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TMI Blog2021 (8) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... ay Textile Trading & Agencies Pvt Ltd reported in 304 ITR 401 (Bom). Accordingly, we are adjudicating the Ground No. 2 raised by the assessee in the original grounds of appeal in the aforementioned perspective. 3. The Ground No. 2 raised by the assessee is as under:- "The learned Assessing Officer erred in including the sub-lease income of Fazlani Exports Pvt. Ltd., in respect of sub-lease of Rational House property to M/s. Goldman Sachs on the ground that Fazlani Exports Pvt. Ltd sub-leased aforesaid property at higher rent and treating as Sham Transaction." 4. We have heard the rival submissions and perused the materials available on record. We find that the assessee company is a Hi-tech capital intensive agro company and had filed its return of income for the Asst Year 2010-11 on 15.10.2010 declaring total income of Rs. 8,11,38,570/- which included income from house property of Rs. 5,89,39,788/- after claiming statutory deduction of 30% towards repairs. 4.1. The assessee company owned a property at Prabhadevi, Mumbai viz. 'Rational House' that was converted into a business centre. The aforesaid property for the past several years was leased by the assessee to its sister con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of ALV of the property for first seven months at Rs. 11,02,50,000/-, the assessee is in appeal before us. 4.3. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. The ld AR placed on record the decision of the co-ordinate bench of this tribunal in the first round of proceedings before the tribunal itself, on the decision of Mumbai Tribunal in the case of Fazlani Exports Pvt Ltd vs DCIT in ITA No. 4090/Mum/2019 dated 4.5.2018 for the Asst Year 2010-11, wherein the sub-leasing receipts of Rs. 11,02,50,000/- were liable to be assessed as 'income from other sources'. It was then submitted by the ld AR that when the sub-leasing receipts of Rs. 11,02,50,000/- had been held to be income of FEPL, therefore, the same could not be assessed as income of the assessee. It was also then pointed out by the ld AR that the issue in dispute in the case of FEPL before the tribunal was whether the sub-leasing receipts would be taxable in the hands of FEPL under the head 'income from business' or 'income from other sources'. The taxability of sub-leasing receipts per se in the hands of FEPL was never in dispute before the tribunal. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aspect, one of us, Chinnappa Reddy J., has proposed a separate and detailed opinion with which we agree." (p.171) Chinnappa Reddy J., while answering the issue of colourable devices referred to various authorities and then observed that time has come for us to depart from the Westminster principle as emphatically as the British Courts have done. After so saying the ratio on the issue of colourable devices has been explained as under :- "In our view, the proper way to construe a taxing statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it." [Emphasis supplied]. In our opinion this would be the ratio of that judgment. In AzadiBachaoAndolan's case (supra) the issue arose out of Taxation Treaty between India and Mauritius. A learned Bench considered some observations made by Chinnappa Reddy specially on the applicability of principles set out in Westminster, but after having so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these companies had activities in dealing in shares of RIL or holding the shares of RIL as investment. Under these circumstances it was held that it is not possible to hold that the transaction between the assessee-company and its tenants is an independent business transaction. Similarly it was held that it was not possible to accept that the transaction between the tenant companies and RIL is an independent transaction between two independent companies. Under these circumstances it held that the rent paid by RIL to the tenant should be considered as annual value. 8. The assessee aggrieved preferred an appeal before the Commissioner (Appeals). The ground of recomputation of annual letting value was in issue. The Commissioner (Appeals) noted that in the case of the appellant for the assessment year 1997-98 the addition made on account of enhanced annual letting value is deleted. That decision was followed. In other words, the finding of fact of the tenant company being the alter ego of Reliance was not accepted. The finding recorded by the Assessing Officer was thus set aside by the Commissioner (Appeals). An appeal was preferred before ITAT. In the grounds of appeal no content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 23(1)(b), learned counsel seeks to contend that what has to be considered is the rent which is receivable as rent from the premises. It is, therefore, submitted that the rent which the tenant was receiving from Reliance would be the rent receivable. On the other hand on behalf of the assessee learned counsel explains that the expression 'receivable' is in the context of the rent reserved in terms of the agreement. As an illustration, it is submitted that if the rent received per annum is Rs. 12,000 even though Rs. 6,000 is paid for the purpose of tax incidence what has to be considered is Rs. 12,000 as that is the rent receivable. We have given our anxious consideration to the rival contentions. Section 23(1)(a) uses the expression 'the sum for which the property might reasonably be expected to be let from year to year'. This has to be considered in the context of the applicable rent laws. The Courts have construed the rent receivable in such circumstances to be either the standard rent or the rateable value as fixed by the local authority. Though the rateable value may also on occasions has to consider the standard rent in cases where the rent law may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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