JK INVESTMENT , MUMBAI V. CIT (A), MUMBAI

ITA 2013/MUM/2023

AI Insights

The case involves JK Investment, a partnership firm engaged in trading, which received rental income from properties and claimed deductions under section 24(1)(a) of the Income Tax Act, 1961. The Assessing Officer disallowed a portion of the deduction claimed on the rental income from amenities, treating it as income from other sources. The assessee appealed to the CIT(A), which upheld the AO's decision. Subsequently, the assessee appealed to the Income Tax Appellate Tribunal, which reversed the CIT(A)'s decision, allowing the deduction claimed by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300118 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 29-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH KISHINCHANDANI
• Keywords: Principle of natural justice
• Section: 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 2013/Mum/2023 (A.Y. 2012-13) JK Investment 202-B, Shreeji Shopping Arcade, M. G. Road, Borivali (East) Mumbai-400066 Vs. DCIT-20(2) Mumbai. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAGFJ3757K Appellant .. Respondent Appellant by : Shri. Shashank Mehta Respondent by : Shri. Prakash Kishinchandani Date of Hearing 07.09.2023 Date of Pronouncement 26.09.2023 आदेश / O R D E R PER AMARJIT SINGH :- 1. The present appeal filed by the assessee is directed against the order passed u/s 250 of the Income Tax Act, 1961 ([hereinafter “the Act”] by the Learned Commissioner of Income Tax (Appeals)- 32/National Faceless Appeal Centre, Delhi [hereinafter „the CIT(A)‟] dated 31.03.2023 for A.Y 2012-13. 2. The grounds of appeal of the assessee are as under: 1. The Ld. CIT(A) has completed the assessment without considering the facts & circumstances of the case, which is contrary to law and is against the principles of natural justice. P a g e | 2 ITA No. 2013/Mum/2023 AY 2012-13 J K Investement 2. The Ld. CIT(A) has erred in passing the order against appellant without considering the submissions dated 10.02.2021 made by the appellant which are on record on E- filing portal. 3. The Ld. CIT(A) has erred in disallowing 30% deduction from rent received from Amenities Agreement by ignoring the fact that the Amenities Agreement is part and parcel of Rental Agreement and is inseparable i.e. one cannot independently let out only amenities. 3. Fact in brief is that return of income declaring total income of ₹ 33,06,720/- was filed on 30.09.2012. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 24.09.2013. The assessee is a partnership firm engaged in the business of trading in photo printing paper, chemical and other photographic items. During the year under consideration the assessee has received gross rental income of Rs. 88,68,750/- out of which it had claimed a standard deduction of 30% to the amount of ₹ 26,66,625/- u/s 24(1)(a) of the Act and offered net of 62,08,125/- as income from house property. The AO mentioned that the assessee has also claimed deduction at the rate of 30% of ₹17,18,600 (rental receipt for amenities). The AO was of the view that rent received from the amenities is to be taxed income from other source. Therefore, the amount of Rs. 5,15,580/- claim as deduction u/s 24(1)(a) of the Act was disallowed and added to the total income of the assessee. P a g e | 3 ITA No. 2013/Mum/2023 AY 2012-13 J K Investement 4. The assessee filed appeal before the Ld. CIT(A). The Ld CIT(A) has dismissed the appeal of the assessee. 5. Heard both the sides and perused materials available on record. Without reiterating the facts as discussed above, the AO has disallowed Rs 5,15,580/- being 30% of Rs 17,18,600/- for rent received from amenities treating the same as income from other sources. 6. During the course of appellate proceedings before me, the Ld. counsel has filed copies of following agreements:  Amenities Agreement dated 31.05.2011 executed between the appellant and Dena Bank.  Amenities Agreement dated 22.10.2011 between the Appellant and Muthoot Fincorp Ltd. With the assistance of Ld. Representatives, I have perused above referred amenities agreement placed in the paper book. Both the agreements are referred as amenities agreement. Vide agreement dated 31.05.2011 the assessee has provided premises on leave and license agreement and received rent for use of the premises to the amount of 71,50,150/- vide agreement dated 22.10.2011 the assessee has received rent of ₹ 17,18,600/- for use of toilet, parking space, use for different facility etc. Looking to the above facts it is observed that the amenities referred mainly to the extra space provided by the assessee which were integral part of P a g e | 4 ITA No. 2013/Mum/2023 AY 2012-13 J K Investement the premises. Therefore, I find merits in the submission of the assessee and the AO is directed to allow the claim of deduction to the assessee. 7. In the result the appeal filed by the assessee is allowed. Order Pronounced in Open Court on 26.09.2023 Sd/- (AMARJIT SINGH) ACCOUNTANT MEMBER Place: Mumbai Date 26.09.2023 ANIKET SINGH RAJPUT/STENO आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai. P a g e | 5 ITA No. 2013/Mum/2023 AY 2012-13 J K Investement No. Details Date Initials Designation 1 Draft dictated on Sr.PS/PS 2 Draft Placed before author Sr.PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member JM/AM 5 Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date on which file goes to the AR 10 Date of Dispatch of order