ITO, New Delhi V. Sh Om Prakash Mishra, New Delhi

ITA 3776/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7394 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G N GUPTA IT PRACT
• Assessee Lawyers: SUNIL KR SHARMA
• Keywords: Rule of consistency
• Section: 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI B.C. MEENA , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 3776 /DEL/ 201 2 (ASSESSMENT YEAR: 2008 - 09 ) ITO WARD - 37 ( 1 ), ROOM NO. 409 , VIKASH BHAWAN, I.P . BUILDING, NEW DELHI VS. OM PRAKASH MISHRA, 325, SOUTH EX PLAZA - II 209, MASJID MOTH, NDSE - II, NEW DELHI PAN: AAIPM9962H (APPELLANT) (RESPONDENT) APPELLANT BY : G. N. GUPTA, IT PRACT. RESPONDENT BY : SUNIL KR. SHARMA, SR. DR O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE REVENUE AGA INST THE ORDER OF THE LD CIT(A - XXVIII , NEW DELHI DATED 28.0 5 .201 2 FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SERVICE TAX PAYABLE AS THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF INTEREST EXPENSES CLAIMED RELATING TO CAR LOAN AND HOUSING LOAN, SINCE THE ASSESSEE IS NOT CHARGING ANY INTEREST ON VARIOUS LOAN GIVEN, IN THE ABSENCE OF ANY EXPLANATION BY THE ASSESSEE DESPITE SPECIFIC QUERY. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN THE SALE VALUE OF PLOT AS PER ASSESSEE AND AS PER CIRCLE RATE AS THE SAID PLOT OF LAND IN NEBSARAI WAS NOT AGRICULTURAL AND BUT COMES UNDER CATEGORY II AND CIR CLE RATE WAS DULY APPLICABLE IN THE SAID AREA AS PER INFORMATION CALLED BY THE AO FROM THE SUB - REGISTRAR - V, MEHRAULI, NEW DELHI U/S. 133(6) OF THE INCOME TAX ACT, 1961. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DEL ETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S, 40(A)(IA) FOR NON - DEDUCTION OF TAX U/S, 194 - I ON 'RENT AND REPAIRS', IN THE ABSENCE OF ANY EXPLANATION ABOUT 'REPAIR' BY THE ASSESSEE SPECIFIC QUERY. PAGE NO. 2 3. GROUND NO.1 IS REGARDING ADDITION OF RS.50 ,273/ - ON ACCOUNT OF SERVICE TAX. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRACTICING CHARTERED ACCOUNTANT WHO COLLECTS SERVICE TAX ALONG WITH HIS FEES. HE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. THE AO HELD THAT ANY EXPENSES PAYABLE AFTER 31 ST MARCH 2008, CAN BE CLAIMED UNDER MERCANTILE SYSTEMS BUT NOT UNDER CASH SYSTEM. AS SUCH, SUM OF RS.50,273/ - PAYABLE ON ACCOUNT OF SERVICE TAX AT THE CLOSE OF THE YEAR WAS BROUGHT TO TAX AS INCOME OF THE ASSESSEE. THE LD CIT(A) HOWEVER HAS DELETED THE ADD ITION BY HOLDING THAT SERVICE TAX LIABILITY HAS NOT BEEN CLAIMED AS DEDUCTION IN THE PROFIT AND LOSS ACCOUNT AND THEREFORE IS NOT HIT BY PROVISION OF SECTION 40(3) OF THE ACT. AND AS SUCH HE DELETED THE ADDITION. 5. HAVING CONSIDERED THE RIVAL SUBMISSION WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT(A) WHICH DERIVES SUPPORT FORM THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NOBLE & HEWITT PVT LTD. 166 TAXMANN148, WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT & LOSS ACCOUNT AS AN EXPENDITURE NOR DID THE ASSESSEE CLAIM ANY DEDUCTION IN RESPECT OF THE AMOUNT THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARISE. 6. IN THE LIGHT OF THE AFORESAID BIND ING PRECEDENT , WE DISMISS THE GROUND RAISED BY THE REVENUE. 7. GROUND NO.2 IS RELATING TO DISALLOWANCE OF INTEREST ON CAR LOAN AND HOUSING LOAN OF RS.1,92,126/ - . 8. THE LD CIT(A) HAS DELETED THE DISALLOWANCE BY CONCLUDING AS UNDER: - IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CAR LOAN IS CONTINUING FROM EARLIER YEARS AND STATEMENT OF SUCH LOAN AND INTEREST IS PART OF RECORD AND CLAIM OF INTEREST HAS ALWAYS BEEN ALLOWED IN PAST, THE GENUINENESS OF CLAIM OF INTEREST NOT IN DISPUTE, THE ASSESSIN G OFFICER IS NOT JUSTIFIED IN DISALLOWING THE INTEREST PAID TO THE TUNE OF RS. 52,126/ - ON CAR LOAN. PAGE NO. 3 AS FAR AS THE CLAIM OF INTEREST ON HOUSING LOAN IS CONCERNED IT HAS ALWAYS BEEN ALLOWED IN PRECEDING .YEARS AND SAME IS IN THE CONTEXT OF SPECIFIC PROVIS IONS OF SEC. 24 AS SUCH THERE IS NO FACTUAL OR LEGAL BASIS FOR SUCH DISALLOWANCE. THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING INTEREST ON HOUSING LOAN TO THE TUNE OF RS. 1,50,000/ - . APPEAL ON THIS GROUND IS ALLOWED. 9. THE LD DR IN COURSE OF TH E ARGUMENT HAS NOT ASSAILED THE FACTUAL POSITION THAT IDENTICAL CLAIM OF INTEREST INCURRED BY THE ASSESSEE HAS BEEN ALLOWED IN THE PRECEDING ASSESSMENT YEAR. THEREFORE FOLLOWING THE RULE OF CONSISTENCY THE CLAIM IS FOUND TO BE IN ORDER AND THE GROUND RAISED BY THE REVENUE IS NOT MAINTAINABLE, SO DISMISSED. 10. GROUND NO.3 IS IN RESPECT OF ADDITION OF RS.8,03,854/ - ON ACCOUNT OF SALE OF AGRICULTURAL LAND. 11. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR SOLD 200 SQ YAR DS OF PLOT OF LAND AND DECLARED SALE CONSIDERATION OF RS.3,50,000/ - AS PER THE AGREEMENT TO SELL. THE AO HOWEVER APPLIED THE CIRCLE RATE AND COMPUTED THE VALUE OF THE PLOT AT RS.11,53,854/ - . AS SUCH THE DIFFERENCE OF RS.8,03,854/ - WAS ADDED AS INCOME OF T HE ASSESSEE, OUT OF WHICH RS.4,01,927/ - WAS ADDED ON SUBSTANTIVE BASIS AND RS.4,01,927/ - ON PROTECTIVE BASIS, SINCE 50% BELONGS TO THE WIFE OF THE ASSESSEE. 12. THE LD CIT(A) WAS PLEASED TO DELETE THE SAME BY CONCLUDING THAT THERE WAS NO VALID BASIS FOR ANY HYPOTHETICAL COMPUTATION OF CAPITAL GAIN. THE LD DR, HOWEVER HAS SUBMITTED THAT THE LD CIT(A) HAS OVERLOOKED THAT THE SAID PLOT OF LAND IN NEBSARI WAS NOT AGRICULTURAL LAND BUT COMES UNDER CATEGORY - II AND THEREFORE CIRCLE RATE WAS DULY APPLICABLE. ON T HE OTHER HAND LD AR SUPPORTED THE ORDER OF LD CIT(A). 13 . WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY PERUSED THE RECORD OF THE CASE. WE FIND THAT THE IMPUGNED TRANSACTION UNDER CONSIDERATION WAS OF SALE OF 200 SQ YARDS OF PLOT UNDER AN AGREEMENT TO SELL DATED 23 RD JULY 2005. ACCORDING PAGE NO. 4 TO THE SAID AGREEMENT, THE SAID LAND IS AN AGRICULTURAL LAND. THE LD DR HAS HOWEVER CONTENDED THAT THE SAID LAND IS NOT AN AGRICULTURAL LAND IN VIEW OF THE INFORMATION OBTAINED FROM THE SUB - REGISTRAR MEHRAULI. HE HAS T HUS PRAYED THAT CIRCLE RATE BE APPLIED TO ENHANCE THE VALUE OF THE DECLARED SALE CONSIDERATIONS. HOWEVER IT MAY BE NOTED THAT SECTION 50 C OF THE ACT AS IS RELEVANT FOR THE YEAR UNDER CONSIDERATION DOES NOT SUPPORT THE CASE OF THE REVENUE , S INCE THE VALUE P ROPOSED TO BE ADOPTED HAS NOT BEEN ASSESSED BY AN AUTHORITY OF THE STATE GOVT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. IN OTHER WORDS IN ABSENCE OF SALE DEED, THERE CAN BE NO SUBSTITUTION OF SALE CONSIDERATION ON THE BASIS OF CIRCLE RATE UNDER SECTION 50 C OF THE ACT. THE AMENDMENT TO SECTION 50 C OF THE ACT WHICH PROVIDE SUBSTITUTION OF CIRCLE RATE EVEN WHERE THERE IS AN AGREEMENT TO SELL HAS BEEN MADE APPLICABLE ONLY WITH FROM FORM 1 ST OCTOBER 2009 BY FINANCE ACT 2009 AND SO THE SAID AMENDMENT IS NOT ATTRA CTED TO THE TRANSACTION IN QUESTION AND THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) . 1 4 . IN THE LIGHT OF THE ABOVE WE ARE INCLINED TO CONFIRM THE DECISION OF THE LD CIT(A) AND WE DISMISS THE GROUND RAISED BY THE REVENUE. 15 . APRO POS GROUND NO.4 IS REGARDING DISALLOWANCE OF RS.1,31,905/ - ON ACCOUNT OF RENT OF OFFICE AND REPAIR AND MAINTENANCE U/S 40(I)(A) OF THE ACT. THE LD CIT(A) HAS DELETED THE DISALLOWANCE BY OBSERVING AS UNDER : - I HAVE GONE THROUGH THE ASSESSMENT ORDER AND WRITTEN SUBMISSION OF THE APPELLANT. IT IS FOUND THAT RENT OF RS. 1,20,000/ - HAS BEEN PAID TO THE WIFE OF PER SECTION 1941 THERE IS NO REQUIREMENT FOR ANY TDS IF THE CLAIM OF RENT IS NOT IN EXCESS OF RS. 1,20,00 0/ - . THEREFORE THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING THE SAME U/S 40(A)(IA) OF THE INCOME - TAX ACT. FURTHER THE ASSESSING OFFICER IS NOT JUSTIFIED IN CLUBBING THE REPAIR CHARGES OF RS. 11,905/ - WITH RENT. BOTH ARE INDEPENDENT AND SEPARATE FR OM EACH OTHER. THE ASSESSING OFFICER HAS WRONGLY CLUBBED THE RENT OF RS.1,20,000/ - WITH THE REPAIR EXPENSES OF RS. 11,905/ - AND INVOKED SECTION 40(A)(IA). I THEREFORE, DELETE THE ADDITION OF RS. 1,31,905/ - . APPEAL ON THIS GROUND IS ALLOWED. PAGE NO. 5 1 6 . THE LD D R HAS NOT BEEN ABLE TO ASSAIL THE FACTUAL ASPECTS BROUGHT ON RECORD BY THE LD CIT(A), THEREFORE WE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER AND THEREFORE WE DISMISS THIS GROUND. 17 . IN THE RESULT THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 01 . 09 . 2014. - SD/ - - SD/ - ( B.C. MEENA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01 / 09 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI