Late Shri Anurag Birla L/H Shri Rishabh Birla, New Delhi V. Jt. CIT, New Delhi

ITA 1933/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5488 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D, NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI G.S. PANNU, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.1933/DEL/2016 (ASSESSMENT YEAR-2010-11) LATE SHRI ANURAG BIRLA L/H SHRI RISHABH BIRLA C-37, HAUZ KHAS NEW DELHI. PAN:AADPB 3556B VS. JT. CIT, RANGE-24, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. SANDEEP SAPRA, ADV. RESPONDENT BY SH. C.P. SINGH, SR. DR DATE OF HEARING 14.08.2020 DATE OF PRONOUNCEMENT 30.09.2020 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 01.01.2016 PASSED BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS)-34, NEW DELHI {CIT(A)} FOR ASSESSMENT YEAR 2010-11. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE RETUR N OF INCOME WAS FILED DECLARING AN INCOME OF RS.81,80,294/-. DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ENJOYED INCOME FR OM BUSINESS OF 2 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT AIR TRANSPORTATION OF GOODS, HOTEL BOOKINGS AND AIR CRAFTS HANDLING CHARGES. THE ASSESSEE ALSO ENJOYED INCOME FROM HOUS E PROPERTY. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED THE ACT) AT A TOTAL INCOME OF RS.1,34,09,780/- AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES: (I) DISALLOWANCE OF INTEREST U/S 36(1)(III) IN RESPECT OF PROPERTY AT SAKET AND GURGAON- RS.26 ,05,634/-. (II) DISALLOWANCES OF SECURITY CHARGES- R S. 4,79,431/- (III) ADDITION ON ACCOUNT OF HOUSE PROPERTY- RS. 2,69,500/- (IV) DISALLOWANCES OF VEHICLE EXPENSES- RS.1, 22,742/- (V) NOTIONAL RENTAL INCOME IN RESPECT OF SHOP AT GRAND MALL, GURGAON- RS.16, 80,000/- 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. FIR ST APPELLATE AUTHORITY CHALLENGING THESE ADDITIONS. TH E APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED WHEREIN THE LD. CIT (A) U PHELD A PART OF DISALLOWANCE ON ACCOUNT OF INTEREST AND RESTORED A P ART TO THE ASSESSING OFFICER TO RECALCULATE THE DISALLOWANCE. W ITH RESPECT TO THE DISALLOWANCE RELATING TO SECURITY CHARGES, THE LD. C IT (A) AGAIN 3 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT ALLOWED A PARTIAL RELIEF AND CONFIRMED THE REST. WI TH RESPECT TO THE ADDITION ON ACCOUNT OF INCOME FROM HOUSE PROPERTY A MOUNTING TO RS.2,69,500/-, THE LD. CIT (A) DIRECTED THE ENTIRE ADDITION TO BE DELETED. SIMILARLY, THE LD. CIT (A) ALSO DIRECTED C OMPLETE DELETION OF DISALLOWANCES OUT OF VEHICLE RUNNING EXPENSES AND TE LEPHONE EXPENSES. WITH RESPECT TO THE ADDITION ON ACCOU NT OF NOTIONAL RENT FROM SHOP AT GRAND MALL GURGOAN, THE LD. CIT ( A) UPHELD THE ADDITION. 2.2 AGGRIEVED WITH THE ORDER OF THE LD. CIT ( A), THE ASSESSEE IS NOW BEFORE THIS TRIBUNAL CHALLENGING TH E ORDER OF THE LD. CIT(A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND UND ER THE LAW IN CONFIRMING DISALLOWANCE OF RS.9,83,879/- ON ACCOUNT OF INTEREST ATTRIBUTABLE TO AMOUNT OF RS.68,00,000/- U TILIZED FOR PURCHASE OF PROPERTY AT GRAND MALL, G.S. 0122, GURG AON ALLEGEDLY NOT USED FOR BUSINESS PURPOSES. 2. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND UNDER THE LAW IN SUSTAINING DISALLOWANCE OF RS.4,02,396/- OUT OF TOTAL SECURITY CHARGES CLAIMED AT RS.5,56,466/-. 3. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND U NDER THE LAW IN CONFIRMING THE ADDITION OF RS. 16,80,000/- UNDER TH E HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF PROPERTY SITUATED ON 4 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT 1 ST FLOOR, DLF GRAND MALL, GURGAON BY ESTIMATING NOTIO NAL RENTAL INCOME @RS.2,00,000/- PER MONTH. 4. THAT WITHOUT PREJUDICE TO ABOVE GROUNDS, THE DISALLOWANCES/ADDITION AS CONFIRMED ARE VERY EXCESS IVE. 5. THAT WITHOUT PREJUDICE TO GROUND NO. 1 & 3 ABOVE, THE DISALLOWANCE/ADDITION, IF ANY MAINTAINED BY THE HONBLE ITAT, DESERVE TO BE TELESCOPED WITH EACH OTHER. 6. THAT THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND/MODIFY THE GROUNDS OF APPEAL. 3.0 THE LD. AUTHORIZED REPRESENTATIVE (AR) SUBMIT TED THAT IN GROUND NO.1, THE ASSESSEE IS CHALLENGING TH E CONFIRMATION OF DISALLOWANCE OF RS.9,83,879/- ON ACCOUNT OF INTEREST ATTRIBUTABLE TO RS.68.00 LACS UTILIZED FOR THE PURCHASE OF PROPERTY AT GRAND MALL, GURGAON FOR ALLEGEDLY NOT BEING FOR BUSINESS PURPOS ES. IT WAS SUBMITTED THAT AN IDENTICAL ISSUE HAD ARISEN IN ASS ESSMENT YEAR 2008-09 IN ASSESSEES OWN CASE AND THE MATTER HAD TR AVELLED UP TO THE TRIBUNAL AND THE ISSUE WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER BY THE TRIBUNAL FOR THE PURPOSE O F RE-COMPUTING THE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO RS.68. 00 LACS UTILIZED FOR THE PURCHASE OF PROPERTY AT GRAND MALL, GURGAON. IT WAS FURTHER SUBMITTED THAT AGAIN IN ASSESSMENT YEAR 2009-10, SI MILAR ISSUE AROSE AND THE ITAT, FOLLOWING ITS ORDER OF ASSESSMEN T YEAR 2008-09, 5 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT RESTORED THE ISSUE TO THE FILE OF THE LD. CIT (A) F OR DEALING WITH THE ISSUE IN ACCORDANCE WITH VIEW TAKEN BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ASSESSMENT YEAR 2008-09. IT WA S SUBMITTED THAT AN IDENTICAL DIRECTION MAY BE GIVEN FOR THIS Y EAR ALSO. 3.1 WITH RESPECT TO GROUND NO.2, IT WAS SUBMITTED T HAT THIS GROUND CHALLENGES THE SUSTAINENCE OF DISALLOWANCE OF RS.4,02,396/- OUT OF THE TOTAL SECURITY CHARGES CLAIMED AT RS.5,5 6,466/- . IT WAS SUBMITTED THAT THE ASSESSEE HAD CARRIED BUSINESS AC TIVITY FROM THE BASEMENT OF PREMISES SITUATED AT C-37, HAUZ KHAS, N EW DELHI FOR WHICH SECURITY CHARGES OF RS.1,54,070/- HAD BEEN PAI D. IT WAS SUBMITTED THAT THIS AMOUNT DESERVES TO BE ALLOWED I N FULL. WITH RESPECT TO THE BALANCE DISALLOWANCE IN RESPECT OF SE CURITY CHARGES, IT WAS SUBMITTED THAT THE SECURITY CHARGES WERE PAID FO R DIFFERENT PREMISES UTILIZED BY THE ASSESSEE FOR BUSINESS PURP OSES ONLY. ON A QUERY FROM THE BENCH, THE LD. AUTHORIZED REPRESENTA TIVE AGREED THAT THE ISSUE CAN BE RE-EXAMINED BY THE ASSESSING OFFICER AND THE ASSESSEE SHALL SUBSTANTIATE BEFORE THE ASSESSING OF FICER THAT THE SECURITY CHARGES WERE INCURRED FOR PREMISES WHICH WERE BEING USED FOR BUSINESS PURPOSES. 6 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT 3.2 WITH RESPECT TO GROUND NO.3, IT WAS SUBMITTED THAT THIS GROUND CHALLENGES THE ACTION OF THE LD. CIT (A) IN CONFIRMING THE ADDITION OF RS.16,80,000/- UNDER THE HEAD INCOME FR OM THE HOUSE PROPERTY BY ESTIMATING NOTIONAL RENTAL INCOME AT RS .2 LACS PER MONTH IN RESPECT OF PROPERTY SITUATED IN DLF GRAND MALL, GURGAON. IT WAS SUBMITTED THAT EARLIER, VIDE LETTER DATED 04. 03.2013, THE ASSESSEE HAD INADVERTENTLY MENTIONED BEFORE THE AO THAT THIS PROPERTY WAS LET OUT BUT SUBSEQUENTLY THE ASSESSEE H AD TIME AND AGAIN COMMUNICATED THROUGH VARIOUS LETTERS AND SUBM ISSIONS BOTH BEFORE THE ASSESSING OFFICER AS WELL AS LD. CIT (A) THAT THE SAID PROPERTY WAS LYING VACANT. IT WAS FURTHER SUBMITTED T HAT THE FACT REMAINED THAT DESPITE THE BEST EFFORTS OF THE ASSES SEE, THE PREMISES COULD NOT BE LEASED OUT. RELIANCE WAS PLACED ON ORDE R OF THE ITAT IN THE CASE OF ITO VS. SH. ANIL KUMAR GUPTA REPORTED I N ITA NO.5911/DEL/2014 FOR THE PROPOSITION THAT THE ANNUA L VALUE DETERMINED U/S 23 (1) (A) WILL BECOME NIL IN ACCORDA NCE WITH THE PROVISIONS OF SEC.23 (1) (C) OF THE ACT IF THE PROP ERTY IS LYING VACANT FOR THE ENTIRE YEAR. 7 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT 3.3 WITH RESPECT TO GROUND NO.4, IT WAS SUBMITTED THAT THIS GROUND IS WITHOUT PREJUDICE TO GROUND NOS.1 & 3. IT WAS SUBMITTED THAT IF THE ADDITIONS ARE TO BE SUSTAINED BY THE TR IBUNAL, THE BENEFIT OF TELESCOPING SHOULD BE GIVEN TO THE ASSESSEE. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT WITH RESPECT TO GROUND NOS.1 & 2, REL IANCE WAS BEING PLACED ON THE ORDERS OF THE LOWER AUTHORITIES BUT ALL THE SAME THE DEPARTMENT HAD NO OBJECTION TO THE ISSUES WERE BEING RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDER ATION. 4.1 WITH RESPECT TO GROUND NO.3 REGARDING NOTI ONAL RENT, IT WAS SUBMITTED THAT VACANCY ALLOWANCE IS AVAILABLE ONL Y IF THE PROPERTY IS LET OUT AND SINCE THERE IS NO PROOF OF THE SAID PROPERTY HAVING EVER BEEN LET OUT, THE PROVISIONS OF SEC. 23 (1) (A) OF THE ACT WOULD BE ATTRACTED AND THE ASSESSEE WILL BE LIABLE TO PAY TAX ON THE NOTIONAL RENT. 4.2 THE LD. SR. DR ALSO OPPOSED THE ASSESSEES PLEA RAISED IN GROUND NO.4 FOR TELESCOPING THE VARIOUS DISALLOW ANCES AND SUBMITTED THAT EACH DISALLOWANCE HAS BEEN MADE ON TH E PECULIAR FACTS AND CIRCUMSTANCES PERTAINING TO SUCH DISALLOW ANCE AND, 8 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT THEREFORE, THE BENEFIT OF TELESCOPING SHOULD NOT BE EXTENDED IN THIS CASE. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. AS FAR AS GROUND NO .1 OF THE ASSESSEES APPEAL IS CONCERNED, IT IS SEEN THAT THE TOTAL DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFICER WAS TO THE TUNE OF RS.26,05,634/- BEING INTEREST IN RESPECT OF PROPER TIES AT SAKET AND GURGAON. WHEN THE MATTER CAME IN APPEAL BEFORE THE LD. CIT (A), THE LD. CIT (A) DELETED THE DISALLOWANCE TO THE TUN E OF RS.16,21,755/- IN RESPECT OF THE SAKET PROPERTY. HO WEVER, WITH RESPECT TO THE INTEREST DISALLOWANCE PERTAINING TO T HE GURGOAN PROPERTY, THE ASSESSING OFFICER WAS DIRECTED TO RE-C ALCULATE THE DISALLOWANCE BY RESTRICTING IT TO INTEREST PORTION R ELATED TO RS.68.00 LACS. IT HAS BEEN BROUGHT TO OUR NOTICE THAT IN ASS ESSMENT YEARS 2008-09 AND 2009-10, THE ISSUE WAS RESTORED TO THE F ILE OF THE ASSESSING