Tera Construction (P) Ltd, V. ITO ward-16 (2),

ITA 1435/DEL/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87019 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-03-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 16-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Depreciation; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM ITA NO.1435/DEL/2008 ASSESSMENT YEAR : 2001-02 TERA CONSTRUCTION PVT. LTD., 2802, TOP FLOOR, BARA BAZAR, KASHMERI GATE, DELHI 110006. PAN: AAACT2579E VS. ITO, WARD 16(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI T. VASANTHAN, SR. DR DATE OF HEARING : 18.03.2015 DATE OF PRONOUNCEMENT : 19.03.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) ON 7.2.2008 UPHOLDING THE PENALTY OF RS. 17,49,622/- IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961 ITA NO.1435/DEL/2008. 2 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2001-02. 2. BEFORE PROCEEDING WITH THE MATTER, WE WANT TO SE T OUT THE RELEVANT FACTS UNDER WHICH THIS APPEAL HAS AGAIN COME UP BEF ORE THE TRIBUNAL FOR CONSIDERATION AND DECISION. THE TRIBUNAL VIDE ITS ORIGINAL ORDER DATED 28.3.2013 ACCEPTED THE ASSESSEES CONTENTION THAT T HE AO DID NOT RECORD PROPER SATISFACTION IN THE ASSESSMENT ORDER BEFORE INITIATING PENALTY PROCEEDINGS U/S 271(1) OF THE ACT. RESULTANTLY, T HE PENALTY WAS DELETED. THE REVENUE APPROACHED THE HONBLE DELHI HIGH COURT. VIDE ITS JUDGMENT DATED 11.3.2014, THE HONBLE DELHI HIG H COURT VACATED THE VIEW OF THE TRIBUNAL IN DELETING THE PENALTY ON THE BASIS OF LACK OF PROPER SATISFACTION. ACCORDINGLY, THE MATTER HAS B EEN REMANDED FOR DECIDING PENALTY ON MERITS. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF TH E ASSESSEE DESPITE NOTICE. WE ARE, THEREFORE, PROCEEDING TO DISPOSE O F THIS APPEAL EX PARTE QUA THE ASSESSEE. ITA NO.1435/DEL/2008. 3 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A BUILDER AND PROMOTER. NO BUSINESS ACTIVITY WAS CARRIED ON D URING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . SOME RENTAL INCOME WAS EARNED APART FROM SOME INTEREST ON FDRS, ETC. THIS RENTAL INCOME WAS DECLARED UNDER THE HEAD INCOME FROM HOU SE PROPERTY ON WHICH DEDUCTION U/S 24 WAS CLAIMED FOR OTHER EXPEN SES, NAMELY, DEPRECIATION, BUILDING MAINTENANCE EXPENSES, COMMIS SION, ETC. THE AO HELD THAT SUCH EXPENSES WERE NOT SEPARATELY ALLOWAB LE AS DEDUCTION BECAUSE THE SAME WERE COVERED UNDER THE COMPOSITE D EDUCTION ALLOWABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HE, T HEREFORE, COMPUTED THE TOTAL INCOME BY ASSESSING THE RENTAL INCOME UND ER THE HEAD INCOME FROM HOUSE PROPERTY AS WAS DECLARED BY THE ASSESSE E WITHOUT ALLOWING ANY SEPARATE DEDUCTION FOR THE EXPENSES WHICH WERE CLAIMED BY THE ASSESSEE. PENALTY AMOUNTING TO RS.17,49,622/- WAS I MPOSED IN RESPECT OF THE DISALLOWANCE OF DEDUCTIONS CLAIMED BY THE ASSES SEE AGAINST THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY, WHICH THE LD. CIT(A) UPHELD IN THE FIRST APPEAL. ITA NO.1435/DEL/2008. 4 5. AT THIS JUNCTURE, IT IS RELEVANT TO MENTION THAT THE ASSESSEE CHALLENGED THE ADDITIONS MADE BY THE AO IN THE QUAN TUM PROCEEDINGS. THE TRIBUNAL, VIDE ITS ORDER DATED 28.3.2013, DISPO SED OF THE ASSESSEES QUANTUM APPEAL. A COPY OF SUCH ORDER IS AVAILABLE ON RECORD. IT CAN BE SEEN FROM THE ORDER PASSED BY THE TRIBUNAL IN QUANT UM PROCEEDINGS THAT THE ASSESSEES CONTENTION FOR ASSESSING RENTAL INCO ME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION HAS B EEN REJECTED AND, RESULTANTLY, CLAIM FOR DEPRECIATION AMOUNTING TO RS .1,83,951/-, BUILDING MAINTENANCE EXPENSES OF RS.22,15,072/- AND COMMISSI ON PAID FOR LETTING OUT BUILDING AT RS.5,39,000/- HAS BEEN REJECTED. T HE ASSESSEES FURTHER CLAIM FOR DEDUCTION OF RS.10 LAC FOR GETTING THE PR OPERTY VACATED HAS ALSO BEEN FOUND TO BE UNACCEPTABLE. SIMILAR IS THE POSI TION REGARDING DISALLOWANCE OF RS.9,15,800/- TOWARDS MAINTENANCE E XPENSES AND RS.70,000/- PAID AS ARCHITECT FEES IN RESPECT OF BU ILDING LET OUT BY THE ASSESSEE. IN VIEW OF THE ABOVE TRIBUNAL ORDER, IT BECOMES CLEAR THAT THE ASSESSEES CONTENTION FOR CLAIMING DEDUCTIONS TOWAR DS VARIOUS EXPENSES ETC. AGAINST INCOME FROM HOUSE PROPERTY HAVE BEEN H ELD TO BE NOT MAINTAINABLE. ITA NO.1435/DEL/2008. 5 6. HERE IS A CASE IN WHICH THE ASSESSEE EARNED RENTAL INCOME TO THE TUNE OF RS. 84.00 LAC ON WHICH IT CLAIMED DEDUCTION U/S 24(I) FOR A SUM OF RS.18.75 LAC. DESPITE THAT, IT FURTHER CLAIMED DEDUCTION FOR VARIOUS EXPENSES AND ALLOWANCE IN RESPECT OF LET OUT PROPER TY FROM WHICH RENTAL INCOME WAS EARNED. SUCH CLAIM FOR DEDUCTION OF VA RIOUS EXPENSES ETC. IN THE COMPUTATION OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IS PATENTLY AND EX FACIE UNTENABLE. IT IS NOT AN ISSUE ON WHICH TWO OPINIONS CAN POSSIBLY BE FORMED AND THE ASSESSE E CHOSE TO FOLLOW THE VIEW FAVOURABLE TO IT. THE PROVISIONS OF CHAPT ER IV-C ARE SIMPLE AND PLAIN IN NOT ADMITTING ANY DEDUCTION FOR EXPEN SES ETC., OF THE NATURE WHICH HAVE BEEN CLAIMED BY THE ASSESSEE, WITHIN ITS AMBIT. AS THE ASSESSEE KNOWINGLY MADE A WRONG CLAIM WHICH IS PATE NTLY INADMISSIBLE, WE CANNOT, BUT, UPHOLD PENALTY U/S 271(1)(C) OF THE ACT. OUR VIEW IS FORTIFIED BY A RECENT JUDGMENT FROM THE HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS. NG TECHNOLOGIES LTD. (2015) 370 ITR 7 (DEL) , IN WHICH THE ASSESSEE CLAIMED DEDUCTION FOR LOSS ON SALE OF FIXED ASSETS IN ITS PROFIT & LOSS ACCOUNT. THE HONBLE DELHI HIGH COUR T UPHELD THE PENALTY IN RESPECT OF SUCH PATENTLY INADMISSIBLE CL AIM. THE FACTS OF THE ITA NO.1435/DEL/2008. 6 INSTANT CASE ARE ON ALL FOURS WITH THAT OF NG TECHNOLOGIES LTD. (SUPRA) INASMUCH AS HERE ALSO THE ASSESSEE CLAIMED DEDUCTIO N FOR EXPENSES AND DEPRECIATION, ETC. AGAINST INCOME FROM HOUSE PROPER TY, WHICH IS CLEARLY NOT ALLOWABLE. WE, THEREFORE, APPROVE THE VIEW TAK EN BY THE LD. CIT(A) IN AFFIRMING THE INSTANT PENALTY. 7. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.03.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 19 TH MARCH, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.