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hs, the undisputed position that emerges is that before leave and license agreement dated 28/08/2009 entered into by the 7 licensors with M/s DFIRPL, there was a pre-existing agreement dated 20/04/2009 between the assessee and other 6 persons. As per terms of this agreement, certain license was granted to these persons against license fees for valuable consideration of Rs. 2.10 Lacs with respect to 60% of the licensed premises. As per Clause-15 of the agreement, the licensees had a right to assign, sub-license or to grant on leave and license basis, the licensed premised to third parties without prior consent of licensors. Pursuant to said agreement, the assessee as well as other 6 persons, entered into subsequent leave and license agreement with M/s DFIRPL. The terms of the said agreement have duly been recognized in leave and license agreement dated 28/08/2009 and the share of the assessee and other 6 persons find specific mention in this agreement. The aforesaid agreement has been executed by the 7 licensors and licensee and the same is a registered document. Pursuant to the terms of both the agreements, the transactions have been carried out and assessee as well as other 6 persons have offered their respective share of income in their own tax returns. There is nothing illegal in both the agreements. This being thecase, the agreement dated 20/04/2009 could not be termed as sham agreement or an artificial structure with a view to evade tax liability. The said argument would be further weakened by the fact that proportionate income has already been offered to tax by the assessee as well as other 6 licensors. The observations of Ld. CIT(A) that the said income should have been offered as Income from House Property by the 6 persons could not be a ground to make impugned additions in the hands of the assessee. It is also fortified by the fact that learned first appellate authority, himself, observed that Ld. AO should have taken corrective measures about income shown as income from house property by the family members. However, the said error, in our considered opinion, could not empower Ld. CIT(A) to confirm the additions in the hands of the assessee. It is trite law that tax planning is legitimate provided it is within four corners of law and done without any fraudulent intention. Colorable devices could not be a part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid payment of tax by resorting to dubious methods. If the tax payer was in a position to carry a transaction in two alternative ways, one of which would result in lower tax liability, the assessee would be at liberty to choose that particular method. In the presentcase, we find nothing illegality in both the leave and license agreement entered into by the assessee. The terms of the agreement were duly honoured by the respective parties and it could not be said that the earlier agreement was a sham agreement. The rule of consistency would also favor assessee’scasesince similar apportionment done in AY 2010-11 has been accepted by the revenue. Thecaselawsreferred to in para 5.2 would also support the cause of the assessee that annual value of the property would be the annual value received or receivable by the assessee from the tenant irrespective of the fact that tenant on further sub-letting had received higher rents. 7. Therefore, keeping in view the entirety of facts and circumstances, we hold that the clubbing of rental & amenities income of 6 persons, in the hands of the assessee, would not be sustainable in the eyes of law. The Ld. AO is directed to recompute the income by taking assessee’s share of rental income and amenities charges under the headIncome from House Property.The rental income of Rs. 25.20 Lacs earned by the assessee from 6 persons would also be taxable under the headIncome from House Property.The statutory deductions, as available as per law, shall be provided to the assessee. Accordingly, the appeal stands allowed.

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Sections 22 of Income Tax Act, 1961— Income from house property – Appeals by assessee for assessment years 2011-12 to 2013-14 contest common order of CIT(Appeals), order dated 09/o1/2017. The ground raised in all the years are identical and it is admitted position that adjudication in any of the year would apply to other years also.  Assessee being resident corporate assessee stated to be engaged as builder and developer was assessed for year under consideration u/s. 143(3) on 20/03/2014 wherein the income of the assessee was determined after certain additions / adjustments as against returned income filed by the assessee on 29/07/2011 which was later on revised to claim deduction of service tax . During assessment proceedings, it transpired that the assessee had entered into two agreements with M/s Diesel Fashion India Reliance Pvt. Ltd. (DFIRPL). One agreement was for leave and license agreement whereas the other agreement pertained to amenities charges in respect of same property.
On the facts and circumstances, Tribunal held that the clubbing of rental & amenities income of 6 persons, in the hands of the assessee, would not be sustainable in the eyes of law. The Assessing officer was directed to recompute the income by taking assessee’s share of rental income and amenities charges under the head Income from House Property. The rental income of earned by the assessee would also be taxable under the head Income from House Property. The statutory deductions, as available as per law, shall be provided to the assessee. Accordingly, the appeal stands allowed.

Facts were pari-materia the same in these years. The impugned order was common order for all the three years. The assessee was before tribunal with similar grounds of appeal. Therefore, the adjudication as for AY 2011-12 shall mutatis-mutandis apply to both these years. Accordingly, both the appeals stand allowed.  All the appeals stand allowed.---  NANAVATI CONSTRUCTIONS vs. Deputy CIT. [2020] 23 ITCD Online 43 (MUM)