OFFICER AND THE LD. CIT (A) RESPECTIVELY WITH THE DIRECTION TO RE-COMPUTE THE INTEREST ATTRIBUTABLE TO RS.68.00 LACS. WE FIND THAT A SIMILAR DIRECTION HAS BEEN GIVEN BY THE LD. CIT (A) IN THIS YEAR ALSO WHEREIN THE LD. CIT (A) HAS DIRECTED THE A SSESSING OFFICER 9 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT TO RE-COMPUTE THE INTEREST ATTRIBUTABLE TO RS.68.00 LACS. THUS, THERE IS NO ERROR IN THE FINDING OF THE LD. CIT (A). IN F ACT THIS IS THE RELIEF WHICH THE ASSESSEE HAS ALSO PRAYED FOR IN ITS GROUND NO.1 AND HAS ALSO ARGUED BEFORE US. THEREFORE, WE UPHOLD THE FIND ING OF THE LD. CIT (A) IN GIVING SUCH DIRECTION TO THE ASSESSING O FFICER. 5.1 WITH RESPECT TO THE DISALLOWANCE MADE OUT O F SECURITY CHARGES, THE LD. AUTHORIZED REPRESENTATIVE HAS STAT ED THAT HE IS WILLING TO ESTABLISH WITH PROOF BEFORE THE ASSESSING OFFICER THAT THE SECURITY CHARGES WERE PAID FOR DIFFERENT PREMISES UT ILIZED BY ASSESSEE FOR BUSINESS PURPOSES. ACCORDINGLY, THIS I SSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECT ION TO RE-EXAMINE THIS ISSUE AFRESH AFTER GIVING PROPER OPPORTUNITY T O THE ASSESSEE TO PRESENT HIS CASE. 5.2 IN RESPECT OF GROUND NO.3, IT IS THE ASSESSEE S CONTENTION THAT HE HAS CONSISTENTLY BEING SUBMITTIN G BEFORE THE LOWER AUTHORITIES THAT THE PROPERTY AT GRAND MALL, GURGAON WAS LYING VACANT DURING THE ENTIRE ASSESSMENT YEAR AND, THEREFORE, NO NOTIONAL RENT CAN BE BROUGHT TO TAX ON SUCH VACANT PREMISES. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THIS PLEA OF THE 10 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT ASSESSEE HAS NOT BEEN CONSIDERED WHILE MAKING THE AD DITION ON ACCOUNT OF NOTIONAL RENT. WE ALSO NOTE THAT THE LD. CIT (A) HAS ALSO NOT CONSIDERED THIS STAND OF THE ASSESSEE WHILE UPHO LDING THE DISALLOWANCE. BOTH THE LOWER AUTHORITIES HAVE PLACED RELIANCE ON ASSESSEES COMMUNICATION DATED 04.03.2013 WHEREIN TH E ASSESSEE IS STATED TO HAVE SUBMITTED THAT THIS PROPERTY WAS LET OUT. THUS, TO OUR MIND, FACTUAL VERIFICATION NEEDS TO BE CARRIED OUT ON THE ISSUE. THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THIS I SSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AS PER LAW AFT ER RECORDING A CLEAR CUT FINDING AS TO WHETHER AT ANY POINT OF TIME EITHER DURING EARLIER ASSESSMENT YEARS OR DURING THE YEAR UNDER C ONSIDERATION, THE PROPERTY WAS LET OUT OR NOT. WHILE ADJUDICATING THE ISSUE, THE ASSESSING OFFICER IS ADVISED TO CONSIDER RATIO OF O RDER OF THE TRIBUNAL IN THE CASE OF SH. ANIL KUMAR GUPTA IN ITA 5911/DEL/2014. 5.3 SINCE, WE HAVE RESTORED ISSUES RAISED IN GROUND NOS. 1-3 BEFORE US TO THE FILE OF ASSESSING OFFICER FOR FRES H CONSIDERATION, GROUND NO.4 OF THE ASSESSEES APPEAL BECOMES IN FRUCTUOUS AND DISMISSED AS SUCH. 11 ITA NO.1933/DEL/2016 LATE SH. ANURAG BIRLA VS. JCIT 5.4 BEFORE PARTING, WE WOULD REITERATE THAT THE ASSESSING OFFICER SHALL ADJUDICATE ALL THE ISSUES BEING RESTO RED TO HIM AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PRES ENT ITS CASE. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30/09/2020. SD/- SD/- (G.S.PANNU) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 30/09/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI