. That the Second Party shall be entitled to receive the monthly rent or other charges/including the arrears of rent / charges if any from the tenants or persons in occupation of their respective portion in the Said Space in its own name and all these tenants/occupants shall be deemed to be the tenants/ occupants of the Second Party and the Second Party shall have the right to receive the rent or charges from them during the currency of this Agreement and also to....
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....o be the owner of the house property so transferred; (ii) the holder of an impartable estate shall be deemed to be the individual owner of all the properties comprised in the estate; (iii) a member of a co- operative society, company or other association of persons to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association, as the case may be, shall be deemed to be the owner of that building or part thereof; (iiia) a person who is allowed to' take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 2 (4 of 1882 ), shall be deemed to be the owner of that building or part thereof; (iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed to be the owner of that building or part thereof;] (iv) " annual charge" means a charge to secure an annual liability, but does n....
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.... reproduced herein above. There is rental income from retail spaces and retail shops owned by assessee, which was collected by M/s.Ambience Developers and Infrastructure Pvt.Ltd., by virtue of agreement dated 31/03/2008.Assessee has raised a plea that, Section 60 is not applicable to facts of case before us. 12.3. Admittedly, facts involved in this case are identical to that of appeals considered hereinabove. Both parties have referred to and relied upon same arguments, that has been advanced hereinabove. 13. We have perused submissions advanced by both sides in the light of the records placed before us. 13.1. We have already taken a view in aforestated appeals regarding taxability of rental income received from leased premises to be considered in the hands of M/s.Ambience Hotels and Resorts Pvt.Ltd. 13.2. Legislative history for enactment of section 60 would be relevant at this stage. Section 60-63 of the Act corresponds to section 16 (1) (c ) of 1922 Act. For doing so we refer to and rely upon commentary by 'Chaturvedi Pithisaria's' to Income Tax Law given in Sixth Edition 2014 Volume 4, which is as under: "Section 60 compared to section 16(1)(c) of the 1922 Act-Change in ....
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....ot be liable to be taxed upon the income arising from that source thereafter unless some statutory provisions, such as those contained in section 60 to 64, are attracted. Leaving out such cases and those where the income is diverted along with the source producing it, the mere fact that the recipient is constrained to apply it in a particular manner either under a statute or under certain contracts would not affect assessee's liability to tax. This is often expressed by saying that application or destination of profits or a charge which has been made upon them by previous agreement or otherwise is immaterial for the purpose of taxation. The above principle is statutorily enacted in section 60. A transfer of income alone without there being a transfer of the source of that income is a mere application of the income (CIT vs. Dr. Rameshwar Lal Pahwa, (1980) 123 ITR 681, 687-88 (Del). Also see Provat Kumar Mitter v. CIT, (1961) 41 ITR 624 (SC); CIT v. Smt. Nandiniben Narottamdas, (1983) 140 ITR 16, 26 (Guj)]. Also see, "Diversion or application of income", u/s. 4, ante. The object underlying the provisions of section 60 is to meet with the device which was being adopted by th....
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....uphold view of Ld.CIT (A) that income from leasing of shops/retail spaces has to be assessed in the hands of assessee under the head, 'Income from House Property', after allowing statutory deductions under section 24 of the Act. 13.6. Accordingly ground No. 1-5 stands dismissed. 14. Ground No. 6 Ld.AO observed that, assessee made investment of Rs. 21,54,72,937/-, in shares during year under consideration. Keeping in view investment made, Ld.AO computed 0.5% of average investment and computed disallowance under section 14 A of the Act, read with Rule 8D, to the extent of Rs.5,56,000/-. 15. Aggrieved by addition made by Ld.AO, assessee preferred appeal before Ld.CIT (A), who confirmed disallowance made by Ld.AO. 16. Aggrieved by order of Ld.CIT (A), assessee is in appeal before us now. 17. Ld.AR argued that, no expenditure has been incurred by assessee for making such huge investments. 18. On the contrary, Ld.CIT.DR submitted that assessee received dividend amounting to Rs.1,48,000/-, on investment in equity shares of M/s. Uflex Ltd. During the year, assessee made investment in its subsidiaries being, M/s.Aman Hospitality Pvt.Ltd., and Ambience Commercial Pvt.Ltd., amounting ....