Vildirect: IncomeTax-caselaws-2010-VIL-414-ITAT-MUM

2010-VIL-414-ITAT-MUM

Income Tax Appellate Tribunal MUMBAI

IT APPEAL NO. 316 (MUM.) OF 2010

Date: 27.08.2010

MATRU ASHISH CO-OPERATIVE HOUSING SOCIETY LTD.

INCOME-TAX OFFICER

A. Palankar for the Respondent.

BENCH

D.K. AGARWAL, JUDICIAL MEMBER AND R.K. PANDA, ACCOUNTANT MEMBER

JUDGMENT

D.K. Agarwal, Judicial Member –

This appeal preferred by the assessee is directed against the order dt. 6th Nov., 2009 passed by the learned CIT(A) for the asst. yr. 2004-05.

2. At the time of hearing none appeared on behalf of the assessee nor filed any application for adjournment of the case despite the fact that notice of date of hearing fixing the case for 16th Aug., 2010 was sent to the assessee by RPAD. It was, therefore, decided to dispose of the appeal ex parte, qua the assessee, on merits after hearing the learned Departmental Representative.

3. Briefly stated facts of the case are that the assessee is a co-operative housing society, filed return declaring an income of Rs. 6,53,990. During the course of assessment it was inter alia observed by the AO that the assessee has shown an amount of Rs. 5.50 lacs as rent received from Reliance Telecom and after deducting an amount of Rs. 1.65 lacs being deduction under s. 24(a) of the IT Act, 1961 (the Act) @ 30 per cent from the above amount, the assessee has shown an amount of Rs. 3,85,000 as income from house property. On being asked it was submitted by the assessee that since the above amount represented rent received for allowing Reliance Telecom to use portion of the terrace, the same was rent received from letting out property, and hence, the same was liable to be taxed as income from house property under s. 22 of the Act as terrace constitutes an integral part of the building as referred to under s. 22 of the Act. However, the AO following the appellate order for the asst. yr. 2003-04 treated the receipt of Rs. 5.50 lacs as income from other sources and disallowed the claim of Rs. 1.65 lacs under s. 24(a) of the Act and accordingly completed the assessment at an income of Rs. 25,21,440, vide order dt. 22nd Nov., 2006 passed under s. 143(3) of the Act. On appeal, the learned CIT(A) for the same reasons while following the appellate order for the asst. yr. 2003-04, upheld the addition made by the AO.

4. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us taking following sole ground of appeal :

"1.The CIT(A) has erred in confirming that the rent received for allowing the use of terrace area under the head 'Income from other sources' instead of under the head 'Income from house property' and accordingly disallowed Rs. 1,65,000 being 30 per cent of rent received as expenses under s. 24(a) of the IT Act, 1961."

5. At the time of hearing the learned Departmental Representative supports the orders of the AO and the learned CIT(A).

6. Having carefully heard the submission of the learned Departmental Representative and perusing the material available on record we find that the facts are not in dispute. We further find that the issue is covered against the Revenue and in favour of the assessee by the orders of the Tribunal. In the case of Sharda Chamber Premises v. ITO in ITA No. 1234/Mum/2008, dt. 1st Sept., 2009 for asst. yr. 2003-04 in which JM was one of the party, on the similar facts, the Tribunal after considering the decision in ITO v. Cuffe Parade Sainara Premises Co-operative Society Ltd. ITA No. 7225/Mum/2005, dt. 28th April, 2008 for asst. yr. 2002-03 and also the decision in the case of S. Sohan Singh v. ITO [1986] 16 ITD 272 (Delhi) has held vide paras 6 and 7 of its order dt. 1st Sept., 2009 as under :

"6. We have carefully considered the submissions of the rival parties and perused the material available on record. We find merit in the plea of the learned counsel for the assessee that in the case of M/s Dalamal House Commercial Complex-Premises Co-operative Society Ltd., the Tribunal while admitting the additional ground being a legal issue has also held that the letting out of the terrace, erection of antenna and income derived from letting out has to be taxed as 'income from house property' and not as 'income from other sources'. The Tribunal while deciding the issue has followed the order of the Tribunal in the case of Cuffe Parade Sainara Premises Co-op. Society Ltd. (supra).

7. In the absence of any distinguishing feature brought on record by the Revenue we, respectfully following the order of the Tribunal (supra), and keeping in view the consistency while admitting the additional ground taken by the assessee hold that the letting out of terrace has to be assessed under the head 'Income from house property' as against 'Income from other sources' assessed by the AO and also allow deduction provided under s. 24 of the Act and accordingly the additional ground taken by the assessee is allowed."

Respectfully following the order of the Tribunal (supra), we are of the view that the letting out of the terrace has to be assessed under the head income from house property subject to deduction under s. 24 of the Act as against income from other sources assessed by the AO. We hold and order accordingly. The ground taken by the assessee is, therefore, allowed.

7. In the result, the assessee's appeal stands allowed.

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