Platinum Avenues Private Limited, Hyderabad V. Asst. Commissioner of Income Tax, Circle-16(2), Hyderabad

ITA 183/Hyd/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8129 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-12-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 29-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: SYED JAMEELUDDIN
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Revised return
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.183/HYD/2018 ASSESSMENT YEAR: 2013 - 14 PLATINUM AVENUES PRIVATE LIMITED, HYDERABAD. PAN: AAIFA 8456 C VS. ACIT, CIRCLE - 16(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI SYED JAMEELUDDIN REVENUE BY: SRI KIRAN KATTA, DR DATE OF HEARING: 05.12.2018 DATE OF PRONOUNCEMENT: 26 .12.2018 ORDER PER S. RIFAUR RAHMAN, A .M.: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 4, HYDERABAD DATED 29.11.2017 FOR THE ASSESSMENT YEAR 2013 - 14. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE CIT(A) - 4, HYDERABAD IS ERRONEOUS IN LAW AND IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) IS WRONG IN DISMISSING THE APPEAL WITH THE FOLLOWING SIMPLE OBSERVATION: FOLLOWING THE EARLIER YEAR APPEAL ORDER IE., FOR A.Y. 2012 - 13, I AM IN AGREEMENT WITH THE A SSESSING OFFICER AND THE ADDITION MADE CONFIRMED AND GROUNDS OF APPEAL DISMISSED. 3. THE ALLEGATION OF THE CIT(A), IN PARAGRAPH - 4 AT PAGE - 8 OF THE ORDER, THAT THE APPELLANT HAD NOT FURNISHED ANY DETAILS FOR THE ASSESSMENT YEAR 2012 - 13 ALSO, IS WRONG AND A GAINST THE FACTS, SINCE THE APPELLANT HAD FILED ALL THE DETAILS CALLED FOR, AND THE ORDER FOR THAT YEAR, IE., ASSESSMENT YEAR 2012 - 13, WAS PASSED ONLY AFTER THE 2 APPELLANT FILED ALL THE DETAILS CALLED FOR AND THE APPELLANT WAS HEARD. 4. THE CIT(A) IS WRONG IN IGNORING THE CRUCIAL GROUND URGED BY THE ASSESSEE IN REGARD TO NON - AFFORDING OF A FAIR OPPORTUNITY BY THE ASSESSING OFFICER, AS PER THE CBDTS INSTRUCTION NO.20/2015, DATED 29/12/2015. \ 5. THE CIT(A) IS WRONG IN ALLEGING THAT THE APPELLANT NEITHER APPEA RED IN PERSON TO EXPLAIN NOR FILED ANY DETAILS, ESPECIALLY WHEN THE APPELLANT FILED A LETTER ON 28/11/2017, THAT TOO, WELL BEFORE THE DATE OF HEARING I.E., 07/12/2017, WITH A SPECIFIC REQUEST TO TAKE - UP THE APPEAL AFTER 28/12/2017, SINCE THE ASSESSEES APP EAL BEFORE THE ITAT, FOR THE A.Y. 2012 - 13, ON THE SAME AND SIMILAR ISSUE, WAS POSTED FOR HEARING ON 28/12/2017. NATURAL JUSTICE DEMANDS CONSIDERATION OF ALL THE GROUNDS URGED AND THE FACTS STATED BY THE APPELLANT IN THE STATEMENT OF FACTS, WHEN IT WAS DEC IDED NOT TO GRANT ADJOURNMENT AND DECIDE THE APPEAL ON MERITS THAT TOO BEFORE THE DATE OF HEARING FIXED. 6. THE CIT(A) IS WRONG IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER, EVEN THOUGH THE ASSESSING OFFICER FAILED TO FOLLOW THE GUIDELINES LAID DOWN, F OR DETERMINATION OF THE A NNUAL LETTING VALUE, BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TIP TOP TYPOGRAPHY, REPORTED IN (2014) 386 ITR 330 (BOMBAY), IN SPITE OF THE ASSESSEES SPECIFIC REQUEST DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7 . THE CIT(A) IS WRONG IN NOT CONSIDERING THE DECISION OF VARIOUS HIGH COURTS, CITED BY THE APPELLANT IN SUPPORT OF THE GROUNDS URGED, AND IN NOT STATING THE REASONS AS TO WHY THE DECISIONS CITED BY THE APPELLANT ARE NOT APPLICABLE. 