TaxTMI 
TaxTMI 
2021 (12) TMI 1281
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....ncome was filed by the assessee on 29.11.2014 at Rs. 2,59,00,06,780/- assessed at Rs. 4,86,64,97,120/-. Majorly the addition of Rs. 2,24,82,44,566/- was made on account of transfer pricing adjustments. Further, the solitary dispute surviving in this appeal is that income from letting out of the property along with amenities and equipments whether it is chargeable to tax under the head income from house property or income from other sources. The assessee offered it under the head income from other sources and the learned assessing officer taxed this as income from house property. 3. The assessee has raised the following grounds of appeal for Ay 2014-15 and similar grounds are also for AY 2015-16:- ITA. No. 8229/Del/2018 (Assessment year: 2014-15) : "1. The order passed by the Assistant Commissioner of Income Tax, Transfer Pricing-2(2)(2) ("Ld. TPO"), draft assessment order passed by Deputy Commissioner of Income Tax, Circle -16(2), New Delhi ("Ld. AO") and the final assessment order passed, on the directions of the Hon"ble Dispute Resolution Panel ("Hon"ble DRP"), by the Ld. AO are bad in law. 2. The Ld. AO has erred on facts and in law in determining t....
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....sfer pricing audit. 8. That on facts and in law, the Hon"ble DRP and the Ld. TPO/ Ld. AO erred in rejecting certain comparables by applying arbitrary filters without any rationale: a. Rejection of comparable companies having turnover less than INR 865 crores and INR 20 crores from the Impugned Transaction I and Impugned Transaction II respectively. b. Rejection of companies having different financial year ending (i.e. not 31 March 2014) or if data of the company do not fall within 12 month period i.e. 01-04-2013 to 31-03-2014. Without prejudice to the other arguments, the Hon"ble DRP and the Ld. TPO/ Ld. AO have also ignored the fact that financial data for several companies for the year ended 31 March 2014 is available in public domain. c. Rejection of companies having export sales less than 75% of the sales. d. Rejection of companies having employee cost less than 25% of the sales. e. Rejection of companies which have persistent losses for last two years out of three years including FY 2013-14 9. The Hon"ble DRP and the Ld. TPO/ Ld. AO erred in facts and in law, by wrongfully rejecting certain companies and adding cer....
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.... income tax proceedings and erred in not correcting mistakes made in earlier years. 16. Without prejudice to our contention that unrealized foreign exchange gain / loss should not be adjusted from the WDV of the assets as observed by the Supreme Court in the case of CIT vs Honda Siel Power Products Ltd. (312 ITR 024) and plain reading of provisions of Section 43A of the Act, the Ld. AO/Hon"ble DRP have erred in not allowing the depreciation on unrealized foreign exchange loss on capital creditors amounting to Rs. 89,24,613 in view of the position taken by Ld. AO/ Hon"ble DRP in the earlier years. 17. That on the facts and in law, the Ld. AO was not justified and has erred in addition of Dividend Distribution Tax ("DDT") amounting to Rs. 44,30,50,434 to the total tax payable of the Appellant, without considering the fact that such DDT liability pertains to AY 2015-16 and has been duly discharged by the Appellant in AY 2015-16. 18. That on the facts and in law, the Ld. AO was not justified and has erred in not granting credit of tax deducted at source amounting toRs. 3,86,54,414. 19. That on the facts and in law, the Ld. AO was not justified and ha....
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....r sources and always offered for taxation Under the head income from house property. For Assessment Year 2011-12 for the first time it has claimed in revised return that the above income is required to be taxed under the head "income from other sources". He submitted that the assessee has been consistently disclosing the above receipts as income from house property and there is no change in the facts and circumstances of the case and therefore, the change made by the assessee is not correct. It was further stated that merely because the rent is inseparable to the letting out of building and furniture and fixtures etc, it cannot be held as income from other sources. It was further stated in substances the assessee has given building on rent only. He relied several judicial precedents. 8. In rejoinder, the ld AR submitted that while deciding the case of the assessee for Assessment Year 2011-12, all these decisions were considered by the coordinate bench. He further submitted that the coordinate bench has followed the decision of the Hon'ble Delhi High Court in case of Garg Dyeing and Processing Industries as well as Jay Metals. In view of this he submitted that issue is square....
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.... (iii) of the Act and not as 'income from house property'?" 10. The Hon'ble High Court, while deciding the aforementioned question of law, observed as under: "17.1 The basic test for determining whether a lease for the letting of a building together with fixtures etc is a composite one was laid down by the Supreme Court in Sultan Bros. (P) Limited v. CIT (1964) 51 ITR 353. In the above decision, the Supreme Court was dealing with Section 12 (3) and (4) of the Indian Income Tax Act, 1922 which correspondence Section 56 of the Act. There the Assessee had constructed a building for the purpose of running a hotel and for certain ancillary purposes. With this objective, the Assessee equipped with the building, furniture and fixtures. The lease deed in that case provided for a monthly rent of Rs. 5,950 for the building and hire of Rs. 5,000 for the furniture and fixtures. 17.2 The Department disallowed the claim of the Assessee stating that the entire sum received under the lease was to be treated as 'income from other sources'. While the rent receipt for the building was treated as 'income from house property', the rent received on ....
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.... to the Lessee was not just the basement, ground floor, first floor and second floor of the building but also the fixtures, furniture which included the air-conditioning and power backup through a 200 KVA diesel generator set. In particular, Clause 2 (d) makes it clear that the Lessor had to hand over the office "with furniture & fixture, 200 KIVA diesel generator and adequate air conditioners to the Lessee in good working condition." 20. There can be no manner of doubt that the Lease Deed was a composite one and the rental receipts thereunder answered the description in Section 56 (2) (iii) of the Act." 11. In light of the aforementioned findings of the Hon'ble High Court, we will now consider the facts of the case in hand. 12. During the course of scrutiny assessment proceedings, vide show cause notice dated 17.12.2014, the assessee was asked to show causeas to why income offered to tax as "Income from house property" should not be treated as "Rental income". 13. The assessee filed detailed submissions vide letter dated 26.02.2014 explaining the contents of the lease agreement and pointing out that it is a composite agreement and the amount....
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....ssessee that the above receipts have been disclosed as 'income from house property" due to inadvertence is highly misleading. The assessee has disclosed the above receipts as 'income from house property" in the original return of income as well as in the revised return of income. It is evident that is an afterthought to take benefit of the recent decision of jurisdictional High Court given in the case of GARG DYEING & PROCESSING INDUSTRIES on 22.11.2012. It is strange that the assessee realized that the above rent is a 'composite rent' only after the above judgement. - The submission of the assessee that the receipts of Rs. 17,22,16,198/- from Microsoft Global Services Center (India) Private Limited are composite rent received towards inseparable letting of building, furniture and fixtures, equipments, air conditioners etc. is also factually incorrect. - 4.3 In the current year also the facts of the case are similar to that of the earlier years. The cases relied upon by the assessee are also factually different from the case of the assessee. The Hon'ble Supreme Court in the case of Sultan Brothers (relied upon by the assessee) has held that few....
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....shall maintain the permanent structure, facade and aesthetics of the BUILDING and the inbuilt infrastructural facilities. The LESSEE may employ contractors selected by the LESSEE. > The LESSOR has agreed that during the term of this LEASE DEED, including the extended term, the LESSOR shall, without any extra or additional cost and charges, allocate a minimum space of fifty (50) sq. ft. at the roof top/terrace of the BUILDING ("Antenna Site"), to the LESSEE for installation of its own dish or other microwave equipment/ V Sat Link equipment/ tower/ dish antennae and/ or satellite, etc. of such size and dimension as may be required by the LESSEE. The LESSOR shall be liable for all cost, charges and taxes, including Municipal Coloration taxes for installation of such dish or other microwave equipment, V Sat Link equipment, tower, dish antennae, and, or, satellite the LESSEE. > The LESSOR has agreed to provide the following services to the LESSEE in the LEASED PREMISES during both the Initial Term and the Extended Term: i) Power back up - The LESSOR shall provide 50 KW diesel generator set power back up for the LEASED PREMISES at no additional cost. The runnin....
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....4,089/-) is being made to the computation of income. 4.5 Without prejudice to the above discussion, it is further held that the claim of the assessee regarding other expenses of Rs. 16,29,82,109/- u/s 57(iii) of the Income-tax Act is rejected as the assessee has neither furnished any evidence regarding its allow ability u/s 57(iii) nor the assessee has charged the above expenses from the lessee. The income from house property is assessed at Rs. 17,22,16,198/- as disclosed by the assessee in its original return of income." 16. We have given thoughtful consideration to the findings of the Assessing Officer but we do not concur with the findings. There is no dispute that the lease agreement is a composite lease agreement which included the inbuilt infrastructural facilities provided which included central air conditions with ducting, DG power supply, net work equipments, access control equipments, electrical equipments, VAVs and controllers, smoke detectors and occupancy sensors. 17. The agreement also included other amenities, namely installation of dish antenna/satellite, parking space, repair and maintenance which includes repairs, interior or exterior, e....