Smt Shashi Singh, New Delhi V. ACIT, New Delhi

ITA 430/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65725 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 28-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY SENIOR
• Assessee Lawyers: T R TALWAR
• Keywords: Salary income; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMEBR AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.430/DEL./2012 (ASSESSMENT YEAR : 2007-08) SMT. SHASHI SINGH, VS. ACIT, CIRCLE 8 (1), B 8, MAGNUM HOUSE 1, NEW DELHI. COMMERCIAL COMPLEX, KARAMPURA, NEW DELHI 110 015. (PAN : ABAPS1382G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.R. TALWAR, ADVOCATE REVENUE BY : SMT. SURJANI MOHANTY, SENIOR DR ORDER PER T.S. KAPOOR, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY CIT (APPEALS) DATED 04.11.2011. THE GROUNDS OF APP EAL TAKEN BY ASSESSEE ARE AS UNDER :- 1. THAT THE ASSESSMENT ORDER PASSED BY THE LD. ASS TT. COMM. OF I. TAX IS WRONG, ILLEGAL, ARBITRARY AND AG AINST NATURAL JUSTICE. 2. THAT THE LD. ASSESSING OFFICER HAS ERRED BY MAKI NG AN ADDITION OF RS.1,50,000/- AS INCOME FROM HOUSE PROPERTY FORM B-8, MAGNUM HOUSE-1, KARAMPURA, NEW DELHI INSPITE OF ITS USE FOR ITS OWN BUSINESS AND F ORM FLAT NO.B-701, SHIV SURBHI APARTMENT, THAKUR VILLAGE, WESTERN EXPRESS HIGHWAY, KANDIVALI (EAST), MUMBAI- ITA NO.430/DEL/2012 2 400 101 INSPITE OF ITS EITHER OWN USE OR REMAINING VACANT DURING THE YEAR UNDER ASSESSMENT. 3. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, CHANGE OR WITHDRAW ANY GROUND OF APPEAL AT THE TIME OF HEARING. 2. THE BRIEF FACTS ABOUT THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND SHE FILED HER RETURN OF INCOME FOR THE ASSESSMENT Y EAR 2007-08 DECLARING TOTAL INCOME OF RS.1,66,425/-. THE INCOME CONSISTE D OF SALARY INCOME FROM SHASHI INTERNATIONAL PVT. LTD. IN WHICH ASSESS EE ALONG WITH HER HUSBAND ARE DIRECTORS. DURING ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD NOT DECLARED INCOME FROM HOUSE PROPERTY FROM HER FLAT AT MUMBAI AND WHEN QUESTIONED, THE AS SESSEE REPLIED THAT THE SAID PREMISES IS BEING KEPT VACANT AND IS USED WHILE GOING ABROAD FOR BUSINESS PURPOSES. THEREFORE, THE QUESTION OF RENT AL INCOME DOES NOT ARISE. THE ASSESSING OFFICER FURTHER NOTED FROM TH E STATEMENT OF IMMOVABLE PROPERTIES THAT ASSESSEE HAD ONE MORE PRO PERTY AT SF-31, NORTH AVENUE, PUNJABI BAGH, NEW DELHI AND THE ASSES SEE HAD ALSO NOT DECLARED ANY INCOME FROM THIS HOUSE PROPERTY. THE ASSESSEE EXPLAINED THAT HOUSE WAS BEING USED BY M/S. SHASHI INTERNATIO NAL (P) LTD. IN WHICH SHE AND HER HUSBAND WERE DIRECTORS AND THE SAME WAS BEING USED FOR BUSINESS PURPOSES. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION OF ASSESSEE AND INCOME FROM THE SAME WAS ESTIMATED AT RS.60,000/- AFTER CONSIDERING MUNICIPAL TAXES AND 3 0% REPAIR EXPENSES ITA NO.430/DEL/2012 3 AND HENCE, AN AMOUNT OF RS.30,000/- WAS ADDED TO TH E INCOME OF THE ASSESSEE BASED UPON HER 50% SHARE IN THE PROPERTY. SIMILARLY, IN RESPECT OF THE HOUSE PROPERTY AT MUMBAI, A SUM OF RS.1,20,0 00/- WAS ADDED BACK CONSIDERING THE ANNUAL RENTAL VALUE AT RS.1,20,000/ - AFTER CONSIDERING MUNICIPAL TAXES AND 30% REPAIR EXPENSES. THE CONTE NTION OF THE ASSESSEE THAT THE SAME WAS BEING USED DURING THE COURSE OF G OING ABROAD FOR BUSINESS PURPOSES WAS NOT ACCEPTED. DISSATISFIED W ITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE CIT (A) AND SUBMITTED THAT THE HOUSE PROPERTY INCOME FROM PROPERTY AT DELHI CANNOT BE TA XED SINCE IT WAS BEING UTILIZED FOR BUSINESS PURPOSE BY HIS HUSBAND AND BY M/S. SHASHI INTERNATIONAL PVT. LTD. IN WHICH SHE AND HER HUSBAN D WERE DIRECTORS. SHE FURTHER STATED THAT MUMBAI PROPERTY WAS BEING USED BY EMPLOYEES & DIRECTORS AS RESIDENCE WHO WERE CONCERNED WITH THE PROMOTION OF BUSINESS AND THUS, THERE WAS NO INCOME FROM HOUSE P ROPERTY. 3. THE LD. CIT (A) AFTER GOING THROUGH THE SUBMISSI ONS OF LD. AR DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND UPHE LD THE ADDITIONS MADE BY ASSESSING OFFICER. THE RELEVANT PORTION OF CIT (A) ORDER IS REPRODUCED BELOW :- THE APPELLANT SMT. SHASHI SINGH IS AN INDIVIDUAL FILING THE RETURN OF INCOME AS AN INDIVIDUAL AND SH OWING INCOME FROM SALARY AND OTHER SOURCES. THE PROPERTY SHOWN AT MEGNUM HOUSE, KARAMPURA, AS STATED BY THE ASSESSEE IS USED FOR BUSINESS USE UNDER THE PROPRIE TORSHIP OF HER HUSBAND SH. P.N. SINGH. FURTHER APPELLANT H AS STATED THAT THIS PROPERTY IS UTILIZED FOR BUSINESS PURPOSES ITA NO.430/DEL/2012 4 BY SHASHI INTERNATIONAL PVT. LTD. A CO. IN WHICH SH E AND HER HUSBAND ARE DIRECTORS. THIS BEING THE CASE THE ASSESSEE IS NOT CARRYING OUT ANY BUSINESS FROM THIS PREMISE. THE PROPRIETORSHIP BUSINESS OF HER HUSBAN D AND THE BUSINESS OF SHASHI INTERNATIONAL PVT. LTD. ARE TOTALLY SEPARATE FORM THE APPELLANT SMT. SHASHI SINGH. SHA HSI SINGH IS ONLY A PROPRIETOR DRAWING SALARY INCOME AS A DIRECTOR IN M/S. SHASHI INTERNATIONAL. THE PROPERT Y IS NOT OCCUPIED BY THE APPELLANT SHASHI SINGH FOR HER BUSI NESS OR PROFESSION AND SHE HAS NO PROFITS FROM ANY BUSIN ESS CARRIED ON AT THE PROPERTY MENTIONED ABOVE. REGARDING THE PROPERTY AT FLAT NO.B-701, SURABHI APTT., THAKUR VILLAGE, WESTERN EXPRESS HIGHWAY, KANDIVALI (EAST), MUMBAI. THE PREMISES IS BEING US ED BY THE BUSINESS CONCERN OF HER HUSBAND AND BY SHAHS I INTERNATIONAL. BOTH THE CONCERNS ARE SEPARATE FROM SHASHI SINGH AS AN INDIVIDUAL. IN VIEW THEREOF AS REGARDS THIS PROPERTY ALSO IT IS NOT OCCUPIED BY THE APPELL ANT FOR THE PURPOSE OF HER BUSINESS OR PROFESSION AND THERE ARE NO PROFITS CHARGEABLE TO INCOME TAX FROM ANY BUSINESS CARRIED ON BY THE APPELLANT ON SUCH PROPERTY. THE ADDITION MADE BY THE ASSESSING OFFICER IS CORRECT AND IS UPHELD. 4. AT THE OUTSET, THE LD. AR READ FROM THE STATEMEN T OF FACTS AND RELIED UPON THE CASE LAWS OF SHRI H.S. SEHGAL & SONS 253 ITR 653 WHEREIN IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT NO NOTION AL INCOME FROM HOUSE PROPERTY CAN BE ADDED IN THE HANDS OF AN HUF WHO WAS A PARTNER IN THE FIRM AND THE LD. AR RELIED UPON THE RATIO DECID ED BY HON'BLE DELHI HIGH COURT AND ARGUED THAT THIS RATIO WAS ALSO APPL ICABLE TO THE ASSESSEE SINCE THE PROPERTY WAS BEING USED FOR BUSINESS PURP OSES OF M/S. SHASHI INTERNATIONAL PVT. LTD. IN WHICH SHE ALONG WITH HER HUSBAND WAS DIRECTOR. ON THE MERITS OF THE CASE, THE LD. AR ARGUED THAT A SSESSEE HAD ONLY 50% ITA NO.430/DEL/2012 5 SHARE IN THE PROPERTY AT MUMBAI AS THE SAME WAS JOI NTLY HELD BY HER WITH HER HUSBAND. HOWEVER, THE ASSESSING OFFICER HAD AD DED THE WHOLE AMOUNT TO THE INCOME OF THE ASSESSEE AND DESPITE TH E ASSESSEES SUBMISSIONS BEFORE LD. CIT (A) FOR INCLUSION OF ONL Y 50% OF THE INCOME, LD. CIT (A) HAD NOT CONSIDERED THE SAME AND HAS INC LUDED 100% OF THE INCOME OF ASSESSEE. OUR ATTENTION WAS ALSO INVITED TO PAGE 8 OF PAPER BOOK WHEREIN THE ANNUAL VALUE OF HOUSE PROPERTY SIT UATED AT DELHI WAS WORKED OUT BY MUNICIPAL CORPORATION OF DELHI AT RS. 43,260/- 5. LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF ASSESSING OFFICER AND ARGUED THAT RATIO IN THE CASE RELIED UP ON BY LD. AR WAS NOT APPLICABLE AS THAT CASE WAS OF A PARTNERSHIP FIRM A ND THE PRESENT CASE RELATED TO A PRIVATE LIMITED COMPANY IN WHICH ASSES SEE WAS A DIRECTOR. REGARDING CONSIDERING 50% SHARE IN THE MUMBAI PROPE RTY, THE LD. DR HAD NO OBJECTION. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE HAVE NOTED FROM THE ORDER OF LD. CIT (A) THAT PROPERTY AT MUMBAI WAS A JOINT PROPERTY WHICH WAS H ELD BY ASSESSEE ALONG WITH HER HUSBAND. THIS FACT WAS NOTED BY CIT (A) AT PAGE 4 OF HIS APPELLATE ORDER. HOWEVER, HE ADDED THE 100% OF REN TAL VALUE OF RS.1,20,000/- INSTEAD OF 50%. THEREFORE, WE HOLD T HAT ONLY 50% SHOULD BE ADDED TO THE INCOME OF ASSESSEE. IN VIEW OF AB OVE FACTS, WE REDUCE THE ADDITION OF RS.1,20,000/- MADE IN RESPECT OF MU MBAI HOUSE PROPERTY ITA NO.430/DEL/2012 6 TO RS.60,000/-. AS REGARDS CONTENTION OF LD. AR TH AT ONLY RS.43,260/- BE TAKEN AS RENTAL VALUE ON THE BASIS OF DETERMINATION BY DELHI MUNICIPAL CORPORATION, WE FIND THAT THIS DOCUMENT DOES NOT FI ND ANY MENTION BY ASSESSING OFFICER, LD. CIT (A) OR BY LD. AR IN HIS SUBMISSIONS BEFORE ASSESSING OFFICER OR LD. CIT (A), THEREFORE, WE IGN ORE IT. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSESSEE IS PARTLY A LLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF OCTOBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 19 TH DAY OF OCTOBER, 2012 TS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XII, NEW DELHI 5. CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI