D.C.I.T Cir - 56,kolkata., Kolkata V. Smt. Sarita Arora, Kolkata

ITA 118/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100176 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRIDHAR BHATTACHARYYA
• Assessee Lawyers: P J BHINDE
• Keywords: Period of limitation; Valuation report
• Section: 143(3)

Judgement Text

I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 118/KOL/ 2013 ASSESSMENT YEAR : 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX,................. ...............APPELLANT CIRCLE-56, KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700 001 -VS.- SMT. SARITA ARORA,................................. ............................RESPONDENT 11, DACERS LANE, KOLKATA-700 069 [PAN : ACUPA 2486 Q] APPEARANCES BY: SHRI SRIDHAR BHATTACHARYYA, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI P.J. BHINDE, FCA , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 02, 2015 DATE OF PRONOUNCING THE ORDER : DECEMBER 16, 2015 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXVI, KOLKATA DATED 12.11.2012 FOR THE ASSESSMENT YEAR 2009-10 FRAMED UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961. 2. THE CONTENTION OF THE REVENUE IN THIS APPEAL IS THAT THE LD. CIT(APPEALS) ERRED IN NOT SUSTAINING THE ENHANCEMEN T OF RENTAL INCOME BY NOT SUSTAINING THE ADDITION MADE UNDER SECTION 4 8 AND BY NOT SUSTAINING THE ADDITION MADE ON ACCOUNT OF CESSATI ON OF LIABILITY UNDER SECTION 41(1) OF THE INCOME TAX ACT. FOR CONVENIENC E, THE GROUNDS OF APPEAL ARE REPRODUCED AS HEREUNDER:- I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 11 (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A)-XXXVI, KOLKATA, ERRED IN FACT BY NOT SUSTAINING THE ENHANCEMENT IN RENTAL INCOME FROM RS.3,56,524/- TO RS.24,48,897/- WITHOUT TAKING INTO COGNIZANCE THE MERITS OF THE ASSESSMENT ORDER. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A)-XXXVI, KOLKATA, ERRED IN FACT BY NOT SUSTAINING THE ADDITION MADE ON ACCOUNT OF DISALLOW ANCE OF BROKERAGE U/S 48 TO THE TUNE OF RS.4,39,419/- WITHO UT TAKING COGNIZANCE THE MERITS OF THE ASSESSMENT ORDE R. (3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A)-XXXVI, KOLKATA, ERRED IN FACT AS WEL L AS IN LAW BY NOT SUSTAINING THE ADDITION MADE ON ACCOUNT OF C ESSATION OF LIABILITY U/S 41(1) AGGREGATING TO RS.46,50,000/ - WITHOUT TAKING COGNIZANCE THE MERITS OF THE ASSESSMENT ORDE R. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. SHE DERIVES INCOME FOR THE RELEVANT ASSESSMENT YEAR UND ER CONSIDERATION FROM PROPERTY, INTEREST FROM BANKS AND OTHERS. THE ASSESSEE HAS PURCHASED 50% UNDIVIDED SHARE FROM THE VENDOR, I.E. SHRI RAMESH KUMAR SARAOGI AND THE SAME HAS BEEN LET OUT TO REGENCY WE LFARE ASSOCIATION @ RS.12,000/- PER ANNUM FOR 99 YEARS. SHE ALSO GOT 30 13 SQ.FT FROM HIS FATHER THROUGH A WILL AND SHE ENTERED INTO AN AGREE MENT WITH M/S. SAMUEL FITZ & CO. PVT. LTD. FOR A PERIOD OF NINE YE ARS FOR LETTING OUT THE PORTION AT A MONTHLY RENT OF RS.13,558.50 ON 02.08. 2001. FURTHER, THE ASSESSEE ALSO GRANTED LICENCE TO RENOVATE THE RENTE D PORTION AND TO CONDUCT BUSINESS OF CATERING FOOD, CONVENTION CENTR E OR MARRIAGE HALL @ RS.32,000/- PER MONTH. ACCORDINGLY SHE FILED A RET URN DECLARING TOTAL INCOME OF RS.1,26,16,980/- ON 11.03.2010. DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DETERMINED THE I NCOME FROM HOUSE PROPERTY AT RS.24,48,897/- AS AGAINST RS.3,56,524/- . IN SUPPORT OF THE ASSESSEES CONTENTION, LD. A.R. PRODUCED A DEED OF RENT DATED 01.08.2001 AND SUBMITTED THAT THE ASSESSEE IS RECEIVING RS.13, 558.50 PER MONTH FROM 01.08.2001. BUT HOWEVER, THE ASSESSING OFFICER DID NOT TAKE INTO CONSIDERATION THE AGREEMENT AND IT IS NOT REGISTERE D AND DOES NOT CONTAIN THE DURATION OF RENT AND OBSERVED AS UNDER:- I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 11 THE AGREEMENT CAN ONLY BE TREATED AS A SELF SERVIN G DOCUMENT TO SUIT THE ASSESSEES PURPOSE. THIS IS VE RY UNUSUAL OF ANY RENT AGREEMENT NOT TO MENTION THE DATE UPTO WHICH THE RENT AGREEMENT SHALL REMAIN IN FORCE. NORMALLY AN AGREEMENT IS ENTERED INTO BETWEEN THE OWNER AND THE TENANT FOR A PERIOD OF 11 MONTHS SUBJECT TO RENEWAL AND ON SUCH RENEWALS THE RENT STRUCTURES ARE ALSO ENHANCED FROM TIME TO TIME. THE AGREEMENT FILED BY THE LD. AR SUFFERS FRO M THE ABOVE INFIRMITIES. THE PROPERTY IS SITUATED IN A CO MMERCIAL PLACE THAT FETCHES A VERY SUBSTANTIAL RENT. THE SUB MISSION THAT THE ASSESSEE HAS NOT RAISED THE RENT FROM AUGU ST, 2002 TO APRIL, 2008 IS COMMERCIALLY INEXPEDIENT AND CANN OT BE ACCEPTED. A REFERENCE WAS MADE TO THE KOLKATA MUNIC IPAL CORPORATION ON 27.09.2011 REQUESTING THE AUTHORITY TO MENTION THE MARKET RENT OR ANNUAL LETTABLE VALUE PE R MONTH PREVAILING IN THE FY 2008-09. THE KOLKATA MUNICIPAL CORPORATION VIDE LETTER NO. NIL DATED 23.11.2011 ST ATED THAT THEY DO NOT HAVE ANY RECORDS OF MARKET RENT FOR ANY LOCALITY. THE INSPECTOR OF INCOME TAX WAS EARLIER ENTRUSTED W ITH THE ENQUIRY TO OBTAIN THE FIGURE OF MARKET RENT OF THAT AREA AS PREVAILED IN THE FY 2008-09. THE IIT HAS SINCE REPO RTED THAT THE LETTABLE VALUE FOR RENTALS IN THE SIMILAR AREA IN THE FY 2008-09 WAS A MINIMUM OF RS.50 PER SQ.FT. ACCORDING LY THE LETTABLE VALUE IS COMPUTED. WITH REGARD TO THE LICENCE GRANTED TO REGENCY CONVE NTION CENTRE, WHERE THE ASSESSEE DECLARED RS.3,84,000/- PER MONTH AS RE NT IN PURSUANCE OF THE AGREEMENT DATED 02.08.2008, BUT HOWEVER, THE ASSESS ING OFFICER HAS TAKEN A VIEW THAT IN THE SAID AGREEMENT THE AREA OF CENTRE IS NOT MENTIONED, THE RENT VALUE FOR THE YEAR 2008 CANNOT BE APPLIED IN 2008-09. BASING ON THE ENQUIRY REPORT OF THE INSPECTOR OF IN COME TAX, THE ASSESSING OFFICER FIXED THE RENT TREATING AS REASON ABLE AT RS.18,000/- PER MONTH AND RS.9,60,000/- BEING ANNUALLY. 4. REGARDING THE RENT AGREEMENT DATED 30.03.1978 WI TH REGENCY WELFARE ASSOCIATION, THE ASSESSING OFFICER WAS OF T HE VIEW THAT THE RENT AGREEMENT ENTERED IN 1978 HAS NOT BEEN REVISED TILL THE RELEVANT YEAR, THEREBY IT CANNOT BE ENFORCED IN 2008-09, IN THE AB SENCE OF ANY EXPLANATION FROM THE ASSESSEE, THE VALUE OF RENT RE ASONABLY ESTIMATED AT RS.16,000/- PER MONTH AND RS.7,20,000/- PER ANNUM B Y RELYING ON THE I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 11 ORDER OF ITAT, MUMBAI BENCH IN THE CASE OF USHA DEV I AGARWAL VS.- ITO REPORTED IN [1992] 41 ITD 85, AND BY THE HONBLE GU JARAT HIGH COURT IN THE CASE OF SHRI BIPINBHAI VADILAL FAMILY TRUST VS .- CIT REPORTED IN [1994] 208 ITR 1005. 5. IN THE APPELLATE PROCEEDINGS, LD. A.R. ON BEHALF OF THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS BEEN RECEIVING RENT UNDER THE ABOVE HEAD IN TERMS OF AGREEMENT. FROM THE SAME TENANTS ALSO, THE ASSESSEE HAS ALL ALONG BEEN ASSESSED IN TERMS OF THE SAID AGREEMENT AND THE RETURNS WERE ACCEPTED BY THE REVENUE. FURTHER, THE LD. CIT(APPEA LS) HAS ALSO FOUND FAULT TO THE ORDER OF ASSESSING OFFICER THAT HE OUG HT NOT TO HAVE ACCORDED MUCH CREDENCE TO THE REPORT OF THE INCOME TAX INSPE CTOR AND THE LD. CIT(APPEALS) OBSERVED THAT IN THE ABSENCE OF ANY EV IDENCE THAT THE ASSESSEE IS RECEIVING THE RENT HIGHER THAN THE AMOU NT RETURNED AND IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE IN SUPPORT OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER IS UNJUSTIFIED IN DETERMINING THE RENT ON FEW ESTIMATES WITHOUT CONCRETE EVIDENCE. THEREFORE, THE LD. CIT(A PPEALS) DIRECTED THE ASSESSING OFFICER TO ACCEPT THE RENTAL INCOME AS PE R THE RETURN FILED BY THE ASSESSEE. 6. BEFORE US, THE LD. D.R. SUBMITTED THAT THE LD. C IT(APPEALS) WITHOUT TAKING INTO CONSIDERATION THE MERITS OF THE CASE DE LETED THE ENHANCEMENT OF RENTAL INCOME OF HOUSE PROPERTY. FURTHER, THE LD . D.R. SUBMITS THAT THE PROPERTY UNDER CONSIDERATION IS SITUATED IN KOLKATA CITY AND IT IS A COMMERCIAL COMPLEX. THE ASSESSING OFFICER RIGHTLY D ETERMINED AND ENHANCED THE RENT AT RS.50/- PER SQ.FT. AS PER THE REPORT OF THE INCOME TAX INSPECTOR. IN REPLY, THE LD. A.R. CONTENDED THAT TH E ASSESSEE HAS PRODUCED ALL THE RELEVANT MATERIAL I.E. RENT AGREEMENT, BOOK S OF ACCOUNT, ETC. INSPITE OF WHICH WITHOUT CONSIDERING THE SAME IN TERMS OF T HE FACTS OF THE CASE, THE ASSESSING OFFICER DETERMINED THE RENT UNILATERA LLY WITHOUT ANY BASIS AND THE LD. A.R. DREW OUR ATTENTION TO PARA 7 OF TH E LD. CIT(APPEALS)S ORDER, WHICH READS AS UNDER:- I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 11 I HAVE HEARD