SEEC Technologies Asia Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-3(1), Hyderabad

ITA 370/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0828 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 19-04-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 19-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation
• Section: 143(3); 64

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 370/HYD/2019 A.Y. 2014 - 15 M/S. SEEC TECHNOLOGIES ASIA PRIVATE LIMITED, HYDERABAD. PAN: AADCS 4181 L VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3(1), HYDERABAD - 084. (APPELLANT) (RESPONDENT) ASSESSEE BY SRI A.V. RAGHURAM REVENUE BY SRI ROHIT MUJUMDAR, DR DATE OF HEARING: 19/04 /2021 DATE OF PRONOUNCEMENT: 08 /07/2021 ORDER PER A. MOHAN ALANKAMONY , A.M: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 2, HYDERABAD IN APPEAL NO. 10269/2017 - 18/CIT(A) - 2, DATED 29/01/2019 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE A.Y. 2014 - 15. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS IN ITS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT: THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE AN ADDITION OF RS. 73,48,373/ - UNDER THE HEAD 2 INCOME FROM HOUSE PROPERTY BY TREATING THE ENTIRE AMOUNT RECEIVED BY THE ASSESSEE AS RENTAL INCOME. 3. THE BRIEF FACTS OF THE CA SE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF DEVELOPING SOFTWARE AND IT ENABLED SERVICES FILED ITS RETURN OF INCOME ON 26/11/2014 ADMITTING INCOME OF RS. 1,13,54,660/ - . THEREAFTER THE CASE OF THE ASSESSEE WAS TAKEN UP FO R SCRUTINY. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD OFFERED RENTAL INCOME OF RS. 18,54,243/ - . IT WAS FURTHER REVEALED THAT THE ASSESSEE HAD LET OUT ITS PROPERTY SITUATED AT PLOT NO.6, S.NO. 64 ADMEASURING AN AGGREGATE OF 16,540 SQ FT ON THE FIRST & SECOND FLOOR TO M/S. POLARIS SOFTWARE LAB LIMITED. IT WAS FURTHER OBSERVED THAT THE PROPERTY WAS LET OUT TO M/S. POLARIS SOFTWARE LAB LIMITED FOR THE FINANCIAL YEAR 2011 - 12 FOR A RENT OF RS. 1,19,51,446/ - PER ANNUM. CONSIDERING THE SAME , THE LD. AO COMPUT ED THE FAIR RENTAL VALUE FOR COMPUTING THE ANNUAL RENT FOR THE RELEVANT ASSESSMENT YEAR AT RS. 1,31,46,590/ - AND GRANT ED STANDARD DEDUCTION @ 30% . ACCORDINGLY, THE LD.AO COMPUTED THE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS RS. 92,02,616/ - . SINCE THE ASSESSEE HAD ALREADY OFFERED RS. 18,54,243/ - AS ITS RENTAL INCOME THE BALANCE AMOUNT OF RS. 73,48,373/ - WAS BROUGHT TO TAX. THE CLAIM OF THE ASSES SEE BEFORE THE LD.AO WAS THAT THE ENTIRE AMOUNT RECEIVED BY THE ASSESSEE WAS TOWARDS RENT AS WELL AS FOR OTHER AMENITIES PROVIDED. HOWEVER, IT APPEARS THAT THE LD. AO HAS 3 NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE BECAUSE NO DETAILS WERE PRODUCED BEFOR E HIM. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS UNDER: 6. THE DECISION: THE AO MADE THE ADDITION ON ACCOUNT OF INCOME FROM HOUSE PROPERTY OF RS. 73,43,373/ - OVER AND ABOVE THE INCOME ADMITTED UNDER THE RESPECTIVE HEAD BY THE APPELLANT. THE AO NOTED THAT THE PROPERTY HAS BEEN LET OUT FOR A SUM OF RS. 1,19,51,446/ - AS ON 31.03.2 012 AND WORKED AN ESCALATION OF 10% ON THE SAID RENT FOR THE PRESENT YEAR UNDER CONSIDERATION. THE APPELLANT CLAIMED THAT THE COMPANY HAS GIVEN THE COMPOSITE BUILDING ALONG WITH FURNITURE FIXTURES ETC., AND THEREFORE HAVE SPITED THE RENTAL INTO TWO PARTS, THE RENTAL ON HOUSE PROPERTY HAS BEEN OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THE RENTAL ON FURNITURE FIXTURE AND FITTINGS ALONG WITH OFFICE EQUIPMENTS AS INCOME FROM OTHER SOURCES AND RELEVANT EXPENDITURE U/ S. 57 AND DEPRECIATION HAS BEE N CLAIMED ACCORDINGLY. THE AO HAS ESTIMATED THE INCOME ON AN ARM'S LENGTH PRINCIPLE AS IN THE EARLIER YEAR THE PROPERTY WAS LET OUT TO THE THIRD PARTY AND IN THE PRESENT YEAR TO THE RELATED PARTY. THE DEFINITION OF THE ANNUAL VALUE IS VERY CLEAR AS IT MEN TIONS THE PROPERTY INCOME WHICH CAN BE REASONABLY BE EXPECTED. THE DEFINITION OF THE ANNUAL VALUE IS VERY CLEAR AND THEREFORE THE AD HAS ESTIMATED THE INCOME CORRECTLY ON THE BASIS OF THE SAME PROPERTY LET OUT TO THE THIRD PARTY AT ARMS LENGTH PRINCIPLE. THE ACTION OF THE A.O. IN SUCH COMPUTATION OF THE GROSS INCOME FROM HOUSE PROPERTY IS UPHELD. AS REGARDS THE APPELLANTS CONTENTION THAT THE SAME SHOULD BE SEPARATELY COMPUTED UNDER TWO HEADS IS INCORRECT AS THE LEASE RENTAL AGREEMENT ENTERED INTO BY THE APPELLANT WITH THE RELATED PARTY AND EARLIER WITH THE UNRELATED PARTY DOES NOT SPECIFY SEPARATE CHARGES FOR THE BUILDING AND FURNITURE FIXTURE ETC AND IN THE SAID CASE, THE A.O. HA S CORRECTLY COMPUTED THE INCOME ON ONE HEAD I.E., INCOME FROM HOUSE PROPERTY. IN VIEW OF THE SAME, THE ADDITION MADE BY THE A.O. IS UPHELD AND THE GROUND NO.1 IS DISMISSED ACCORDINGLY. 4. BEFORE US, THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD. REVENUE AUTHORITIES. HOWEVER, THOUGH THE ASSESSEE HAS PRODUCED A PAPER BOOK CONTAINING 1 TO 82 PAGES BEFORE US, NOTHING WAS PRODUCED TO ESTABLISH THAT THE ENTIRE AMOUNT RECEIVED BY THE ASSESSEE WAS 4 TOWARDS RENT AND OTHER AMENITIES. THE LD. DR VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE AUTHORITIES AND REQUESTED FOR CONFIRMING THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE HAS LET OUT 16,540 SQ FT AGAINST WHICH AN ANNUAL RENT OF RS. 1,31,46,590/ - IS DETERMINED TAKING INTO CONSIDERATION OF THE FAIR RENTAL VALUE. THAT WORKS OUT TO RS. 66 PER SQ FT APPROX. [RS. 1,31,46,590 / 1 6,540 SQ FT = RS. 795/ - APPROX. RS. 795 / 12 = RS. 66.25 I.E, ROUNDED OFF TO RS. 66 PER SQ FT PER MONTH ] WHICH IS A REASONABLE RENTAL VALUE OF THE PROPERTY CONSIDERING ITS LOCATION . THEREFORE, THERE DOES NOT APPEAR TO BE ANY SCOPE TO CONSIDER PAYMENT FOR AMENITIES PROVIDED BY THE ASSESSEE IN THE RENTED PREMISES WHICH IS TO BE SEPARATED FROM THE RENTAL OF RS. 66 PER SQ FT PER MONTH APPROX. , ESTIMATED BY THE LD. REVENUE AUTHORITIES. T HEREFORE, WE DO NOT FIND ANY MERIT IN THE ARGUMENTS RAISED BY THE LD. AR BEFORE US. ACCORDINGLY WE HEREBY CONFIRM THE ORDERS OF THE LD.REVENUE AUTHORITIES ON THIS ISSUE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 08 TH JULY, 2021. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 08 TH JULY , 2021. 5 OKK COPY TO: - 1) M/S. SEEC TECHNOLOGIES ASIA PRIVATE LIMITED, C/O. A.V. RAGHURAM, ADVOCATE, FLAT NO. 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD - 01. 2) DCIT, CIRCLE - 3(1), 7 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, OPP. BOTANICAL GARDENS, HYDERABAD. 3) THE CIT (A) - 2, HYDERABAD. 4) THE PR. CIT - 3, HYDERABAD. 5) THE DR, ITAT, HY DERABAD 6) GUARD FILE