TMI Blog2017 (12) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of ₹ 6,27,84,240/- has already been made in case of AHRPL, there is no question confirming the protective addition of ₹ 6,27,84,240/- in case of ADIPL by the ld. CIT (A) because one income cannot be taxed twice.- Decided against revenue - ITA No. 6420, 6421 and 6422/Del/2015 And ITA No. 6873/Del/2014, ITA No. 6872/Del/2014 and 6415/Del/2015, CO No. 377/Del/2015 And ITA No. 6872/Del/2014 - - - Dated:- 20-11-2017 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Ms. Aparna Karan, CIT DR For The Assessee : Shri TR Talwar, Adv ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the appeals for AY 2009-10, 2010-11, 2011-12 and 2012-13 filed by Revenue where the respondent is M/s Ambience Hotel Resorts private limited ( in short AHRPL). 2. The revenue has raised the following grounds of appeal in ITA No. 6420/Del/2015 where AHRPL is respondent for the Assessment Year 2009-10 wherein the ld Assessing Officer has made addition of ₹ 76190927/- in the hands of the assessee under the head income from house property and the ld CIT(A) vide order dated 14.09.2015 has held that such inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not tenable in law and on facts. 5. The assessee has raised the following grounds of appeal in ITA No. 6422/Del/2015 for the Assessment Year 2012-13 on identical facts and circumstances:- 1. That the Ld. CIT(A) erred in law and on facts in deleting the addition of ₹ 8,64,34,218/- (after giving 30% deduction on account of house property income) made on account of lease rental income without appreciating the fact that the assessee is the legal owner of the property in line with section 60 of the Income Tax Act, 1961. 2. That the Ld. CIT(A) erred in law and on facts in deleting the addition and ignoring the fact that her predecessor Ltd. CIT(A) has confirmed the addition on the same ground. 3. That the Ld. CIT(A) erred in law and on facts in deleting the addition of ₹ 62,85,102/- made u/s 14A of the Income Tax Act, 1961 r/w Rule 8D of the Income Tax Rules, 1962 by ignoring the facts and circumstance of the case. 4. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts. 6. In case of Ambience Developers and Infrastructure Pvt. Ltd ( in short ADIPL) the revenue has filed appeal for Assessment Year 2010-11 against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the event, the income from lease rentals is taxed under the head income from business and profession in the asessee‟s hand, instead of under the hand income from house property , the business expenses incurred there to by the assessee be allowed from the said income. 8. The revenue has raised the following grounds of appeal in ITA No. 6415/Del/2015 for the Assessment Year 2012-13:- 1. That the Ld. CIT(A) erred in law and on facts in deleting the addition of ₹ 12,34,77,455/- 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. 9. The brief issue involved in appeals filed by the Revenue in case of Ambience Hotels and Resort Pvt. Ltd is that ld CIT(A) has deleted the addition on account of lease rent taxed in the hands of the assessee by the AO is deleted. 10. On the date of hearing on 14.11.2017 the ld counsel for the assessee submitted that the issue involved in these appeals is covered by the decision of the coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own account all receipts and receivables from the leasing of its retail spaces in lieu of interest free deposit of ₹ 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. 5. Briefly stated the facts necessary for adjudication of the controversy at hand in all the aforesaid three appeals are : originally assessment was completed in case of M/s. Ambience Developers Infrastructure Pvt. Ltd. (in short, ADIPL) and M/s. Ambience Hotels Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s / retail space in its premises and has earned lease rental therefrom to the tune of ₹ 6,27,84,240/- during the year under assessment. It is also not in dispute that AHRPL has claimed TDS of ₹ 1,09,32,212/- without offering corresponding income for taxation. It is also not in dispute that order passed u/s 263 of the Act by ld. CIT has also been upheld by the Tribunal vide order dated 16.06.2015. 10. From the aforesaid undisputed facts, grounds of appeal raised by the assessee as well as by the Revenue and the arguments addressed by ld. Authorized Representatives to the parties of the appeal, the sole question arises for determination in this case is :- as to whether lease rental of ₹ 6,27,84,240/- qua the shops/ retail space in the hotel owned by AHRPL is to be taxed in the hands of ADIPL on the basis of agreement dated 31.03.2008 entered into between AHRPL and ADIPL for a consideration of interest free refundable deposit of ₹ 75,00,00,000/- or in the hands of AHRPL being owner of the shops / retail space? 11. Ld. AR for the assessee by invoking the principle of beneficial owner contended that lease rental income has been derived by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 deal/negotiate with the said tenants occupants in the manner the Second Party deem fit and proper. 14. When we peruse the recitals of the Agreement (supra) reproduced above particularly clause 4, it goes to unequivocally prove that the second party to the Agreement (supra), namely, ADIPL is entitled to receive the rent or the charges from the tenants/occupants during the currency of this agreement. When ADIPL has got rights and interest in the property in question by virtue of the Agreement (supra) w.e.f. 31.03.2008 then it is estopped by its own act and conduct from showing the income from the rental of the shops and rental space in its hands for the earlier period prior to 31.03.2008. 15. In the given circumstances, the ld. CIT (A) has rightly upheld the addition of ₹ 4,39,48,968 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. 13. The coordinate bench has held that substantive addition of the lease rent is required to be made in case of Ambience Hotels and Resorts Pvt. Ltd and protective addition in the hands of Ambience Developer and Infrastructures Pvt. Ltd is required to be deleted. Therefore, respectfully following the decision of the coordinate bench we also held that substantive addition with respect to lease income is required to be made in the hands of the Ambience Hotel and Resort Pvt. Ltd. Consequently, the grounds of appeal of the Revenue for Assessment Year 2009-10 to 2012-13 in case of Ambience Hotels and Resorts Pvt. Ltd regarding taxability of lease rent are allowed. 14. Similarly, the appeals of the revenue and cross objection of the assessee for these years in case of Ambience Developers and Infrastructure Ltd are dismissed because in that particular the addition was made on protective basis which is upheld on substantive basis now in the hands of Ambience Hotels and Resort Pvt. Ltd. 15. ITA No. 6421/Del/2015 for Assessment Year 2010-11, the Revenue has also raised a ground where the ld CIT(A) has restricted the disallowance made u/s 14A of ₹ 3686230/- to ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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