THE LD. AR, PERUSED THE ASSESSMENT OR DER AND EVIDENCE ON RECORD. THE FACTS OF ACQUIRING THE PROPERTY BY THE APPELLANT, DEMOLISHING THE OLD STRUCTURE, CONST RUCTION OF NEW STRUCTURES THEREON, MEASUREMENT OF SPACE ALLOTT ED TO THE APPELLANT AND THE PERSONS TO WHOM THE PROPERTY WAS LET OUT/LEASED OUT VIDE AGREEMENTS WITH THE TENANT STAT ED ABOVE WERE NOT DISPUTED BY THE A.O. THE A.O. DID NOT FIND THE RENTAL INCOME SHOWN BY THE APPELLANT REASONABLE AND DISBEL IEVED THE SAME ONLY ON THE GROUND THAT THE AGREEMENTS ENTERED INTO ON STAMP PAPER WORTH RS.I0/- WERE NOT REGISTERED WITH THE RENT CONTROL AUTHORITY AND THE AGREEMENTS DID NOT STIPUL ATE THE DATE UP TO WHICH THE AGREEMENTS SHALL REMAIN IN FORCE, W HICH RENDERED THE AGREEMENTS INVALID DOCUMENTS. HE ALSO FOUND IT UNUSUAL THAT THE APPELLANT HAS NOT INCREASED THE RE NT FROM AUGUST, 2002 TO APRIL, 2008. THE A.O. BASED HIS EST IMATION OF RENT LEASE CHARGES ON THE REPORT OF THE INSPECTOR, FAILING TO GET ANY INFORMATION FROM KMC ABOUT ANNUAL LETTABLE VALU E IN THE LOCALITY PREVAILING DURING THE RELEVANT PERIOD. IN MY CONSIDERED OPINION, RENT IS NOT ALWAYS FIXED ON THE AVAILABLE MARKET RATE AND SUBSEQUENT INCREASE IN RENT IS ALSO SUBJECT TO MUTUAL UNDERSTANDING AND SETTLEMENT. IT DEPENDS ON THE MUT UAL UNDERSTANDING AND CONVENIENCE TO SETTLE THE RENT. T HERE IS NOTHING ON RECORD TO ESTABLISH THAT THE TENANTS GAV E HIGHER RENT TO THE APPELLANT OVER AND ABOVE THE AGREED REN T DESCRIBED IN WRITING IN THE LEASE AGREEMENT. THEREFORE, RENT CLAIMED TO HAVE BEEN RECEIVED BY THE APPELLANT AND DULY ACCOUN TED FOR IN HER BOOKS OF ACCOUNT CANNOT BE DISBELIEVED WITHOUT ANY CORROBORATING EVIDENCE IN THAT RESPECT. FURTHER, K1 :FC HAS NOT PROVIDED ANY INFORMATION ABOUT MARKET RENT OF THE L OCALITY AND IN SUCH SITUATION, THE ONLY RECOURSE WITH THE A.O. FOR DETERMINATION OF THE ANNUAL VALUE ON THE LOCATION O F THE PROPERTY WAS TO OBTAIN A REPORT FROM THE APPROVED V ALUER, WHICH HAS NOT BEEN DONE IN THIS CASE. THE REPORT OF THE INSPECTOR OF THE DEPARTMENT ESTIMATING THE LETTABLE VALUE IN THE LOCALITY CANNOT PARTAKE THE ASSESSMENT OF AN AP PROVED VALUER INASMUCH AS INSPECTOR IS NOT A TECHNICAL PER SON TO DO SUCH THING. ACCORDING TO THE LD. AR, THE APPELLANT ENTERED INTO AGREEMENTS WITH M/S. SAMUEL FITZ & CO. PVT. LTD. FO R LETTING OUT 3013 SQ.FT. AND REGENCY CONVENTION CENTRE IN AUGUST , 2001 FOR A PERIOD OF 9 YEARS WITH OPTION TO CARRY OUT NECESS ARY RENOVATION TO FACILITATE RUNNING OF THEIR BUSINESSE S AND THE MONTHLY RENTS AS PER THE AGREEMENTS WERE SETTLED UP TO F.Y. 2010-11 AND IN SUCH CIRCUMSTANCES, IN MY OPINION, S UCH AGREED SETTLEMENT OF RENT CANNOT BE CHANGED UNILATERALLY B Y THE APPELLANT WITHOUT THE OPTION OF THE TENANTS. IT IS FURTHER BROUGHT TO MY NOTICE BY THE LD. AR THAT THE RENT RE CEIVED ON THE BASIS OF THE AFORESAID AGREEMENTS HAS BEEN ACCEPTED IN EARLIER YEARS, WHERE IN THE APPELLANT'S INCOME FROM HOUSE P ROPERTY HAS BEEN DETERMINED ON THE BASIS OF SUCH AGREEMENTS. TH EREFORE, WHEN THE RENT RECEIVED FROM THE SAME HOUSE PROPERTY AS SHOWN BY THE APPELLANT WAS ACCEPTED IN PAST YEARS, THERE REMAINS NO CONCEIVABLE RATIONALE TO DISBELIEVE THE RENTAL INCO ME FROM HOUSE PROPERTY ON THE BASIS OF THE SAME VERY AGREEM ENTS I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 6 OF 11 ENTERED INTO WITH THE SAME TENANTS. IN VIEW OF DISC USSIONS ABOVE, I FIND NO VALID JUSTIFICATION TO FIX THE REN T FROM THE AFORESAID HOUSE PROPERTY ON PURE ESTIMATE BASIS WIT HOUT CONCRETELY DISCARDING THE BACKGROUND OF THE CASE AN D SETTLEMENT OF RENT ON MUTUAL AGREEMENT. THE A.O. IS , THEREFORE, DIRECTED TO TAKE THE ANNUAL RENTAL INCOME RECEIVED FROM THE AFORESAID THREE HEADS OF RENTAL INCOME AS SHOWN BY THE APPELLANT AFTER ALLOWING ADMISSIBLE DEDUCTIONS THER EFROM. THIS GROUND IS ALLOWED. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E SIDES AND CAREFULLY CONSIDERED THE RELEVANT MATERIAL AVAILABL E ON RECORD AND THE FACTS RELATING TO THE ISSUE ON MERITS, IN WHICH THE ISSUE ON THIS GROUND IS WHETHER THE ASSESSING OFFICER CONSIDERED THE EVIDEN CE PLACED BEFORE HIM DURING THE ASSESSMENT PROCEEDINGS IN RIGHT PERSPECT IVE OR NOT. IT APPEARS FROM THE RECORD THAT THE ASSESSEE PRODUCED ALL THE EVIDENCES IN REFERENCE TO THE INCOME RETURNED BUT THE OBSERVATIONS OF THE ASSESSING OFFICER REGARDING THE AGREEMENTS DATED 30.03.1978, 11.08.20 01 AND 02.08.2008 WERE NOT REGISTERED, CANNOT BE ENFORCED IN THE RELE VANT YEAR UNDER CONSIDERATION, NOT STIPULATED ANY PERIOD OF RENT, I N OUR OPINION, IS NOT JUSTIFIED. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE RENT HAS NOT BEEN REVISED, THE ASSESSEE IS EXPECTED TO GET HIGHE R RENT IN THE RELEVANT YEAR ARE ALL ON ASSUMPTIONS AND PRESUMPTIONS WITHOU T THERE BEING ANY EVIDENCE TO THAT EFFECT. WITH REFERENCE TO THE REPO RT OF THE INCOME TAX INSPECTOR THAT, AS A DUBIOUS FROM THE ASSESSING OFF ICERS ASSESSMENT ORDER THAT THE LETTABLE RENTAL VALUE IN SIMILAR ARE A IN FINANCIAL YEAR 2008- 09 IS A MINIMUM OF RS.50/- PER SQ.FT., BUT, HOWEVER , THE LD. CIT(APPEALS) HAS RIGHTLY OBSERVED THAT THE REPORT OF THE INSPECT OR IN ESTIMATING THE VALUE CANNOT PARTAKE THE ASSESSMENT OF AN APPROVED VALUER, BUT FOR THE REASON OF THAT THE INCOME TAX INSPECTOR IS NOT TECH NICAL PERSON TO SUBMIT VALUATION REPORT. IN OUR VIEW, IN ABSENCE OF ANY EV IDENCE IT IS JUST IMPROPER TO FIX THE RENT ON MERE ASSUMPTIONS AND PR ESUMPTIONS, THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(APPE ALS) ON THIS ISSUE AND DISMISS THE GROUND NO. 1 RAISED BY THE REVENUE. I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 7 OF 11 8. REGARDING GROUND NO. 2, THE ASSESSING OFFICER TO OK A VIEW THAT THE BILL ISSUED BY M/S. SOOD REALTERS AND DEVELOPERS DO ES NOT BEAR ANY SERVICE TAX REGISTRATION. THE AMOUNT PAID IS NOT I N TERMS OF ANY DUTY OR CESS OR TAXES PAID TO THE GOVERNMENT OF KARNATAKA. THE ASSESESE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE THAT M/S. SOOD RE ALTERS AND DEVELOPERS RENDERED ANY SERVICES TO THE ASSESSEE AN D THE ASSESSEE FAILED TO ESTABLISH THE BUSINESS EXPEDIENCY. THEREFORE, TH E ASSESSING OFFICER DISALLOWED THE SUM PAID THEREIN TO THE SAID M/S. SO OD REALTERS AND DEVELOPERS TREATING THE SAME AS NOT GENUINE. THE LD . CIT(APPEALS) RELYING ON TWO ORDERS OF THE HONBLE DELHI BENCHES OF THIS TRIBUNAL IN THE CASE OF DCIT VS.- JINDAL EQUIPMENT LEASING & CONSULTANCY S ERVICES LIMITED REPORTED IN [2011] 131 ITD 263 AND ITAT, PUNE BENCH IN THE CASE OF KRA HOLDING & TRADING (P) LTD. VS.- DCIT REPORTED IN [ 2011] 46 SOT 19 (PUNE) OPINED THAT THE ASSESSING OFFICER WAS NOT JU STIFIED IN DISALLOWING THE EXPENDITURE ON PAYMENT TO M/S. SOOD REALTERS & DEVELOPERS AND THEREBY DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAID DEDUCTION. DURING THE PROCEEDINGS BEFORE THIS TRIBUNAL, LD. D.R. CONT ENDED THAT THERE IS NO AGREEMENT BETWEEN THE ASSESESE AND M/S. SOOD REALTE RS & DEVELOPERS TO SHOW THAT M/S. SOOD REALTERS & DEVELOPERS RENDERED THEIR SERVICES IN SELLING THE PROPERTY BELONGING TO THE ASSESSEE. HE ALSO SUBMITTED THAT THE BILL PRODUCED BY THE ASSESSEE IN SUPPORT OF HER PAY MENT TO M/S. SOOD REALTERS LIMITED DOES NOT CONTAIN ANY SERVICE TAX, THEREBY THE ASSESESE FAILED TO ESTABLISH THAT THE SAID M/S. SOOD REALTER S & DEVELOPERS HAD RENDERED THEIR SERVICES FOR SELLING THE PROPERTY AN D THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE EXPENDITURE. 9. IN REPLY, LD. A.R. CONTENDED THAT THE PROPERTY I S IN BANGALORE AND FROM THE PAPER BOOK IT CLEARLY SHOWS THAT THE BILL OF THE SAID REALTOR THAT HE CHARGED THE AMOUNT FOR THE SERVICES RENDERED BY IT TO THE ASSESSEE. THE SAID AMOUNT ALSO PAID BY THE ASSESSEE THROUGH C HEQUE AND IT CLEARLY SHOWS THAT THE ARGUMENT OF THE LD. D.R. IS NOT SUST AINABLE IN LAW IN THIS REGARD. FURTHER, THE LD. A.R. HAS DRAWN OUR ATTENTI ON TO THE PARAGRAPH 25 OF ITAT, PUNE BENCHS ORDER (SUPRA). I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 8 OF 11 FROM THE JUDGMENT IT IS CLEAR THAT THE DEDUCTION CA N BE ALLOWED ON THE EXPENDITURE INCURRED DURING THE TRANSFER OF AN ASSE T AND IT CLEARLY SHOWS THAT THE BURDEN IS ON THE ASSESESE TO DEMONSTRATE T HAT THE EXPENSES INCURRED FOR THE TRANSFER OF ASSET IS FULFILLED. IN THE CASE ON HAND ALSO, THE ASSESSEE PRODUCED THE BILL ISSUED BY M/S. SOOD REAL TORS & DEVELOPERS AND THE AMOUNT PAID BY THE ASSESSEE BY WAY OF CHEQUE, T HEREFORE, THE LD. CIT(APPEALS) HAS RIGHTLY APPLIED THE PRINCIPLE LAID DOWN BY THE ITAT PUNE BENCH IN THE CASE OF KRA HOLDING & TRADING PVT . LTD. (SUPRA). WE ARE OF THE VIEW THAT THE LD. CIT(APPEALS) WAS RIGHT LY JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE SAID DEDUCTION. THEREFORE, THIS GROUND OF THE REVENUES APPEAL IS DISMISSED. 10. IN RESPECT OF GROUND NO. 3, THE ASSESSING OFFIC ER FOUND RS.15,00,000/- AND RS.31,50,000/- IN THE LEDGER ACC OUNT OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT A SUM OF RS. 15,00,000/- WAS RECEIVED FROM HER FATHER DURING HIS LIFE TIME AND R S.31,50,000/- WAS RECEIVED FROM THE ESTATE OF HER LATE FATHER BY WAY OF A LESSEE TO ENABLE HER TO PURCHASE HOUSE PROPERTY FOR HERSELF. THE ASS ESSING OFFICER TOOK THE VIEW THAT WHEN BOTH THE AMOUNTS REFLECTED IN THE LE DGER ACCOUNT OF THE ASSESSEE AS LOAN AND CREDIT SHOWN UNDER THE HEAD C URRENT LIABILITY HAVING CEASED TO EXIST AS THERE IS NO CHANCE OF REV IVAL AS THE FATHER OF THE ASSESSEE DIED LONG BACK AND TREATING THE SAME AS TR ADING LIABILITY BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE INC OME TAX ACT AND ADDED THE AMOUNT OF RS.15,00,000/- AND RS.31,50,000/- TOT ALLING TO RS.46,50,000/- AS INCOME OF THE ASSESSEE. 11. DURING THE COURSE OF FIRST APPELLATE PROCEEDING S, LD. A.R. CONTENDED THAT THE ORDER OF THE ASSESSING OFFICER IS BAD IN L AW AND THE ASSESSEE WAS NEVER ASSESSED UNDER THE HEAD BUSINESS AND THERE IS NO CESSATION OF LIABILITY AND SECTION 41(1) IS NOT RELATABLE TO THE ASSESSEE. I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 9 OF 11 12. LD. CIT(APPEALS) FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- SOUGALI SUGAR WORKS PVT. LTD. WHICH CONFIRMED THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT, WHICH WAS REPORTED IN 236 ITR AT PAGE 518 REPRODUCED AS UNDER :- THE PRINCIPLE THAT EXPIRY OF THE PERIOD OF LIMITAT ION PRESCRIBED UNDER THE LIMITATION ACT COULD NOT EXTIN GUISH THE DEBT BUT IT WOULD ONLY PREVENT THE CREDITOR FRO M ENFORCING THE DEBT, HAS BEEN, WELL SETTLED. IF THAT PRINCIPLE IS APPLIED, IT IS CLEAR THAT MERE ENTRY IN THE BOOK S OF ACCOUNT OF THE DEBTOR MADE UNILATERALLY WITHOUT ANY ACT ON THE PART OF THE CREDITOR WILL NOT ENABLE THE DEBTOR TO SAY THAT THE LIABILITY HAS COME TO AN END. APART FROM T HAT, THAT WILL NOT BUY ITSELF CONFER ANY BENEFIT ON THE DEBTO R AS CONTEMPLATED BY THE SECTION. 13. LD. D.R. CONTENDED THAT THE ASSESSEE HAS SHOWN SEVERAL LIABILITIES IN THE RETURN, THE CONDITION OF SECTION 41(1) IS ATTRA CTED TREATING THE SAME AS TRADING LIABILITY AS THE ASSESSEE HAS SHOWN THE LOAN OUTSTANDING AND IT IS BEING FORWARDED FOR THE LAST SEVERAL YEARS AND T HE ASSESSEE FAILED TO EXPLAIN THAT IT IS NOT TRADING LIABILITY. 14. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. D .R. AND LD. A.R. WITH REGARD TO THE SCOPE OF SECTION 41(1). THE ASSE SSEE WAS NEVER ASSESSED UNDER THE HEAD BUSINESS AND THE ASSESSEE HAS BEEN ASSESSED UNDER INDIVIDUAL CAPACITY ONLY FOR THE PREVIOUS ASS ESSMENT YEARS. THE SAID AMOUNT RECEIVED FROM HER FATHER DURING HIS LIF E TIME AND ALSO AFTER HIS DEMISE FOR THE PURPOSE OF PURCHASING HOUSE PROP ERTY. HENCE, THERE IS NO LIABILITY CEASED UNDER SECTION 41(1) OF THE ACT. THE LD. CIT(APPEALS) HAS RIGHTLY POINTED OUT AND RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- SOUGALI SUGA R WORKS PVT. LTD., WHEREIN IT WAS HELD THAT THE PRINCIPLE THAT EXPIRY OF THE PERIOD OF LIMITATION PRESCRIBED UNDER THE LIMITATION ACT COUL D NOT EXTINGUISH THE DEBT BUT IT WOULD ONLY PREVENT THE CREDITOR FROM EN FORCING THE DEBT AND AT THE SAME TIME, THE LIABILITY WILL NOT ENABLE THE DEBTOR TO SAY THAT THE LIABILITY HAS COME TO AN END. THE PRINCIPLE THAT EX PIRY OF THE PERIOD OF LIMITATION PRESCRIBED UNDER THE LIMITATION ACT COUL D NOT EXTINGUISH THE I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 10 OF 11 DEBT BUT IT WOULD ONLY PREVENT THE CREDITOR FROM EN FORCING THE DEBT, HAS BEEN, WELL SETTLED. IF THAT PRINCIPLE IS APPLIED, I T IS CLEAR THAT MERE ENTRY IN THE BOOKS OF ACCOUNT OF THE DEBTOR MADE UNILATER ALLY WITHOUT ANY ACT ON THE PART OF THE CREDITOR WILL NOT ENABLE THE DEB TOR TO SAY THAT THE LIABILITY HAS COME TO AN END. APART FROM THAT, THAT WILL NOT BUY ITSELF CONFER ANY BENEFIT ON THE DEBTOR AS CONTEMPLATED BY THAT SECTION. IN THE CASE ON HAND, THE FATHER OF THE ASSESSEE DIED LONG BACK, THE SAID AMOUNT GIVEN BY HIM AS IN THE NATURE OF PERSONAL LOAN TO P URCHASE A HOUSE PROPERTY AND ALSO RECEIVED FROM THE ESTATE OF HER F ATHER ENTERED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE SINCE LONG BACK. T HE ASSESSEE DID NOT CREDIT THE SAID AMOUNT TO HER PROFIT & LOSS ACCOUNT THEREFORE, IN OUR VIEW, SCOPE OF SECTION 41(1)(A) IS NOT APPLICABLE TO THE CASE ON HAND. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT JUDGMENT (SUPRA), WE ARE OF VIEW THAT THE LD. CIT(A PPEALS) RIGHTLY ALLOWED THE GROUND OF THE ASSESSEE RAISED BEFORE HI M AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. THEREFORE , WE CONFIRM THE ORDER OF THE LD. CIT(APPEALS) IN THIS GROUND IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 16, 2015. SD/- SD/- (P.M. JAGTAP) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 16 TH DAY OF DECEMBER, 2015 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-56, KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700 001 (2) SMT. SARITA ARORA, 11, DACERS LANE, KOLKATA-700 069 I.T.A. NO. 118/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 11 OF 11 (3) COMMISSIONER OF INCOME-TAX (APPEALS)- XXXVI, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.