COMMISSIONER OF INCOME TAX Vs. S MOHAN KUMAR

JUDGEMENT

(1.) These 12 appeals are preferred by the Assessees against the order passed by the Tribunal holding that the rental received by the Assessees from letting out work stations, air conditioners, electrical fittings, fire detectors etc. are to be bifurcated under the heading of 'income from other sources' and not 'income from house property.'

(2.) The substantial question of law that arises for consideration in all these appeals is as under:

(3.) The Assessees in all these appeals are co-owners of the property situated at 13, 14, 15, & 16 Magrath Road, Bangalore. The said property was given on joint development to M/s. Embassy Classic Private Limited. After the transfer of the portion of the interest in the property in favour of the developer or its nominees in terms of the joint development agreement, the Assessees had reported long term capital gains. The Assessees had filed returns under Section 143(1) of the Income Tax Act, 1961, (hereinafter referred to as 'the Act' for short). The proceedings under Section 132 of the Act was initiated by the Department in the premises of the Assessees on 9-4-2005. No income or assets let alone undisclosed or the concealed income was found. After the completion of the search operations notices were issued under Section 153A and 139(1) of the Act for the assessment years 2000-01 to 2005-06 calling upon the Assessees to file returns of the income for the said years. The Assessees filed their replies on 20-4-2006 and requested the assessing authority to treat the returns of income filed earlier under Section 139(1) of the Act, as the returns of the income in response to the notices issued under Section 153A of the Act. The assessing officer thereafter proceeded to pass orders on 28-12-2007 for all years from 2000-01 to 2003-04. The assessing officer accepted the income reported by the Assessee. The assessing officer computed the long term capital gains on the joint development at Rs. 53,07,353/- as against Rs. 46,35,694/- shown by the Assessees in the return of the income. The assessing authority brought to tax the furniture, fixtures and equipment and hire charges shown under the heading "other sources" by the Assessees under the heading "Income from house property" thereby denying the deduction claimed by the Assessees for the interest paid on the monies borrowed from ICICI bank for providing the said amenities and the depreciation allowance on the furniture, fixtures and equipment. Thus aggrieved by the same, the assesses preferred an appeal to the Commissioner of Income-Tax (Appeals). The appellate authority granted relief to the Assessees in so far as computation of long term capital gains is concerned. However, in other aspects the order of the assessing officer was confirmed. The Assessees preferred an appeal to the Tribunal challenging that portion of the order which did not give them the relief.