BIPIN SURESHCHANDRA MEHTA, MUMBAI V. ACIT-12(1), MUMBAI

ITA 2427/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5708 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S SHARMA
• Keywords: Deemed owner of house property; TDS; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2427/M/2018 ASSESSMENT YEAR: 2012-13 MR. BIPIN SURESHCHANDRA MEHTA, 403, EXIM HOUSE, 375, NARSI NATHA STREET, MUMBAI 400 009 PAN: ABDPM3888J VS. ACIT 12(1), ROOM NO.117, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400002 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DHAVAL SHAH, A.R. REVENUE BY : SHRI C.S. SHARMA, D.R. DATE OF HEARING : 08.05.2019 DATE OF PRONOUNCEMENT : 14.05.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 22.03.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. UPON THE FACTS AND THE CIRCUMSTANCES OF THE CA SE, THE LR. C.LT (APPEALS) 55, MUMBAI HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3,00,000=00 IN RESPECT OF COMMISSION EXPENSES IGNORING THE FACTUAL MATRIX AND OF THE WRITTEN SUBMISSIONS MADE. 2. THE LR. CIT (APPEALS)-55 MUMBAI HAS GROSS LY ERRED IN CONFIRMING THE ADDITION OF RS. 3,50,400=00 MADE IN REGARD TO THE INCOME FRO M HOUSE PROPERTY BY IGNORING THE WORKING SUBMITTED ON 23-03-2018 AS WAS ORALLY A SKED FOR. 3] YOUR APPELLANT CRAVES LEAVE OF YOUR HONOU R TO ADD, ALTER, MODIFY, OR DELETE THE ABOVE GROUNDS OF APPEAL. ITA NO.2427/M/2018 MR. BIPIN SURESHCHANDRA MEHTA 2 3. THE ISSUE RAISED IN THE FIRST GROUND OF APPEAL I S AGAINST THE CONFIRMATION OF ADDITION OF RS.3,00,000/- BY LD. CI T(A) AS MADE BY THE AO BY DISALLOWING EXPENSES ON ACCOUNT OF COM MISSION PAID TO THE RELATED PARTIES. 4. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE HAS INCU RRED COMMISSION EXPENSES OF RS.30,01,549/- ON A TURNOVER OF RS.7,17,15,423/- WHICH WORKS OUT TO RS.3.89%. THE AO ALSO NOTED THAT OUT OF THE SAID COMMISSION, RS.14,84,17 6/- WAS PAID AS COMMISSION TO ASSESSEES TWO SONS WHO RECENTLY G RADUATED AND JOINED THE ASSESSEE AND THUS MADE AN ADHOC DIS ALLOWANCE OF RS.3,00,000/- OUT OF THE SAID COMMISSION. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AFF IRMED THE ORDER OF AO BY OBSERVING AND HOLDING AS UNDER: I HAVE GONE THROUGH THE AO'S CONTENTION AN APPELLA NTS'S SUBMISSION. THE APPELLANT HAS JUSTIFIED THE PAYMENT OF COMMISSION SAYING THAT THE SON'S HAVE PAID TAXES ON THAT AMOUNT. THE APPELLANT HAS NOT GIVING ME ANY WO RKING ON COMMISSION PAYMENT MADE TO OTHER PARTIES AND ALSO THE BASIS OF THE SAM E. HENCE, 1 AM CONSTRAINED TO ACCEPT THE LOGIC OF THE AO THAT COMMISSION PAYMENT IS ON HIGBCR SIDE NND CONFIRM THE ADDITION. THIS GROUND OF APPEAL IS DISMISSED. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS PAID COMMI SSION OF RS.30,01,549/- OUT OF WHICH RS.14,84,176/- WAS PAID TO THE ASSESSEES TWO SONS WHO RECENTLY JOINED THE BUSINES S OF THE ASSESSEE AND WERE PAID BY WAY OF COMMISSION ON THE SALES QUANTIFYING THE COMMISSION BILLWISE. DURING THE CO URSE OF HEARING THE ASSESSEE PLACED BEFORE THE BENCH THE MO DE AND DATE OF COMPUTATION OF COMMISSION PAID TO THE ASSESSEE S ONS VIS--VIS THIRD PARTIES. WE OBSERVE THAT COMMISSION HAS BEEN PAID AT A UNIFORM RATE OF 5% TO ALL THE AGENTS INCLUDING THE SONS OF THE ITA NO.2427/M/2018 MR. BIPIN SURESHCHANDRA MEHTA 3 ASSESSEE AND IS BASED UPON THE SALES/PERFORMANCE OF THE PARTIES. IN THIS CASE, THE AO HAS MADE ADHOC DISAL LOWANCE WITHOUT DOUBTING THE GENUINENESS OF THE EXPENDITURE . WE FURTHER NOTE THAT BOTH THE SONS OF THE ASSESSEE HAV E FILED THE ITRS AND SHOWED THE SAID RECEIPTS IN THEIR RESPECT IVE RETURNS OF INCOME. THE ASSESSEE HAS ALSO DEDUCTED TDS ON THE SAID PAYMENTS AND DEPOSITED THE SAME INTO GOVERNMENT TRE ASURY. THIS IS NOT THE CASE OF EITHER OF THE LOWER AUTHORI TIES THAT THE COMMISSION PAYMENT IS UNREASONABLE OR EXCESSIVE HAV ING REGARD TO THE PRACTICE IN THE INDUSTRY. THEREFORE WE ARE O F THE VIEW THAT DISALLOWANCE WAS BASED UPON PURELY ON SURMISES AND CONJECTURES AND CAN NOT BE SUSTAINED. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE. 7. THE ISSUE RAISED IN SECOND GROUND OF APPEAL IS A GAINST THE CONFIRMATION OF ADDITION OF RS.3,50,400/- BY LD. CI T(A) AS MADE BY THE AO WITH REGARD TO HOUSE PROPERTY AT LONAVALA . 8. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE ASSESSEE HAS SHOW N THE VALUE OF PROPERTY IN THE BALANCE SHEET AT RS.43,79,990/- WHILE NO INCOME WAS OFFERED UNDER THE HEAD HOUSE PROPERTY IN COME AND ACCORDINGLY ISSUED SHOW CAUSE NOTICE VIDE ORDER SHE ET ENTERED DATED 02.02.2015 AS TO WHY THE INCOME FROM THE SAID PROPERTY SHOULD NOT BE BROUGHT TO TAX. THE ASSESSEE DID NOT REPLY THE SAID SHOW CAUSE AND CONSEQUENTLY, THE AO, BY APPLYING 8% ON RS.43,37,990/-, THE COST OF PROPERTY IN THE BALANC E SHEET, DETERMINED THE DEEMED RENT AT RS.3,50,400/- AND ACC ORDINGLY MADE ADDITION UNDER THE HEAD HOUSE PROPERTY. ITA NO.2427/M/2018 MR. BIPIN SURESHCHANDRA MEHTA 4 9. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 5.3 THE FACTS OF THE CASE IS APPELLANT HAS TWO HOU SE PROPERTY AND ONLY ONE CAN BE TAKEN AS SOP AS PER THE IT. ACT. THE APPELLANT H AS REQUESTED ME THAT THE WORKING DONE BY AO IN AY - 2013-14 SHOULD BE TAKEN. THE A PPELLANT HAS NOT GIVEN ME ANY WORKING AS TO WHY AO'S WORKING SHOULD NOT BE ACCEPT ED. HENCE, I AM CONSTRAINED TO ADMIT THAT THE WORKING DONE BY AO IN INSTANT ASSESS MENT YEAR CAN ONLY BE TAKEN AND THE SAME IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS TWO PROPER TIES DURING THE YEAR, ONE AT MUMBAI AND 2 ND AT LONAVALA. THE ASSESSEE DID NOT FILE ANY DETAILS OF THESE PROPERTIES DURING THE ASSESSMENT PROCEEDINGS AND AO ASSESSED THE DEEMED RENT ON THE BASIS OF VALUE OF PROPERTY SHOWN IN THE BALANCE SHEET BY APP LYING 8% ON THE COST. HOWEVER, IN THE SUBSEQUENT YEAR THE AO T REATED THE PROPERTY AT RS.6,040/- BY TAKING THE STANDARD RENT AT RS.34,733/- AND AFTER ALLOWING MUNICIPAL TAXES AND 30% TOWARDS REPAIRS A NET INCOME WAS ASSESSED AT RS.6, 040/-. DURING THE ASSESSMENT PROCEEDINGS, THE LD. A.R. SUB MITTED BEFORE THE BENCH THAT THE PROPERTY AT MUMBAI MAY KI NDLY BE TAKEN AS DEEMED LET OUT AND HOUSE AT LONAVALA MAY P LEASE BE TAKEN AS SELF OCCUPIED. THE LD. A.R. SUBMITTED THA T THIS HAS BEEN ACCEPTED BY THE AO IN THE SUBSEQUENT ASSESSMEN T YEAR I.E. A.Y. 2013-14 WHEREIN THE ASSESSMENT WAS FRAMED UNDE R SECTION 143(3) DATED 18.01.2016. 11. AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIR CUMSTANCES OF THE CASE, WE OBSERVE THAT THE ASSESSEE IS WELL WITH IN HIS RIGHTS TO CHOOSE ONE OF THE TWO PROPERTIES AS SELF OCCUPIED A ND OFFERED THE PROPERTY AS DEEMED LET OUT AT HIS OPTION. THEREFOR E, WE ARE TREATING THE HOUSE AT MUMBAI AS DEEMED LET OUT AND HOUSE AT ITA NO.2427/M/2018 MR. BIPIN SURESHCHANDRA MEHTA 5 LONAVALA AS SELF OCCUPIED. ACCORDINGLY, WE SET ASI DE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO ASSESS THE DEEMED R ENT ON THE SAME BASIS AS HAS BEEN DONE IN THE ASSESSMENT YEAR 2012-13. 12. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.05.2019. SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.05.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.