Padma Vashi Shewaramani, CHENNAI V. DDIT, CHENNAI

ITA 1215/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8625 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2016
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: V TARISH
• Keywords: Business income

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NO. 1215/MDS/2016 / ASSESSMENT YEAR : 2011-12 SMT. PADMA VASHI SHEWARAMANI NO.73, JANKI BHAWAN SARDAR PATEL ROAD GUINDY, CHENNAI 600 032 VS. THE DY. COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION II CHENNAI [PAN AAYPS 4687 D] ( ! / APPELLANT) ( '# ! /RESPONDENT) / APPELLANT BY : SHRI V. TARISH, CA /RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT / DATE OF HEARING : 16 - 0 6 - 2016 / DATE OF PRONOUNCEMENT : 18 - 08 - 2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-16, CHENN AI, DATED 18.1.2016 AND PERTAINS TO ASSESSMENT YEAR 2011-1 2. 2. SHRI V. TARISH, LD. REPRESENTATIVE FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE CLAIMED DEDUCTION TOWARDS SERVIC E TAX PAYMENT WHILE COMPUTING INCOME FROM HOUSE PROPERTY. ACCORD ING TO THE LD. REPRESENTATIVE, THE ASSESSEE HAS NOT COLLECTED ANY AMOUNT TOWARDS ITA NO. 1215/16 :- 2 -: SERVICE TAX FROM THE TENANT, HOWEVER, HE PAID SERVI CE TAX FROM THE RENTAL INCOME. THE LD. REPRESENTATIVE SUBMITTED TH AT SINCE THE ASSESSEE HAS NOT COLLECTED THE SERVICE TAX FROM THE TENANT, THE SERVICE TAX HAS TO BE REDUCED FROM THE RENTAL INCOME RECEIV ED BY THE ASSESSEE WHILE COMPUTING INCOME FROM HOUSE PROPERTY . IN THE EARLIER ASSESSMENT YEAR, ACCORDING TO THE LD. REPRESENTATIV E, THE ASSESSEE CLAIMED RENTAL INCOME AS INCOME FROM BUSINESS, HOWE VER, THE ASSESSING OFFICER ASSESSED THE SAME AS INCOME FROM HOUSE PROPERTY. THIS TRIBUNAL BY AN ORDER DATED 27.3.2015 IN I.T.A. NO. 2281/MDS/2014 REMITTED THE MATTER BACK TO THE ASSESSING OFFICER F OR RECONSIDERATION. THEREFORE, THE LD. REPRESENTATIVE SUBMITTED THAT FO R THIS ASSESSMENT YEAR ALSO, THE MATTER MAY BE REMITTED BACK TO THE F ILE OF THE ASSESSING OFFICER. ON A QUERY FROM THE BENCH, THE LD. REPRESE NTATIVE SUBMITTED THAT WHAT WAS RECEIVED BY THE ASSESSEE IS ONLY REN TAL INCOME AND NOT THE SERVICE TAX. SINCE SERVICE TAX WAS NOT COLLECT ED FROM THE TENANT, THE SAME HAS TO BE PAID FROM THE RENTAL INCOME. HE NCE, THE PAYMENT OF SERVICE TAX IS TO BE CONSIDERED AS EXPENDITURE I N THE HANDS OF THE ASSESSEE. 3. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT UNDER THE SCHEME OF S ERVICE TAX ACT, THE ASSESSEE IS EXPECTED TO COLLECT SERVICE TAX FR OM THE TENANT AND THE ITA NO. 1215/16 :- 3 -: SAME IS TO BE PAID TO THE GOVERNMENT. IN THIS CASE , THE ASSESSEE CLAIMS THAT THE SERVICE TAX WAS NOT COLLECTED. PAY MENT OF SERVICE TAX IS NOT AN ALLOWABLE DEDUCTION U/S 24 OF THE ACT. WHI LE COMPUTING INCOME FROM HOUSE PROPERTY, THE ASSESSING OFFICER C ANNOT IGNORE THE PROVISIONS OF SEC. 24 OF THE ACT. SEC. 24 ALLOWS 3 0% STANDARD DEDUCTION FROM THE RENTAL INCOME. SO, WHATEVER MAY BE THE EXPENDITURE INCURRED BY THE ASSESSEE INCLUDING THE SERVICE TAX, HAS TO BE MADE FROM THE STANDARD DEDUCTION AND HE ASSESSE E CANNOT CLAIM ANYTHING MORE THAN 30% WHILE COMPUTING THE INCOME F ROM HOUSE PROPERTY. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SEC . 24 PROVIDES THE METHOD OF COMPUTATION OF DEDUCTION FROM INCOME FROM HOUSE PROPERTY. SERVICE TAX IS NOT ONE OF THE ITEMS REFE RRED IN SEC. 24 OF THE ACT. UNDER THE SCHEME OF THE SERVICE TAX ACT, THE TAX HAS TO BE COLLECTED BY THE LANDLORD FROM THE TENANT AND THE S AME HAS TO BE PAID TO THE GOVERNMENT. THEREFORE, SERVICE TAX IS ALWAYS OVER AND ABOVE THE AGREED RENT. THE QUESTION ARISES FOR CONSIDERA TION IS WHEN THE ASSESSEE HAS NOT COLLECTED THE SERVICE TAX OVER AND ABOVE THE RENT, WHETHER CAN IT BE ALLOWED AS DEDUCTION WHILE COMP UTING THE TAXABLE INCOME OF THE ASSESSEE? THIS TRIBUNAL IS OF THE CONSIDERED OPINION ITA NO. 1215/16 :- 4 -: THAT DEDUCTION FROM INCOME FROM HOUSE PROPERTY COUL D BE ALLOWED ONLY UNDER THE PROVISIONS OF SEC. 24 OF THE ACT. EVEN T HOUGH THE PAYMENT OF SERVICE TAX IS AN OUTGOING IN THE HANDS OF THE ASSESSEE, THE SAME CANNOT BE ALLOWED OVER AND ABOVE 30% OF THE STANDAR D DEDUCTION PROVIDED IN SEC. 24(A) OF THE ACT. HENCE, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT DEDUCTION TOWARDS PAYMENT O F SERVICE TAX CANNOT BE ALLOWED WHILE COMPUTING INCOME FROM HOUSE PROPERTY. 5. I HAVE ALSO GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 IN I.T.A.NO. 2281/MDS/2014. THIS TRIBUNAL REMITTED THE MATTER B ACK TO THE FILE OF THE ASSESSING OFFICER TO FIND OUT WHETHER THE RENTA L INCOME IS A BUSINESS INCOME OR INCOME FROM HOUSE PROPERTY. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT DOUB TED THE CLASSIFICATION MADE BY THE ASSESSING OFFICER. NO G ROUNDS WERE RAISED IN THE APPEAL WITH REGARD TO CLASSIFICATION OF INCO ME. IN OTHER WORDS, THE ASSESSEE ACCEPTED THE INCOME AS INCOME FROM HO USE PROPERTY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT DECISION OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2007-08 MAY NOT B E APPLICABLE TO THE FACTS OF THIS CASE. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT( A) AND ACCORDINGLY THE SAME IS CONFIRMED. ITA NO. 1215/16 :- 5 -: 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2016, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 18 TH AUGUST, 2016 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF