M/s. Rajendra Kumar Ravi Kumar, Kolkata V. ITO, Ward - 33(1), Kolkata, Kolkata

ITA 212/KOL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0557 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-02-2011
• Court: TRIBUNAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 2 12 /KOL/201 1 ASSESSMENT YEAR : 200 5 - 0 6 M/S. RAJENDRA KUMAR RAVI KUMAR VS. INCOME - TAX OFFICER, WD - 33(1), KOLKATA (PAN: AADFR3456N) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 06 .0 4 .2015 DATE OF PRONOUNCEMENT: 06. 04 . 2015 FOR THE APPELLANT: SHRI V. N. PUROHIT , ADVOCATE FOR THE RESPONDENT: S HRI KANHIYA LAL KANAK, JCIT, SR. DR, ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A) - XX , KOLKATA IN APPEAL NO. 425 /CIT(A) - XX/ WD - 33(1)/2007 - 08/KOL DATED 0 1 . 12 .201 0 . ASSESSMENT WAS FRAMED BY ITO, WARD - 33 ( 1 ), KOLKATA U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER RE FERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 5 - 0 6 VIDE HIS ORDER DATED 2 4 .12.200 7 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF DEDUCTION OF GROUND RENT OF RS.2,49,924/ - FROM HOUSE PROPERTY INCOME. THE ASSESSEE HAS FILED THE AMENDED GROUND AND ONLY RESTRICTED TO GROUND NOS. 2 AND 3, WHICH READ AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN TREATING THE RENTAL INCOME EARNED FROM LETTING OUT THE BUILDIN G CONSTRUCTED ON LAND TAKEN ON LEASE FROM POST TRUST OF KOLKATA (PTK) (CORRECTLY TO BE READ AS KOLKATA PORT TRUST (KPT) ON PAYMENT OF LEASE RENT UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION , A S WAS CLAIMED DURING COURSE OF ASSESSMENT. 3. THE LD. CIT(A) FURTHER ERRED IN FAILING TO APPRECIATE THAT THE LEASE RENT OF RS.2,49,924/ - PAID ON THE LAND TAKEN ON LEASE FROM KPT ON WHICH THE APPELLANT CONSTRUCTED ITS BUILDING IS AN OUTGOING AT SOURCE AND THAT THEREFORE, THE SAME IS DEDUCTIBLE FROM THE GROSS RENT RECEIVABLE FROM THE PROPERTY CONSTRUCTED ON LEASEHOLD LAND FOR DETERMINATION OF THE ANNUAL VALUE OF THE PROPERTY OF WHICH ASSESSEE IS NOT THE OWNER. 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE T HROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS DECLARED INCOME FROM SALE OF SHARES, 2 ITA NO. 2 12 /K/201 1 M/S. RAJENDRA KUMAR RAVI KUMAR AY 200 5 - 0 6 INTEREST RECEIVED, RENTAL INCOME AND EXCESS PROVISION WRITTEN OFF. IN EFFECT, THE ASSESSEE HAS NO OTHER ACTIVITY EXCEPT RENTAL ACTIVITY APART FROM INCOME FROM OTHER SOURCES . THE ASSESSEE HAS DEBITED GROUND RENT PAID OF RS.2,49,924/ - . THE AO REQUIRED THE ASSESSEE AS TO WHY THIS DEDUCTION BE NOT DISALLOWED BECAUSE THE ASSESSEE HAS TO CLAIM DEDUCTION U/S. 24 OF THE ACT ONLY AND GROUND RENT CANNOT BE CLAIMED U/S. 24 OF THE ACT. THE ASSESSEE FILED REVISED COMPUTATION OF TAXABLE INCOME BEING RENT PAID TO KPT BEING THE OWNER OF THE PROPERTY. THE AO HAS NOT ALLOWED THIS DEDUCTION RATHER HE HAS COMPUTED THE INCOME AS RENT RECEIVED AN D ALLOWED THE DEDUCTION U/S. 24 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF AO VIDE PARA 3 OF THE APPELLATE ORDER AS UNDER: 3. GROUND NO. 1, 2, 3 & 4 RELATE TO ASSESSMENT OF RENT AS INCOME FROM HOUSE PROP ERTY, AND DISALLOWANCE OF CLAIM FOR EXPENSES. AS THESE GROUNDS ARE INTER - LINKED, THEY ARE TAKEN TOGETHER. THE BRIEF FACTS OF THE CASE ARE THAT BY LEASE DEED DATED 27.07.1978, THE APPELLANT TOOK ON LEASE A PLOT OF LAND FOR A PERIOD OF 30 YEARS; AND, CONS TRUCTED BUILDING THEREON WHICH WAS LEASED OUT TO ALLAHABAD BANK AT MONTHLY RENT OF RS.L,37,380/ - . IN THE RETURN OF INCOME, THE APPELLANT HAS SHOWN RENTAL INCOME OF RS.16,48,560/ - UNDER THE HEAD HOUSE PROPERTY; AND, CLAIMED DEDUCTIONS U/S 24(A) AND 24(B). D URING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BEFORE THE AO THAT THE RENTAL INCOME SHOULD BE ASSESSED AS BUSINESS INCOME; AND, CLAIM OF EXPENSES SHOULD BE ALLOWED. ALTERNATIVELY, IN CASE THE RENT IS ASSESSED AS HOUSE PROPERTY INCOME, THE GRO UND RENT OF RS.2,49,924/ - SHOULD BE DEDUCTED WHILE COMPUTING THE ANNUAL VALUE OF THE PROPERTY. THE AO HELD THAT RENT HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY; MOREOVER, DEDUCTION ON ACCOUNT OF GROUND RENT IS NOT ALLOWABLE. THE LD. AR REITERATED THE SUBMISSIONS MADE AT THE ASSESSMENT STAGE. I DO NOT FIND MERIT IN THE SUBMISSIONS OF THE APPELLANT. GIVEN THE FACTS OF THE CASE, THE RENTAL INCOME HAS TO BE ASSESSED UNDER THE HEAD HOUSE PROPERTY. IN FACT, THE APPELLANT HAS ITSELF SHOWN THE RENT AS HOUSE P ROPERTY INCOME IN THE RETURN. SECONDLY, THE LEASE RENT IN RESPECT OF LAND CANNOT BE DEDUCTED WHILE DETERMINING THE ANNUAL VALUE OF THE BUILDING. THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS, AND, DO NOT HELP ITS CASE. THE ORDER OF THE AO IS UPHELD. GROUND NO. I, 2, 3 & 4 ARE DISMISSED. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 4. WE FIND THAT THE ASSESSEE HIM SELF HAS DECLARED RENTAL INCOME FROM LEASE PROPERTY I.E. LEASE OF A PLOT OF LAND FROM A PERIOD OF 30 YEARS AND CONSTRUCTED BUILDING THEREON, WHICH WAS LET OUT TO ALLAHABAD BANK AT MONTHLY RENTAL OF RS.1,37,380/ - . THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTI ON U/S. 24 OF THE ACT I.E. THE STATUTORY DEDUCTION. APART FROM THAT NO OTHER DEDUCTION IS AVAILABLE TO THE ASSESSEE AS PER THE ACT. IN VIEW OF THIS, WE 3 ITA NO. 2 12 /K/201 1 M/S. RAJENDRA KUMAR RAVI KUMAR AY 200 5 - 0 6 ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY AO. WE ALSO CONFIRM T HE SAME. APPEAL OF ASSESSEE IS DISMISSED. 5 . IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED . 6 . ORDER IS PRONOUNCED IN THE OPEN COURT . S D / - S D / - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 6 TH APRIL , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT M/S. RAJENDRA KUMAR RAVI KUMAR, 36, CHOWRINGHEE ROAD, KOLKATA - 700071. 2 RESPONDENT ITO, WARD - 33(1) , KOLKATA. 3 . THE CIT (A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .