TaxTMI 
TaxTMI 
2024 (7) TMI 1648
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.... appreciating the fact that the assessee's facts are identical to the facts of the case of Shambhu Investments Pvt. Ltd. v. CIT (kolkatta) HC 116 Taxman 795) which was later affirmed by the Hon'ble Supreme Court. (ii) On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that the Assessee does not fulfill all the three tests laid down by Shambhu Investments Pvt. Ltd. v. CIT (kolkatta) HC 116 Taxman 795) and accordingly the decision cannot be applied to facts of the case for treating the service centre income as income from house property. (iii) The Ld. CIT(A) further erred in holding that where the assessee has entered into two separate agreements for letting of premises and for providing services and that income from providing services are to be taxed as business income (iv) On the facts and circumstances of the case and in Law, Ld. (CITA) erred in appreciating the fact that the A.O. has treated income from service center income and car parking as income from house property and depreciation is not allowable under the head income from house property. (v) On the facts and in the circumstances of the case....
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....ties fees at Rs. 53.77 crore, income from service centre of Rs. 12.72 crore and income from gymnasium at Rs. 2.02 lakhs. Out of the aforesaid receipts, the assessee had offered income from service centre and gymnasium business under the head profits and gains from business or profession. While the assessee has offered the income from licence fees and amenities fees along with car parking charges under the head income from house property. During the course of assessment, the assessing officer has asked the assessee to explain as to why the income from service centre offered as income by the assessee should not be treated as income from house property considering the nature of income. The assessee explained that the aforesaid income was rightly taxed under the head business income and it has also claimed depreciation on that portion of the building which has been used for the purpose of business. It was also explained that the intention of the assessee was purely to profit business service centre and accordingly many more additional services required for conducting business. However, the assessing officer has not agreed with the submission of the assessee. The AO stated that assessee....
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....le Supreme Court in the case of Sultan Bros. Pvt. Ltd. were in the context of letting of furniture and equipment along with property on which assets were fixed. The question raised in the case was regarding the head of income to tax such proceeds under. The three tests laid down deal with the intention of the parties at the time of entering into an agreement. The Hon'ble Supreme Court in the case of Sultan Bros. has held that the income from such letting cannot be taxed under the house property but under the head income from other sources. The analysis of these judgments has been well carried out in the decision of Shanaya Enterprises Limited (ITA No. 3648/MI2010) by the jurisdictional tribunal and is reproduced by the appellant, hence requires no repeating. 3.4.3 In the instant case, from the perusal of the Service Centre documents and the relationship of the appellant with the service user, the appellant is seen to be rendering complex services rendered along with facilities and high-end infrastructure in addition to mere letting of the premises. The intention of the parties is emanating from the service agreement, and it is seen that the relationship between the par....
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....ground is allowed." 6. During the course of appellate proceedings before us, the ld. DR has supported the order of assessing officer that income from service centre should be taxed under the head income from house property as against income from business held by the ld. CIT(A). On the other hand, ld. Counsel submitted that similar issue on identical fact in the case of the assessee itself has been adjudicated by the ITAT Mumbai in favour of the assessee from A.Y. 2010-11 to A.Y. 2014-15. The ld. Counsel has also filed the copies of decisions of ITAT in the paper book filed before us. 7. Heard both the sides and perused the material on record. The assessee has earned income from service centre to the amount of Rs. 12,72,52,601/- during the year under consideration from the following parties: Service Centre Fees Premises Amount in (Rs.) Piramal Enterprises Limited Piramal Tower (owned) 93647486 Piramal Glass Limited Piramal Tower Annex (not owned) 7703040 Piramal Fund Management Private Limited Piramal Tower Annex (not owned) 509103 SRL Disgnostics Pvt. Ltd. Piramal Tower Annex (not owned) 25391972 Total 127251601 ....
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....der the head income from house property still as assessee is not the owner of 9th floor and annexe, same cannot be taxed under the head house property. In view of this, we confirmed the decision of Ld. CIT (A) treating the same as income from business. In these terms, ground no. I, Il & l1 raised by the revenue are dismissed." 9.1. Since this is a recurring issue there is no change in the fact of the case during the year under consideration. Therefore, following the decision of the ITAT as referred above we do not find any infirmity in the decision of ld. CIT(A) accordingly ground no. 1 to 3 of the appeal of the revenue are dismissed. 9.2. Ground No. 4 regarding treating income from car parking as business income. Since the assessee has already offered the income from car parking under the head income from house property which is already discussed at para 3.1 of the assessment order by the assessing officer therefore this ground of appeal filed by the revenue become infructuous and the same is dismissed. Therefore, the same is dismissed. 9.3 Ground No. 5 relates to allowing claim of interest expenses u/s 24(b) on the basis of area allocation for portion of property used fo....
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....essee had been allocating the interest on loan on the basis of area let out and the aforesaid basis of allocation of interest commensurate with the area let out was accepted by the Department from the assessment year 2004-05 onwards, except, the impugned assessment year. As could be seen, the Assessing Officer has disallowed the deduction claimed under section 24(b) of the Act, basically for two reasons viz. (i) the assessee has not proved utilization of fund for construction of property; and (ii) the deduction under section 24(b) of the Act cannot be allowed on the basis OT area let out. In our view. the reasons on the basis of which the Assessing Officer disallowed deduction under section 24(b) of the Act, are unacceptable. Undisputedly, the loan was sanctioned for construction of the entire building. When a part of the building is used for commercial purpose and the rest of it is let out, the interest expenditure on the loan availed for construction of building has to be apportioned between the area let out and area used for commercial purpose, as this is the most scientific basis on which the interest can be allocated. It is also very much clear that the Assessing Officer has n....
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.... of the revenue. It is undisputed fact that assessee has not earned any exempt income from the investment made during the year under consideration. We find that on similar issue on the identical fact in the case of the assessee itself for A.Y. 2009-10 vide ITA No. 779/Mum/2014, the ITAT Mumbai has decided the issue in favour of the assessee on the proposition that no disallowance u/s 14A r.w.r. 8D can be made in absence of any exempt income earned during the year. 16. We further find that the Hon'ble Delhi High Court in the case of Pr. CIT vs Era Infrastructure (India) Ltd. (2022) 141 taxmann.com 289 Delhi High Court held that amendment inserted by Finance Act, 2022 is prospective in nature and that cannot be applied retrospectively u/s 14A in case the assessee has not earned any exempt income. Since this issue is recurring issue which has been adjudicated in favour of the assessee by the ITAT in the earlier years as discussed supra in this order. Therefore, following the decision of the ITAT, we do not find any reason to interfere in the decision of ld. CIT(A) accordingly this ground of the appeal of the revenue is also dismissed. 17. Ground No. 9 regarding sale promotion ex....
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....nce of any express provision in the Act and he treatment is in accordance with the said guidance note. The said expenses are not incurred for construction or development of project and hence the same cannot be capitalized. 74.3 The AO's observations that in the absence of income generated from construction contract during the year under consideration, the expenses are not allowable u/s 37 and hence not allowable is also not tenable. In the case of DCIT V. HMS Real Estate Pvt. Ltd (ITA no.3289/DELI2018) (Delhi Trib.), a part of the order is reproduced, "6.10 In the case of CIT Vs Hughes Escorts Communication [2009] 311 ITR 253, it has been held that the expenses incurred in the previous year, prior to the commencement of the business but after the setting up of its business, which two dates need not be the same, would be deductible as revenue expenses. In this case, while making distinction between the setting up and commencement of a business the Hon'ble Court has relied upon the Bombay High Court in Western India Vegetables Products Ltd. In this case, the Bombay High Court, which was in this case dealing with the corresponding provision of the Indian Income-tax Ac....
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....as not disproved the fact that assessee has not carried out construction work in pursuance of any contract with the contractee but it has carried out the construction of Pune project on ownership basis. 22. Looking to the above fact, we consider that the observation of the assessee to apply Accounting Standard AS-7 to the case of the assessee is not justified. 23. In view of the above fact and judicial finding as referred supra in this order, we do not find any infirmity in the decision of ld. CIT(A) in allowing the claim of advertisement expenditure incurred by the assessee towards promotion of its Thane project carried out during the year under consideration. Therefore, we do not find any merit in the ground of appeal of the revenue and the same is dismissed. ITA No. 2019/Mum/2023 "i. On the facts and in the circumstances of the case and in law, Ld. CITA) erred in reclassifying income from service centre business as income from business as against Income from house property and thereby erred in not appreciating the fact that the assessee's facts are identical to the facts of the case of Shambhu Investments Pvt. Ltd. v. CIT (kolkatta HC 116 Taxman 795) which ....