ACIT, Cir.24(1), V. Nirja Guleri,

ITA 2662/DEL/2005

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6874 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-10-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 02-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: V K GARG
• Keywords: Depreciation; Tax effect

Judgement Text

ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2662/DEL/2005 A.Y. : 2001-02 ACIT, CIRCLE - 24(1), R.NO. 238B, C.R. BLDG., NEW DELHI VS. SMT. NIRJA GULERI, PROP. PRIME CHANNEL, A-2/30, SAFDARJUNG ENCLAVE, NEW DELHI (PAN: AALPG4019P) AND ITA NO. 2987/DEL/2005 A.Y. 2001-02 SMT. NIRJA GULERI, PROP. PRIME CHANNEL, A-2/30, SAFDARJUNG ENCLAVE, NEW DELHI (PAN: AALPG4019P) (APPELLANTS) VS. ACIT, CIRCLE - 24(1), R.NO. 238B, C.R. BLDG., NEW DELHI (RESPONDENTS) ASSEESSEE BY : SH. V.K. GARG, ADV. DEPARTMENT BY : SH. N.K. CHAND, SR. D.R. ORDER PER BENCH THESE APPEALS BY REVENUE AND ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 23 .3.2005 PERTAINING TO ASSESSMENT YEAR 2001-02. ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 2 REVENUES APPEAL 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION AMOUNTI NG TO ` 5,62,252/- DISALLOWED BY ASSESSING OFFICER FOR UTILIZING THE BORROWED FUNDS FOR NON-BUSINESS USE. 2.1 AT THE THRESHOLD, WE NOTE THAT THE TOTAL ADDITI ON MADE IN THIS CASE IS ` 5,62,252/- AND THE TAX EFFECT IN THIS CA SE IS BELOW ` 2 LAKHS, FIXED BY THE CBDT FOR FILING THE APPEAL BEFORE THE TRIBUNAL VIDE INSTRUCTION NO. 5 DATED 16.7.2007. WHILE CONSIDER ING THE EFFECT OF CBDT INSTRUCTIONS IN THIS REGARD, ITAT DELHI BENC HES ARE CONSISTENTLY TAKING THE VIEW THAT REVENUE AUTHORITIES MUST GIVE RESPECT TO THE C.B.D.T. CIRCULARS AND SHOULD NOT FILE APPEAL IN SMA LL AND PETTY CASES. THE WHOLE IDEA OF THE CIRCULAR IS NOT TO WASTE ENER GY OF THE DEPARTMENT ON SMALL MATTERS AND SAVE IT FOR HIGH-TAX YIELDING C ASES. 2.2 IN OUR ABOVE VIEW, WE FIND SUPPORT FROM THE REC ENT DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PITHWA ENGG. WORKS, [2005] 197 CTR (BOM) 655 : [2 005] 276 ITR 519 (BOM) WHEREIN THEIR LORDSHIPS FOLLOWING THEIR O RDER IN THE CASE OF CIT VS. CAMCO COLOUR CO. [2002] 173 CTR (BOM) 255 : [2002] 254 ITR 565 (BOM) HELD THAT INSTRUCTION DT. 27 TH MARCH, 2000 REFLECT THE POLICY DECISION TAKEN BY THE BOARD NOT TO RAISE QUESTIONS OF LAW WHERE THE TAX EFFECT IS LESS THAN THE AMOUNT PRESCRIBED WITH A VI EW TO REDUCE LITIGATIONS BEFORE THE HIGH COURTS AND THE SUPREME COURT. THE SAID CIRCULAR IS BINDING ON THE REVENUE. ONE FAILS TO U NDERSTAND HOW THE ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 3 REVENUE CAN CONTEND THAT SO FAR AS NEW CASES ARE CO NCERNED, THE CIRCULAR ISSUED BY THE BOARD IS BINDING ON THEM AND IN COMPLIANCE WITH THE SAID INSTRUCTIONS, THEY DO NOT FILE REFERENCES IF THE TAX EFFECT IS LESS THAN ` 2 LAKHS, BUT THE SAME APPROACH IS NOT ADOPTED WITH RESPECT TO THE OLD REFERRED CASES EVEN IF THE TAX EFFECT IS LE AS THAN ` 2 LAKHS. THERE IS NO LOGIC BEHIND THIS APPROACH. BOARDS CI RCULAR DT. 27 TH MARCH, 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFEREN CES WHICH ARE STILL UNDECIDED. THE DEPARTMENT IS NOT JUSTIFIED IN PROC EEDING WITH THE OLD REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL. THUS, THERE IS NO JUSTIFICATION TO PROCEED WITH DECADES OLD REFERENCES HAVING NEGLIGIBLE TAX EFFECT. 2.3 FOR SIMILAR PROPOSITION, WE ALSO FIND SUPPORT FRO M THE DECISION OF HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF IN COME TAX VS. PRADEEP KUMAR GUPTA, [2007] 207 CTR (DEL) 115 WHEREI N THEIR LORDSHIPS HELD THAT TAX EFFECT BEING LESS THAN ` 2 LAKH, THE APPEAL FILED BY THE REVENUE AGAINST THE CBDT INSTRUCTION WAS NOT MAINTAINABLE. 2.4 IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLL OWING THE DECISIONS (SUPRA), IT IS HELD THAT SINCE THE TAX EFFECT INVOL VED IN THE INSTANT APPEAL OF THE REVENUE IS LESS THAN ` 2 LAC, THE SAME IS AGAINST THE INSTRUCTIONS ISSUED BY THE CBDT AND, HENCE, NOT MAI NTAINABLE BEFORE THE TRIBUNAL. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS LIABLE TO ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 4 BE DISMISSED ON THIS GROUND ALONE AND THE SAME IS DI SMISSED ACCORDINGLY. ASSESSEES APPEAL 3. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF ` 122090/- OUT OF TOTAL DISALLOWANCE OF ` 6873842/- BEING INTEREST PAID ON LOANS BORROWED AND UTILIZED BY THE ASSESSEE FOR ITS BUSINESS PURPOSE S IN EARLIER YEARS. 3.1 THE ASSESSEE IS PROPRIETOR OF M/S PRIME CHANNEL, WHICH IS ENGAGED IN THE PRODUCTION OF TELE-SERIALS. DURING T HE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED INCOME FROM HOUS E PROPERTY AND BUSINESS. THE P&L ACCOUNT FILED BY THE ASSESSEE SHOWS AN AMOUNT OF ` 23,80,000/- DEBITED AS INTEREST PAID. FURTHER, THE BALANCE SHEET SHOWED AN AMOUNT OF ` 1,93,80,000/- AS UNSECURED LOA NS ON WHICH INTEREST AT THE RATE OF 14% WAS PAID DURING THE YE AR. THE DETAILS OF INVESTMENT SHOWN IN THE BALANCE SHEET SHOW THAT DUR ING THE YEAR FRESH INVESTMENTS WERE MADE FOR ` 1,70,00,000/-. ON ENQUI RY AS TO WHY THE INTEREST PAID ON LOANS TO THE EXTENT OF THIS INVEST MENT MAY NOT BE DISALLOWED AS THESE WERE INVESTED IN INSTRUMENTS FR OM WHICH INCOME EARNED WAS NOT CHARGEABLE TO TAX. IN RESPONSE ASSE SSEE STATED THAT LOANS FROM WHICH INTEREST WAS PAID WAS TAKEN IN EARL IER YEAR TO MEET THE REQUIREMENT OF BUSINESS. ASSESSING OFFICER PRO CEEDED TO HOLD AS UNDER:- THUS, FROM THE ABOVE DISCUSSION IT IS AMPLY CLEAR T HAT INTEREST ON BORROWED CAPITAL CANNOT BE ALLOWED ON T HE AMOUNT, WHICH IS UTILIZED FOR NON-BUSINESS PURPOSE A ND FOR THE PERIOD FOR WHICH THE FUND IS UTILIZED AS SUCH. THUS, IN ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 5 THE PRESENT CASE THE DISALLOWANCE IS CALCULATED @ 1 4% ON SUCH AMOUNT AND FOR SUCH PERIOD AS THE BUSINESS FUN DS WERE UTILIZED FOR NON-BUSINESS PURPOSE. THE DISALL OWANCE IS SHOWN IN THE TABLE BELOW:- INVESTMENT AMOUNT DATE NO. OF DAYS FOR WHICH INTERE ST DISALL OWED INTEREST DISALLOWED @ 14% ALLIANCE EQUITY GROWTH MUTUAL FUND 2500000 11.01.2001 80 76712.33 FRANKLIN TEMPLETON INDEX DIV. OPTION 2500000 11.01.2001 80 76712.33 MERYLL LYNCH BOND FUNDS 10000000 11.01.2001 80 306849.32 FIXED DEPOSIT UTI 2000000 09.06.2000 296 227068.49 TOTAL 687342.47 IN VIEW OF THE ABOVE DISCUSSIONS, OUT OF THE TOTAL INTEREST PAYMENT OF ` 23,80,000/- AN AMOUNT OF ` 6,87,342.47 IS DISALLOWED FOR UTILIZING THE BORROWE D FUNDS FOR NON-BUSINESS USE. ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 6 3.2 UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUE AND HELD AS UNDER:- IN THE LIGHT OF THE ABOVE OBSERVATIONS, IT IS SE EN THAT THE APPELLANTS STAND IS THAT LOANS TAKEN IN A.Y. 1997- 98 HAD BEEN UTILIZED FOR THE BUSINESS IN THAT YEAR ITSELF AND THE INVESTMENTS MADE IN THIS YEAR WERE OUT OF ITS OWN FU NDS, AND THERE WAS NO NEXUS BETWEEN THE INTEREST BEARING OLD LOANS AND THE INVESTMENTS. TO EXAMINE THIS CLAIM THE APPELLANTS BALANCE SHEET FOR THAT YEAR AND SUBSEQ UENT YEARS HAS BEEN EXAMINE. IT IS SEEN THAT IN THE PERIO D RELEVANT TO A.Y. 1997-98 THE APPELLANT HAD TAKEN U NSECURED LOANS OF ` 2,03,51,709/- AND IT HAD ALSO UTILIZED I TS EXISTING CURRENT ASSETS TO THE EXTENT OF ABOUT ` 2.70 CRORES TO ACQUIRE NEW FIXED ASSETS OF ABOUT ` 1.20 CRORES, AN D TO REDUCE ITS CURRENT LIABILITIES BY ABOUT ` 3.12 CROR ES. THUS MOST OF THE FUNDS RAISED AS UNSECURED LOANS HAD BEE N UTILIZED IN THAT YEAR. NO INTEREST BEARING LOANS WE RE TAKEN IN SUBSEQUENT YEARS. BUT, IT IS ALSO SEEN THAT EVEN AFTER SUCH UTILIZATION OF FUNDS IN A.Y. 1997-98, THE APPELLAN T STILL HAD AN AMOUNT OF ` 30,18,611.73 AS CASH IN HAND AND CAS H IN BANK, AS SEEN IN ITS CURRENT ASSETS AS ON 31.3.1997 . THAT IS TO SAY THAT THE APPELLANTS PLEA THAT ALL ITS FUNDS RAISED AS INTEREST BEARING LOANS IN A.Y. 1997-98 HAD BEEN US ED UP IN THAT YEAR ITSELF IS NOT FOUND TO BE ENTIRELY CORREC T. IT IS FURTHER SEEN THAT THIS AMOUNT WAS NOT FULLY DEPLETE D IN THE SUBSEQUENT YEARS AS WELL, THAT COULD INDICATE THAT ALL THE NON BUSINESS INVESTMENT IN A.Y. 2001-02 WAS MADE OUT OF ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 7 THE CURRENT YEARS CAPITAL, PROFITS ETC. IT IS SEEN THAT IN THE INTERVENING YEARS ALSO THE APPELLANT HAD CASH IN HA ND AND IN BANK OF ABOUT ` 66.06 LAKHS ON 31.3.09, ` 73.27 LAK HS AS ON 31.3.2000 AND ` 2.83 CRORES AS ON 31.3.2001. THUS I T IS NOT CORRECT TO SAY THAT ALL THE BORROWED FUNDS HAD BEEN USED UP IN A.Y. 1997-98 OR EVEN IN THE SUBSEQUENT AND INTE RVENING YEARS, SINCE THE APPELLANT ALWAYS HAD A PART OF THE UNUTILIZED FUNDS OUT OF THE INTEREST BEARING LOANS, AT LEAST OF ` 30,19,611,73 COMING DOWN SINCE A.Y. 1997-98 , WHIC H COULD BE SAID TO HAVE BEEN INVESTED TOWARDS THE NON BUSINESS INVESTMENTS IN A.Y. 2001-02 OUT OF THE OLD INTEREST BEARING LOANS. IT MAY BE ADDED HERE THAT IN THE PREC EDING A.Y.S, ESPECIALLY IN A.Y. 99-00 THE FACT THAT THE I NTEREST PAYMENTS WERE ALLOWED AS A DEDUCTION WOULD INDICATE THAT IT WAS ACCEPTED BY THE ASSESSING OFFICER IN THAT Y EAR THAT THE INTEREST EXPENDITURE WAS FOR THE APPELLANTS BU SINESS AND HENCE ALLOWABLE. BUT DURING THESE PROCEEDINGS N O CASE HAS BEEN MADE OUT BY THE APPELLANT TO SHOW THAT THI S AMOUNT TOO HAD BEEN USED UP FOR BUSINESS IN THE INTERVENING YEARS. BUT THE BALANCE INVESTMENT OUT OF ` 1.70 CRORES HAS TO BE TAKEN TO HAVE BEEN INVESTED O UT OF THE APPELLANTS INCOME AND CAPITAL OF THE PRESENT A.Y., AS THE SAME FOR EXCEEDED THE AMOUNTS INVESTED IN FDRS ET C. THUS, THERE WAS A NEXUS BETWEEN THE INTEREST BEARI NG LOANS TAKEN IN A.Y. 1997-98 AND THE INVESTMENTS MADE IN T HE PRESENT A.Y., TO THE EXTENT OF ` 30,19,611.73 ONLY AND NOT IN RESPECT OF THE BALANCE INVESTMENT. IN VIEW OF THIS POSITION, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER HAS TO BE ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 8 PARTLY SUSTAINED. OUT OF THE CLAIM OF ` 23.80 LACS, THE ASSESSING OFFICER HAD DISALLOWED A SUM OF ` 6,87,34 2/-, IN THE PRESENT A.Y. WHEN IT WAS TREATED THAT THE ENTIR E INVESTMENTS OF ` 1.70 CRORES WAS MADE OUT OF INTERES T BEARING LOANS. NOW SINCE THE INVESTMENT OUT OF INTE REST BEARING LOANS IS TAKEN TO BE OF ` 30,1,611.73 / ` 1 .70 CORES X ` 6,87,342, WHICH COMES TO ` 1,22,090/-. THIS IS MA DE FOR THE SAME REASONS MENTIONED BY THE ASSESSING OFFIC ER, NAMELY THAT THE INVESTMENTS WERE FOR NON-BUSINESS PU RPOSE AND ALSO THAT THE INVESTMENTS WERE MADE TO EARN INC OME THAT WAS NOT CHARGEABLE TO TAX. THE DISALLOWANCE OUT OF THE INTEREST CLAIMED BY THE APPELLANT THUS COMES TO ` 1,22,090/- AND THE APPELLANT GETS A RELIEF OF THE B ALANCE AMOUNT I.E. ` 5,62,252/- [ ` 6,87,342 - ` 1,22,090] . 3.3 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S MADE A FACTUAL ANALYSIS AND FOUND THAT ONLY A PART OF THE INTERES T CAN BE DISALLOWED. HE HAS GIVEN A FINDING THAT OUT OF ` 1.70 CRORES C ONSIDERED BY THE ASSESSING OFFICER INVESTMENT OUT OF INTEREST BEARI NG FUNDS WAS ` 30,19,611.73. THE LD. COUNSEL OF THE ASSESSEE COUL D NOT CONTROVERT THE FINDING. HENCE, IN OUR CONSIDERED OPINION HIS ORD ER DOES REQUIRE ANY INTERFERENCE ON OUR PART. HENCE THE DISALLOWANCE O F ` 1,22,090/- STANDS AFFIRMED. 