TaxTMI 
TaxTMI 
2021 (3) TMI 1158
X X X X Extracts X X X X
X X X X Extracts X X X X
....therefore, has effectively raised three grounds of appeal:- "l (i). That on facts and circumstances, the Id. CIT(A) was not justified in treating rental income from house property under the head 'Income from Business and Profession' as against 'Income from House Property' offered by the assessee in disregard to past history and judicial precedents. (ii) That the order of Id. CIT (A) is highly arbitrary and without proper opportunity* appreciation of facts and against the principle of natural justice. (iii) That the Id. CIT(A) having disregarded the order of Hon'ble ITAT for AY 2009-10 and order of CIT(A) for AY 2011-12 which have attained finality, the impugned order is arbitrary, misconceived and not in conformity with settled position. 2(i) That on facts and circumstances of the case, the Id. CIT(A) was not justified in rejecting claim of Standard Deduction u/s 24 in respect of income from letting of property by reclassifying the same under the head 'Income from business and Profession'. (ii) That in any case, the income from letting of property having been consistently assessed under the head 'Income from House Property' in the preced....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see as well as others. The maintenance income and reimbursement charges were treated by the ld. Assessing Officer as rental income. It has been split by the assessee to claim the entire expense as business expenditure. Assessing Officer noted that under Section 24, 30% of the rental income is allowed as deduction to the assessee from income from house property and further such expenditure cannot be claimed as allowable under any other head of income. Therefore, the ld. Assessing Officer also treated the maintenance income of Rs. 2,96,63,830/- as rental income. According to the Assessing Officer as assessee is holding 34.72% of the total area he proportionately worked out 34.72% of the income of Rs. 2,96,63,830/- i.e. Rs. 1,02,99,281/- as income from house property and the balance income is treated as income from business and profession. Thus, the expenditure claimed by the assessee under the head business income is to be disallowed. 05 The assessee stated that entire expenditure is allowable under the head income from business. The Assessing Officer held that it is not acceptable because assessee is collecting rental income of Rs. 4,56,70,064/- by owning 34.72% of the total area....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. Consequently, he as per para 7 held as under:- " 7. Decision 7.1 Briefly, the facts of the case are that the Assessee is a builder in the business of real estate. During the year under consideration, it has earned income from the letting out the office premises as well as maintenance charges for building, reimbursement of Air Conditioners, maintenances and housekeeping etc. The Assessee was providing services like running and operation of lifts, cleaning of floors, window panels and white wash etc. The Assessee was providing the maintenance services for a total area of 1,50,061 sq. feet., out of which 52,101 sq. feet was owned by it. The balance area had already been sold out. But the Assessee was providing maintenance services not only for the area owned by it but also for the sold area. The area owned by the Assessee was 34.72 % of total area. The Assessee declared house property income at Rs. 4,56,70,064/- and claimed standard deduction of 30% u/s 24 of the Act, besides interest of Rs. 30,707/-. Total income from maintenance, reimbursement and housekeeping charges was Rs. 2,96,63,830/-.The Assessee showed this income as income from business or profession and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....decision taken by the authorities in the previous year would not stop or operate as res judicata for subsequent year. The revenue cannot act mechanically without applying its mind to earlier facts and circumstances under which a view was taken by the taxman and the facts and circumstances of the assessment year in question calling to depart from earlier view. 7.3 The Hon'ble Calcutta High Court in the case of CIT vs. Shamuh Investment Pvt. Ltd. (2001), 249 ITR 47 held that merely because income is attached to any immovable property that cannot be sole factors for assessment of such income as income from property. What has to be seen is what was the primary object of the assessee while exploiting the property. If it is found applying such test that the main intention is for Jetting out the property or any portion thereof the same must be considered as rental income or income from property'. In case it is found that the main intention is to exploit the immovable property by way of complex commercial activities in that event it must be held as business income. 7.4 In view of the above decision and many other decisions of the Courts, it is clear that if the income ear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the Assessee. This is to be further enhanced by the net income earned by the Assessee from the maintenance, reimbursement and housekeeping charges in respect of sold out area. There is a simple arithmetical work to be carried out by the Assessing Officer to compute the total income of the Assessee. " 07 The learned authorised representative submitted that that this issue has arose in the case of the assessee for assessment year 2008 - 09 and 2009 - 10 dated 31st of January 2014 wherein in para number 11 onwards the coordinate bench has decided this issue in favour of the assessee. It was further stated that the learned and CIT - A in assessee's own case for assessment year 2011 - 12 dated 11/1/2016 has already accepted the contentions of the assessee and despite there being the order of the learned and CIT - A in this year has decided this issue in favour of the assessee. He referred to both these orders placed at paper book page number one - 15 and 16 - 23 respectively. He further referred to the same police deed dated six number 2007 and the copy of the simple maintenance agreement even dated placed at paper book page number 41 - 47 and 48 - 50 respectively. He therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....building, reimbursement for air ITA NOS. 3482/DEL/2011 & 2609/DEL/2012 conditionings, maintenance, housekeeping etc. It was observed that the assessee is providing services like running and operation of lifts, cleaning of floors, window panels, white washing etc. It was also observed that the assessee is under contract to maintain total area of 150,061 squre feet out of which 51,101 sq.ft. is owned by the assessee itself while balance area of 97,960/- sqft is sold out area. However as per the terms of contract it is providing maintenance services to them as well. AO observed that thus area owned by the assessee worked out to 34.72% and 65.28% of the area is owned by others. In computation of income furnished by the assessee it has shown income from house property at Rs. 4,54,10,619/- and had claimed deduction of 30% on the same u/s. 24 of the Act besides interest expense of Rs. 41,752/- related to it. The income from maintenance and other services including reimbursements have been shown as income from business and profession and had claimed all the expenses against such income. The income broadly falls under the following heads: - i) Maintenance income Rs. 2,74,58,525/- i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtionate expenses of Rs. 1,12,59,458/- (34.72% of Rs. 324,29,316) was held to be relatable to income from maintenance housekeeping and reimbursement related to property owned by the assessee. The disallowance was thus worked out as under:- Expenses allowed Rs. 1,12,61,952/- Less: 30% standard deduction allowed On treating maintenance income Of Rs. 1,12,59,458/-, as rental Income Rs. 33,77,837/- Net disallowance Rs. 78,84,115/- 14. The AO added the above amount of Rs. 78,84,115/- to the business income of the assessee as per return. 15. Against the above order the Assessee appealed before the Ld. CIT(A). Ld. CIT(A) noted that these maintenance receipts have been treated as business income from Asstt. Year 2001-02 and it was approved by the ITAT vide its order dated 30.5.2008 in ITA No. 4530/Del/2004 for Asstt. Year 2001-02. The observation of the ITAT was as under:- "3.3 We have perused the records and considered the matter carefully. The issue raised in this ground is whether the brokerage paid by the assessee in connection with ITA NOS. 3482/DEL/2011 & 2609/DEL/2012 renting out of the premises can be allow....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of business receipts as receipts assessable under the head income from house property without proving that receipts totally fall in the category of income derived from property which is essential for classifying the income under the head 'income from house property'. The action of the AO is not approved." 16. Against the above order the Revenue is in appeal before us. 17. Ld. DR relied upon the orders of the AO. He submitted that the AO has rightly made the disallowance. He submitted that certain portion of the maintenance receipt were actually house property income and hence expense in relation thereto has been rightly restricted by the AO to 30%. Hence, he pleaded that the order of the AO may be sustained. 18. Ld. Counsel of the assessee on the other hand submitted that without any cogent basis, the AO has treated the business income in the shape of maintenance and other services including reimbursement as income from house property. He claimed that in the assessment order in the concluding computation the AO has treated the entire income as business income. Still he has proceeded to disallow expenditures in this regard by treating the certain ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....house keeping and maintenance related to property owned by the assessee. AO worked out following disallowance:- Expenses allowed Rs. 1,12,61,952/- Less: 30% standard deduction allowed On treating maintenance income Of Rs. 1,12,59,458/-, as rental Income Rs. 33,77,837/- Net disallowance Rs. 78,84,115/- 21. From the above, we note that AO has not specifically identified the expenses which is being disallowed. He has calculated 34.72% of maintenance receipt (of Rs. 324,29,316) amounting to Rs. 11261952 as the expenses disallowed. From the above he has allowed 30% as standard deduction and has thereafter arrived at disallowance of Rs. 78,84,115/-. 22. We find that the above working out of disallowance by the AO is not comprehendible. AO has done some theoretical exercise by bifurcating maintenance receipts in the ratio of property owned vis-a- vis the total property and accordingly, out of the income in this regard assessee has made disallowance amounting to 70% of income thereof. We find that the above disallowance by the AO is devoid of cogency and the same is not sustainable. 23. We find that the assessee has entered into the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecting the view taken for earlier years, there must be change in facts, situation or law. 26. In this regard, we further place reliance upon the decision in the case of CIT vs. Excel Industries Ltd. 358 ITR 295. In this case the Hon'ble Apex Court has inter-alia held that when the Department has accepted the verdict of the Tribunal in some years, it cannot be allowed to challenge the verdict in other years. Thus, in our considered opinion in the background of the aforesaid discussion and precedents, there is no infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the same. 27. In the result, both the appeals filed by the Revenue stand dismissed." 10 The learned departmental representative could not state that if the order of the coordinate bench in the earlier years are not in accordance with the law, why they have not been challenged before the higher forum. Further as per para number 7.2 of the order of the learned CIT - A he held that the learned and CIT - A and the ITAT in assessee's own case in the previous year did not consider the fact that the expenses allowed as a deduction at the rate of 30% and many other expenses claimed by the asses....