Vidya Education Investments Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1778/DEL/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5775 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Charitable institution; Additional evidence; Set aside
• Section: 143(3); 133(6); 264; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 1778/DEL/2016 : ASSTT. YEAR : 2011-12 VIDYA EDUCATION INVESTMENTS PVT. LTD., 5C, OLD FRIENDS COLONY (WEST), MAIN MATHURA ROAD, NEW DELHI-110065 VS DCIT, CIRCLE-17(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCV9413E ASSESSEE BY : SH. P. C. YADAV, ADV. REVENUE BY : SH. BHOPAL SINGH, SR. DR DATE OF HEAR ING: 08 . 0 3 .20 2 1 DATE OF PRONOUNCEMENT: 26 .04 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-9, NEW DELHI DATED 18.0 2.2016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS RIGHT IN NOT DELETING T HE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF TH E INCOME TAX ACT, OF RS.50,00,000/- IN RESPECT OF THE ADVANCE RECEIVED BY CROSSED ACCOUNT PAYEE CHEQUE FROM M/S KAKADE STONE CRUSHERS, FOR WHICH CONFIRMATION AND PAN PARTICULARS AND BANK DETAILS WERE FURNISHED. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS JUSTIFIED IN DISALLOWING THE ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 2 FEE OF RS. 13,51,175/- PAID TO AN ARCHITECT FOR MAINTENANCE OF SCHOOL BUILDING DURING THE YEAR. 3. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT DELETING THE ADDITI ONS OF RS. 1,00,00,000/- MADE BY THE A.O. IN RESPECT OF INTEREST PAID ON SECURED LOAN, UTILIZED FOR CONSTRUCTION OF SCHOOL BUILDING, IN RESPECT OF WHIC H FULL RENTAL INCOME OF RS.2,75,00,000/- IS INCLUDED IN THE COMPUTATION OF TAXABLE INCOME OF THE ASSESSEE. 4. THE CIT(A) GROSSLY ERRED IN COMPUTING THE ALV OF THE SCHOOL BUILDING AT RS. 3,47,77,778/- BY APPLYIN G THE RATE OF 8% ON TOTAL COST OF LAND AND BUILDING. THUS ENHANCING THE ALV OF THE SCHOOL BUILDING, LET OUT BY LEASE AGREEMENT FOR CONSIDERATION OF RS. 2.7 5 CRORE PER ANNUM, AND THEREBY ENHANCING THE TAXABLE INCOME BY RS. 72,77,778/-. 3. GROUND NO. 1 RELATES TO ADDITION OF RS.50,00,000 /- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE AO HAS OBSE RVED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAD SHOWN TO RECEIVE A LOAN OF RS.50,00,000/- AS AN ADVANCE FOR SALE OF LAND AT THE VILLAGE SHILATNE, MARAL, LO NAWALA, FROM M/S KAKADE STONE CRUSHERS. THE ASSESSEE HAS SUBMITT ED A CONFIRMATION IN THIS REGARD. NOTICE U/S 133(6) WAS ISSUED BY THE AO ON 25.11.2013, FOR WHICH THE RECIPIENT FAILED TO COMPLY. THE AO TREATED THE AMOUNT AS UNEXPLAINED CASH CREDIT U/ S 68. THE LD. CIT (A) UPHELD THE ACTION OF THE AO ON THE GROU NDS THAT THE ASSESSEE FAILED TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE DEPOSITOR. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE US. 5. DURING THE HEARING, THE LD. AR SUBMITTED THAT AN AMOUNT OF RS.50,00,000/- RECEIVED AS ADVANCE FROM M/S KAKADE STONE CRUSHER. ARGUED THAT THE ASSESSEE HAS PLACED ON REC ORD ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 3 COMPLETE ADDRESS AND PAN OF M/S KAKADE STONE CRUSHE R. THE RS.50,00,000/- WAS RECEIVED BY ACCOUNT PAYEE CHEQUE FROM THE SAID PARTY ON 27.01.2011 AND REFUNDED THE SAID AMOU NT ON 23.07.2011 BY CROSSED ACCOUNT PAYEE CHEQUE. ALL BAN K ENTRIES ARE APPEARING IN THE ASSESSEES BANK ACCOUNT AND IN BOOKS OF ACCOUNTS. IT WAS ARGUED THAT THE ASSESSEE HAS DISCH ARGED ITS RESPONSIBILITY TO DISCLOSE, ALL THE PARTICULARS OF THE PARTY WHICH IS DULY IDENTIFIABLE BY THE PAN CARD. 6. THE LD. AR ARGUED THAT THE ASSESSEE CANNOT BE HE LD RESPONSIBLE, IF M/S KAKADE STONE CRUSHER DOES NOT C OMPLY TO THE NOTICE U/S 133(6) ISSUED BY THE DEPARTMENT. IF, M/S KAKADE STONE CRUSHER IS RESPONSIBLE FOR ANY MISDEMEANOR OR NON- COMPLIANCE, THEN M/S KAKADE STONE CRUSHER SHOULD BE TREATED AS IN DEFAULT BUT NOT THE ASSESSEE. 7. IT WAS ARGUED THAT THE AMOUNT WAS RECEIVED BY AC COUNT PAYEE CHEQUE AND ALSO RETURNED BACK ON 23.07.2011 B Y CROSS ACCOUNT PAYEE CHEQUE. THE ASSESSEE HAS DISCLOSED AL L THE PARTICULARS AND PAN SO IDENTITY WAS PROVED. 8. ON THE OTHER HAND, THE LD. DR ARGUED THAT THE AS SESSEE ABSOLUTELY FAILED TO PROVE THE IDENTITY, GENUINENES S AND CREDITWORTHINESS AND THE ONUS IS MUCH MORE ON THE A SSESSEE ESPECIALLY WHEN THERE WAS NO COMPLIANCE TO THE NOTI CES ISSUED U/S 133(6) TO THE LOAN PARTY. THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT (A) WHICH PLACED RELIANCE ON THE JUDGME NT OF HONBLE DELHI HIGH COURT IN THE CASE OF GLOBUS SECURITIES A ND FINANCE PVT. LTD. REPORTED IN 264 CTR 481 WHILE CONFIRMING THE ADDITION. THE RELEVANT FINDINGS ARE AS UNDER: ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 4 SECTION 68 OF THE INCOME-TAX ACT, 1961- CASH CREDI T [BURDEN OF PROOF/SHARE CAPITAL]- ASSESSMENT YEAR 2006-07 WHETH ER MERELY RELIANCE ON NEUTRAL DOCUMENTARY EVIDENCE CANNOT ALW AYS BE REGARDED AS SATISFACTORY DISCHARGE OF ONUS- HELD, Y ES- WHETHER GENUINENESS OF TRANSACTION IN ALL CASES IS NOT ESTA BLISHED BY ONLY SHOWING THAT TRANSACTION WAS THROUGH BANKING C HANNELS OR ACCOUNT PAYEE INSTRUMENTS; SURROUNDING AND CORROBOR ATIVE FACTUAL DETAILS ARE EQUALLY IMPORTANT- HELD, YES- I N RESPECT OF ISSUING SHARES, TRIBUNAL HAD NOTICES BUT NOT GIVEN DUE CREDENCE TO SURROUNDING CIRCUMSTANCES WHICH INCLUDED A HUGE PREMIUM EQUIVALENT TO FOUR TIMES OF FACE VALUE OF SHARES, C REDIT ENTRIES IN BANK ACCOUNTS BEFORE TRANSFER OF MONEY TO ASSESS EE, FAILURE OF COMPANIES TO FILE DETAILS OF INVENTORIES/SCHEDUL E OF INVESTMENTS AND FACT THAT ASSESSEE-COMPANY HAD NOT CHARGED ANY PREMIUM EARLIER- IT WAS NOT KNOWN WHY AND FOR W HAT REASONS ASSESSEE WAS NOT ABLE TO PRODUCE PRINCIPAL OFFICER OR DIRECTOR OF SHAREHOLDER COMPANIES- WHETHER ALL THES E ASPECTS WERE REQUIRED TO BE GONE INTO THE TRIBUNAL IN DETAI L- HELD, YES [PARA 11 TO17] [MATTER REMANDED] IT; CREDITWORTHINE SS OF SHAREHOLDERS AND GENUINENESS OF TRANSACTION IN ALL CASES IS NOT ESTABLISHED BY ONLY SHOWING THAT TRANSACTION IS THR OUGH BANKING CHANNELS OR ACCOUNT PAYEE INSTRUMENT; SURROUNDING A ND CORROBORATIVE FACTUAL DETAILS ARE EQUALLY IMPORTANT . 9. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 10. WE FIND THAT THE ADVANCE OF RS.50,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE ON 27.01.2011 AND REPAID O N 23.07.2011. THE RETURN FOR THE RELEVANT ASSESSMENT YEAR WAS ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 5 FILED ON 28.09.2011 AND THE NOTICE U/S 143(3) WAS I SSUED ON 10.09.2012 WHICH PRIMARILY SHOWS THAT THE TRANSACTI ONS HAVE BEEN COMPLETED BEFORE FILING OF THE RETURN. THE ASS ESSEE FROM THEIR SIDE REPRODUCED THE RELEVANT DETAILS AND DOCU MENTS TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINES S OF THE LOAN PARTY AND THE TRANSACTIONS. SINCE, THE AMOUNT HAS A LREADY BEEN PAID, THE ASSESSEE COULD NO MORE EXERT ANY INFLUENC E ON THE LOAN PARTY. AT THE SAME TIME, THE ASSESSEE CAN BE S AID TO HAVE DISCHARGED HIS PRIMARY ONUS WITH REGARD TO THE ADVA NCE. THERE WAS NO INFORMATION WITH THE AO BEFORE OR DURING THE ASSESSMENT PROCEEDINGS TO POINT OUT ANY SUSPICION WITH REGARD TO THE DEPOSIT AND ITS SOURCES EITHER IN THE FORM OF CASH DEPOSITS OR ANY OTHER ENQUIRIES CONDUCTED. THE ADDITION HAS BEE N MADE MERELY ON THE GROUNDS THAT THERE WAS NO COMPLIANCE FROM M/S KAKADE STONE CRUSHER TO THE NOTICE ISSUED U/S 133(6 ). WE HAVE ALSO GONE THROUGH THE JUDGMENT RELIED UPON BY THE L D. CIT (A) WHILE CONFIRMING THE ADDITION. WE FIND THAT THE JUD GMENT HAS BEEN DELIVERED WHILE DEALING WITH THE QUESTION OF G ENUINENESS OF THE HUGE PREMIUM PAID ON THE SHARES. THE ADDITIO N WAS CONFIRMED OWING TO PRESENCE OF ABUNDANT CORROBORATI VE EVIDENCES WHICH IS NOT SHOW IN THE INSTANT CASE. 11. HAVING GONE THROUGH THE ENTIRE FACTUM OF THE CA SE, WE HEREBY HOLD THAT THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED AS THE ASSESSEE HAS DISCHARGED THE PRIMAR Y ONUS CASTED UPON THEM AND THE REVENUE HAS NOT BROUGHT ON RECORD TO TREAT THE AMOUNTS U/S 68. ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 6 12. APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWE D. 13. GROUND NO. 2 DEALS WITH THE DISALLOWANCE OF RS. 13,51,175/- ON ACCOUNT OF ARCHITECT FEES. THE AO OBSERVED THAT DURING THE YEAR THE ASSESSEE COMPANY PAID A SUM OF RS.13,51,17 5/- AS ARCHITECT FEES TO M/S FOURTH DIMENSION ARCHITECTS P VT. LTD. AND THE AMOUNT NEEDS TO BE CAPITALIZED. THE LD. CIT (A) CONFIRMED THE ADDITION ON THE SAME LOANS. 14. BEFORE US, IT WAS SUBMITTED THAT THE ARCHITECT FEE HAS BEEN PAID OWING TO RENDERING OF SERVICES REGULARLY ON MO NTHLY BASIS FOR PROJECT MANAGEMENT CONSULTATION TO THE MANAGEME NT OF THE COMPANY. THE ARCHITECTS ARE ENGAGED TO MANAGE THE P ROPERTY OF THE ASSESSEE AND ARE PAID FOR MONTHLY CHARGES AS PR OFESSIONAL FEE. SINCE, THIS IS REVENUE EXPENSE AND HENCE CHARG ED TO PROFIT AND LOSS ACCOUNT. 15. THE LD. DR ARGUED THAT THE ASSESSEE IS RECEIVIN G ONLY RENTAL INCOME AGAINST WHICH IT IS CLAIMING STANDARD DEDUCTION AND INTEREST ON BORROWINGS. FURTHER, THIS EXPENDITU RE IS NOT ADMINISTRATIVE EXPENSES AS CLAIMED BUY IT IN THE PR OFIT AND LOSS ACCOUNT, RATHER IT IS AN ARCHITECT FEES PAID FOR TH E PROJECT OF SCHOOL BUILDING FOR WHICH IT HAS ALREADY CLAIMED AN D ALLOWED STATUTORY DEDUCTION. 16. ON GOING THROUGH THE FACTS ON RECORD, WE FIND T HAT THE ASSESSEE IS RECEIVING RENTAL INCOME AGAINST WHICH I NTEREST AND OTHERS STATUTORY DEDUCTION ARE CLAIMED AND HENCE NO OTHER DEDUCTION ON ACCOUNT OF MAINTENANCE CHARGE OR ANY O THER NOMENCLATURE IS NOT AN ALLOWABLE DEDUCTION. APPEAL OF THE ASSESSEE ON THIS GROUND IS DISMISSED. ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 7 17. GROUND NOS. 3 & 4 RELATES TO DISALLOWANCE OF IN TEREST PAID ON LOAN RAISED FOR CONSTRUCTION OF THE SCHOOL BUILD ING AND COMPUTATION OF ALV @ 8% OF THE TOTAL OF THE LAND AN D BUILDING. 18. AT THE OUTSET, BOTH THE PARTIES AGREED THAT THE MATTER STANDS COVERED BY THE ORDER DATED 22.06.2018 OF THE TRIBUNAL IN ITA NO. 6177/DEL/2014 FOR THE ASSESSMENT YEAR 2010- 11 IN THE ASSESSEES OWN CASE. FOR THE SAKE OF BREVITY AND RE ADY REFERENCE, THE RELEVANT PART OF THE SAID ORDER ARE REPRODUCED HEREUNDER: PARA 17 ON THE ISSUE OF INTEREST 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND D O NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. THE INTE REST PAID ON BORROWED FUNDS USED FOR THE ACQUISITION AND CONSTRU CTION OF THE PROPERTY IS AN ALLOWABLE DEDUCTION UNDER SECTION 24 (B) OF THE I.T. ACT. THE AUTHORITIES BELOW HAVE DISALLOWED 50% OF THE INTEREST BECAUSE NO BIFURCATION OF THE FUNDS USED F OR LAND AND BUILDING AND OTHER ASSETS HAVE BEEN- PROVIDED BY TH E ASSESSEE. THE ASSESSEE HAS, HOWEVER, GIVEN COMPLETE DETAILS B EFORE THE LD. CIT(A) TO SHOW HOW MUCH OWN FUNDS ARE AVAILABLE TO ASSESSEE AND HOW MUCH AMOUNTS HAVE BEEN BORROWED FR OM THE BANK AND OTHER INSTITUTIONS. THE ASSESSEE CLAIMED T HAT THE BORROWINGS AS ON 31.03.2010 WERE ONLY RS.25,13,58,9 04/-, ON WHICH, ABOVE INTEREST HAVE BEEN PAID. THE ASSESSEE HAS INVESTED A SUM OF RS.43,46,57,917/- IN THE SCHOOL L AND, AND BUILDING. THIS ITSELF PROVES THAT ASSESSEE UTILIZED THE ENTIRE BORROWED FUNDS FOR CONSTRUCTION OF SCHOOL BUILDING. LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PAGE-10 O F THE SYNOPSIS TO SHOW BIFURCATION OF THE LAND AND BUILDI NG OF THE ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 8 DEMISE PROPERTY AND OTHER ASSETS AND SUBMITTED THAT THE OTHER NET ADDITION ON OTHER ASSETS IN ASSESSMENT YEAR UND ER APPEAL IS ONLY RS.60,35,902/ WHICH IS NOT DISPUTED BY THE LD. CIT(A), BECAUSE, SUCH SCHEDULE-5 OF THE FIXED ASSETS WAS AL SO FILED BEFORE AUTHORITIES BELOW. HE HAS, THEREFORE, RIGHTL Y CONTENDED THAT THE ENTIRE BORROWED FUNDS HAVE BEEN USED FOR T HE PURPOSE OF ACQUISITION AND CONSTRUCTION OF THE SCHOOL BUILD ING. SIMILAR DEDUCTION OF INTEREST CLAIMED IN EARLIER YEAR NOT D ISPUTED BY AUTHORITIES BELOW. THEREFORE, INTEREST IS ALLOWABLE . WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE ADDITION. THIS GROUND OF APPEAL OF ASSES SEE IS ALLOWED. PARA 10 ON THE ISSUE OF ALV 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. THE OPERATIVE WORDS IN SECTION 23(1)(A) ARE THE SUM, FOR WHICH, THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. THESE WORDS PROVIDE A SP ECIFIC DIRECTION TO THE REVENUE FOR DETERMINING THE FAIR R ENT. THE A.O. HAVING REGARD TO THE AFORESAID PROVISIONS IS EXPECT ED TO MAKE AN ENQUIRY AS TO WHAT WOULD BE THE REASONABLE RENT THAT THE PROPERTY UNDER REFERENCE MIGHT FETCH. IF THE A.O. F INDS THAT ACTUAL RENT RECEIVED IS LESS THAN THE FAIR RENT/MAR KET RENT BECAUSE OF CERTAIN REASONS, THE A.O. CAN TAKE NECES SARY EXERCISE IN THAT BEHALF. HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. MONI KUMAR SUBBA (SUPRA), IN PARA-20 HAS GI VEN ITS CONCLUSION, REPRODUCED ABOVE, IN WHICH, IT WAS OBSE RVED THAT WILLINGNESS OF THE LESSOR AND LESSEE SHALL HAVE TO BE CONSIDERED AND EXTRANEOUS CONSIDERATIONS SHOULD, BE AVOIDED. S UCH ANNUAL ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 9 LETTING VALUE, HOWEVER, CANNOT EXCEED THE STANDARD RENT AS PER RENT CONTROL LEGISLATION APPLICABLE TO THE PROPERTY . IF THE STANDARD RENT HAS NOT BEEN FEED BY THE RENT CONTROL LER, THEN, IT IS THE DUTY OF THE A.O. TO DETERMINE THE STANDARD R ENT AS PER PROVISIONS OF RENT CONTROL ENACTMENT. THE STANDARD RENT IS UPPER LIMIT, IF THE FAIR RENT IS LESS THAN THE STAN DARD RENT, THEN, IT IS THE FAIR RENT WHICH SHALL BE TAKEN AS ANNUAL LETTING VALUE AND NOT THE STANDARD RENT. IN THE PRESENT CASE, THE ASSESSEE EXPLAINED ALL THE FACTS, BEFORE A.O. WITH REGARD TO RENT RECEIVED AND THAT THE PROPERTY WAS LET OUT EARLIER AND IN TH E CASE OF LESSEE CVT, IT IS PLEADED BEFORE ITAT, MUMBAI BENCH THAT THE RENT HAS BEEN GRADUALLY INCREASED FROM TIME TO TIME . THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE DEPARTMENT. TH EREFORE, THE A.O. ACCEPTED THE CLAIM OF ASSESSEE OF RECEIVIN G FAIR AND REASONABLE RENT OF RS.1.80 CRORES IN ASSESSMENT YEA R UNDER APPEAL. THE LD. CIT(A) WAS HOWEVER, INFLUENCED BY T HE FACT THAT THE ASSESSEE COMPANY AND THE LESSEE IS CONTROLLED B Y SHRI VINEET NAYYAR AND HIS FAMILY MEMBERS AND INVESTMENT IN BUILDING. THEREFORE, HE HAS CONSIDERED THAT ASSESSE E HAS RECEIVED A LOW RENT. HOWEVER, IT IS AN EXTRANEOUS C ONSIDERATION, WHICH HAS NO BEARING ON THE ISSUE OF DETERMINATION OF ANNUAL LETTING VALUE OF THE PROPERTY. THE LD. CIT(A) DID N OT UNDERTAKE ANY NECESSARY EXERCISE TO COMPUTE ANNUAL LETTING VA LUE OF THE ASSESSEE AS PER ABOVE GUIDELINES. NO COMPARABLE CAS E HAVE BEEN BROUGHT BY HIM ON RECORD. LD. CIT(A) SIMPLY RE JECTED THE CLAIM OF THE ASSESSEE FOR APPLYING 8% OF THE TOTAL INVESTMENT TO COMPUTE ANNUAL LETTING VALUE. HE HAS NOT DETERMINED THE STANDARD RENT IN THE CASE OF ASSESSEE AS PER RENT C ONTROL LEGISLATION AND HAS ALSO NOT CONSIDERED EVEN MUNICI PAL VALUE DETERMINED BY THE MUNICIPALITY. THE LD. CIT(A) ALSO FAILED TO ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 10 NOTE THAT THE LESSEE WAS A CHARITABLE INSTITUTION P ROVIDING EDUCATION TO THE STUDENTS. THEREFORE, IT COULD NOT BE COMPARED WITH COMMERCIAL OR RESIDENTIAL OCCUPANCY OF DEMISED PROPERTY WHICH IS NOT INVOLVED IN CHARITABLE INSTITUTION. FO R COMMERCIAL AND RESIDENTIAL USER OF THE PROPERTY, THE RENT MAY BE HIGH AS COMPARED TO PROPERTY GIVEN ON RENT TO THE EDUCATION AL AND CHARITABLE INSTITUTIONS. THUS, THERE WERE NO BASIS FOR LD. CIT(A) TO ENHANCE THE ANNUAL LETTING VALUE OF THE PROPERTY IN QUESTION WE MAY ALSO NOTE THAT IDENTICAL ISSUE WAS CONSIDERE D IN THE CASE OF LESSEE I.E., CVT BY ITAT, MUMBAI BENCH AND THE ENTIRE ADDITION MADE BY THE A.O. HAVE BEEN DELETED BY TIRE TRIBUNAL. THOUGH THIS CASE PERTAINS TO SUBSEQUENT A.Y. 2011-2 012, BUT THE FACT REMAINS THAT THE TRIBUNAL ACCEPTED THE CLA IM OF LESSEE OF FAIR RENT PAID BY THEM TO ASSESSEE. THE DEMISED PROPERTY WAS LET-OUT THOUGH AGREEMENT WHICH FOLLOW IN YEAR UNDER APPEAL. SO, FACTS ARE IDENTICAL. THE CLAIM OF ASSESSEE HAS BEEN SUPPORTED BY OPINION/REPORT OF M/S. ATHARVA LAND DEVELOPERS WHO HAVE DETERMINED FAIR RENT AGAINST WHICH LD. CIT(A) HAS N OT BROUGHT ANY REPORT OF EXPERT. SO, IT COULD NOT BE DISPUTED. IN THE CASE OF ASSESSEE AND LESSEE, THE RENT PAID IN EARLIER YEAR HAVE NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. CONSIDERING TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES AND IN THE LIGHT OF DEC ISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, WE AR E OF THE VIEW THAT THE LESSEE HAS PAID FAIR REASONABLE RENT TO THE ASSESSEE. THEREFORE, THERE WERE NO BASIS TO ENHANCE THE FAIR RENT PAID BY LESSEE TO THE ASSESSEE-COMPANY. WE, AC CORDINGLY, SET ASIDE THE ORDERS OF THE LD. CIT(A) AND DELETE E NHANCEMENT IN RENT MADE BY HIM OF RS. 1,67,74,073/-. WE MAY AL SO NOTE THAT LD. CIT(A) WHILE ENHANCING RENTAL INCOME, DID NOT DECIDE THE ISSUE OF SERVICE TAX PAID BY ASSESSEE, LD. CIT( A) ADMITTED ITA NO. 1778/DEL/2016 VIDYA EDUCATION INVESTMENTS PVT. LTD. 11 THE ADDITIONAL EVIDENCES WHICH ARE SERVICE TAX PAID BY THE ASSESSEE THROUGH CHALLAN AND SERVICE TAX RETURNS FI LED FOR ASSESSMENT YEAR UNDER APPEAL. IT WOULD SUPPORT THE EXPLANATION OF ASSESSEE THAT ASSESSEE PAID SERVICE TAX FOR ASSE SSMENT YEAR UNDER APPEAL, OUT OF RENT RECEIVED FROM THE LESSEE BECAUSE THERE WERE NO MENTION OF THE SERVICE TAX IN THE REN T AGREEMENT. SINCE THE SERVICE TAX IS A LIABILITY UPON THE ASSES SEE-COMPANY WHICH HAVE BEEN DISCHARGED AS PER SERVICE TAX ACT, THEREFORE, IT IS AN ALLOWABLE DEDUCTION IN FAVOUR OF ASSESSEE, BECAUSE IN THE SERVICE TAX, ASSESSEE HAS NO RIGHT TO CLAIM IT AS A RENT. THE AUTHORITIES BELOW WERE, THEREFORE, NOT JUSTIFIED IN MAKING ADDITION OF RS. 16,80,870/-. THE ORDERS OF THE AUTH ORITIES BELOW TO THAT EXTENT ARE ALSO SET ASIDE AND THIS ADDITION IS ALSO DELETED. 19. SINCE, THE MATTERS STANDS SQUARELY COVERED BY T HE EARLIER ORDER OF THE CASE OF THE ASSESSEE, IN THE ABSENCE O F ANY MATERIAL CHANGE IN THE FACTS OF THE CASE, THE ADDIT ION MADE BY THE REVENUE IS HEREBY DIRECTED TO BE DELETED. 20. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 26/04/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR