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2016 (11) TMI 204 - ITAT MUMBAI

2016 (11) TMI 204 - ITAT MUMBAI - TMI - Rectification of mistake - Rental income earned from sublease of the property - “income from house property” or “business income” - Held that:- Tribunal after appreciation of facts has held that the sub leasing of the property was not part of the business activity of the assessee. The Tribunal, as the facts were available before it, has given a categorical factual finding upon which the relevant case laws have been relied upon. With due respect to the all .....

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quent decision can not be held to be a reason enough to hold that there was any mistake in the earlier order of different Bench of the Tribunal. Moreover, we deem it fit to mention further here that this Tribunal has no power to review etc. If the assessee has any grievance against the impugned order, proper course to agitate the same is by filing an appeal before the next appellate authority i.e. the Hon’ble Bombay High Court, but, not with the present application under section 254(2) of the Ac .....

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Shri Firoz B. Andhyarujina, A.R. For The Revenue : Shri Pavan K. Beerla, Sr. A.R. ORDER Per Sanjay Garg, Judicial Member: The above captioned miscellaneous applications have been moved by the assessee under section 254(2) of the Act pleading that an error apparent on record has occurred in the common order dated 14.08.13 passed in relation to ITA Nos.2367/M/2011 and others as mentioned above relating to assessment years 2003-04 to 2008-09. The issue involved in the above stated appeals was as t .....

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f the assessee that the income in relation to any services provided by the assessee was to be assessed as income from other sources . 2. Now through the present miscellaneous petitions, the assessee has come with the pleading that in the light of the decision of the Hon ble Supreme Court in the case of Chennai Properties & Investments Ltd. (civil appeal No.4494 of 2004 & others) decided vide order dated April 9, 2015; the rental income earned by the assessee from sublease of the property .....

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d 17.11.1971 to contend that a mistake arising as a result of subsequent interpretation of law by the Hon ble Supreme Court would constitute a mistake apparent from records and in that event rectificatory action under section 154 of the Act would be in order. The Ld. Counsel has also brought our attention to the subsequent order of the Tribunal in the own case of the assessee for A.Y. 2009-10 wherein the Tribunal while relying upon the decision of the Hon ble Supreme Court in the case of Chennai .....

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s business income of the assessee and not under the head income from house property . The Ld. Counsel, thus, has stressed that even the subsequent decision of the Hon ble Supreme Court would operate as if it was the law of land at the time of adjudication of the issue by the Tribunal on a date prior to the decision of the Hon ble Supreme Court and if the lower authorities have interpreted a certain provision in contravention to the interpretation done by the Hon ble Supreme Court, then such inte .....

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and the relevant case laws relied upon by the Ld. Counsel for the assessee. There is no disagreement to the contention of the Ld. Counsel for the assessee that the law declared by the Hon ble Supreme Court is the law of the land and the same is binding on all subordinate courts including this Tribunal. We, further, find that the Hon ble Supreme Court in the case of Chennai Properties & Investments Ltd. (supra) has held that from the facts and circumstances of the case before them, an irresi .....

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d Firhavin Estate 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 Hon ble Supreme Court emphasized that holding the aforesaid properties and earning income by letting out those properties was the main objective of the company. The Hon ble Supreme Court also relied upon its earlier decision in the case of Karanpura Development Company Ltd. vs. CIT 44 ITR 362 (SC) wherein the facts were that the as .....

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jects and the manner of its activities and the nature of its dealings with its property, it was possible to say on which side the operations fall and to what head the income was to be assigned. Applying the said principle, the Hon ble Supreme Court treated the income of the assessee in that case as business income of the assessee. We may further point out that the Hon ble Supreme Court has further observed that the facts of the case before them [Chennai Properties & Investments Ltd. (supra)] .....

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of buying and developing landed properties and promoting and developing markets. Thus, the main objective of the company was to develop the landed properties into markets. It so happened that some shops and stalls, which were developed by it, had been rented out and income was derived from the renting of the said shops and stalls. In those facts, the question arose for consideration was as to whether the rental income that was received was to be treated as income from the house property or the i .....

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ping and setting up properties. The Hon ble Supreme Court further observed that in the case of Sultan Brothers (P) Ltd. the Constitutional Bench of the Supreme Court has clarified that merely an entry in the object clause showing a particular object would not be the determinative factor to arrive at an conclusion whether the income is to be treated as income from business and such a question would depend upon the circumstances of each case, viz., whether a particular letting is business or not. .....

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a particular activity is business because it is concerned with an asset with which trade is commonly carried on. We find nothing in the cases referred, to support the proposition that certain assets are commercial assets in their very nature." 5. Now coming to the decision of the Tribunal dated 14.08.13 in the case of the assessee, we find that following specific observations have been made by the Tribunal relating to the case of the assessee. Since the assessee is deemed owner of the prop .....

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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 property. 6. While giving a factual finding in this respect, the Tribunal noted that the income from sublease of the premises was to be assessed as rental income of the assessee. This Tribunal also took note of the services provided by the assessee along with renting of the building. We have also noted the details of services as .....

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duction under section 57 of the Income Tax Act. It was also held that if any expenditure in relation to services which is also included in relation to expenses on repair and maintenance of the portion of the building let out, such expenses have to be excluded as the same were already covered in the statutory allowance under section 24(c) of the Income Tax Act while computing the house property income. The above narrated part of the order of the Tribunal reveals beyond doubt that the Tribunal has .....

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ourt in the case of Chennai Properties & Investments Ltd. (supra) has relied upon another decision of the Tribunal of the Hon ble Supreme Court in the case of Karanpura Development Company Ltd. (supra) which was well considered by the Tribunal while passing the impugned order dated 14.08.13. Hence, the proposition of law as laid down subsequently by the Hon ble Supreme Court in the case of Chennai Properties & Investments Ltd. (supra) and further in the case of M/s. Rayala Corporation Pv .....

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s in the business of commercial exploitation of the property or leasing out of the properties and held that the income earned by the assessee from the sublease of the premises was simple case of letting out of the property and thus income there from was assessable under the head Income from the house property . 7. We further find that the main objects of the assessee in this case are providing advisory, consultancy and technical services in the area of real estate and properties such as architec .....

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ndia Housing Land Development Trust Ltd. (supra) as discussed above wherein the Hon ble Supreme Court has held that when letting out of the property was not the object of the company then rental income can not be assessed as business income . 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. So far as the reliance of the Ld. Counsel on the decision of the Hon ble Supreme Court in the case of M/s. Rayala Cor .....

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assessee as per memorandum of association. It was the contention of the Revenue that rent should be the main source of income or the purpose for which the company is incorporated should be to earn income from rent so as to make the rental income to be taxed under the head profits and gains of business or profession. The Hon ble Supreme Court rejected the above contention and held that since the assessee company had stopped all other activities except the business activity of leasing its property .....

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enting of the property was part of the business activity of the assessee. However, in the case in hand, the Tribunal after appreciation of facts has held that the sub leasing of the property was not part of the business activity of the assessee. The Tribunal, as the facts were available before it, has given a categorical factual finding upon which the relevant case laws have been relied upon. With due respect to the all case laws relied upon by the Ld. Counsel for the assessee, we find no mistak .....

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