4. THE NEXT ISSUES RAISED READ AS UNDER:- I) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING THE ASSESSM ENT OF RATEABLE VALUE OF PROPERTY NO. 41-A, ROYAL ACCORD, M UMABI, ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 9 AT ` 5,00,000/- WITHOUT APPRECIATING THE APPELLANT S CLAIM THAT THE SAID PROPERTY WAS USED FOR BUSINESS PURPO SES AND AS SUCH, NO RATEABLE VALUE WAS ASSESSABLE. II) THAT WITHOUT PREJUDICE AND IN THE ALTERNATIVE, I F INCOME FROM PROPERTY NO. 41A, ROYAL ACCORD, MUMBAI, BE ASSESSABL E AS INCOME FROM HOUSE PROPERTY, THE SAME IS INCORRECTLY COMPUTED WITHOUT PROPER ALLOWANCE, OUTGOINGS AND DEDUCTIONS THERE FROM, INCLUDING BECAUSE RATEABLE V ALUE HAS BEEN TAKEN ON NON-COMPARABLE BASIS WITHOUT ADOPT ING STANDARD RENT IN VIEW OF THE DECISIONS OF THE HONB LE APEX COURT. AS SUCH TOO, THE SAID ADDITION IS LIABLE TO BE SUBSTANTIALLY REDUCED, IF NOT DELETED. III) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED ON FACTS IN LAW IN SUSTAINING THE NON-ALLOWA NCE OF DEPRECIATION ON PROPERTY NO. 41-A, ROYAL ACCORD, MU MBAI USED BY THE ASSESSEE FOR THE PURPOSES OF ITS BUSINE SS. THE SAME WAS DULY CLAIMED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS THOUGH INADVERTENTLY NOT CLAIMED IN RET URN. 4.1 DURING THE COURSE OF ASSESSMENT ASSESSEE WAS REQ UIRED TO FURNISH THE DETAILS OF PROPERTIES OWNED BY HER. IN THE DETAILS FILED IT WAS OBSERVED THAT THE PROPERTY NO. 41-A, ROYAL ACC ORD, MUMBAI WAS MENTIONED AS USED FOR BUSINESS AND ITS ANNUAL VALUE WAS TAKEN AT NIL. HOWEVER, FROM THE SCHEDULE OF FIXED ASSETS FURNISH ED BY THE ASSESSEE ALONG WITH THE RETURNS, IT WAS OBSERVED THAT NO DEP RECIATION WAS CLAIMED ON THIS PROPERTY. THE ASSESSEE COULD NOT EX PLAIN WHY DEPRECIATION WAS NOT CLAIMED ON THIS PROPERTY IF TH E SAME WAS USED FOR THE PURPOSE OF BUSINESS. ASSESSING OFFICER OPINED THAT PROPERTY NO. ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 10 41-A, ROYAL ACCORD, MUMBAI WAS NOT USED FOR THE BUSI NESS PURPOSE OF THE ASSESSEE. FURTHER, IN THE CASE OF THE ASSESSEE FOR A.Y. 1999-2000 THE ASSESSING OFFICER HELD THAT THE PROPERTY WAS N OT USED FOR BUSINESS AND THE INCOME WAS CHARGEABLE UNDER THE HEAD HOUSE PROPERTY. FOR DETERMINING THE ANNUAL VALUE, ASSESSING OFFICER FOU ND THE SAME TO BE EQUAL TO THAT OF PROPERTY NO. 41-B, ROYAL ACCORD, MU MBAI FROM WHICH, THE ASSESSEE SHOWED ANNUAL RENT OF ` 5,00,000/-. T HUS, THE ANNUAL VALUE OF THIS PROPERTY IS ALSO TAKEN AT ` 5,00,000 /-. 4.2 UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) AFFIRMED THE ADDITION. 4.3 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 4.4 LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE I N ASSESSEES OWN CASE, THE TRIBUNAL HAD EARLIER DELETED THE ADDI TION MADE FOR A.Y. 1999-2000 IN ITA NO. 1865/DEL/2005. 4.5 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THE SAID ORDER THE TRIBUNAL ON THE SAI D ISSUE HAD HELD AS UNDER:- WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE B ILLS OF FURNITURE AND FIXTURE WHICH WAS ADDED DURING THE YE AR UNDER CONSIDERATION, THE CLAIM OF DEPRECIATION OF TH E ASSESSEE HAS NOT BEEN DISTURBED. THOSE BILLS CLEARL Y SHOWS THAT THE FURNITURE INSTALLED OR BROUGHT WAS BELONGING TO THAT PROPERTY. IT IS ALSO NOT SHOWN B Y THE REVENUE THAT ASSESSEE USED THE SAID PROPERTY FOR HE R PERSONAL USE. AS AGAINST THAT THE ASSESSEE HAS BEE N ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 11 ABLE TO SHOW THAT THE SAID PROPERTY WAS BUSINESS PROPERTY AND THE SAID FACTS WAS CLEARLY STATED IN THE WEALTH TAX RETURN SO FILED. IT HAS NOT BEEN SHOW N BY THE REVENUE THAT THE CLAIM OF THE ASSESSEE THAT THE SAID PROPERTY IS BUSINESS PROPERTY WAS NOT ACCEPTED IN WEALTH TAX PROCEEDINGS. THUS, IT IS DIFFICULT T O REJECT THE SUBMISSIONS OF THE ASSESSEE THAT THE SAID PROPERTY WAS BEING USED AS BUSINESS PROPERTY WITHO UT BRINGING ANY MATERIAL ON RECORD TO SUGGEST THAT THE FACT STATED BY THE ASSESSEE IN THE WEALTH TAX RETUR N OR ON THE BILLS OF FURNITURE WAS WRONG. THE ASSESSEE HAD BROUGHT THE MATERIAL ON RECORD BEFORE THE ASSESSING OFFICER TO SHOW THAT THE SAID PROPERTY WAS BEING UTILIZED FOR THE PURPOSE OF BUSINESS. THE SAID REC ORD HAS BEEN REJECTED WITHOUT ANY COGENT REASONS OR BY BRINGING SOME ADVERSE MATERIAL ON RECORD TO SUGGEST THAT THE FACTS STATED BY THE ASSESSEE WAS FALSE OR INCORRECT. IN THESE CIRCUMSTANCES, THE ALV COULD NOT BE ASSESSED AS THE SAID PROPERTY WAS NOT SELF- OCCUPIED PROPERTY. HOWEVER, SO AS IT RELATES TO CLA IM OF THE ASSESSEE WITH REGARD TO DEPRECIATION ON THE SAID PROPERTY, LD. C.I.T.(A) HAS NOT GIVEN ANY FINDING DESPITE THE FACT THAT THE GRIEVANCE WAS STATED BY T HE ASSESSEE BEFORE HIM IN GROUND NO. 5. IN THE CIRCUMSTANCES, WE HOLD THAT ALV COULD NOT BE ASSESSED AS HOUSE PROPERTY INCOME AS THE ASSESSEE WAS USING THE PROPERTY FOR THE PURPOSE OF BUSINESS. IF IT IS SO, THE CLAIM OF DEPRECIATION IS CONSEQUENTIAL . ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 12 HOWEVER, NEITHER THE ASSESSING OFFICER NOR THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS QUANTIFIED THE DEPRECIATION AVAILABLE, THEREFORE, WE DIRECT T HE ASSESSING OFFICER TO COMPUTE THE ADMISSIBLE DEPRECIATION ON THE VALUE OF THE SAID PROPERTY. IN THE RESULT, THE ADDITION MADE OF ` 4,32,000/- ( ` 5,76,000 FOR REPAIR AND MAINTENANCE, ` 1,44,000 /-) ASSESSING NET ANNUAL LETTING VALUE OF THE PROPERTY IS DELETED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION AS DIRECTED ABOVE. THUS, GROUND NO. 3 AND 3.1 ARE ALLOWED IN THE MANNER AFORESAID. 4.6 THE FACTS IN THE PRESENT CASE ARE IDENTICAL, H ENCE, FOLLOWING THE ABOVE PRECEDENT, WE SET ASIDE THE ORDERS OF THE AU THORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE IN ACCOR DANCE WITH ABOVE TRIBUNAL DECISION. 5. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF ` 112409/- ON ACCOUNT OF ELECTRICITY CHARGES IN RESPECT OF PROPERTY NO. 4 1-A, ROYAL ACCORD, MUMBAI USED BY THE ASSESSEE FOR THE PURPOSE OF BUSIN ESS. 5.1 THIS ISSUE IS CONSEQUENTIAL TO THE ABOVE AND A S SUCH THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. 6. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION OF INCOME FROM HOUSE PROPERTY IN RESPECT OF PROPERTY NO. W-97, GREATER K AILASH-II, NEW DELHI WHICH HAS BEEN ERRONEOUSLY ASSESSED ON A NET ANNUAL VALUE OF ` 413610/-. ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 13 6.1 ON THIS ISSUE ASSESSING OFFICER OBSERVED THAT IN THE CHART FURNISHED BY THE ASSESSEE THE PROPERTY AT GREATER K AILASH-II, NEW DELHI WAS SHOWN AS DILAPIDATED PROPERTY AND NOT IN USE. MOREOVER, THE SIZE OF THE PROPERTY WAS NOT MENTIONED BY THE ASSESSEE A S REQUIRED. FROM THE SCHEDULE OF THE FIXED ASSETS, IT WAS OBSERVED THAT THE WDV WAS SHOWN AT ` 1,43,25,000/- AND NO DEPRECIATION WAS CL AIMED ON THIS PROPERTY. SINCE THE VALUE SHOWN IN THE BALANCE SHE ET WAS QUITE HIGH IT IS CLEAR THAT THE SAME CANNOT BE DILAPIDATED AS CLA IMED BY THE ASSESSEE. FURTHER, THE ASSESSING OFFICER MENTIONED THAT IN A.Y. 1999- 2000 ALSO, THE ASSESSING OFFICER HAD TAXED RENTAL INCOME FROM THIS PROPERTY UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HENCE, TAKING THE SAME STEP IN THIS YEAR THE ANNUAL VALUE WAS TAK EN AT ` 4,13,610/- WHICH WAS TREATED BY THE ASSESSING OFFICER RATEAB LE VALUE OF THE PROPERTY AS PER THE PROPERTY TAX BILL ISSUED BY TH E ASSESSMENT AND COLLECTION DEPARTMENT OF MCD. 6.2 UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION. 6.3 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT NO EVIDENCE WHATSOEVER HAS BEEN FURNISHED BY THE ASSESSEE FOR THE CLAIM THAT THE SAID PROPERTY IS IN DILAPI DATED CONDITION AND WAS NOT LET OUT. IN THE EARLIER YEAR THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THE LAST TITL ED DEED WAS REGISTERED ON 12 TH APRIL, 1999 AND TRIBUNAL HAS HELD THAT UNLESS IT W AS ESTABLISHED THAT THE ASSESSEE HAS GOT THE POSSESSION OF THE MAI N PROPERTY BEFORE THE EXECUTION OF THE LAST TITLE DEED, IT CANNOT BE SAID THAT WITH CERTAINTY THAT ANY ALV WAS ASSESSABLE WITH REGARD T O THAT PROPERTY. THEREFORE, TRIBUNAL HAD DIRECTED THE ASSESSING OFFI CER TO DELETE THE ITA NOS. 2662 & 2987/DEL/2005 A.Y. 2001-02 14 SAME. FOR THE PRESENT YEAR UNDER CONSIDERATION, THERE IS NO DOUBT REGARDING THE POSSESSION OF THE PROPERTY BY THE ASS ESSEE. IN THE ABSENCE OF THE ANY EVIDENCE PRODUCED BY THE ASSESSE E THAT THE SAME WAS IN A DILAPIDATED CONDITION, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE AUTHORITIES BELOW AND, THEREFOR E, WE AFFIRM THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED AND APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/10/2010. SD/- SD/- [A.D. JAIN] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 22/10/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES