ACIT, CHENNAI V. Kalyani Construtions (P) Limited, CHENNAI

ITA 469/CHNY/2003

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8576 (ITAT-CHENNAI)
• Duration Of Justice: 13 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1999-2000
• Appeal Filed On: 07-03-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.468 & 469/MDS/2003 * +* / ASSESSMENT YEARS : 1998-99 & 1999-2000 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(5), CHENNAI - 600 034. V. M/S KALYANI CONSTRUCTIONS PVT. LTD., NO.9, BAZULLAH ROAD, T. NAGAR, CHENNAI - 600 017. PAN : 1-K (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /0-. 1 2 / RESPONDENT BY : NONE ' 1 3& / DATE OF HEARING : 25.07.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 15.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THESE APPEALS OF THE REVENUE WERE DISPOSED OF EA RLIER BY AN ORDER DATED 25.08.2006. THE REVENUE CHALLENGED THE CORRECTNESS OF THE ORDER OF THIS TRIBUNAL DATED 25. 08.2006 BEFORE THE MADRAS HIGH COURT. THE MADRAS HIGH COURT BY JU DGMENT DATED 13.01.2015, SET ASIDE THE ORDER OF THIS TRIBUNAL DA TED 25.08.02016 2 I.T.A. NOS.468 & 469/MDS/2003 AND REMANDED BACK THE MATTER TO THE FILE OF THIS TR IBUNAL FOR RECONSIDERATION. ACCORDINGLY, THE APPEAL WAS POSTE D FOR HEARING FOR FINAL DISPOSAL. 2. DR. ANITA SUMANTH, THE LD.COUNSEL FOR THE ASSESS EE, BY A LETTER DATED 11.07.2016, INFORMED THE REGISTRY THAT SHE HAS RECEIVED A LETTER DATED 09.07.2016 FROM THE ASSESSEE SAYING THAT THEY DO NOT WISH TO PURSUE THE MATTER SINCE THE TAX AMOUNT HAS ALREADY BEEN PAID. ACCORDINGLY, SHE INFORMED THE REGISTRY THAT SHE IS WITHDRAWING HER VAKALATHNAMA. A COPY OF THE LETTER OF THE ASSESSEE DATED 09.07.2016 IS ALSO AVAILABLE ON RECORD WHICH READS AS FOLLOWS:- WE WISH TO INFORM YOU THAT THE COMPANY HAS ALREADY PAID THE TAXES AND IT BEING DEPARTMENT APPEAL THE CO MPANY DOES NOT INTEND TO BE REPRESENTED FOR THE ITAT HEAR ING DATED 27 TH JULY, 2016. IN VIEW OF THE ABOVE LETTER OF THE ASSESSEE, IT IS OBVIOUS THAT THE ASSESSEE IS NOT WILLING TO APPEAR BEFORE THIS TRIBU NAL, THEREFORE, WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PROCE ED TO DISPOSE OF THE APPEAL ON MERIT. 3. SHRI SHIVA SRINIVAS, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THIS TRIBUNAL FOUND THAT THE ASSESSE E LEASED OUT A 3 I.T.A. NOS.468 & 469/MDS/2003 VACANT AREA TO THE EXTENT OF 43,011 SQ.FT. THE BAL ANCE PROPERTY WAS HELD AS STOCK-IN-TRADE. THE ASSESSEE BEING A DEVEL OPER OF THE PROPERTY, THE ASSESSING OFFICER HAS DETERMINED THE ANNUAL LETTING VALUE OF THE AREA LYING VACANT WHICH WAS HELD BY TH E ASSESSEE AS STOCK-IN-TRADE. ACCORDING TO THE LD. D.R., THE TRI BUNAL FOUND THAT WHEN THE PROPERTY WAS HELD AS STOCK-IN-TRADE, THERE CANNOT BE ESTIMATION OF ANY ANNUAL LETTING VALUE FOR THE PURP OSE OF ASSESSING THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR BUSINESS INCOME. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER AS CONFIRMED BY THE CIT(APPEALS) WAS DELETED. HOWEVER, THE REVENUE TOOK THE MATTER BEFORE THE HIG H COURT. THE HIGH COURT FOUND THAT THIS TRIBUNAL EXCEEDED THE SC OPE OF THE APPEALS, THEREFORE, THE MATTER WAS REMANDED BACK TO THE TRIBUNAL FOR RECONSIDERATION. THE LD. D.R. FURTHER CLARIFIE D THAT THE ASSESSING OFFICER HIMSELF ASSESSED THE INCOME AS INCOME FROM HOUSE PROPERTY AND THE CIT(APPEALS) CONFIRMED THE SAME AND THE ISS UE BEFORE THIS TRIBUNAL IS ONLY WITH REGARD TO ESTIMATION OF ANNUA L LETTING VALUE FOR THE PURPOSE OF ASSESSING THE INCOME FROM HOUSE PROP ERTY. THE LD. D.R. FURTHER SUBMITTED THAT THE ANNUAL LETTING VALU E ASSESSED BY THE ASSESSING OFFICER AT THE RATE OF ` 170/- PER SQ.FT. IS VERY REASONABLE, THEREFORE, THE ORDER OF THE CIT(APPEALS) THAT THE A MOUNT DETERMINED 4 I.T.A. NOS.468 & 469/MDS/2003 AS ANNUAL LETTING VALUE CANNOT BE APPROVED IS NOT C ORRECT. ACCORDING TO THE LD. D.R., ONCE THE CIT(APPEALS) CO NFIRMED THAT THE INCOME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROP ERTY, THE ANNUAL LETTING VALUE OF PROPERTY HAS TO BE ESTIMATE D AND IT HAS TO BE ASSESSED ACCORDINGLY. 4. WE HAVE CONSIDERED THE SUBMISSION OF LD. DEPARTM ENTAL REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL AV AILABLE ON RECORD. THE ASSESSING OFFICER ASSESSED THE INCOME ON LETTING OUT OF PROPERTY UNDER THE HEAD INCOME FROM HOUSE PROPE RTY AND ESTIMATED THE ANNUAL LETTING VALUE AT ` 170/- PER SQ.FT. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONFIRMED THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, THE CI T(APPEALS) FOUND THAT THE ANNUAL LETTING VALUE CANNOT BE ESTIM ATED. THE CIT(APPEALS) ALSO REFERRED THE JUDGMENTS OF APEX CO URT IN DEWAL DAULAT RAJ KAPOOR V. NEW DELHI MUNICIPAL COMMITTEE (1980) 122 ITR 700 AND MRS. SHEEL KAUCHISH V. CIT (1981) 131 I TR 435 AND FOUND THAT THE ANNUAL LETTING VALUE SHOULD BE DETER MINED IN ACCORDANCE WITH RENT CONTROL LEGISLATION. 5. IN THIS CASE, WHAT WAS LET OUT BY THE ASSESSEE I S CONSTRUCTED BUILDING/VACANT SPACE, WHICH WAS TREATED AS STOCK-I N-TRADE. THE 5 I.T.A. NOS.468 & 469/MDS/2003 QUESTION ARISES FOR CONSIDERATION IS ESTIMATION OF ANNUAL RENTAL VALUE FOR THE PURPOSE OF ASSESSMENT. THE ANNUAL RENTAL V ALUE HAS TO BE DETERMINED AS PER THE RENT CONTROL REGULATION APPLI CABLE FOR BUILDING. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE CTION 23 & 24 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE RENT RECEIVABLE HAS TO BE ESTIMATED. THE CLASSIFICATION OF RENTAL INCOME UNDER THE HEAD HOUSE PROPERTY IS NOT DISPUTED EITHER BY ASS ESSEE OR BY REVENUE. THE DISPUTE IS WITH REGARD TO ESTIMATION OF EXPECTED RENT. 6. HAVING GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE HAS NOT CHALLENGED THE ASSESSMENT OF INCOME UNDER THE H EAD INCOME FROM HOUSE PROPERTY, THE RENT RECEIVABLE HAS BEEN RIGHTLY ESTIMATED BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDER OF THE LOWER AUTHORITY. ACCORDING LY, THE ORDER OF THE LOWER AUTHORITY IS SET ASIDE AND THAT OF THE ASSESS ING OFFICER IS RESTORED. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE ALLOWED. 6 I.T.A. NOS.468 & 469/MDS/2003 ORDER PRONOUNCED ON 15 TH SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 15 TH SEPTEMBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-II, CHENNAI 4. ' :3 /CIT JUDICIAL, CHENNAI 5. 8; /3 /DR 6. * < /GF.