8. THE CIT(A) IS HIGHLY UNJUSTIFIED IN NOT ADJUDICATING THE GROUNDS URGED BY THE APPELLANT AND IN NOT STATING THE REASONS THEREFOR. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY DERIVES INCOME FROM LET OUT OF VARIOUS PROPERTIES. FOR THE A.Y. 2013 - 14, THE ASSESSEE F I LED ITS RETURN OF INCOME ON 01.10.2013 ADMITTING TOTAL INCOME OF RS. 67,75,540/ - . THEREAFTER, ASSESSEE FILED ITS REVISED RETURN OF INCOME WHEREIN THE CREDIT CLAIMED U/S 115JB OF THE ACT WAS WITHDRAWN CONSEQUENT TO THE REVISED RETURN OF INCOME AND DECLARE D THE SAME TAXABLE INCOME. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. DURING THE ASSESSMENT PROCEEDING S, A.O. NOTICED THAT DURING THE YEAR ASSESSEE - COMPANY RECEIVED RENTAL INCOME OF RS. 1,16,65,162/ - AND CERTAIN OTHER INCOMES VIZ., INTEREST ON FDRS, INTEREST ON IT REFUND, OTHER OPERATING REVENUES WHICH WERE CREDITED TO THE P&L ACCOUNT. AGAINST 3 THE SAID INCOME, ASSESSEE - COMPANY CLAIMED CERTA IN EXPENDITURES UNDER THE HEADS (I) EMPLOYEE BENEFIT EXPENSES (II) FINANCE COSTS (III) OTHER EXPENSES AND (IV) DEPRECIATION AND AMORTIZATION OF EXPENSES. ON VERIFICATION OF THE DETAILS OF LESSEES OF THE ASSESSEE - COMPANY AND THE SUBMISSIONS MADE BY THE ASSE SSEE, THE A.O OPINED THAT THE ASSESSEE - COMPANY HAS LET OUT THE PROPERTIES TO M/S. PLATINUM BUSINESS HOTELS AT A VERY LOWER RATE WHEN COMPARED TO THE OTHER FLOORS IN THE SAME PREMISES. THEREFORE, THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE FAIR MARKET VALU E OF THE RENTAL INCOME OF THE PROPERTY IN RESPECT OF M/S. PLATINUM BUSINESS HOTELS SHOULD NOT BE ESTIMATED AS AGAINST THE RENTAL INCOME ADMITTED BY THE ASSESSEE - COMPANY. IN RESPONSE, ASSESSEE OBJECTED FOR THE ESTIMATION OF INCOME FROM HOUSE PROPERTY AND R ELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF DR. BALBIR SING & OTHERS VS. M.C.D AND OTHERS (152 ITR 388); HONBLE HIGH COURT OF TELANGANA AND ANDHRA PRADESH IN THE CASE OF A. VENKATESWARA RAO VS. ACIT (372 ITR 136) AND DECISION OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPHY (368 ITR 366) (BOM) IN SUPPORT OF ITS CONTENTION THAT THE ANNUAL LETTING VALUE WOULD THE SUM AT WHICH THE PROPERTY MAY BE REASONABLY LET OUT BY A WILLING LESSOR TO A WILLING LESSEE . TAK ING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PREVAILING RENTS IN THE NEIGHBOURHOOD PREMISES AND THE LEASE INCOME RECEIVED BY THE ASSESSEE - COMPANY FROM THE OTHER FLOORS OF THE SAME PREMISES THE A.O. RESORTED TO ESTIMATE THE RENTAL INCOME AT AN AVERAGE RATE OF RS. 100/ - PER MONTH FOR THE AREA OCCUPIED BY THE LESSEE, IN LINE WITH THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEAR 2012 - 13 AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AND DETERMINED THE TOTAL TAXABLE INCOME AT RS. 2,49,04, 234/ - . 3. AGGRIEVED , ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CONTENDING THAT THE A.O. MADE HUGE ADDITIONS / DISALLOWANCES WITHOUT 4 AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PRESENT ITS CASE. 4. BEFORE THE CIT(A), NONE APPEARED ON BEHALF OF THE ASSESSEE - COMPANY EXCEPT FILING A LETTER DATED 28.11.2017 WHEREIN THE CIT(A) WAS REQUESTED TO HOLD THE APPEAL SINCE THE MATTER INVOLVING THE IDENTICAL ISSUES IS PENDING BEFORE THE INCOME TAX APPELLATE TRIBUNAL FOR THE A.Y. 2012 - 13 , WHICH WAS FIXED FOR HEARING ON 21.12.2017. CIT(A) WAS NOT CONVINCED WITH THE ASSESSEES LETTER AND DISMISSED THE APPEAL EX - PARTE FOLLOWING THE EARLIER APPEAL ORDER FOR THE A.Y. 2012 - 13. AGGRIEVED, ASSESSEE FILED THE PRESENT APPEAL BEFORE US BY RAISING THE ABOVE MENTIONED GROUNDS. 5. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE BRIEFLY NARRATED THE FACTS OF THE CASE AND SUBMITTED T HAT BOTH THE A.O. AND THE CIT(A) HAVE NOT AFFORDED ANY REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PRESENT ITS CASE, WHICH IS A BREACH TO THE PRINCIPLES OF NATURAL JUSTICE. HE FURTHER SUBMITTED THAT A.O. HAS NOT FOLLOWED THE GUIDELINES LAID D OWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY (SUPRA) FOR DETERMINATION OF ANNUAL LETTING VALUE OF THE PROPERTY AND OTHER DECISIONS ON THE SIMILAR ISSUE. THE CIT(A) , WITHOUT GOING INTO THE MERITS OF THE CASE, FOLLOWED THE EARLIER YEAR APPEAL ORDER FOR THE A.Y. 2012 - 13. LEARNED COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2012 - 13 (ITA NO.1454/HYD/2016, DATED 16/02/2018), WHEREIN THE IDENTICAL ISSUES WERE RAISED AND THE T RIBUNAL RESTORED THE MATTER TO THE FILE OF A.O. TO DECIDE THE ISSUE AFRESH AFTER GIVING A DUE OPPORTUNITY TO THE ASSESSEE , AND PRAYED FOR SIMILAR DIRECTIONS. 6. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. HAVING REGARD TO THE FACTUAL MATRIX OF THE CASE, CONTENTIONS OF BOTH THE LEARNED REPRESENTATIVES AND ON PERUSAL OF THIS TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR THE A.Y. 2012 - 13 (SUPRA), WE ARE OF THE OPINION, THE IDENTICAL ISSUES IE., DETERMINATION OF ANNUAL LETTING VALUE AS PER THE PROVISIONS OF THE IT ACT, 1961; TAXABILITY OF CERTAIN EXPENDITURES CLAIMED BY THE ASSESSEE UNDER THE HEAD BUSINESS OR UNDER T HE HEAD OTHER SOURCES CAME UP BEFORE THE ITAT AND THE TRIBUNAL VIDE ITS ORDER DATED 16.02.2018 (IN PARA 9 AND 9.1) RESTORED THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE ISSUES AFRESH IN ACCORDANCE WITH LAW AND AFTER GIVING A DUE OPPORTUNITY TO THE AS SESSEE. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PARAS ARE EXTRACTED AS FOLLOWS: 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD AND ALSO THE CASE LAW RELIED UPON. IT IS ADMITTED THAT AO HAS POWER TO RE - DETERMI NE THE ANNUAL VALUE UNDER THE PROVISIONS OF THE ACT, WHEREVER HE FINDS THAT THE RENT REPORTED IS ARBITRARILY LOW. AS SEEN FROM THE FACTS OF THE CASE, ASSESSEE WAS OFFERING THE HIGHER INCOME OF RS. 4 LAKHS IN EARLIER YEARS WHICH WAS ACCEPTED BY THE AO. HOWE VER, THE CORRESPONDING RENTS OF GROUND FLOOR AND FIRST FLOOR IN THOSE YEARS ARE NOT AVAILABLE ON RECORD WHETHER THERE IS REASON TO REDUCE THE RENTS, PARTICULARLY IN A CASE WHERE THE DIRECTORS ARE INTERESTED IN THE FIRM AS WELL. LOSS INCURRED BY TENANT HAS NO RELEVANCE AS FAR AS THE DETERMINATION OF ANNUAL VALUE UNDER THE PROVISIONS OF SECTION 23 IS CONCERNED. IT IS ADMITTED THAT ASSESSEE HAS LET OUT THE PROPERTY AT A REASONABLE VALUE NOT ONLY PART OF THE MONTHS IN THE YEAR BUT ALSO IN EARLIER YEARS AS WELL. THEREFORE, AO IS WELL WITHIN HIS RIGHTS/POWERS TO REDETERMINE THE ANNUAL VALUE. MOREOVER, THE SAID PARTY IS AN INTERESTED PARTY, BEING A UNIT HAVING COMMON PERSONS. WHETHER THE SAID FIRM IS INTERESTED PARTY FROM THE BEGINNING OR BECAME A SISTER CONCERN ON LY DURING THE YEAR IS NOT ON RECORD. AS SEEN FROM THE ORDER OF THE AO, HE HAS NOT CONSIDERED THE ISSUE IN THE CORRECT PERSPECTIVE. THE BUILDING IS SUBJECT TO LET OUT ONLY TO A HOTEL I.T.A. NO. 1454/HYD/2016 : - 6 - : BUSINESS AS IT CONTAINS ROOMS AND ALSO RE STAURANT. THE GROUND FLOOR AND FIRST FLOOR BUILDING, HAVING ROAD FRONTAGE AND USING FOR SHOW ROOM PURPOSES, MAY FETCH A HIGHER RENT BUT THAT DOES NOT INDICATE THAT ALL THE FLOORS IN THE BUILDING WILL FETCH THE SAME RENT. THEREFORE, IN OUR VIEW, ADOPTION OF RS. 100/ - PER SQ. FT., IS NOT ONLY ARBITRARY BUT ALSO WITHOUT ANY BASIS AS WELL. SINCE THE RATIO OF COMMERCIAL RENT RECEIVED IN GROUND FLOOR WITH THAT OF HOTEL PROPERTY IN EARLIER YEARS IS NOT AVAILABLE AND SINCE NO OTHER COMPARABLE RENT DETAILS WERE PLAC ED ON RECORD, WE ARE OF THE OPINION THAT THE MATTER REQUIRES RE - EXAMINATION BY THE AO, PARTICULARLY KEEPING IN MIND THE 6 PRINCIPLES LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPHY (SUPRA) RELIED ON BY ASSESSEE AND ALSO K EEPING IN MIND THE CASE LAW RELIED ON BY THE DR AND THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF A. VENKATESWARA RAO VS. ACIT [372 ITR 136] (AP). AO IS DIRECTED TO EXAMINE ALL THE ASPECTS, AND BY GIVING AN OPPORTUNITY TO ASSESSEE RE - DETERMINE THE ANNUAL LETTING VALUE, AS PER THE PROVISIONS OF THE ACT AND LAW INVOLVED. 9.1. ASSESSEE ALSO OFFERED OTHER INCOMES, PARTICULARLY RENT ON FURNITURE AND FIXTURES. ASSESSEE ALSO CLAIMED SERVICE TAX AND OTHER EXPENDITURE. WHETHER THOSE INCOMES CAN BE CONSIDER ED AS PART OF HOUSE PROPERTY INCOME OR HAS TO BE ASSESSED SEPARATELY EITHER UNDER THE HEAD BUSINESS OR UNDER THE HEAD OTHER SOURCES ALSO REQUIRE RE - EXAMINATION BY THE AO. THE ALLOWANCE OF VARIOUS EXPENDITURE DEPENDS ON THE HEAD UNDER WHICH INCOMES ARE ASSESSED. THEREFORE, THE ENTIRE ORDER OF THE AO AND CIT(A) IS SET ASIDE AND THE ISSUES ARE RESTORED TO THE FILE OF AO TO DO IT AFRESH, I.T.A. NO. 1454/HYD/2016 : - 7 - : AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. GROUNDS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH ON SIMILAR ISSUES IN THE ASSESSEES OWN CASE, WE DIRECT THE A.O TO EXAMINE ALL THE ISSUES AT LENGTH AND DECIDE THE ISSUES AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH DECEMBER, 2018. SD/ - SD/ - (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH DECEMBER, 2018 OKK 7 COPY TO: - 1) M/S. PLATINUM AVENUES PRIVATE LIMITED C/O.SYED JAMEELUDDIN, INCOME TAX CONSULTANT, 16 - 7 - 302, ERRAM COTTAGE, HYDERABAD. 2) ACIT, CIRCLE - 16(2), HYDERABAD. 3) THE CIT(A) - 4 , HYDERABAD 4) THE PR. CIT - 4 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE