DCIT, New Delhi V. M/s DLF Ltd., New Delhi

ITA 3561/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74292 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVAS R
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B: NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3561/DEL/2013 (ASSESSMENT YEAR: 2005-06) DCIT VS. DLF LTD., CIRCLE 10(1), (FORMERLY KNOWN AS DLF UNIVERSAL LTD.,) NEW DELHI. DLF CENTRE, SANSAD MARG, NEW DELHI (AAACD3494N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. S. SINGHVI, CA REVENUE BY :MS. NIDHI SRIVASTAVA,S R. DR ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XIII, NEW DELHI DATED 26.03.2013 FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS: 1) WHETHER THE CIT (A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN ITA NO. 3561/DEL/2013 2 DELETING DISALLOWANCE OF RS.15,05,000/- ON ACCOUNT OF INTERNAL DEVELOPMENT EXPENDITURE? 2. WHETHER THE CIT (A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS.4,51,86,148/- ON ACCOUN T OF RECLASSIFICATION OF INCOME FROM HOUSE PROPERTY? 3. WHETHER THE CIT (A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS.3,02,61,251/- ON ACCOUN T OF NOTIONAL RENTAL INCOME VACANT/ LEASED PROPERTIES ? 4. THE ASSESSEE CRAVES LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MAT ERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. GROUND NO. 1 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE, IS ENG AGED IN THE BUSINESS OF REAL ESTATE AND DEVELOPMENT. DURING THE YEAR THE AS SESSING OFFICER MADE SEVERAL DISALLOWANCES OUT OF WHICH RS.15,05,000/- W AS DISALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF INTERNAL DEVELOPMEN T EXPENDITURE NOT CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE CONTENT ION OF THE ASSESSEE REMAINED THAT THIS EXPENDITURE WAS NOT CLAIMED BY T HE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT BUT THE SAME WAS INCLUDED IN THE W ORK-IN-PROGRESS. IT WAS ITA NO. 3561/DEL/2013 3 SUBMITTED THAT THE CLAIMED DEVELOPMENT EXPENDITURE WAS ACTUALLY INCURRED DURING THE YEAR. IT WAS RELATING TO SECURITY CHARGE S, CONVERSION CHARGES, ROAD WORK ETC. THE LD. CIT (A) HAS DELETED THESES D ISALLOWANCE WHICH HAS BEEN QUESTIONED BY THE REVENUE IN THIS GROUND. 4. AT THE OUT SET, THE LD. AR SUBMITTED THAT THE IS SUE RAISED IS FULLY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 1994-95, 2000-01, 2002-03 & 2004-0 5 UNDER THE SIMILAR SET OF FACTS AND CIRCUMSTANCES. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITT ED THAT THE EXPENDITURE WAS NOT CLAIMED BY THE ASSESSEE IN ITS PROFIT AND L OSS ACCOUNT. 6. THE LD. AR SUBMITTED THAT THE LD. CIT (A) HAS PA SSED DETAIL ORDER AFTER DISCUSSING THE CASE OF THE PARTIES AND FOLLOW ING THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF ON AN IDENT ICAL ISSUE UNDER SIMILAR SET OF FACTS AND CIRCUMSTANCES FOR THE ASSESSMENT YEARS 1994-95, 2000-01, 2001- 02,2002-03 & 2003-04. 7. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIMED EX PENDITURE WITH THIS OBSERVATION THAT OUT OF THE TOTAL DEVELOPMENT EXPEN DITURE INCURRED ON INTERNAL DEVELOPMENT, EXPENDITURE ON THE MAINTENANC E, BILLING SERVICES COULD ITA NO. 3561/DEL/2013 4 NOT BE TREATED AS EXPENSES FOR CONSTRUCTION AND DEV ELOPMENT. WE FIND THAT IN THE ABOVE CITED ASSESSMENT YEARS AN IDENTICAL ISSUE WAS RAISED, WHEREIN ASSESSING OFFICER WAS DIRECTED TO DELETE SUCH DISAL LOWANCE WITH FURTHER DIRECTION TO CONSIDER THE SAME AS PART OF WORK-IN-P ROGRESS. 8. THE LD. CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE DURING THE YEAR FOLLOWING THE ORDERS OF THE TRIBUNAL IN TH E ABOVE CITED ASSESSMENT YEARS IN THE CASE OF ASSESSEE ITSELF. FOR A READY R EFERENCE, WE ARE REPRODUCING CONTENTS OF PARA 5.9 OF THE FIRST APPELLATE ORDER: 5.9 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT, OBSERVATIONS OF THE ASSESSING OFFICER, REMAND REPOR T AND REJOINDER TO THE REMAND REPORT. I HAVE ALSO CONSIDERED THE DECISION OF CIT (A) AS WELL AS HONB LE ITAT IN APPELLANTS OWN CASE FOR EARLIER YEARS. IT IS SEEN THAT THIS ISSUE IS COVERED IN FAVOUR OF THE APPELLA NT BY THE ORDERS OF HONBLE ITAT IN APPELLANTS OWN CASE FOR AY 1994-95, 2000-2001 TO 2002-03 AND 2004-05. IT IS OBSERVED THAT THE ASSESSING OFFICER NOTED THAT THE APPELLANT IS CLAIMING DEDUCTION IN RESPECT OF INTER NAL DEVELOPMENT EXPENDITURE OF THE AMOUNT IN PROPORTION TO THE AREA CONVEYANCED IN RESPECT OF PROPERTIES DURIN G THE YEAR. THE APPELLANT WAS ASKED TO GIVE DETAILS OF SU CH EXPENDITURE INCURRED. THE ASSESSING OFFICER OBSERVE D THAT THE EXPENDITURE UNDER THE HEAD INTERNAL DEVELOPMENT CHARGES, ROAD WORKS ETC. IT WAS ALSO OBSERVED BY THE ASSESSING OFFICER THAT OUT OF THE TOTAL DEVELOPMENT EXPENDITURE INCURRED ON INTERNAL DEVELOPMENT, EXPENDITURE ON THE MAINTENANCE BILLING SERVICES COULD NOT BE TREATED AS EXPENSES FOR CONSTRUCTION AND DEVELOPMENT AND HENCE WAS NOT ALLOWABLE. SIMILAR ISSUE AROSE IN APPEALS OF THE APPELLANT FOR EARLIER YEARS AND IN TERMS OF APPELLA TE ITA NO. 3561/DEL/2013 5 ORDERS, THE ASSESSING OFFICER HAD BEEN DIRECTED TO DELETE SUCH DISALLOWANCE AND THE ASSESSING OFFICER WAS DIRECTED TO CONSIDER THE SAME AS PART OF WORK IN PROGRESS. THE HONBLE ITAT B BENCH VIDE ITS RECEN T ORDER DATED 09.04.2009 IN ITA NO.93/DEL/2008 FOR A. Y. 2004-05 IN APPELLANTS OWN CASE DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT. RELEVANT EXTRACTS FROM THE SAID ORDER IS REPRODUCED AS UNDER: 5. AFTER CONSIDERING RIVAL SUBMISSIONS, WE FIND THA T THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE E BY THE TRIBUNAL IN APPEAL FOR ASSESSMENT YEAR 1994-95. THIS FACT HAS BEEN CONFIRMED BY BOTH THE COUNSELS. SINCE THE INTERNAL DEVELOPMENT EXPENSES ARE DEBITED TO WORK IN PROGRESS ACCOUNT AND THE EXPENSES DEBITED T O PROFIT AND LOSS ACCOUNT ARE IN PROPORTION TO PROPER TIES CONVEYANCED IS ALLOWABLE. THE TRIBUNAL IN APPEAL FO R ASSESSMENT YEAR 1994-95 OBSERVED AS UNDER: 13. THE NEXT ISSUE IS WITH REGARD TO 30% OF SALE VA LUE WHICH, PER SECTION 5(1) OF HDRUA ACT HAS TO BE DEPOSITED IN A SEPARATE BANK ACCOUNT UNDER THE CONT ROL OF DIRECTOR, TOWN & COUNTRY PLANNING, HARYANA. THE ASSESSEE DEBITS ON YEARLY BASIS ALL DIRECT EXPENSES FOR DEVELOPMENT OF THIS COLONY, INTO THE W ORK- IN PROGRESS ACCOUNT. ON SALE OF THE LAND OR UNITS, IT CREDITS WORK-IN-PROGRESS: ACCOUNT BY 30% OF SALE VA LUE AND DEBITS THE SAME TO PROFIT & LOSS ACCOUNT AS INTERNAL DEVELOPMENT CHARGES. THIS, IT H AS DONE CONSISTENTLY, RIGHT FROM 1981 TILL DATE. THE C IT (A) HAS DISCUSSED THIS ISSUE IN PARA 24 OF PAGE 23 ONWA RDS. HIS FINDING GIVEN AT PAGE 28 PARA (V) OF HIS ORDER. NOW, HERE AGAIN THE CIT(A) VARIES THE METHOD OF ACCOUNTI NG ITA NO. 3561/DEL/2013 6 REGULARLY FOLLOWED AND EMPLOYED BY THE ASSESSEE AND ACCEPTED BY ALL CONCERNED AUTHORITIES RIGHT FROM ASSESSMENT YEAR 1982-83 TO 1993-94. HAVING VERIFIED THE DETAILS AS PER DIRECTIONS OF THE CIT(A); 30% HA S BEEN ACCEPTED AS THE FAIR VALUE OF INTERNAL DEVELOP MENT EXPENSES BY A. O. IN FACT, WHEN THE MATTER WENT BACK IN REMAND, CIT(A) FOUND THAT THE ACTUAL EXPENDITURE INCURRED IN THE YEAR WAS MORE THAN 30% OF THE SALE BOOKED IN THE YEAR. THEREFORE, METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS FAIR AND CORRECT AND I N ACCORDANCE WITH HDR UA ACT. IT IS ONLY WHEN THE PROJECT COMES TO A CLOSE, THAT THE CLOSING ENTRIES WOULD NEED TO BE PUT TO THE BALANCE, IF ANY, IN THE WORK- IN PROGRESS ACCOUNT. 13.1 WE ALSO FIND THAT THE FINDING OF CIT(A) THAT T HIS IS NOT THE ANNUAL EXPENDITURE, IS ACTUALLY INCORRECT. IT IS ONLY EXPENDITURE WHICH IS WRITTEN OFF, BUT WHAT PERCENTAGE THEREOF IS THE QUESTION, - ALL OF IT BE WRITTEN OFF OR SOME PART OF IT BE WRITTEN OFF 'THIS WOULD DEPEND ON THE VARIOUS FACTORS, SUCH AS, DEVELOPMENT OF THE COLONY AND AS THE ASSESSEE FOLLOWS THE PROJECT COMPLETION METHOD, INCOME ON REGISTRATION OF SALE, THEN IT HAS TO BE NECESSARILY PERCENTAGE OF THE SALE VAL UE. THERE CAN BE NO BETTER METHOD THAN THIS WHICH GIVES THE CORRECT PROFIT OR LOSS ON A PARTICULAR SALE. IT IS DUE TO THIS REASON THAT IN SPITE OF THIS ORDER OF CIT(A), THIS WAS NEVER FOLLOWED BY THE DEPARTMENT, NOR WAS IT AGITAT ED UPON IN THE EXECUTION PROCEEDINGS OR IN APPEALS IN SUBSEQUENT YEARS. THIS HAS NOT RESULTED IN ANY PROF IT TO THE REVENUE, BUT HAS ONLY INCREASED THE ADMINISTRAT IVE WORK, BOTH FOR THE REVENUE, AS WELL AS, FOR THE ASSESSEE. THIS IS EVIDENT FROM THE FACT THAT, IN RE MAND PROCEEDINGS, THE ACTUAL INCOME FROM BUSINESS (LOSS) HAS BEEN INCREASED TO RS. 79,82,5161-. THE RELEVANT PAR A IS LAST SUB PARA OF PARA 3 AT PAGE NO.7 OF THE ADS ORDER DATED 24.03.2000 WHICH IS REPRODUCED HEREUNDER: THE ASSESSEE COMPANY HAS SUBMITTED THE DETAILS IN RESPECT OF THE TOTAL AREA OF LAND OF THE COLONY KNO WN AS ITA NO. 3561/DEL/2013 7 DLF QUTAB ENCLAVE, TOTAL LICENSED AREA OF THE COLON Y, AREA UNDER PLOTS. GROUP HOUSING, AREA UNDER COMMERCIAL USE, AREA UNDER ROADS, PARK AND AREA UNDER COMMUNITY SITES, TOTAL EXPENSES FOR INTERNAL DEVELOPMENT OF THE COLONY ACTUALLY INCURRED AND DEB ITED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSEE COMPANY HAS ALSO SUBMITTED THE WORKING OF THE PROFITS/LOSS ON CONSTRUCTED PROPERTIES ON POSSESSION BASIS AS ALSO THE REVISED WORKING OF THE TRADING ACCOUNT AS PER THE FINDINGS OF THE LEARNED CIT(A)-23 FOR ASSTT. YE AR 1994-95. ACCORDING TO THE REVISED WORKING, THE G. P. WILL GO DOWN BY A FIGURE OF RS. 79,82,516/- AND THE SAME IS REDUCED FROM THE, TOTAL INCOME OF THE ASSESSEE COMPANY. A COPY OF THE REVISED TRADING ACCOUNT DULY SIGNED BY THE ASSESSEE IS ENCLOSED HEREWITH. ' THEREFORE, THIS TINKERING OF THE METHOD OF ACCOUNTI NG OF THE ASSESSEE HAS NOT RESULTED IN ANY GAIN TO THE RE VENUE IN THE YEAR UNDER APPEAL. FURTHER, COLLECTIVELY, IF ALL THE YEARS ARE TAKEN INTO CONSIDERATION, THERE IS NO GAI N TO THE REVENUE. IN FACT, THERE IS LOSS TO THE REVENUE, IF THE EFFECT OF ORDER OF CIT IS GIVEN IN ALL THESE PREVIOUS YEARS AND SUBSEQUENT TO THE YEAR UNDER APP EAL. A CHART HAS BEEN FILED BY THE ASSESSEE IN RE-ASSESS MENT APPELLATE PROCEEDINGS IN ITAT WHICH WERE ALSO HEARD TOGETHER ALONG WITH THIS APPEAL. SINCE IN ULTIMATE ANALYSIS. WE HAVE HELD THAT THE RECOURSE TO PROVISO TO SECTION 145 OF THE ACT IS UNCALLED FOR, THE BOOK RE SULTS ARE TO BE ACCEPTED SINCE THERE IS NO DISPUTE TO THE INCOME OFFERED AND EXPENSES CLAIMED, THESE DIRECTIO NS GIVEN BY CIT(A), IN HIS ORDER, ARE INCORRECT AND TH E ORDER OF THE AD AND THE CIT, DELHI (CENTRAL)/' NEW DELHI, ON THIS GROUND FOR APPLYING SECTION 145 OF T HE ACT NEEDS TO BE OVER-RULED AND THE RETURN OF THE ASSESSEE ON THIS POINT NEEDS TO BE RESTORED THE INC OME OF THE ASSESSEE, AS RETURNED, BE ACCEPTED AS SUCH. ' 6. IN VIEW OF THE ABOVE LD. CIT (A) WAS JUSTIFIED I N DELETING THE DISALLOWANCE. ' ITA NO. 3561/DEL/2013 8 IT IS SEEN THAT THERE IS NO CHANGE IN THE FACTS OF THE APPELLANT'S CASE AS COMPARED TO EARLIER YEARS. THEREFORE, RESPECTFULLY FOLLOWING THE ORDERS OF HON 'BLE ITAT IN APPEALLANTS OWN CASE (SUPRA), THE ADDITION OF RS. 15,05,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF INTERNAL DEVELOPMENT EXPENDITURE IS DELETED AND THE SAID AMOUNT IS HEREB Y ALLOWED TO BE DEBITED TO WORK IN PROGRESS ACCOUNT. 9. WE FIND THAT THE FIRST APPELLATE ORDER ON THE ISSUE IS COMPRESSIVE AND REASONED ONE, HENCE, WE ARE NOT INCLINED TO INT ERFERE THEREWITH ESPECIALLY WHEN THERE IS NO CHANGE IN THE FACTS IN THE ASSESSEES CASE IN COMPARISON TO ABOVE CITED ASSESSMENT YEARS. THE GRO UND NO.1 IS ACCORDINGLY REJECTED. GROUND NO. 2 10. THE ASSESSING OFFICER MADE ADDITION OF RS.4,51, 86,148/- ON ACCOUNT OF RECLASSIFICATION OF INCOME FROM HOUSE PROPERTY A ND INCOME FROM OTHER SOURCES. THE ADDITION HAS ARISEN DUE TO DISALLOWANC E OF STANDARD DEDUCTION OF 30% CLAIMED BY THE ASSESSEE U/S 24(A) OF THE I. T. ACT, AS A RESULT OF ITA NO. 3561/DEL/2013 9 RECLASSIFICATION OF THE INCOME FROM HOUSE PROPERTY TO INCOME FROM OTHER SOURCES. 11. THE LD. AR POINTED OUT THAT THE ISSUE RAISED IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE IT SELF FOR THE ASSESSMENT YEAR 2001-02 IN ITA NO.3377/DEL/2000 AND FOR THE ASSESSM ENT YEAR 1996-97 IN ITA NO.3522/DEL/2000. HE POINTED OUT FURTHER THAT T HE FIRST APPELLATE AUTHORITY HAS ALSO DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE IN THE CASE ASSESSEE ITSELF OF THE ASSESSMENT YEARS 2006-07, 20 07-08 & 2008-09. HE SUBMITTED FURTHER THAT THERE IS NO CHANGE IN THE FA CTS AND CIRCUMSTANCES OF THE CASE IN THIS REGARD DURING THE YEAR UNDER APPEA L. 12. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND TRIED TO JUSTIFY THE ASSESSMENT ORDER ON THE ISSUE. 13. WE FIND THAT THE LD. CIT (A) HAS DISCUSSED THE ISSUE IN DETAIL AND HAS GIVEN ITS FINDING IN THIS REGARD IN PARA NO.6.14 OF THE FIRST APPELLATE ORDER, REPRODUCED HEREUNDER: 6.14 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT, OBSERVATION OF THE ASSESSING OFFICER AND DECISION O F HONBLE ITAT FOR A. Y 1996-97 IN APPELLANTS OWN CA SE AND ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) XVIII FOR A. Y 2006-07 AND MY OWN ORDERS FOR A. Y. ITA NO. 3561/DEL/2013 10 2007-08 AND A. Y. 2008-09 IN APPELLANTS OWN CASE WHEREIN THIS ISSUE WAS DECIDED IN FAVOUR OF THE APPELLANT. IT IS SEEN THAT THE ISSUE IN THIS GROUND IS COVERED IN FAVOUR OF THE APPELLANT BY THE ORDER OF HONBLE ITAT IN APPELLANTS OWN CASE FOR AY 1996-97 . THE APPELLANT HAS RECEIVED INCOME FROM THE HOUSE PROPERTIES OWNED BY IT AND SUCH PROPERTIES ARE REFLECTING IN BALANCE SHEET AS STOCK IN TRADE. THE APPELLANT HAS FURNISHED THE RECEIPT OF HOUSE TAX PA YMENT WITH RESPECT TO ABOVE SAID PROPERTIES BELONG TO APPELLANT AND OWNED BY IT. IT IS NOTICED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BY RECLASSI FYING THE INCOME BY RELYING UPON VARIOUS JUDGMENTS. HOWEVER, THERE IS NO DISPUTE ON THE FACTS NOTED ABO VE. TAKING INTO CONSIDERATION THE ORDER OF HONBLE ITAT IN THE APPELLANTS OWN CASE FOR EARLIER AND THE DECISI ON IN CIT VS. NATIONAL & GRINDLAYS BANK LIMITED (SUPRA) A ND CIT (A)S ORDER FOR THE IMMEDIATELY SUCCEEDING YEAR S RELEVANT TO AY 2006-07, 2007-08 AND 2008-09 IN APPELLANTS OWN CASE, THE INCOME RECEIVED FROM THE PROPERTIES OWNED BY THE APPELLANTS OWN CASE, THE INCOME RECEIVED FROM THE PROPERTIES OWNED BY THE APPELLANT AND SHOWN IN THE BALANCE SHEET AS INCOME FROM HOUSE PROPERTY. ASSESSING OFFICER IS DIRECTED TO TREAT THE INCOME FROM SUCH PROPERTIES AS INCOME FRO M HOUSE PROPERTY AND ALLOW DEDUCTION U/S 24(A) OF T HE IT ACT. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.4,51,86,148/ -IS DELETED. 14 . WE NOTE THAT THE CONTENTION OF THE ASSESSEE ON T HE ISSUE REMAINED THAT AS PER THE SECTION 22 OF THE I. T. ACT FOLLOWING THREE CONDITIONS ARE REQUIRED TO ASSESS THE INCOME FROM HOUSE PROPERTY UNDER THE HEA D INCOME FROM HOUSE PROPERTY: I) THAT THE PROPERTY SHOULD CONSIST OF ANY BUILDING, L AND ITA NO. 3561/DEL/2013 11 APPURTENANT HERETO. II) THE ASSESSEE IS THE OWNER OF SUCH BUILDING, AN D III) SUCH BUILDING IS NOT OCCUPIED BY THE ASSESSEE FOR THE PURPOSE OF ANY BUSINESS OR OCCUPATION. 15. SINCE, THERE WAS NO DISPUTE ON THE FACT THAT TH E ASSESSEE IS OWNER OF ALL THE PROPERTIES AND THAT THE RENTAL INCOME WAS DERIV ED FROM SUCH PROPERTIES AND SECTION 22 OF THE I. T. ACT DOES NOT SAY ANYWHE RE THAT PROPERTY SHOULD BE HELD AS INVESTMENTS AS THE BASIS OF ASSESSING THE I NCOME FROM OTHER SOURCES. CONSIDERING THESE FACTS, RELATED TO PROVISIONS OF L AW AND DECISION OF THE TRIBUNAL OF THE ISSUE IN THE CASE OF THE ASSESSEE I TSELF IN OTHER ASSESSMENT YEARS. WE ARE OF THE VIEW THAT THE LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH DIRECTION TO TREAT T HE INCOME FROM SUCH PROPERTIES AS INCOME FROM HOUSE PROPERTY AND TO ALL OW DEDUCTION U/S 24(A)_OF THE ACT. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. GROUND NO.2 IS ACCORDINGLY REJECTED. GROUND NO.3 16. THE ASSESSING OFFICER MADE AN ADDITION OF RS.3, 02,61,251/- ON ACCOUNT OF NOTIONAL RENT/ ADDITIONAL ANNUAL LETTING VALUE (ALB) U/S 23(1) (A) OF THE INCOME TAX ACT,1961, IN RESPECT OF VACANT PROPERTIES. THE DETAILS OF THE ADDITION AS PER THE ASSESSMENT O RDER IS AS UNDER: ITA NO. 3561/DEL/2013 12 - DLF CITY CENTRE RS.2,36,01,310/- - DLF COMMERCIAL SHOPPING COMPLEX RS. 27,21,360 /- - DLF CORPORATE PARK RS.1,69,07,688/- RS.4,32,30,358/- LESS: STANDARD DEDUCTION U/S 24(1) RS. 1,29,69,10 7/- . RS.3,02,61,250/- 17. THE LD. CIT (A) HAS DELETED THE ADDITION AFTER DISCUSSING THE CASE OF THE ASESSEE IN DETAIL AND FOLLOWING THE DECISION CI TED BEFORE HIM IN THIS REGARD INCLUDING DECISION OF D BENCH OF THE TRIBUNAL ON AN IDENTICAL ISSUE IN THE ASSESSEES GROUP CONCERN M/S DLF OFFICE DEVELOPERS VS. ACIT REPORTED IN 23 SOT 19 (DEL) AND FIRST APPELLATE ORDERS IN THE ASSE SSEES OWN CASE FOR THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. 18. IN SUPPORT OF THE GROUND THE LD. DEPARTMENTAL R EPRESENTATIVE HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. 19. THE LD. AR ON THE OTHER HAND REITERATED THE SU BMISSIONS MADE BEFORE THE LD. CIT (A) AND THE DECISIONS CITED AND RELIED UPON BEFORE HIM. 20. CONSIDERING THE ABOVE SUBMISSION, WE FIND THA T THE LD. CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE NARRATI NG THE OBSERVATION MADE IN THE CITED DECISIONS IN CASE OF M/S DLF OFFICE DEVELOPER S VS. ACIT (SUPRA) AND ITA NO. 3561/DEL/2013 13 OTHER THAT WHERE THERE WAS AN INTENTION TO LET OUT THE HOUSE PROPERTY AND ASSESSEE TOOK STEPS TO LET IT BUT COULD NOT GET SUI TABLE TENANT, IN SUCH CASES THE ANNUAL VALUE HAVE TO BE WORKED OUT U/S 23(1) (C) OF THE IT ACT AND ACCORDING TO THIS CLAUSE IF THE ACTUAL RENT RECEIVED/ RECEIVABLE DURING THE YEAR IS NIL THEN THAT HAS TO BE TAKEN AS ANNUAL VALUE OF THE PROPERTY IN ORDER TO COMPUTE THE INCOME FROM PROPERTY. HE HAS ACCORDINGLY HELD THAT IN CASE OF THE ASSESSEE WHERE THE PROPERTY REMAINED VACANT THEN THE ALV OF SUCH PROPE RTY WILL BE NIL. HENCE, NO NOTIONAL RENT CAN BE ESTIMATED IN THE CASE OF VACAN T PROPERTIES. 21. IN ABSENCE OF REBUTTAL OF ABOVE ASPECT OF THE FACTS IN THE CASE OF PRESENT ASSESSEE, WE ARE OF THE VIEW, THAT THE LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE TAKING ASSISTAN CE OF THE CITED DECISIONS BEFORE HIM. WE FIND THAT THE LD. CIT (A) HAS DISCUSSED THE ISSUE IN APPEAL AND HAS PASSED A SPEAKING ORDER, WHICH IS BEING REPRODUCED HEREUNDER: 7.15 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT, OBSERVATION OF THE ASSESSING OFFICER AND VARIOUS JUDICIAL PRONOUNCEMENTS AVAILABLE ON THE ISSUE AND ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XVIII FOR A Y 2006-07 AND MY OWN ORDERS FOR A Y 2007-08 & 2008-09 IN THE CASE OF APPELLANT WHEREIN THIS ISSUE WAS DECIDE D IN FAVOUR OF APPELLANT. IT IS SEEN THAT IMPUGNED ADDIT ION MADE ITA NO. 3561/DEL/2013 14 ON ACCOUNT OF NOTIONAL RENT ON PROPERTIES THAT REMA INED VACANT FOR PART OF THE' PREVIOUS YEAR, THE AR REITE RATED SUBMISSIONS MADE BEFORE THE AO AND EMPHASIZED THAT THE MATTER IS COVERED IN FAVOUR OF THE APPELLANT BY JUD GMENT IN THE CASE OF ONE OF THE APPELLANT'S GROUP CONCERNS M /S DLF OFFICE DEVELOPERS VS. ACIT REPORTED IN 23 SOT 19 (D EL) AND ORDERS OF CIT(APPEALS) IN APPELLANT'S OWN CASE FOR THE ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09. IT IS OBSERVED THAT' WHERE THERE WAS AN INTENTION TO LET OUT THE HOUSE PROPERTY AND ASSESSEE TOOK STEPS TO LET IT BU T COULD NOT GET SUITABLE TENANT, IN SUCH CASES THE ANNUAL V ALUE WILL HAVE TO BE WORKED OUT UNDER SECTION 23(L)(C) OF THE IT ACT AND ACCORDING TO THIS CLAUSE, IF THE ACTUAL RENT RE CEIVED / RECEIVABLE DURING THE YEAR IS NIL THEN THAT HAS TO BE TAKEN AS ANNUAL VALUE OF THE PROPERTY IN ORDER TO COMPUTE THE INCOME FROM PROPERTY. ' IN THE CASE OF APPELLANT, THE APPELLANT HAD INTENTI ON TO LET SUCH PROPERTIES BUT COULD NOT GET SUITABLE TENANT. IN SUCH A SITUATION, THE AL V WILL BE NIL AS PER PROVISION OF SECTION 23(1)(C) OF THE IT ACT. SECTION 23(1)(A) R.W.S 23(1 )(C) CLEARLY PROVIDES THAT IF THE PROPERTY REMAIN VACANT WHOLLY OR PARTLY DURING THE YEAR, THEN ACTUAL RENT RECEIVE D OR RECEIVABLE WILL BE TAKEN AS THE ALV OF SUCH PROPERT IES. IN THE CASE OF APPELLANT THE PROPERTY IS REMAINED VACA NT, THEREFORE, THE ALV OF SUCH PROPERTIES WILL BE NIL. HENCE, NO NOTIONAL RENT CAN BE ESTIMATED IN THE CASE OF VACAN T ITA NO. 3561/DEL/2013 15 PROPERTIES. THE DECISION OF THE ASSESSING OFFICER W AS NOT JUSTIFIED. AS REGARDS, THE ASSESSING OFFICERS DECISION OF COM PUTING THE NOTIONAL RENT BASED ON HIGHEST RENT IN RESPECT OF EACH BUILDING, IT IS SEEN THAT THE PROPERTIES HAVE BEEN GIVEN TO VARIOUS PARTIES WHICH ARE NOT RELATED TO THE APPELL ANT AND SOME OF THEM ARE OF INTERNATIONAL REPUTE LIKE GE CA PITAL, KPMG. THE RENT HAS BEEN CHARGED BASED ON THE LOCATI ON OF THE PROPERTY, AREA OF LEASE PROPERTY AND TIMING OF LEASE AGREEMENT. IT IS SEEN THAT APPELLANT HAS FILE D COPIES OF THE ALL LEASE AGREEMENT BEFORE ASSESSING OFFICER FOR VERIFICATION AND NO DISCREPANCY IN THE RENTAL INCOM E IN THE BOOKS OF ACCOUNTS, AS COMPARED TO THE LEASE AGREEMENT WAS POINTED OUT BY THE ASSESSING OFFICER. IT IS NOT THE CASE THAT APPELLANT HAS RECEIVED SOME UNDER HAND RENT FROM THE TENANTS. IN THIS REGARD THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD AND NO ENQUI RY IN THIS DIRECTION WAS CONDUCTED BY HIM. THEREFORE, ASSUMING THE RENT FOR ALL PROPERTIES BASED ON THE H IGHEST LEASE AGREEMENT WAS NOT JUSTIFIABLE. AS REGARDS ASS ESSING OFFICERS RELIANCE ON VARIOUS JUDGMENTS IN THE ASSE SSMENT ORDER, IT IS SEEN THAT THE FACTS OF THE SAID JUDGME NTS ARE SQUARELY DIFFERENT WITH THAT OF THE APPELLANTS CAS E. IN THE CASE OF APPELLANT, NONE OF THE PROPERTIES HAVE BEEN RENTED OUT/LEASED TO THE RELATED PARTIES. THEREFORE , THE RATIO OF THE SAID JUDGMENT CANNOT BE APPLIED IN THE ITA NO. 3561/DEL/2013 16 APPELLANT CASE. IN VIEW OF THE ABOVE, THE BONAFIDE LEASE AGREEMENT BETWEEN THE APPELLANT AND THIRD PARTIES CANNOT BE DISREGARDED WITHOUT HAVING ANY ADVERSE INFORMATION IN THIS REGARD AND BASED ON CONJECTURES AND SURMISES. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUED IS DELETED. FACTS OF THE ABOVE CITED JUDICIAL PRONOUNCEMENTS AR E IDENTICAL WITH THE FACTS OF THE APPELLANTS CASE. T HEREFORE, RATIO OF THE SAID JUDGMENT IS SQUARELY APPLICABLE T O THE FACTS OF THE APPELLANTS CASE. HENCE, THE NOTIONAL ADDITION MADE BY THE ASSESSING OFFICER OF RS. 3,02,61,251/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY ON ACCOUNT OF NOTIONAL INCOME U/S 23(1) (A) OF THE INCOME TAX ACT IS DELETED. 22. WE FIND THAT THE FIRST APPELLATE ORDER ON THE I SSUE AS DISCUSSED ABOVE IS REASONABLE AND VIEW SUPPORTED WITH THIS DECISION. HENCE, WE AR E NOT INCLINED TO INTERFERE WITH THE ORDER, THE SAME IS UPHELD. GROUND NO.3 IS ACCORDING LY REJECTED. IN THE RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2014. SD/- SD/- (SHAMIM YAHYA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATE 5 TH MARCH, 2014 ITA NO. 3561/DEL/2013 17 S. SINHA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT