Accordion Properties Pvt. Ltd., , Kolkata V. DCIT, Circle - 4(2), Kolkata , Kolkata

ITA 1546/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1252 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 18-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: P J BHIDE
• Keywords: Depreciation; Non-deduction of tax
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] I.T.A NO. 1546/KOL/20 18 ASSESSMENT YEAR : 2013-1 4 ACCORDION PROPERTIES PVT. LTD. VS- DCIT, CIRCLE-4(2), KOLKATA [PAN: AAECA 0439 N] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI P.J. BHIDE, CA FOR THE REVENUE : SHRI SAURABH KUMAR, ADDL. CIT SR. DR DATE OF HEARING : 30.10.2018 DATE OF PRONOUNCEMENT : 28.11.2018 ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 11.05.2018 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S 250 OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE IS A COMPANY AND HAS FILED ITS RET URN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ELECTRONICALLY ON 21.09.2013. 3. THE FACT RELATING TO THE ISSUE THAT IS TO BE ADJ UDICATED BY ME IN GROUND NOS. 1 AND 2 ARE STATED BY THE ASSESSING OFFICER AT PAGE 2.8 WHI CH IS EXTRACTED FOR READY REFERENCE: 2 ITA NO.1546/KOL/2018 ACCORDION PROPERTIES PVT. LTD. A.YR .2013-14 2 (A) INCOME FROM HOUSE PROPERTY THE ASSESSEE IS THE OWNER OF A BUILDING (FLAT) AT 9 A, BALLY HIGH, 1, BALLYGUNGE PARK ROAD, KOLKATA-700019 AND EARNING RENTAL INCOME BY L ET OUT A PORTION OF SUCH PROPERTY BUT AND COMPUTED THE SAME UNDER THE HEAD INCOME FR OM BUSINESS OR PROFESSION. THEREFORE, CONSIDERING THE FACTS, THE SAID INCOME I S COMPUTED AS INCOME FROM HOUSE PROPERTY AND THE ASSESSEE IS ENTITLED TO GET DEDUCT IONS UNDER SECTION 24 ONLY AND THE ASSESSEE IS NOT ENTITLED TO GET ANY OTHER DEDUCTION IN RESPECT OF THAT AS PER PROVISION OF THE ACT. CONSIDERING THE SAME THE FOLLOWING EXPENDI TURE SHOULD BE DISALLOWED UNDER THE HEAD OF INCOME FROM BUSINESS OR PROFESSION. T HOSE ARE- I) CORPORATION TAX : RS. 39,852/- II) MAINTENANCE EXPENSES : RS. 69,600/- III) DEPRECIATION : RS. 90,971/- IV) SERVICE TAX AND OTHER CHARGES : RS. 11,272/- ( RELATED TO BUILDING ONLY) TOTAL AMOUNT TO BE DISALLOWED IS RS. 2,11,695/-. 4. THE SECOND ISSUE THAT ARISES IN THIS APPEAL IS O N THE TIME OF DISALLOWANCE U/S 14A OF THE ACT. THE THIRD ISSUE IS WITH REGARD TO A DISALL OWANCE MADE U/S 40A(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE. THE LD. CIT(A) UPHO LD THE ORDER OF THE ASSESSING OFFICER ON ALL THESE ISSUES. AGGRIEVED THE ASSESSEE IS IN A PPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE SHRI P.J. BHIDE SUBMITTED THAT THE ASSESSEE COMPANY IS A OWNER OF A FLAT AT 9A, BALLY HIGH, 1, BALLYGUN GE PARK ROAD, KOLKATA-700019. HE SUBMITS THAT THE COMPANY ALLOWED ITS OWN DIRECTOR T O USE A PORTION OF THIS FLAT FOR THE PURPOSES OF THE DIRECTORS PERSONAL BUSINESS. THE P ORTION BY THE DIRECTORS FOR WHICH RENT WAS CHARGED IS USED, ADMITTEDLY A COMMON AREA IN THE RESIDENTIAL FLATS. AN AMOUNT OF RS. 16,000/- PER MONTH WAS CHARGED FROM THE DIRE CTORS TOWARDS RENT FOR THE USE OF A COMMON AREA. THE LD. COUNSEL FOR THE ASSESSEE RELIE S ON A NUMBER OF CASE LAWS FOR THE PROPOSITION THAT THE RENT IN QUESTION IS ASSESSABL E UNDER THE HEAD INCOME FROM BUSINESS AND NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE LD. DR RELIES ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS LD. C IT(A). 3 ITA NO.1546/KOL/2018 ACCORDION PROPERTIES PVT. LTD. A.YR .2013-14 3 6. I FIND THAT, WHAT IS LET OUT IS THE COMMON ARE A OF THE RESIDENTIAL FLATS COMPLEX IN QUESTION. COMMON AREA GENERALLY BELONGS TO THE OWNE RS ASSOCIATION AND IT CANNOT BE UNDER EXCLUSIVE OWNERSHIP TO THE ASSESSEE COMPANY A S SUCH. WE ARE NOT ON THE ISSUE AS TO WHETHER ANYBODY CAN RENT OUT COMMON AREAS IN A R ESIDENTIAL FLATS COMPLEX. THE ISSUES ARE, UNDER WHICH HEAD OF INCOME THE RENT IN QUESTION IS TAXABLE, AS THE ASSESSEE CANNOT BE SAID TO BE THE EXCLUSIVE OWNER OF THE COM MON AREA. THE RENT RECEIVED FROM LETTING OUT SUCH AREA OF WHICH THE ASSESSEE IS NOT THE EXCLUSIVE OWNER, IN MY VIEW IS NOT TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPE RTY. AS LETTING OUT OF THE COMMON AREA OF A RESIDENTIAL COMPLEX CANNOT BE THE BUSINESS OF THE ASSESSEE, THE RENT CANNOT BE TAXED UNDER THE HEAD INCOME FROM BUSINES S. I HOLD THAT THE INCOME IN QUESTION SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY, GROUND NOS. 1 AND 2 IS ALLOWED IN PART. 7. GROUND NO. 3 IS AGAINST THE DISALLOWANCE U/S 14A OF THE ACT. THE DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE YEAR, WHICH IS CL AIMED AS EXEMPT IS RS. 10,800/-. THE DISALLOWANCE MADE U/S 14A WAS RS. 1,02,863/- AND R S. 920/- . THE DISALLOWANCE IN QUESTION CANNOT BE MADE IN EXCESS OF THE EXEMPT INC OME EARNED, IN VIEW OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF JOINT INVESTMENT PVT. LTD. VS. CIT I.T.A NO. 117/KOL/2015 ORDER DATED 25.02.2015. HENCE I RESTRICT THE DISALLOWANCE IN QUESTION TO RS. 10,800/- ONLY. ACCO RDINGLY, GROUND NO. 3 IS ALLOWED IN PART. 8. GROUND NO. 4 IS OF THE DISALLOWANCE U/S 40A(IA) OF THE ACT. THE ASSESSEE SUBMITS THAT THIS IS A CASE OF REIMBURSEMENT OF EXPENDITURE. THE LD. CIT(A) HELD THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUGGEST THAT THE P AYMENT IN QUESTION WAS 4 ITA NO.1546/KOL/2018 ACCORDION PROPERTIES PVT. LTD. A.YR .2013-14 4 REIMBURSEMENT OF EXPENDITURE OF M/S SHARMA KAJARIA & CO.. THE ASSESSEE FURNISHES COPY OF THE BILL RAISED BY THE ADVOCATES WHICH DEMO NSTRATES THAT AMOUNT IN QUESTION WAS PAID TOWARDS COURT FEE AND STAMP DUTY. THI S PAYMENT DOES NOT REQUIRE ANY DEDUCTION OF TAX AT SOURCE. HENCE, I DELETE THE DIS ALLOWANCE AND ALLOW THIS GROUND OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. ORDER PRONOUNCED IN THE COURT ON 28 .11.2018 SD/- [ J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 28.11.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACCORDION PROPERTIES PVT. LTD., 12, PRETORIA STR EET, 5 TH FLOOR, KOLKATA-700071. 2. DCIT, CIRCLE-4(2), P-7, CHOWRINGHEE SQUARE, AAYA KAR BHAWAN, 4 TH FLOOR, KOLKATA-700069. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT , KOLKATA BENCHES