DCIT/CIR-5/KOL, Kolkata V. M/s Bagaria More Co. Ltd., Kolkata

ITA 1738/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4984 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency
• Section: 143(3); 142(1)

Judgement Text

I.T.A. NO. 1738/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1738/KOL/ 2013 ASSESSMENT YEAR : 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX,................. ....... APPELLANT CIRCLE-5, KOLKATA, -VS.- M/S. BAGARIA MORE CO. LTD., KOLKATA .......................... RESPON DENT [PAN : AABCB 4387R] APPEARANCES BY: FOR THE DEPARTMENT : SHRI RAJAT KUMAR KUREEL, JCIT , SR.DR FOR THE ASSESSEE : SHRI P. R. KOTHARI, FCA DATE OF CONCLUDING THE HEARING : 2 ND MARCH, 2016 DATE OF PRONOUNCING THE ORDER : 29 TH APRIL, 2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI THIS APPEAL BY THE REVENUE FILED AGAINST THE ORDER DATED 26- 10-2012 IN APPEAL NO.289/CIT(A)-VI/CIR-5/11-12/KOL PASSED BY THE CIT(A)-VI, KOLKATA FOR ASSESSMENT YEAR 2009-10. 2. THE APPELLANT REVENUE FILED THIS APPEAL WITH A D ELAY OF 136 DAYS AND THE REASONS STATED IN THE AFFIDAVIT ARE TH AT THE AO WAS BUSY WITH TIME BARRED CASES ETC. THE DR SUBMITTED THAT T HE AO GOT I.T.A. NO. 1738/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 6 ENGAGED IN PREPARATION OF PAPERS IN THIS APPEAL, AS WELL AS, OTHER TIME-BARRED APPEALS AND PRAYED TO CONDONE THE DELAY IN THE INTEREST OF JUSTICE. THE A.R. POINTED OUT THAT THE AO COULD ONLY EXPLAIN THE DELAY FROM THE DATE ON WHICH THE LIMITATION FOR FIL ING APPEAL EXPIRED BUT THE AO DID NOT EXPLAIN THE REASONS FOR THE PERI OD BETWEEN 26.10.12 AND 17.01.2013. BUT FOR THE REASONS STATED IN THE AFFIDAVIT, WE ARE OF THE OPINION IN THE INTEREST OF JUSTICE, T HAT THE REASONS SUBMITTED ARE REASONABLE, THEREFORE THE DELAY OF 13 6 DAYS CONDONED AND APPEAL OF THE REVENUE IS ADMITTED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND DEALING IN VARIOUS BUSINESSES I.E. TRADING IN J UTE, SAREES AND FINANCING. THE RETURN OF INCOME FILED ON 24.09.2009 DECLARING RS.80,13,330/- AS ITS TOTAL INCOME AND IT WAS PROCE SSED UNDER SECTION 143(1) OF THE ACT. UNDER SCRUTINY, NOTICES UNDER SECTION 143(2), 115WE(2) AND 142(1) OF THE ACT WERE ISSUED. THE CASE OF THE ASSESSEE WAS REPRESENTED BY THE A.R. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO F OUND THAT THE ASSESSEE HAS DEBITED EXPENSES OF RS.46,62,285/- FROM THE RENTAL INCOME. THE SAID EXPENSES RELATING TO SERVICE AND M AINTENANCE CHARGES, STAFF WELFARE AND ELECTRIC CHARGES. THE AO WAS OF THE VIEW THAT AS PER THE PROVISIONS OF THE INCOME TAX THE AS SESSEE IS ENTITLED TO GET RELIEF OF ONLY 30% OF THE RENTAL INCOME U/S 24(A) AND TAXES PAID FOR THE PROPERTY. THE AO COMPUTED THE HOUSE PR OPERTY INCOME AS BELOW: TOTAL RENT RECEIVED RS. 1,64,20,722/- LESS: MUNICIPAL TAX PAID RS. 7,61,865/- I.T.A. NO. 1738/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 6 RS. L,56,58,857/- LESS: INTEREST ON LOAN U/S.24(B) RS. 22,8 43/- DEDUCTION U/S.24(A)@30% RS. 46,91,657 /- INCOME FROM HOUSE PROP RS. 1,09,38,357/- 5. ACCORDINGLY, THE EXPENSES OF RS.46,62,285/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE 6. THE CIT-A, IN FIRST APPEAL, OBSERVED THAT THE OP INION OF THE AO THAT ASSESSEE COULD NOT PROVE THAT INCOME RECEIV ED BY THE ASSESSEE INCLUDED SERVICE CHARGES IS CONTRARY TO FA CTS ON RECORD AND THAT THE ASSESSEE COULD PRODUCE BEFORE HIM AGREEMEN T WITH ONLY ONE TENANT, IS ALSO CONTRARY TO THE FACTS ON RECORD AS THE SAID ISSUE WAS DISCUSSED IN DETAIL IN THE ASSESSMENT YEAR 2007-08 IN ASSESSEES OWN CASE IN APPEAL NO. APPEAL NO. 1544/CIT(A)-VI/KO IICIRCLE- 5/09-101 DATED 19/10/2012 TAKING INTO CONSIDERATION THE FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEA RS. THE CIT-A FOLLOWING THE SAME DELETED THE ADDITION OF RS.46,62 ,285/- AS MADE BY THE AO. 7. BEFORE US, THE LD. DR RELIED ON THE ORDERS OF AO AND LD. AR SUBMITTED THAT THIS TRIBUNAL CONSIDERED THE ISSUE O N HAND FOR EARLIER YEARS AND TAKING INTO CONSIDERATION OF THE SAME THE CLAIM OF EXPENSES ON RENTAL INCOME WERE ALLOWED FOR ASSESSME NT YEARS 2002- 03, 2004-05 TO TO 2006-07 BY THE AO AND RELIED ON CIT-AS ORDER. I.T.A. NO. 1738/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 6 8. WE FIND THAT THE ASSESSEE COMPANY EARNED INCOME FROM RENT AND SERVICE CHARGES RECEIVED FROM TENANTS IN RESPEC T OF BUILDING CONSTRUCTED BY IT ON LEASEHOLD LAND LIKE EARLIER YE ARS. THE SAID EXPENSES WERE INCURRED FOR PROVIDING SERVICES AND A MENITIES TO TENANTS. AS PER PRACTICE ADOPTED BY THE ASSESSEE IN EARLIER YEARS THE CLAIMED EXPENSES WERE REDUCED FROM THE GROSS RENT R ECEIVED WHICH INCLUDES SERVICE CHARGES. THIS TRIBUNAL ALLOWED THE SAID EXPENSES WHICH WAS FOLLOWED BY THE CIT(A) AND THE AO ACCEPT ED SUCH CLAIMS MADE BY THE ASSESSEE IN EARLIER YEARS. THE O BSERVATION OF WHICH IS REPRODUCED HEREIN BELOW 9. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMI SSIONS OF THE ASSESSEE. AS PER THE ORDERS OF THE HON'BLE ITAT IN THE CASE OF THE APPELLANT ITSELF THE SAID EXPENSES HAVE BEEN ALLOWED IN THE EARLIER YEARS. THE ASSESSING OFFICER HAS ITSELF ALSO ALLOWED THE SAID EXPENDITURE FROM A. Y 2004-05 TO 2006-07 U /S 143(1) AND IN 2002-03 IN ORDER U/S 143(3) THE ASSESSING OF FICER HAS NOT BROUGHT ANY DIFFERENT FACTS ON RECORD TO DISALL OW THE EXPENDITURE AS COMPARED TO THE ASSESSMENT YEAR 2002 -03 AND 2004-05 TO 2006-07. THE ASSESSING OFFICER HAS NOT A NALYSED WHETHER ANY EXPENDITURE BEING CLAIMED PERTAINS TO T HE MAINTENANCE OR NOT AND DID NOR MENTION ANY LEGAL DI FFERENT LEGAL ISSUE OR DISTINGUISHED IT FROM EARLIER YEARS. THE ASSESSING OFFICER HAS NOT CONSIDERED WHETHER THE RE NT AGREEMENT IS CONSOLIDATED OR SEPARATE FOR RENT AND SERVICES. HE HAS NOT MENTIONED WHAT IS THE PORTION/SHARE OF R ENT AND SERVICE CHARGES IN THE GROSS RECEIPTS OF THE APPELL ANT TO MAKE ANY DISTINCTION FROM EARLIER YEARS. 10. THEREFORE. FOLLOWING THE RULE OF CONSISTENCY AN D THE JUDGMENT OF THE HON'BLE ITAT AND LD. CIT(A) IN THE CASE OF THE APPELLANT ITSELF IN THE EARLIER YEARS THE EXPEN SES OF RS.16,18,508/- IS ALLOWED TO BE DEDUCTED FROM THE R ECEIPTS OF GROSS RENT AND SERVICE CHARGES. THE DEDUCTION U/S.2 3 @ 30% IS TO BE ALLOWED AFTER DEDUCTING THE SAID EXPENDITURE ALONG WITH I.T.A. NO. 1738/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 6 INTEREST ON LOAN DISALLOWED BY THE APPELLANT ITSELF . THIS GROUND OF APPEAL IS ALLOWED. 9. THE AO EVEN WITHOUT FINDING ANY CHANGE IN THE FA CTS AND CIRCUMSTANCES PREVAILING IN THE EARLIER YEARS REFUS ED TO FOLLOW FINDING OF THE TRIBUNAL, FOLLOWED BY CIT(A) AND THE APPELLANT REVENUE IN EARLIER YEARS, EVEN IN SCRUTINY ASSESSME NTS. SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ISSUE I NVOLVED IN THE EARLIER YEARS ARE SAME, THUS, WE ARE OF THE VIEW FO R COMPUTING ANNUAL VALUE OF RENT U/S 23 OF THE ACT THAT EXPENSE S RELATING TO PROVISION OF AMENITIES TO TENANTS ARE ALLOWED TO BE REDUCED FROM COMPOSITE RENT & SERVICE CHARGES. THEREFORE, SOLE G ROUND RAISED BY THE APPELLANT REVENUE IN THIS APPEAL IS DISMISSED A ND THE ADDITION MADE BY THE ASSESSING OFFICER STANDS DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016. SD/- SD/- (P.M. JAGTAP) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 29 TH APRIL, 2016 COPIES TO :(1) DEPUTY/ASSISTANT COMMISSIONER OF INCOMETAX,CIRCLE-5, KOLKATA,AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. BAGARIA MORE CO. LTD., 23A, NETAJI SUBHASH ROAD, KOLKATA-700 001 I.T.A. NO. 1738/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 6 (3) COMMISSIONER OF INCOME-TAX (APPEALS)- VIII,KOL. (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA TALUKDAR, SR.PS(OS)