ACIT, New Delhi V. Plaza Partner, New Delhi

ITA 4380/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2825 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 14-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHEFALI SWAROOP
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO. 4380 /DEL/2014 : ASSTT. YEAR : 2011 - 1 2 ACIT, CIRCLE - 31(1), NEW DELHI VS PLAZA PAR TNER, DLF CENTRE, 9 TH FLOOR, SANSAD MARG, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A XMPK7608 P ASSESSEE BY : SH. R. S. SINGHVI, CA REVENUE BY : MRS. SHEFALI SWAROOP, CIT DR DATE OF HEARING : 14 .06 .201 7 DATE OF PRONOUNCEMENT : 14 . 0 6 .201 7 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 21.05 .2014 OF LD. CIT(A) - XXVI, NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE CIT (A) HAS ERRED IN DELETING T HE DISALLOWANCE OF RS. 4,68,66,632/ - MADE BY THE AO U/S 24A OF THE IT ACT. 2. THE CIT (A) HAS ERRED IN DIRECTING THAT RENTAL INCOME OF THE ASSESSEE SHOULD BE ASSESSED UNDER THE HEAD 'INCOME FORM HOUSE PROPERTY' AND NOT AS BUSINESS INCOME WITHOUT APPRECIAT ING THE FACT THAT THE ASSESSEE IS ENGAGED IN ORGANIZED BUSINESS OF LETTING OUT COMMERCIAL PROPERTY TO VARIOUS ENTITIES. ITA NO. 4380 /DEL /201 4 PLAZA PARTNER 2 3. THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 1,50,000/ - OUT OF TOTAL DISALLOWANCE OF RS. 11,88,878/ - MADE BY THE AO U/S 57(III) OF THE IT ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE THAT THE EXPENDITURE WAS INCURRED SOLELY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING INTEREST INCOME. 4. THE DEPARTMENT HAS FILED APPEAL IN ITAT ON IDENTICAL ISSUE S IN THE CASE OF THE ASSESSEE IN AY 2009 - 10 & 2010 - 11 AND THE SAME ARE STILL PENDING. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF APPEAL. 3 . DURING THE COURSE OF HEARING TH E LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ISSUES RAISED IN THIS APPEAL ARE FULLY COVERED BY THE EARLIER ORDER DATED 01.07.2016 OF THIS BENCH OF THE TRIBUNAL IN ITA NO. 709/DEL/2014 FOR THE ASSESSMENT YEAR 2010 - 11 IN ASSESSEE S OWN C ASE (COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD). 4 . THE LD. CIT DR IN HER RIVAL SUBMISSIONS ALTHOUGH SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 5 . AFTER CON SIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE RELATING TO THE ITA NO. 4380 /DEL /201 4 PLAZA PARTNER 3 DISALLOWANCE MADE BY THE AO U/S 24 (A) OF THE INCOME TAX ACT, 1961 NOW RAISED BY THE DEPARTMENT VIDE GROUND NOS. 1 & 2, WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL FOR THE ASSESSMENT YEAR 2010 - 11 IN ITA NO. 709/DEL/2014 (SUPRA) WHEREIN THE ISSUE HAS BEEN DECIDED AGAINST THE DEPARTMENT AND IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 3 & 4 OF THE SAID ORDER WHICH READ AS UNDER: 3. ON CAREFUL AND VIGILANT READING OF TRIBUNAL ORDER (SUPRA) FOR PRECEDING AYS, WE NOTE THAT THE ISSUE OF RENTAL INCOME I.E. BUSINESS INCOME HAS BEEN DECIDED IN FAVOUR OF THE ASSES SEE WITH FOLLOWING OBSERVATIONS : GR OUND NOS. 1 AND 2 : SIMILAR ARGUMENTS HAVE BEEN ADVANCED BY THE PARTIES AS THEY ARGUED ON ISSUE NO. A HEREINABOVE IN THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09. IN THE PRESENT YEAR THE ASSESSEE HAD DECLARED RENTAL INCOME OF RS. 15,4,40,614/ - UNDER THE HEAD HOUSE PROPERTY AND CLAIMED 30% DEDUCTION AMOUNTING TO RS. 4,51,32,144/ - AS PER THE PROVISIONS LAID DOWN IN SECTION 24(1) OF THE IT ACT. THE AO DID NOT AGREE AND DISALLOWED THE CLAIMED DEDUCTION. THE LD. CIT(A) HAS, HOWEVER, ALLOWED THE CLAIMED DEDUCTION. UNDER SIMILAR FACTS AN IDENTICAL ISSUE HAS BEEN ADJUDICATED UPON AND DECIDED IN FAVOUR OF THE ASSESSEE HEREINABOVE IN THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09. FOLLOWING THE SAME, WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. THE GROUND NOS. 1 AND 2 ARE ACCORDINGLY REJECTED. 4. IN VIEW OF ABOVE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FOR AY 2008 - 09 & 2009 - 10, WE ARE INCLINED TO HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE AS SESSEE BY ITA NO. 4380 /DEL /201 4 PLAZA PARTNER 4 THE TRIBUNAL ORDER (SUPRA) CONSEQUENTLY GROUND NOS. 1 & 2 OF THE REVENUE FOR AY 2010 - 11 ARE DISMISSED. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER, THE ISSUE RAISED BY THE DEPARTMENT IN GROUND NOS. 1 & 2 IS DECIDED AGAINST THE DE PARTMENT AND IN FAVOUR OF THE ASSESSEE. 6 . AS REGARDS TO GROUND NO. 3 RELATING TO THE DISALLOWANCE U/S 57(3) OF THE ACT, IT IS NOTICED THAT AN IDENTICAL ISSUE HAS BEEN DECIDED IN THE AFORESAID REFERRED TO EARLIER ORDER DATED 01.07.2016 IN ASSESSEE S OWN CASE VIDE PARAS 6 & 7 IN ITA NO. 709/DEL/2014 WHICH READ AS UNDER: 6. FROM RELEVANT OPERATIVE PARAS OF TRIBUNAL ORDER (SUPRA) FOR AY 2009 - 10. WE NOTE THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS & FINDINGS: 15. G ROUND NO. 3 : THE LD. AR AT THE OUTSET OF HEARING POINTED OUT THE ISSUE RAISED IS COVERED BY THE ORDER DATED 12.3.2014 OF THE TRIBUNAL IN THE CASE OF ACIT VS. MESSERS ATIRIA PARTNERS, ITA NO. 2490/DEL/2012 (AY2008 - 09). IN THIS REGARD, HE REFERRED CONTAINS OF PARA NO. 14 OF THE ORDER. 16. IN SUPPORT OF THE GROUND THE LD. SR. DR PLACED RELIANCE ON THE ASSESSMENT ORDER. 17. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE AO DISALLOWED EXPENSES AMOUNTING TO RS. 7,06200/ - CLAIMED BY THE ASSESSEE AGAINST INCOME FROM OTHER SOURCES. THE ASSESSEE HAD DECLARED INCOME FROM OTHER SOURCES AMOUNTING TO RS. 80,46,782/ - . THE TOTAL EXPENSES OF RS. 12,07,029 WAS CLAIMED OUT OF WHICH THE ITA NO. 4380 /DEL /201 4 PLAZA PARTNER 5 ASSESSEE DISALLOWED A SUM OF RS. 4,30,829/ - . THE ASSESSEE CL AIMED DEDUCTION OF RS. 7,76,200/ - AGAINST INCOME FROM OTHER SOURCES. THE AO NOTED THAT IN ASSESSMENT YEAR 2008 - 09 THE TOTAL EXPENSES CLAIMED AGAINST INCOME FROM OTHER SOURCES WERE DISALLOWED. THE ASSESSEE PLEADED THE ADMISSIBILITY OF THE EXPENSES BE CONSID ERED AFRESH. THE AO HELD THAT SINCE THE ASSESSEE HAS NO GROUND TO CLAIM DEDUCTION OF EXPENSES AMOUNTING TO RS. 7,76,200/ - AGAINST THE INCOME FROM OTHER SOURCES AMOUNTING TO RS. 80,46,782/ - , THE SAME WAS DISALLOWED. CONSIDERING THE FACTS OF THE CASE AND SUB MISSIONS OF THE ASSESSEE THE LD. CIT(A) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY THE CLAIM OF THE ENTIRE EXPENSES. HE, HOWEVER, CONSIDERING THE NATURE OF EXPENDITURE BEING OFFICE MAINTENANCE, SALARY PAID, CONVEYANCE, LEGAL AND PROFESSIONAL EXPEN SES FOUND IT UNJUSTIFIABLE TO ASSUME THAT NO EXPENSES WHATSOEVER HAS BEEN INCURRED FOR EARNING AN INCOME OF OVER RS. 80,00,000/ - FROM OTHER SOURCES. HE, THUS, KEEPING IN VIEW THE PROVISION OF SECTION 57 (III) OF THE ACT AND JUDICIAL DECISIONS CITED BEFORE HIM ALLOWED A RELIEF OF RS. 1,20,000/ - I.E. AT THE RATE OF RS. 10,000/ - PER MONTH ON ACCOUNT OF EXPENSES OR MAINTENANCE OF ITS STATUS AS A FIRM. HE ACCORDINGLY, SUSTAINED THE ADDITION OF RS. 6,06,200/ - . WE FIND THAT THE FIRST APPELLATE ORDER IS REASONED ON E, HENCE, NO INTERFERENCE THEREWITH IS REQUIRED. THE SAME IS UPHELD. GROUND NO. 3 IS ACCORDINGLY REJECTED. 7. FACTS OF CIRCUMSTANCES OF THE PRESENT AY 2010 - 11 ARE SIMILAR HENCE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) WE HOLD THAT KEEPING IN VIEW THE PROVISIONS OF SECTION 57(III) OF THE INCOME TAX ACT, 1961 AND RATIO OF THE RELEVANT JUDICIAL PRONOUNCEMENTS ON THE ISSUE IN THE PRESENT CASE. THE CIT(A) IN RELEVANT PARA 6 OF THE FIRST APPELLATE ORDER, ALLOWED RELIEF OF RS. 3,00,000/ - I.E. AT THE RATE OF 25,000/ - PER MONTH ON ACCOUNT OF EXPENSES OR MAINTENANCE OF ITS STATUS AS A FIRM. ITA NO. 4380 /DEL /201 4 PLAZA PARTNER 6 CONSEQUENTLY THE CIT(A) SUSTAINED ADDITION OF RS. 4,92,244/ - . WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER. CONSEQUENTLY, GROUND NO. 3 OF THE REVENUE BEING DEVOID OF MERITS IS ALSO DISMISSED. 7 . SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE SIMILAR AS WERE INVOLVED IN THE PRECEDING YEAR, S O , RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 01.07.2016 IN ASSESSEE S OWN CASE IN ITA NO. 709/DEL/2014 FOR THE ASSESSMENT YEAR 2010 - 11. WE DO NOT SEE ANY MERIT IN THIS GROUND RAISED BY THE DEPARTMENT. 8 . IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. (O RD ER PRONOUNCED IN THE COURT ON 14 /0 6 /2017 ) SD/ - SD / - (BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 14 /06 /2017 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSIST ANT REGISTRAR