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TMI Blog2021 (12) TMI 1281X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 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 the total income of the Appellant at INR 486,64,97.120 as against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying 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 certain companies to the final set of comparables for the impugned transactions of the Appellant, on an adhoc basis. Thus, they have resorted to cherry picking of comparables to determine A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 has erred in levying interest under section 234A of the Act amounting to Rs. 43,30,448 even when the return of income for the AY was filed within the due date specified under section 139(1) of the Act. 20. That on the facts and in law, on disposal of this appeal material adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 squarely covered in favour of the assessee. 9. We have carefully considered the rival contentions and perused the orders of the lower authorities. On careful analysis of the facts and circumstances, we find that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (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 account of furniture and fixtures alone was held to be admissible under 'income from other sources'. 17.3 However, the Supreme Court accepted the Assessee's claim by holding that 'when a building, plant, machinery or furniture are inseparably let, the Act contemplates the rent for the building as a residuary head of income'. The Court observed as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king 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 received by the assessee is not simply for the let out of building simplicitor i.e. only towards the letting out of the building space but the same is composite rent received towards composite/inseparable letting of building, furniture and fixtures, equipments air conditioners, etc. It was explained that it is a case of renting of the premises with a host of facilities by way of infrastructure/amenities and maintenance. 14. Strong reliance was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 tests are required to be conducted to ascertain whether the rent has been received towards inseparable letting of building, furniture and fixtures etc. The relevant extract of the above judgment is reproduced below:- "It seems to us that the inseparability referred to in subsection (4) is an inseparability arising from the intention of the parties. That intention may be ascertained by framing the following questions: Was it the intention in making the lease-and it matters not whether there is one l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk 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 running cost for the said 50 KW diesel generator set, during the Initial Term and Extended term, shall be payable as mutually agreed upon by the Parties. (ii) Air conditioning - The LESSOR shall provide 25 TR airconditioning for the LEASES Premises at no additional cost. The LESSOR will ensure an ambient temperature of +/-1 degree from 23 degree Celsius. Now we are in a position to conduct the tests suggested by the Hon"ble Apex Court. > Was it the intention to make the letting of the two practically one letting? No, as the assessee has computed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, electrical and plumbing work, repair and maintenance of common and open areas and facilities provided at the building like compounds, gardens, passage, elevators, lifts, terrace, DG sets etc and also 100% power backup and centralized air conditioning. 18. In our considered opinion, for similar set of amenities/facilities, the Hon'ble Supreme Court in the case of Sultan Brothers [supra] has laid down certain tests which have been followed by the Hon'ble High Court of Delhi in the case of Garg Dyeing & Processing Industries [supra] and later on in the case of Jay Metals [supra]. We are of the considered view that in light of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot pressed and hence dismissed. Ground Nos. 15 to 19 were not pressed and therefore, same are also dismissed. 15. The only ground left with us is only Ground No. 14 wherein, the identical issue is involved, that whether the rent received of Rs. 23.67 crores from letting out building space along with inbuilt infrastructure and other amenities is chargeable to tax under the head "income from house property or income from other sources" . As per statement of both the parties, facts relating to this issue are identical to the facts decided in case of the assessee for Assessment Year 2011-12 and their argument are also similar. 16. We have carefully considered the rival contentions and perused the orders of the lower authorities. This ground is identical to ground No. 14 in case of the appeal of the assessee for Assessment Year 2014-15 wherein, we have held that such income is chargeable to tax under the head "income from other sources". Respectfully following the decisions of the coordinate bench in assessee"s own case for Assessment Year 2011-12 for this year also, and for similar reasons for this year also, we hold that such receipts against the letting out of the property along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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