M. Rama Rao., Yanam V. The ITO, Ward -3, Kakinada

ITA 21/VIZ/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8763 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SESHA SRINIVAS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 21 / VIZ /201 6 (ASST. YEAR : 2009 - 10 ) M. RAMA RAO, D.NO. 1 - 460, SRIRAMNAGAR, YANAM. V S . IT O , WARD - 3 , KAKINADA . PAN NO. AACHM 8536 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI SESHA SRINIVAS SR. DR DATE OF HEARING : 07 / 02 /201 8 . DATE OF PRONOUNCEMENT : 21 / 02 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , GUNTUR , DATED 29 / 1 0/201 5 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE IS A WHOLESALE DEALER IN COCONUT BUSINESS AND OPERATES SCORPIO VEHICLE ON HIRE BASIS AND TAKES EXCAVATORS ETC. ON LEASE AND WORK FOR HIS CLIENTS. THE ASSESSEE HAS FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 4,48,816/ - AND CLAIMED A REFUND OF RS. 55,926/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') AND ACCORDINGLY CASE WAS SELECTED FOR SCRUTINY . AFTER DUE 2 ITA NO. 21/VIZ/2016 ( M. RAMA RAO ) PROCESS, ASSESSMENT IS COMPLETED UNDER SECTION 143(3) OF THE AC T. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS DECLARED INCOME UNDER THE HEAD HOUSE PROPERTY . THE ASSESSEE STATED TO HAVE RECEIVED RENT OF RS. 3,30,000/ - FOR 7 MONTHS DURING THE PREVIOUS YEAR . ON BEING ASKED, ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT AS PER THE ORAL AGREEMENT WITH HIS SON SRI M.V.V. SATYANARAYANA , HE LEASED OUT HIS HOUSE PROPERTY ON 01/07/2007 TO 30/06/2009 AT A MONTHLY RENT OF RS. 55,000/ - AND IN TURN, HIS SON LEASED IT O UT TO M/S. ATLAS MARINE AT A MONTHLY RENT OF RS. 1,10,000/ - . IT IS FURTHER SUBMITTED THAT M/S. ATLAS MARINE , TERMINATED THE LEASE AGREEMENT FROM 30/09/2008 ONWARDS AND THUS, HIS SON WAS IN RECEIPT OF RENT AT RS. 1,10,000/ - P.M. FOR ONLY 6 MONTHS DURING THE PREVIOUS YEAR AND ACCORDINGLY THE ASSESSEE WAS ALSO IN RECEIPT OF RENT ONLY FOR 6 MONTHS @ RS. 55,000/ - P.M. THE ASSESSEE HAS SUBMITTED BEFORE TH E ASSESSING OFFICER THAT HE WAS IN RECEIPT OF RENT OF RS.3,30,000/ - ONLY. THE ASSESSING OFFICER BY CONSIDERING SECTION 23 OF THE ACT OBSERVED THAT THE ASSESSEE IS REQUIRED TO ADMIT THE SUM , FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR . A S HAS BEEN ADMITTED BY ASSESSEE HIMSELF , THE PROPERTY FETCHED RS. 1,10,000/ - P.M. , WHICH THE ASSESSEES SON RECEIVED . THEREFORE, THE ASSESSEE OUGHT TO HAVE ADMITTED THE RENT FROM THE PROPERTY @ 1,10,000/ - P.M. ACCORDINGLY, THE 3 ITA NO. 21/VIZ/2016 ( M. RAMA RAO ) ASSESSING OFFICER HAS COMPUTED FOR THE ENTIRE PREVIOUS YEAR, TAKING THE MONTHLY R ENT AT RS. 1,10,000/ - . 3 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 . BEFORE US, LD. C OUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THE CASE OF ASSESSEES SON SRI M.V.V. SATYANARAYANA, THE LD.CIT(A) DIRECTED THE ASSESSING OFFICER TO TAX ON THE INCOME FROM HOUSE PROPERTY LEASED OUT FOR THE PERIOD OF 6 MONTHS. THERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO TAX THE ASSESSEE FOR 12 MONTHS ON THE VERY SAME PROPERTY. IT IS FURTHER SUBMITTED THAT ISSUE MAY BE REMITTED BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AS WELL AS L D. CIT(A). 6 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 7 . THE ASSESSEE LEASED OUT THE PROPERTY TO HIS SON SRI M.V.V. SATYANARAYANA FOR RS. 55,000/ - P.M. IN TURN, SRI M.V.V. SATYANARAYANA, SUB - LEASED THE SAME TO M/S.ATLAS MARINE AT A MONTHLY RENT OF RS. 1,10,000/ - . THE CASE OF THE ASSESSEE IS THAT LEASE AGREEMENT BETWEEN HIS SON AND M/S. ATLAS MARINE IS CANCELLED , HENCE, HE ONLY RECEIVED RENT FOR 6 MONTH S FROM HIS SON. HOWEVER, THE ASSESSING OFFICER HAS NOT AGREED WITH THE 4 ITA NO. 21/VIZ/2016 ( M. RAMA RAO ) EXPLANATION GIVEN BY THE ASSESSEE AND CALCULATED RENTAL INCOME WHAT IS RECEIVED BY HIS SON AT RS. 1,10,000/ - FOR A PERIOD OF 12 MONTHS. THE LD. CIT(A) CONFIRMED THE SAME. WE FIND THAT THE VERY SAME LD. CIT(A) IN THE CASE OF ASSESSEES SON IN APPEAL NO. 171/11 - 12 , DATED 31/05/2016 , HAS DIRECTED THE ASSESSING OFFICER TO CONSIDER THE RENTAL INCOME FOR A PERIOD OF FOR SIX MONTHS ONLY. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT IN THE LIGHT OF THE ORDER PASSED BY THE LD. CIT(A) IN ASSESSEES SONS CASE , IT NEEDS , THE ISSUE HAS TO BE RE - ADJUDICATED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, W E SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ADJUDICATE THE ENTIRE ISSUE AFRESH IN DENOVO IN ACCORDANCE WITH LAW. THUS, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 8 . IN THE RESULT, APPEAL FI LED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 1 S T DAY OF FEB . , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 1 S T FEBRUARY , 201 8 . VR/ - 5 ITA NO. 21/VIZ/2016 ( M. RAMA RAO ) COPY TO: 1. THE ASSESSEE - M. RAMA RAO, D.NO. 1 - 460, SRIRAMNAGAR, YANAM. 2. THE REVENUE - ITO, WARD - 3, KAKINADA. 3. THE PR. CIT - 2, VISAKHAPATNAM. 4. THE CIT(A) - 2, GUNTUR. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.