2016 (1) TMI 1392 - AT - Income Tax

Head of income - treatment to income received in respect of the Amenities Agreement with the lessee of the premises - Income from Other Sources or Income from House Property - Held that - Since similar facts are permeating in this year also as per earlier AYs 2015 (6) TMI 757 - ITAT MUMBAI arising out of the same agreement, therefore, no different view can be taken and following the rule of consistency and judicial precedent, we decide this issue against the Assessee by holding that the amenities charges received by the Assessee is to be assessed under the head income from other sources . Accordingly, ground no. 1 raised by the Assessee is treated as dismissed. Municipal taxes paid should be allowed against income from other sources instead of income from house property - it has been again admitted by both the parties that this issue too has been decided against the Assessee by the Tribunal vide same order. Allowing of certain business expenses - Held that - The Assessee has claimed various expenses under the head administrative expenses which has been claimed out of the income received from providing space and facilities for hosting functions for HSBC Bank. The Assessing Officer held that the Assessee had received hire charges from cinema hall which cannot be treated as business income, therefore, such an expenditure cannot be allowed. On this issue, consistent with the view taken in the earlier year, we also direct the Assessing Officer to decide this issue afresh in line with the directions given by the Tribunal in the earlier year after giving reasonable opportunity to the Assessee. Thus, ground no. 3 is treated as allowed for statistical purpose.

Summary

Issues involved:
1. Treatment of income received under Amenities Agreement as 'Income from House Property' or 'Income from Other Sources'.
2. Allowance of municipal taxes against 'Income from Other Sources' instead of 'Income from House Property'.
3. Deduction of business expenses related to space utilization of theater property.

Analysis:

Issue 1:
The Assessee appealed against the order treating income from Amenities Agreement as 'Income from Other Sources' instead of 'Income from House Property'. The Assessee argued that the income should be assessed under 'Income from House Property' based on various legal precedents. However, the Tribunal upheld the Revenue's stand, stating that the amenities charges should be taxed under 'Income from Other Sources'. The decision was based on the fact that the amenities provided were not substantial and were related to property maintenance. The Tribunal emphasized consistency with previous rulings and dismissed the Assessee's appeal.

Issue 2:
Regarding the Revenue's appeal, the Tribunal addressed the allowance of municipal taxes against 'Income from Other Sources'. Consistent with the decision for the A.Y 2009-10, the Tribunal ruled that municipal taxes cannot be deducted from income from other sources. The Tribunal upheld this view, emphasizing that such expenses are directly related to the letting out of the property and should not be deducted from 'Income from Other Sources'. Therefore, the Revenue's appeal on this issue was allowed.

Issue 3:
The third issue involved the deduction of business expenses related to space utilization of theater property. The Tribunal noted that this matter had been sent back to the Assessing Officer in the A.Y 2009-10 for further examination. The Tribunal directed the Assessing Officer to verify the usability of the Cinema Theatre and decide on the issue after providing a fair opportunity to the Assessee. Consistent with the previous year's decision, the Tribunal directed the Assessing Officer to reevaluate the issue, and for statistical purposes, the appeal was treated as allowed.

In conclusion, the Assessee's appeal was dismissed, while the Revenue's appeal was partly allowed for statistical purposes. The Tribunal upheld the treatment of amenities charges and municipal taxes, emphasizing consistency with previous rulings and legal principles. The business expenses issue was remanded to the Assessing Officer for further examination, ensuring a fair opportunity for the Assessee.