GURPARTAP SINGH KAIRON,CHANDIGARH, INDIA V. .INCOME TAX OFFICE, WARD-2(1), , CHANDIGARH, INDIA

ITA 561/CHANDI/2024

AI Insights

The case revolves around an appeal by Gurpartap Singh Kairon against the order of the CIT(A), which upheld the addition of Rs. 5,97,172/- to his income for the Assessment Year 2017-18. This addition was based on a mismatch between the income reported in the assessee's ITR and the income reflected in Form 26AS. The Tribunal examined whether the rental income, which was reported in the assessee's Form 26AS, was rightfully taxable in his hands or if it had already been assessed in the partnership firm, M/s Capital Estate, of which he is a partner. The Tribunal concluded that the income had been correctly reported and taxed in the hands of M/s Capital Estate, and thus, the addition in the assessee's hands constituted double taxation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107645 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 13-05-2024
• Other Referred Cases: Commissioner of Income-tax-1 v. Bhooratnam & Co. [2013] 357 ITR 396 (Andhra Pradesh), Commissioner of Income-tax-15 v. Relcom, Commissioner of Income-tax, Central-ll, Kolkata v. Ganesh Narayan Brijlal Ltd. (2017) 244 taxmann 14 (Cal)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: ASHOK GOYAL; ASHISHA MITTAL; C.A S; CORRESPONDING RENTAL RECEIPT OF RS
• Keywords: TDS; FORM 26AS
• Section: 143(1)

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी िवŢम िसंह यादव, लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM & SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 561/Chd/2023 िनधाŊरण वषŊ / Assessment Year : 2017-18 Gurpartap Singh Kairon #69, Sector 2, (Chandigarh) S.O, Chandigarh-160009 बनाम The ITO Ward-2(1) Chandigarh ˕ायी लेखा सं./PAN NO: ACEPK5317N अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Ashok Goyal & Ms. Ashisha Mittal, C.A’s राजˢ की ओर से/ Revenue by : Shri Vivek Vardhan, JCIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 24/09/2024 उदघोषणा की तारीख/Date of Pronouncement : 12/12/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A), ADDL/JCIT(A), Madurai dt. 12/04/2024 pertaining to Assessment Year 2017-18. 2. In the present appeal, the assessee has raised the following grounds of appeal: 1. “That the Ld. CIT(A) has erred in upholding addition of income amounting to RS. 5,97,172/- on account of mismatch between Form 26AS and ITR filed by Assessee without appreciating that the income already stood assessed in the hands of the partnership firm \"M/s Capital Estates\". 2. Whether upholding of addition of Rs.5,97,172/- in the hands of the Assessee tantamount to double taxation, and is therefore, bad in law and liable to be quashed. 3. Whether the order passed by Ld. CIT(A) is contrary to documentary evidence on record and premised on conjectures and surmises. 4. That the levy of consequential interest and penalty is bad in law since the addition proposed in unsustainable in law. 5. That the appellant craves to add, amend, or alter grounds of appeal before the appeal is finally heard and disposed off.” 2 3. Briefly, the facts of the case are that the assessee filed his return of income declaring income of Rs. 40,25,939/- on 27.03.2018. The return of income was processed and in terms of intimation under section 143(1) dated 05.12.2018, an addition of Rs. 20,65,050/- was made under the head “income from House Property” and demand of Rs. 8,58,081/- was raised on the assessee. 4. Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) wherein the appeal was partly allowed and addition of Rs. 5,97,172/- was sustained and against the addition so sustained, the assessee is in appeal before us. 5. During the course of hearing, the ld AR submitted that Ld. CIT (A) has erred in upholding addition of Rs, 5,97,172/- without considering the facts and circumstances of the case. The addition to returned income of assessee amounting to Rs. 20,65,050/- has been made on account of certain rental income reflecting in Form 26AS of the assessee. However, the rental income reflecting in Form 26AS does not belong to him as the subject property for which the rent was accrued does not belong to the assessee. 6. It was further submitted that the rent pertains to the property at SCO 114- 115, Sector 34A, Chandigarh which is owned by M/s Capital Estate, a partnership firm, in which the assessee is a partner. The copy of the title deed of the property along with the latest property tax demand bill available at that time in the name of the firm, M/s Capital Estate is placed on record and is forming part of the paperbook Volume 1 at Page No. 28-34. 7. It was submitted that a part of the said premises had been led out to M/s India Infoline Limited (NFL Securities Limited) by way of leave and license agreement between Capital Estate and M/s IIFL Securities Limited dated 3 10.07.2014. The copy of the leave and license agreement is placed on record and is forming part of the Paper book Volume 1 at Page No. 35-45. 8. It was further submitted that the assessee had inadvertently claimed the credit for TDS credited to his account due to automatic import of data from the software. While noticing the discrepancy from the intimation u/s 143(1), the assessee tried to correct the data in the TDS return of IIFL Securities Limited to show the correct particulars of landlord. However, M/s IIFL Securities Limited had vacated the premises in the year 2016 and therefore, the assessee could not get the requisite corrections in the TDS return and that is why even as on date, Form 26AS of the assessee is still showing the credit of Rs, 5,97,172/- and a copy of updated Form 26AS is placed on record and forms part of the Paperbook Volume 1 at Page No. 50-53. 9. It was further submitted that M/s Capital Estate has already included this rental income in their tax return filed for the AY 2017-18. To establish the fact that the said firm has included the rental income amounting to Rs. 5,97,172/- erroneously, the following documents are placed on record and form part of the paperbook- (1) Balance sheet and Profit and Loss account showing a rental income of Rs. 50,55,072/- in total at Page No. 54-58 of Paperbook Volume 1. The bifurcation is as follows: Name of the Entity Rent Received TDS as per form 26AS Artex Informatics Solutions Ltd. 10,70,000/- 1,07,000/- The Catholic Syrian Bank Ltd 23,52,900/- 2,35,296/- NFL Securities Ltd. 5,97,172/- - Other tenants (cabins) 10,35,000/- - Total 50,55,072/- 3,42,296/- (2) Income Tax Return for the AY 2017-18 along with computation and acknowledgment at Page No. 59-110. 4 (3) Rent account in the books of M/s Capital Estate at Page No. 115-118 clearly stating the complete detail of all the lessees and the rental income received. 10. It was submitted that the correction in Form 26AS of the assessee could not be affected as the tenant company had already vacated the premises in year 2016 and could not be contacted. The assessee had inadvertently claimed the TDS. It is further submitted that M/s Capital Estate has not claimed the credit of TDS deducted as the same in not reflecting in their Form 26AS. 11. In support, reliance was placed on the decision of Hon'ble High Court of Andhra Pradesh in the case of Commissioner of lncome-tax-1 v. Bhooratnam & Co. [2013] 357 ITR 396 (Andhra Pradesh), Hon'ble High Court of Delhi in the case of Commissioner of lncome-tax-15 v. Relcom and Hon'ble High Court of Calcutta in the case of Commissioner of Income-tax, Central-ll, Kolkata v. Ganesh Narayan Brijlal Ltd. (2017) 244 taxmann 14 (Cal). 12. It was submitted that upholding the addition of Rs, 5,97,172/- will tantamount to double taxation as the M/s Capital Estate has already included the rental income in the Income Tax return filed and therefore the same has already been offered for taxation. Further, M/s Capital Estate has not claimed the TDS as the same is not appearing in their Form 26AS. The addition in the hands of the assessee will lead to the rental income being taxed twice. Therefore, the addition is bad in law and liable to be quashed. 13. It was submitted that the assessee had already submitted the documentary evidence during the first appeal proceedings. The leave and license agreement between M/s Capital Estate and M/s India Infoline Ltd (IIFL) was provided to the Ld. CIT to substantiate the fact that the M/s Capital Estate was the Licensor and not the assessee. The Assessee is a partner in M/s Capital 5 Estate. However, the Ld. CIT contended that \"the agreement mentions that the appellant is a partner in M/s Capital Estates but does not mention that he is signing as a partner or that the property belongs to the firm\" which is arbitrary and based on conjectures and surmises. It was accordingly submitted that the assessee has provided all the relevant documentation and information contradicting the claim of the Ld. AO as well as LD. CIT(A) and necessary relief be provided to the assessee. 14. Per contra, the Ld. DR relied on the order of the lower authorities and our reference was drawn to the findings of the ld CIT(A) which read as under: “The CPC has added the difference between returned house property income and income reported in 26AS as the income under house property of the appellant. In the ITR filed the appellant claimed credit for TDS as per 26AS of Rs 295013/- with respect to Rental income. But the income was not declared in the return and the CPC has corrected the mistake. 5.2 The appellant has claimed that the rent belonged to the firm M/s Capital Estate in, which he is a partner. The appellant has filed copy of ITR filed by the firm also. The appellant has not claimed credit for this TDS in the firms returns but according to the ITR it is not clear which rent is declared as income as only gross rent is shown. In the computation filed now the appellant claims that this rent is offered by the Firm. The claim of the appellant that this rent is declared by the firm is not proved beyond doubt. The appellant has now filed a copy of revised Form 26AS and according to this one of the tenant's M/s Catholic Syrian Bank has corrected the mistake in form 26AS. The appellant has now filed copy of revised form 26As of M/s Capital Estate and the TDS on the rent from M/s Catholic Syrian Bank is reflected in this. The claim of the appellant that rent from M/s Catholic Syrian Bank belongs to the firm is thus proved with the filing of revised form 26AS and the claim is allowed. The AO is directed to rework house property income excluding the rent from M/s Catholic Syrian Bank. Credit for TDS as per 26AS may be granted. 5.3 Regarding the rent from IIFL Securities Ltd Rs 5,97,172/- the appellant has claimed credit for TDS in the ITR and in form 26AS the TDS is still in the name of the appellant. The appellant claims that \" M/s IIFL Securities Limited had vacated the premises in the year 2016 and the assessee could not get the requisite corrections in their TDS returns.' The appellant has filed a copy of the rent agreement with M/s IIFL Securities Limited. The screen shot of the first para is as under: LEAVE AND LICENCE AGREEMENT THIS LEAVE AND LICENCE AGREEMENT is mad and entered at Chandigarh On this 10th day of July 2014 Between 6 Mr. Gurpartap Singh Kairon S/o Shri Surinder Singh Kairon Ages Adult, residence at House No. 69, Sector 2A, Chandigarh Partner of M/S CAPITAL ESTATES, SCO No. 114-115, Sector 34A Chandigarh hereinafter called “the LICENSOR” (which expression shall, unless repugnant to the context or meaning thereof mean and include his/her/their heirs, executors, representatives and administrators and assigns etc.) of the ONE PART. AND INDIA INFOLINE LTD (IIFL) a Company incorporated under the provisions of the Companies Act, 1956 and having a Registered Office at IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, MIDC, Thane Industrial Area, Wagle Estate, Thane-400604 through its authorized signatory Narendra Pratap Singh the context or meaning thereof be deemed to mean and include its group, holding, subsidiaries, successors and permitted assigns) of the OTHER PART. The agreement mentions that the appellant is a partner in M/s Capital estates but does not mention that he is signing as partner or that the property belongs to the Firm. The ITR of the Firm also does not support the claim that the income is offered by the firm. The TDS is still in the name of the appellant. The addition made by CPC regarding rent from IIFL Securities Ltd Rs 5,97,172/- is upheld. The AO is directed to give TDS as per Form 26AS.” 15. We have heard the rival contentions and purused the material available on record. The matter relates to taxability of rental receipts from property situated at SCO 114-115, Sector 34A, Chandigarh. Basis perusal of the title deed of the property, it is noted that the property is in name of M/s Capital Estate. During the financial year relevant to impugned assessment year 2017-18, M/s Capital Estate has shown rental receipts from various tenants of the said property totaling to Rs. 50,55,072/- which includes Rs. 10,70,000/- from Artex Informatics Solutions Ltd, Rs 23,52,900/- from Catholic Syrian Bank Limited, Rs 5,97,172/- from IIFL Securities Ltd, and Rs 10,35,000/- from various other small tenants. Both Catholic Syrian Bank Limited as well IIFL Securities Ltd while deducting TDS on rental payments has submitted the PAN details of the assessee instead of M/s Capital Estate and the same later on, got reflected in Form 26AS of the assessee and basis the same, the assessee while filing his return of income has claimed the TDS credit and at the same time, rental receipts were not shown in assessee’s return of income but were shown in the return of income filed by M/s Capital Estate. Given the mismatch in the income offered 7 and TDS credit claim, the CPC while processing the return of income, enhanced the income in the hands of the assessee by corresponding rental receipt of Rs 20,65,050/-. Later on, realizing the mistake as pointed out by the assessee, Catholic Syrian Bank Limited revised its TDS return and corresponding revision happened in Form 26AS of the assessee and basis the same, the ld CIT(A) has allowed the relief to the assessee to the extent of Rs 23,52,900/- as the corresponding receipts were shown in return of income filed by M/s Capital Estate and revised Form 26AS has been received, however, in respect of IIFL Securities Ltd, no relief has been given by the ld CIT(A). 16. We find that the ld CIT(A) has adopted a piecemeal approach whereby in respect of the same property having multiple tenants, he has allowed the relief in so far as Catholic Syrian Bank is concerned and when it comes to IIFL Securities, he has denied the claim of the assessee. In our view, where the property is in the name of M/s Capital Estate as demonstrated by the title deed, the whole of the rental receipts of Rs 50,55,072/- have been shown in the books of M/s Capital Estate and which has been duly offered to tax as evident from its return of income, merely the fact that TDS return filed by IIFL Securities Ltd couldn’t be revised and the rental receipts continue to appear in Form 26AS cannot be held against the assessee. The TDS return and Form 26AS are filings in compliance with the TDS provisions and when it comes to determining the real income and the person in whose hands the real income is to be brought to tax, the same is subject to necessary examination and verification especially where the assessee is challenging the fact that such rental receipts doesn’t belong to him but belong to M/s Capital Estate and has been wrongly captured in his Form 26AS basis the data/input by another party on whom he has no control. In the instant case, we find that the assessee has duly demonstrated that he is not the real owner of the said rental receipts and such receipts actually belongs to M/s Capital Estate who had already reflected and offered the same in its return 8 of income. In light of aforesaid discussion and in the entirety of facts and circumstances, the addition of Rs 5,97,172/- is hereby directed to be deleted and the AO is directed accordingly. 17. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 12/12/2024. Sd/- Sd/- परेश म. जोशी िवŢम िसंह यादव (PARESH M. JOSHI) ( VIKRAM SINGH YADAV) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "