New Vijaya Lakshmi Oil Extractions and Refinery P.Ltd., Secunderabad V. ITO, Hyderabad

ITA 1731/HYD/2008

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1479 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Business expenditure; Cost of acquisition; Fair market value; Corroborative evidences
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALHYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1731/HYD/2008 ASSESSMENT YEAR : 2005-06 NEW VIJAYALAKSHMI OIL EXTRACTIONS AND REFINERY PVT. LTD., APPELLANT HYDERABAD. (PAN AAACN 7958H) VS. INCOME TAX OFFICER, WARD 16(2), RESPONDEN T HYDERABAD. APPELLANT BY : SHRI M.V. ANIL KUMAR RESPONDENT BY : SHRI M.H. NAIK DATE OF HEARING : 08/11/2012 DATE OF PRONOUNCEMENT : 24/01/ 2013 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT-IV, HYDERABAD DATED 30/09/2008 FOR THE ASSES SMENT YEAR 2005-06. 2. GROUND NO. 1 IS DIRECTED AGAINST THE ACTION OF T HE CIT(A) IN NOT CONSIDERING THE DRT LETTER AND OUGHT TO HAVE ALLOWE D THE INTEREST AMOUNT OF RS. 28,11,177/- TO BE SET OFF AGAINST THE LONG TERM CAPITAL GAIN. 2 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. 3. THE ASSESSEE IS A PVT. LTD. COMPANY. FOR THE YEA R UNDER CONSIDERATION, IT WAS HAVING TAXABLE INCOME, INCLUS IVE OF INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS. HOWEVER, THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME. THEREFORE, THE AO I SSUED A NOTICE U/S 142(1) OF THE ACT ON 05/10/2006, CALLING UPON THE A SSESSEE TO FILE RETURN OF INCOME FOR THIS ASSESSMENT YEAR BY 20/10/ 2006. HOWEVER, AS NOTED BY THE AO, THE ASSESSEE DID NOT FILE RETUR N OF INCOME. SUBSEQUENTLY, HE HAD ISSUED A SHOW CAUSE LETTER DA TED 26/10/2007 PROPOSING TO COMPLETE THE ASSESSMENT EX-PARTE U/S 1 44 OF THE ACT. HOWEVER, THERE WAS NO COMPLIANCE FROM THE ASSESSEE TO THE SAID SHOW CAUSE NOTICE. HENCE, THE AO PROCEED TO COMPLET E THE ASSESSMENT U/S 144 OF THE ACT, AS PER BEST OF HIS J UDGMENT AND BASING ON THE MATERIALS AVAILABLE ON RECORD. 4. THE AO NOTED THAT THE ASSESSEE COMPANY WAS OWNER OF 4 ACRES OF OPEN PLOT BEARING SY. NO. 103, PLOT NO. 28,29,30 & 32 IN KOTHUR INDUSTRIAL DEVELOPMENT AREA, KOTHUR VILLAGE, SHADNA GAR MANDAL, WHICH WAS AUCTIONED DURING THE PREVIOUS YEAR ON 17/ 05/2004 BY DEBT RECOVER TRIBUNAL AND FROM SUCH AUCTION, AN AMO UNT OF RS. 35,30,000/- WAS REALIZED. TREATING THIS AMOUNT AS C APITAL RECEIPT, ARISING FROM SALE OF LAND BELONGING TO THE ASSESSEE COMPANY, THE AO HELD THAT THE PROFIT THEREFROM HAS TO BE TAXED UNDE R THE HEAD LONG TERM CAPITAL GAINS. SINCE THE ASSESSEE HAD NOT FURN ISHED ANY INFORMATION AND HAD NOT MADE ANY COMPLIANCE, TREATI NG THE COST OF ACQUISITION OF THE SAID LAND AT NIL, THE AO HAD T AXED THE ENTIRE AMOUNT OF RS. 35,30,000/- AS INCOME FROM LONG TERM CAPITAL GAINS. HE FURTHER NOTED THAT FROM ENQUIRIES, IT REVEALED T HAT THE ASSESSEE COMPANY HAD CONSTRUCTED 80 SHOPS ON THE EASTERN AND SOUTHERN SIDES OF THE COMPANYS LAND FROM WHICH IT WAS DERIV ING RENT AT RS. 3 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. 600 PER MONTH PER SHOP. COMPUTING THE ANNUAL RENTAL RECEIPT FROM THE SAID SHOPS AT RS. 5,76,000, THE AO HAD TAXED TH E ENTIRE AMOUNT UNDER THE HEAD INCOME FROM OTHER SOURCES. THE AO COMPLETED THE ASSESSMENT AFTER MAKING BOTH THE ADDITIONS, VIDE AB OVE ORDER DATED 04/12/2007 PASSED U/S 144 OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(A). 6. BEFORE THE CIT(A), THE ASSESSEE FILED WRITTEN SU BMISSIONS AND THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE C OMPANY HAD BORROWED AN AMOUNT OF RS. 7,18,823/- FROM SOUTH IND IA BANK LTD. IN 1977 AND THE COMPANY WAS NOT IN A POSITION TO REPAY THIS AMOUNT. THEREFORE, THE PRINCIPAL AND INTEREST AMOUNT ACCRUE D UP TO 30/04/2002 WAS RS. 31,28,480/-. THE BANK THROUGH DR T IN Q.A. NO. 923 OF 2001, DATED 18/09/2002, OBTAINED PERMISSION FOR PUBLIC AUCTION AND THE LAND ADMEASURING 4 ACRES WAS SOLD O N PUBLIC AUCTION AND A SALE DEED WAS EXECUTED ON 15/02/2005. THE CON SIDERATION RECEIVED BY THE BANK WAS RS. 35,30,000/-. HE FURTHE R SUBMITTED THAT OUT OF TOTAL CONSIDERATION REALIZED ON SALE OF LAND, THE PRINCIPAL REPAYMENT IS RS. 7,18,823/- AND BALANCE RS. 28,11,1 77/- IS TOWARDS THE INTEREST AND DRT EXPENSES. 7. THE ASSESSEE CLAIMED THE SAID EXPENSES AS BUSINE SS EXPENSES AS ALLOWABLE AS PER THE PROVISIONS OF SECTION 36(II I) OF THE ACT. THE AR OF THE ASSESSEE SUBMITTED THAT THE ENTIRE LOAN F ROM THE BANK WAS OBTAINED FOR THE PURPOSE OF BUSINESS. 4 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) HELD THAT THOUGH THE ASSESSEE HAS SUBMITTED THAT OU T OF THE SALE CONSIDERATION REALIZED ON SALE OF THE SAID LAND, TH E PRINCIPAL REPAYMENT IS RS. 7,18,823/- AND THE BALANCE RS. 28, 11,177/- IS TOWARDS INTEREST AND DRT EXPENSES, IN ABSENCE OF AN Y SUPPORTING EVIDENCE FILED, SUCH CONTENTIONS OF THE ASSESSEE CA NNOT BE ACCEPTED AND HENCE THE SAME ARE NOT ACCEPTED AND AS DIRECTED ABOVE, THE AO HAS TO COMPUTE THE LONG TERM CAPITAL GAINS AFTER DE DUCTING THE INDEXED COST OF ACQUISITION OF LAND FROM THE TOTAL SALE CONSIDERATION OF RS. 35,30,000/-. 9. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 10. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI M.V. ANIL KUMAR SUBMITTED THAT OUT OF THE TOTAL CONSIDERATION OF RS. 35,30,000/- REALIZED ON SALE OF LAND THE PRINCIPAL REPAYMENT IS RS. 7,18,823/- AND BALANCE RS. 28,11,177/- IS TOWARD TH E INTEREST AND DRT EXPENSES, WHICH ARE BUSINESS EXPENSES ALLOWABLE AS PER PROVISIONS OF SECTION 36(III) OF THE IT ACT, 1961. HE FURTHER SUBMITTED THAT THE ENTIRE LOAN FROM THE BANK WAS OB TAINED FOR THE PURPOSE OF BUSINESS AND IN THE COURSE OF BUSINESS. 11. ON THE OTHER HAND, THE LEARNED DR RELIED UPON T HE ORDER OF THE CIT(A). 12. AFTER HEARING THE PARTIES AND PERUSING THE RECO RD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT T HE ASSESSEE COMPANY IS A DEFUNCT COMPANY AND IT IS AN ESTABLISH ED FACT THAT, BUT, FOR THE ACQUISITION OF CERTAIN ASSETS IN THE S HAPE OF LAND AND 5 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. BUILDING, THE ASSESSEE DID NOT CARRY ON ANY BUSINES S OPERATIONS [AS ADMITTED BY THE ASSESSEE IN THE STATEMENT OF FACTS BEFORE THE CIT(A) ]. THE ASSESSEE ITSELF HAS STATED THAT HE D ID NOT CARRY ANY BUSINESS OPERATIONS. THE LAND ACQUIRED BY THE ASSES SEE WAS SUBJECTED TO LOAN FROM BANKERS, WHICH THE ASSESSEE DEFAULTED, THE BANKER OF THE ASSESSEE AUCTIONED THE PROPERTY UNDER THE DIRECTION OF THE DRT AND RECEIVED A SUM OF RS. 35,30,000/-. THIS WAS DONE WITHOUT THE ASSESSEES KNOWLEDGE AS UNDER THE PROVI SIONS OF SECURITIZATION LAW, THE BANKER IS PERMITTED TO SELL THE SECURITY WITHOUT REFERENCE TO THE OWNER. THE ASSESSING OFFI CER ACCEPTED THE FACT THAT THESE ASSETS WERE LONG TERM ASSETS AND LE VIED CAPITAL GAINS ON THE WHOLE SUM OF RS. 35,30,000/- WITHOUT CONSIDE RING THE COST OR INDEXATION THEREOF. ON APPEAL, THE ASSESSEE CONTEND ED BEFORE THE CIT(A) THAT OUT OF THE SALE CONSIDERATION REALIZED ON SALE OF THE SAID LAND, THE PRINCIPAL REPAYMENT IS RS. 7,18,823/- AND THE BALANCE RS. 28,11,177 IS TOWARDS INTEREST AND DRT EXPENSES. TH E CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DIREC TED THE ASSESSING OFFICER TO COMPUTE LONG TERM CAPITAL GAIN AFTER DEDUCTING, THE INDEXED COST OF ACQUISITION OF LAND FROM THE TO TAL SALE CONSIDERATION OF RS. 35,30,000/-. SINCE THE REPAYME NT TOWARDS PRINCIPLE AND TOWARDS INTEREST AND DRT EXPENSES ARE NOT TO BE ALLOWED AS BUSINESS EXPENDITURE AND THE AMOUNT OF R S. 35,30,000/- IS TO BE TREATED ONLY AS CAPITAL GAIN, WE CONFIRM T HE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE LONG TERM CAPITAL GAIN AFTER DEDUCTING THE INDEXED COST OF LA ND FROM THE CONSIDERATION OF RS. 35,30,000/-. THIS GROUND IS RE JECTED. 6 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. 13. AS REGARDS THE CIT(A) CALLING FOR REMAND REPORT WITH RESPECT TO THE TWO ISSUES, NAMELY, I) WHETHER THE ASSESSEE LET OUT SHOPS DURING THE PERIOD RELEVANT TO AY 2005-06, AND II) WHAT WAS THE FAIR MARKET VALUE OF THE LAND, WHICH WAS TRANSFERRED AS ON 01/0 4/1981, AFTER RECEIPT OF THE REMAND, THE ASSESSEE FILED WRITTEN S UBMISSIONS WHEREIN IT WAS SUBMITTED THAT THE AO ARRIVED AT THE FAIR MARKET VALUE AS ON 01/04/1981 BASED ON THE BALANCE SHEET O N 31/03/1979. 14. IT WAS SUBMITTED BY THE LEARNED AR THAT THE SAL E DEED COPY DATED 07/02/1998 HAS A VALUE OF RS. 1,23,879/-, AS ON 13/11/1975 AND THE STAMPS AFFIXED IS RS. 18,500 AND STAMP DUTY PAID WAS RS. 8,921/- AND THE DEVELOPMENT COST IN THE SAID BALANC E SHEET SHOULD HAVE BEEN ADDED TO ARRIVE AT THE COST. IT WAS FURTH ER SUBMITTED THAT THE VALUE OF THE SAID LAND PER ACRE AS PER CERTIFIC ATE GIVEN BY GRAM PANCHAYAT IS RS. 2 LAKH. IT WAS CONTENDED THAT THE VALUE OF 4 ACRES OF LAND AS ON 01/04/1981 WOULD BE RS. 8 LAKHS, WHIC H SHOULD BE INDEXED ACCORDINGLY. 15. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND THE REMAND REPORT OBTAINED FROM THE AO, THE CIT(A) HELD THAT THE SALE DEED DATED 07/02/1998, WHICH WAS EXECUTED BY AP IND USTRIAL CORPORATION LTD. (APIAC) SHOWING THE TOTAL CONSIDER ATION AT RS. 1,23,879/-, HAS NO RELEVANCE SINCE THE SAME WAS EXE CUTED MUCH AFTER 01/04/1981. HE FURTHER HELD THAT EVEN THOUGH THE ASSESSEE HAD REFERRED TO THE SAID CERTIFICATE FROM THE GRAM PANCHAYAT, KOTHUR, THE SAME HAD ALSO NO RELEVANCE SINCE IN THE WRITTEN SUBMISSIONS FILED EARLIER, THE AMOUNT OF RS. 2 LAKH S PER ACRE IS CLAIMED AS PER OWN ESTIMATION. THE CIT(A) OBSERVED THAT THE AO IN HIS REMAND REPORT HAD SUGGESTED TO CONSIDER THE FAI R MARKET VALUE 7 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. PER ACRE OF THE LAND AS ON 01/04/1981 AT RS. 56,054 /-, BASED ON THE CERTIFIED COPIES OF THE BALANCE SHEET OF THE ASSESS EE COMPANY FOR THE YEAR ENDING 31/03/1979, AVAILABLE ON RECORD. FU RTHER, HE OBSERVED THAT THE ADDL. CIT, RANGE-16, IN HIS FORWA RDING REPORT, HAS FURTHER MENTIONED THAT THE RATES AVAILABLE IN THE B ALANCE SHEET FILED BY THE ASSESSEE BEFORE THE REGISTRAR OF COMPANIES M AY BE CONSIDERED AS THERE MAY NOT BE ANY SIGNIFICANT VARI ATION FROM 1976 TO 1981. 16. THE CIT(A) HELD THAT IT WOULD BE APPROPRIATE TO REFER TO THE SAID BALANCE SHEET OF THE ASSESSEE COMPANY, FOR THE YEAR ENDING 31/03/1979, AS AVAILABLE ON RECORD AND SINCE THE VA LUE OF THE LAND AS ON 31/03/1979 IS SHOWN AT RS. 56,054/- IT WOULD BE FAIR TO ESTIMATE THE VALUE OF THE SAID LAND AS ON 01/04/198 1 AT RS. 57,000/-. HE, THEREFORE, DIRECTED THE AO TO CONSIDE R THE SAID AMOUNT AS FAIR MARKET VALUE OF THE SAID LAND SOLD T HROUGH DRT DURING THE PREVIOUS YEAR AND TO COMPUTE THE INDEXED COST ACCORDINGLY AND TO COMPUTE THE LONG TERM CAPITAL GA INS AFTER DEDUCTING THE SAID AMOUNT OF INDEXED COST FROM THE SALE CONSIDERATION OF RS. 35,30,000/- REALIZED ON SALE O F THE LAND. 16. ON FURTHER APPEAL BEFORE US, THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE AO ARRIVED AT THE FAIR MARKET VALUE AS ON 01/04/1981 BASED ON THE BALANCE SHEET AS ON 31/0 3/1979 AND THE ASSESSEE HAS BEEN INSISTING UPON THE COPY OF TH E BALANCE SHEET BY THE DEPARTMENT AS ON 31/03/1979, AS HE DOES NOT HAVE THE COPY OF THE SAME, WHICH HAS NOT BEEN GIVEN BY THEM AS OF NOW. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OBTAINED CERTIFICATE FROM PANCHAYAT, KOTHUR, WHEREI N IT STATES THE VALUE OF RS. 2.00 LAKHS PER ACRE AND THE SAME MAY B E ADOPTED. 8 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. 17. THE LEARNED DR ON THE OTHER HAND RELIED UPON TH E ORDER OF THE CIT(A). 18. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD TAKE NECESSARY STEPS TO OBTAIN THE BALANCE SHEET AS ON 3 1/03/1979 FROM THE REGISTRAR OF COMPANIES AND PRODUCE THE SAME BEF ORE THE ASSESSING OFFICER WHO SHALL ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. 19. GROUND NO. 5 READS AS UNDER:- THE CIT(A) AND THE AO HAS ERRED IN TAXING RENTS FRO M 4 SHOPS. YOUR APPELLANT SUBMITS THAT ONLY 2 SHOPS WERE LET O UT THEREFORE ONLY RENT FROM 2 SHOPS SHOULD BE TAXED. 20. BEFORE THE CIT(A), THE ASSESSEE, ON PERUSAL OF THE REMAND REPORT FURNISHED BY THE ASSESSING OFFICER, SUBMITTE D THAT THE INSPECTOR HAD REPORTED IN PARA 1.1 THAT THERE WERE 2 SHOPS AND IN PARA 1.2 FOUR SHOPS ON THE ASSUMPTION THAT ELECTRIC ITY CONNECTION HAVE BEEN GIVEN. IT WAS STATED THAT THERE WAS NO FI NDING OF THE ASSESSING OFFICER OR THE INSPECTOR AS TO THE EXACT MONTH OF OCCUPATION. FURNISHING PHOTOCOPIES OF SOME AFFIDAVI TS STATED TO BE GIVEN BY THE TENANTS OF THE 4 SHOPS, THE ASSESSEE C ONTENDED THAT THERE WAS NO RENTAL INCOME RECEIVED DURING THE PREV IOUS YEAR RELEVANT TO AY 2005-06. FURTHER IT WAS STATED THAT THE INSPECTOR HAD REPORTED IN PARA 1.1 THAT THERE WERE 2 SHOPS. H OWEVER, IT MAY BE MENTIONED THAT IN PARA 1.1 OF HIS REMAND REPORT, WHILE REFERRING TO THE ITIS REPORT DATED 12/06/2008, HE ASSESSING OFFICER HAD REFERRED TO THE SHOP NO. 5 WHICH WAS UNDER OCCUPATI ON SINCE 2002 9 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. AND SHOP NO. 33 WHICH IS IN OCCUPATION SINCE LAST 6 YEARS. HE POINTED OUT THAT, HOWEVER, IN THE SAID PARA NOWHERE THE ASSESSING OFFICER HAD MENTIONED THAT THE INSPECTOR HAD REPORT ED THAT ONLY 2 SHOPS HAVE BEEN GIVEN ON RENT DURING THE PREVIOUS Y EAR AND IN RESPECT OF SHOP NO. 5, IN HIS REPORT THE ITI HAD ME NTIONED THAT THE SHOP IS OCCUPIED BY ONE SRI SITARAM, WHO IS RUNNING BUSINESS IN THE NAME AND STYLE OF SHAM GRAPHIC. THE SON OF SRI SITA RAM WHO WAS PRESENT IN THE BUSINESS PREMISES HAS CONTACTED SRI SITARAM OVER PHONE AND HE INFORMED THAT HE IS IN OCCUPATION OF T HE SAID SHOP SINCE 2002. IN RESPECT OF THE 2 SHOPS, NOS. 19 & 20 , THE INSPECTOR HAD REPORTED THAT THE SAME ARE OCCUPIED BY ONE SRI G. POCHAIH, AS INFORMED BY THE WORKER SRI CHANDU WORKING UNDER HIM . SHRI CHANDU FUTHER INFORMED THAT HIS OWNER MAY BE PAYING AROUND RS. 900 IN RESPECT OF WHICH HE IS NOT SURE. HOWEVER, AS REPORT ED BY THE INSPECTOR, SRI CHANDU HAS STATED THAT THE SHOPS ARE UNDER OCCUPATION SINCE THE YEAR 2002. IN RESPECT OF THE S HOP NO. 33, THE INPECTOR HAS REPORTED THAT THERE IS ONE TENT HOUSE IN THIS SHOP IN THE NAME AND STYLE OF SRI MATA SUPPLYING CO. SRI KU MAR IS THE OWNER OF THE SHOP AND HAS STATED THAT HE IS PAYING RS. 1400/- PER MONTH AND IS IN OCCUPATION OF THE SHOP SINCE 6 YEAR S. 21. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THAT HAVING REGARD TO THE REPORT FURNISHED BY THE INSPECTOR, AFTER MAKING ENQUIRIES FROM THE CONCERNED SHOP PREM ISES, HELD THAT THE RENTAL AMOUNT FOR THE PREVIOUS YEAR 2004-05 FRO M THE SAID 4 SHOPS HAD TO BE CONSIDERED FOR TAXING THE INCOME IN THE HANDS OF THE ASSESSEE FOR AY 2005-06. HE FURTHER HELD THAT I N PARA 1.2 OF HIS REMAND REPORT, THE AO HAD MENTIONED THE AMOUNT AT R S. 900 PER MONTH AGAINST EACH SHOP. HOWEVER, IN PARA 1.1 AND A LSO EVIDENT 10 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. FROM THE ENQUIRY REPORT OF THE INSPECTOR, THE OWNER OF THE SHOP NO. 33 WAS PAYING RENT OF RS. 1400/- PER MONTH. THUS, R ENT OF RS. 900 EACH PER MONTH AGAINST SHOP NO. 5 AND SHOP NO. 19 A ND 20 COMBINEDLY, AND RS. 1400 AGAINST SHOP NO. 33 HAD TO BE TAKEN INTO ACCOUNT FOR COMPUTING THE INCOME. SINCE THE ASSESSE E HAD RECEIVED THESE AMOUNTS TOWARDS RENT FROM SHOPS, IN THE ABSEN CE OF ANY REASONS STATED BY THE AO IN THE ASSESSMENT ORDER, T HE ANNUAL RENTAL RECEIPTS FROM THE ABOVE 4 SHOPS HAD TO BE CONSIDERE D FOR TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THUS, THE CIT(A) HELD THAT TAKING INTO ACCOUNT THE ANNUAL RENTAL AMOUNT F ROM THE ABOVE 4 SHOPS AT RS. 38,400 (RS. 3200 X 12), AND AFTER ALLO WING STATUTORY DEDUCTIONS ON THAT ACCOUNT, THE AO HAS TO COMPUTE T HE TAXABLE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY ACCORDINGLY. 22. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 23. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE YEAR 2004-05 THERE WERE NO SHOPS GIVEN O N RENT, TO THIS EFFECT ENCLOSED AFFIDAVITS FROM THE TENANTS IN SUPP ORT OF ITS CLAIM. FURTHER, IT IS SUBMITTED THAT ONLY 43 SHOPS ARE UND ER CONSTRUCTION, OUT OF WHICH 3 SHOPS HAVE BEEN USED FOR STAIRCASE. OUT OF THE BALANCE 40 SHOPS ONLY 4 SHOPS HAVE BEEN COMPLETED F OR OCCUPATION AS ON 31/03/2005 AND LET OUT IN THE NEXT FINANCIAL YEAR. HE FURTHER SUBMITTED THAT AS ON DATE ONLY 12 OR 13 SHOPS ARE L ET OUT AND THE BALANCE ARE YET TO BE FINISHED OR NO PERSONS IS REA DY TO TAKE THEM ON LEASE OR RENT. HE CONTENDED THAT THE ASSESSING O FFICER IS WRONG IN ESTIMATING RENT FROM 80 SHOPS WHEN THOSE NUMBERS OF SHOPS ARE NOT IN EXISTENCE. 11 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. 24. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UP ON THE ORDER OF THE CIT(A). 25. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. IT IS OBSERVED THAT THE CIT(A) HAS RIGH TLY CONCLUDED FROM THE ENQUIRY REPORT OF THE INSPECTOR THAT THE ANNUAL RENTAL RECEIPTS FROM THE ABOVE 4 SHOPS HAD TO BE CONSIDERED FOR TAX ATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HENCE, WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) IN HOLDING THAT THE AN NUAL RENTAL AMOUNT FROM THE ABOVE 4 SHOPS HAS TO BE TAKEN AT RS . 38,400 (RS. 3200 X 12), AND AFTER ALLOWING STATUTORY DEDUCTIONS ON THAT ACCOUNT, THE AO HAS TO COMPUTE THE TAXABLE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY ACCORDINGLY. WE CONFIRM THE OR DER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE ASS ESSEE. 26. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2013. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 24 TH JANUARY, 2013. KV 12 ITA NO. 1731/HYD/2008 NEW VIJAYA LAKSHMI OIL EXTRANCTIONS AND REFINERY P. LTD. COPY TO:- 1) NEW VIJAYALAKSHMI OIL EXTRACTIONS AND REFINERY PVT. LTD., C/O M. ANANDAM & CO., CHARTERED ACCOUNTANTS, 7 A, SURYA TOWERS, SP ROAD, SECUNDERABAD. 2) ITO, WARD 16(2), HYDERABAD 3) THE CIT(A)-V, HYDERABAD 4) CIT-IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYD ERABAD.