CRESCENT CHEMICALS, MUMBAI V. THE DEPUTY COMMISSIONER OF INCOME TAX 22(1), MUMBAI

ITA 1266/MUM/2023

AI Insights

Crescent Chemicals appealed against the order of the Commissioner of Income Tax (Appeals), which had disallowed the deduction of society charges paid for a let-out property while computing the annual letting value. The original assessment included income from house property, and the assessee claimed deductions for municipal taxes and maintenance charges. The Assessing Officer allowed only the deduction for municipal taxes, leading to an addition of the maintenance charges to the income. The CIT(A) dismissed the appeal ex-parte due to non-appearance of the assessee. The ITAT, upon review, noted the absence of necessary details during the CIT(A)'s proceedings and decided to remand the case back for a fresh evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125490 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 16-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 142(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.1266/Mum./2023 (Assessment Year : 2012–13) Crescent Chemicals 2 nd Floor, Windsor, CST Road Mumbai 400 098 PAN – AAAFC0755A ................ Appellant v/s Dy. Commissioner of Income Tax Circle–22(1), Mumbai ................ Respondent Assessee by : Shri Sumit Mantri Revenue by : Shri Ashok Kumar Ambartha Date of Hearing – 05/07/2023 Date of Order – 14/07/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 21/03/2023 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2012-13. 2. In this appeal, the assessee has raised the following grounds:- “On the facts and circumstances of the case, the Commissioner of Income Tax (appeals) erred in disallowing the deduction claimed while computing Annual let out Value of Rs.5,82,110/- on account of Society Charges paid for let out Property. Crescent Chemicals ITA no.1266/Mum./2023 Page | 2 2. On the facts and circumstances of the case, the Commissioner of Income Tax (appeals) failed to consider the various decisions rendered by Honorable ITAT, Mumbai that the Maintenance charges paid to the Society is an allowable deduction while computing Annual Letting Value. 3. The appellant craves leaves to add, to delete or amend any of the above grounds of appeal at the time of hearing.” 3. The only dispute raised by the assessee is against the disallowance of the deduction of society charges paid for let-out property while computing annual letting value. 4. The brief facts of the case as emanating from the record are: The assessee is a firm and is engaged in the business of dealing in chemicals, plastics, and electrical appliances products and also consignment and indenting agents. For the year under consideration, the assessee filed its return of income on 26/09/2012, declaring a total income of Rs. 2,70,80,898. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the year under consideration, the assessee, inter-alia, earned income of Rs.1,18,90,873, under the head „income from house property‟. During the assessment proceedings, the assessee was asked to produce the copy of rental agreement and proof of payment of municipal taxes. In response thereto, the assessee submitted that it has partly rented out the property in Windsor House, and the rent received therefrom is duly shown under the head „income from house property‟. It was further submitted that the assessee has claimed municipal taxes including property taxes as well as maintenance charges in respect of same. The Assessing Officer (“AO”) vide order dated 20/03/2015 passed under section 143(3) of the Act held that Crescent Chemicals ITA no.1266/Mum./2023 Page | 3 under section 23 of the Act, only taxes levied by any local authority with respect to the property let out and actually paid by the assessee can be deducted while computing the annual value of any property. Accordingly, the AO only allowed the deduction of municipal taxes of Rs. 3,77,781, paid by the assessee, during the relevant financial year, while computing the income from house property, and the sum of Rs. 4,07,481, was added to the income of the assessee under the head „income from house property‟. 5. In the appeal before the learned CIT(A), despite various notices being issued, no reply/submission was filed on behalf of the assessee. Accordingly, vide impugned ex–parte order dated 21/03/2023, the learned CIT(A) dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us. 6. We have considered the rival submissions and perused the material available on record. It is evident that the learned CIT(A) has passed the order ex-parte due to the non-appearance of/on behalf of the assessee. Now in appeal before us, the assessee is duly represented by the learned Authorised Representative (“learned AR”) and wishes to pursue the litigation against the additions made by the AO. The assessee has also filed the paper book enclosing the copy of invoices for maintenance charges paid in respect of the aforesaid property. The assessee has also provided a copy of the order passed by the learned CIT(A) in assessee‟s own case for the assessment year 2013- 14, wherein the maintenance charges paid, inter-alia, in respect of the aforesaid property was allowed as a deduction while computing the annual letting value along with the municipal taxes paid. However, it is evident from Crescent Chemicals ITA no.1266/Mum./2023 Page | 4 the record that all these details were not furnished before the learned CIT(A). Therefore, in view of the above, we deem it appropriate to restore the appeal to the file of the learned CIT(A) for de novo adjudication. We direct the assessee to furnish all the details in support of its claim before the learned CIT(A) within 90 days of the receipt of this order and thereafter notice of hearing be issued by the learned CIT(A). Needless to mention that no order shall be passed without affording reasonable opportunity of hearing to the parties. Further, the assessee is directed to appear before the learned CIT(A) on all the dates of hearing as may be fixed without any default. Accordingly, grounds raised by the assessee are allowed for statistical purposes. 7. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 14/07/2023 Sd/- PRASHANT MAHARISHI ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 14/07/2023 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai