NARESH CHELLRAM GIDWANI, MUMBAI V. ITO 19(3)(3), MUMBAI

ITA 3810/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2853 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3810/M/12 ( %' ( / ASSESSMENT YEAR: 2008-09) SHRI NARESH CHELLARAM GIDWANI MAJITHIA & ASSOCIATES CHARTERED ACCOUNTANTS, 6, NEW JAGRUTI CO-OP. HSG. SOC. LTD., 1 ST FLOOR, 227, S.V.ROAD, OPP. H.P.PETROL PUMP, BANDRA (W), MUMBAI 400050 ' / VS. INCOME TAX OFFICER19(3)(3) PIRAMAL CHAMBER, 3 RD FLOOR, MUMBAI ./ ./ PAN/GIR NO. : AAKPG9396B ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 18.03.2016 !' /DATE OF PRONOUNCEMENT: 22.06.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26.03.2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 30, ASSESSEE BY: SHRI BHAVESH R. MAJITHIA DEPARTMENT BY: SHRI SUMIT KUMAR ITA NO.3810/M/2012 A.Y. 2008-09 2 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- '1. THE LEARNED CIT (APPEAL) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION CLAIMED FROM CAPITAL GAIN INCOME IN RESPECT OF BROKERAGE PAID IN RESPECT OF SALES TRANSACTION IN SPITE SUBMISSION OF THE EVIDENCE AMOUNTING TO RS.70,787/- (35% OF 2,02,248). 2. THE LEARNED CIT(APPEAL) ERRED IN CONFIRMING THE NOTIONAL ADDITION OF RENT INCOME OF RS.11,00,000/-, IN SPITE OF THE FACT THAT ULTIMATE REALIZATION OF RENT WAS RS.1,00,000/- (OF ONE MONTH) ONLY AS THE SAME PROPERTY WAS SOLD IN 1 MONTH AFTER RECEIVING THE ADVANCE RENT OF RS.12,00,000/-. THE REMAINING RS.11,00,000/- RECEIVED WAS ADJUSTED AGAINST THE SALE PROCEEDS OF THE FLAT. 3. THE ASSESSEE FILED THE RETURN OF INCOME DECLARIN G TOTAL INCOME TO THE TUNE OF RS.1,18,060/- ON 30.09.2008. THE CA SE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S.143(3) OF THE I NCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 05.08.2009 WAS I SSUED AND SERVED UPON THE ASSESSEE ON 24.09.2009. THEREAFTER, THE NOTICE U/S.142(1) DATED 27.09.2010 WAS ISSUED. THEREAFTER THE ASSESS ING OFFICER ASSESSED THE INCOME OF THE ASSESSEE TO THE TUNE OF RS.31,47,730/- BUT THE ASSESSEE WAS NOT SATISFIED, THEREFORE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) CONFIRMED THE D ISALLOWANCE OF ITA NO.3810/M/2012 A.Y. 2008-09 3 DEDUCTION CLAIMED ON ACCOUNT OF CAPITAL GAIN INCOM E IN RESPECT OF BROKERAGE ON SALE TRANSACTION TO THE TUNE OF RS70,7 87/- AND THE LEARNED CIT(A) ALSO CONFIRMED THE NOTIONAL ADDITION ON RENT INCOME FOR RS.11,00,000/-. WHEREAS, THE ASSESSEE ONLY REALISE D RENT FOR A PERIOD OF ONE MONTH TO THE TUNE OF RS.1,00,000/- AND REMAI NING RS.11,00,000/- WAS ADJUSTED TOWARDS THE SALE PROCEE DS OF THE FLAT. AGGRIEVED BY THIS ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 4. ACCORDING TO ISSUE NO.1 THE ASSESSEE HAS CHALLEN GED THE CONFIRMATION OF DISALLOWANCE OF DEDUCTION CLAIMED F ROM CAPITAL GAIN INCOME IN RESPECT OF BROKER PAID AMOUNTING TO RS.70 ,787/- (35% OF RS.2,02,248/-). ORDER OF ASSESSING OFFICER DATED 2 4.12.2010 PERUSED. WE FOUND THAT THIS ISSUE HAS NOT BEEN DEALT BY THE ASSESSING OFFICER BY SPEAKING ORDER AND THE LEARNED CIT(A) ALSO DEALT THIS ISSUE BY OBSERVING THIS FACT THAT AS PER SECTION 48 OF THE A CT THE ASSESSEE WAS NOT ENTITLED FOR THE DEDUCTION OF BROKERAGE. IN VI EW OF THE SAID CIRCUMSTANCES WE SET ASIDE THE FINDING OF THE CIT(A ) ON THIS ISSUE AND REMAND THIS ISSUE BEFORE THE ASSESSING OFFICER TO P ASS THE ORDER AFRESH AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. ACCORDINGLY THESE ISSUES ARE DECIDED IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE. ITA NO.3810/M/2012 A.Y. 2008-09 4 ISSUE NO.2:- 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D CAREFULLY. THE ASSESSEE, SHRI NARESH GIDWANI WAS A JOINT OWNER OF A FLAT WITH HIS BROTHER SHRI HARESH C. GIDWANI. THE SAID FLAT WAS LET OUT AS PER LEAVE AND LICENSE AGREEMENT TO M/S. SCHLUMBERGER AS IA SERVICES LIMITED. THE LEAVE AND LICENSE AGREEMENT DATED 26. 10.2007 WAS FOR THE PERIOD OF 36 MONTHS COMMENCING FROM 10.11.2 007 TO 09.11.2010. THE LICENSEE AGREED TO PAY ADVANCE REN T TO THE TUNE OF RS.2,00,000/- PER MONTH X 12 MONTHS = RS.24,00,000/ - I.E. (RS. 12,00,000/- TO MR. NARESH GIDWANI & RS.12,00,000/- TO MR. HARESH GIDWANI) IN ADVANCE FOR FIRST 12 MONTHS. THE LICEN SEE ALSO AGREED TO PAY A SECURITY DEPOSIT OF RS.4,00,000/- (RS.2,00,00 0/- TO NARESH GIDWANI & RS.2,00,000/- TO MR. HARESH GIDWANI). TH E LEAVE AND LICENSE AGREEMENT HAVE BEEN PRODUCED BY THE ASSESSE E WHICH LIES AT PAGE 18 TO 32 OF THE PAPER BOOK. SUBSEQUENTLY, ASS ESSEE ALONG WITH HIS BROTHER SOLD THE SAID FLAT ON 19.12.2007. IN V IEW OF THE AGREEMENT OF SALE LIES IN THE PAPER BOOK AT PAGE 33 TO 44, TH E ADVANCE COMPENSATION TO TUNE OF RS.22,00,000/- AND SECURITY TO THE TUNE OF RS.4,00,000/- TOTAL BEING RS.26,00,000/- WERE ADJUS TED TOWARDS THE SALE AMOUNT. INFACT, THE ASSESSEE RECEIVED THE REN T FOR THE PERIOD OF ONE MONTH ONLY I.E. ALSO IN PROPORTIONATE AS THE AS SESSEE RECEIVED RS.1,00,000/-, HIS BROTHER ALSO RECEIVED RS.1,00,00 0/-. IT CAN BE SAID ITA NO.3810/M/2012 A.Y. 2008-09 5 THAT THE RENTAL INCOME OF THE ASSESSEE WAS TO THE T UNE OF RS.12,00,000/- VIDE WHICH RS.1,00,000/- HAS BEEN RE CEIVED AND THE REMAINING RS.11,00,000/- WAS ADJUSTED TOWARDS THE S ALE OF THE FLAT. IN VIEW OF THE SAID FACTUAL POSITION, THE RENT TO THE TUNE OF RS.11,00,000/- WHICH HAS NOT BEEN RECEIVED BY THE ASSESSEE AND ADJ USTED TOWARDS THE SALE AMOUNT OF THE FLAT CANNOT BE SAID TO THE INCOM E OF THE ASSESSEE. IN THIS REGARD THE CBDT CIRCULAR NO.5, DATED 02.03. 2001, CLEARS THE SAID POSITION. NO DOUBT IN THE SAID CIRCUMSTANCES THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE RENTAL INCOME OF RS.11,00 ,000/- OF THE ASSESSEE AND ADDED TO THE TAX. HOWEVER ADJUSTMENT WITH REGARD TO THE ADVANCE TAX PAID, THE PLEA HAS BEEN TAKEN ON THE BA SIS OF CIRCULAR NO.5/2001 DATED 02.03.2001. NO DOUBT IT IS OBVIOUS THAT THE INSTRUCTION CONTAINED IN THE CIRCULAR NO.5/2001 DAT ED 02.03.2001 IS REQUIRED TO BE COMPLIED WITH. ACCORDINGLY, THIS IS SUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 22 ND JUNE, 2016 MP MP MP MP ITA NO.3810/M/2012 A.Y. 2008-09 6 * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI