Span Overseas Private Ltd., Pune V. Assistant Commissioner of Income-tax,

ITA 471/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9348 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHENDER BISHNOI
• Keywords: Rule of consistency; Earning of tax free income
• Section: 143(3); 14A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 396 /PUN/2015 / ASSESSMENT YEAR : 20 10 - 11 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 6, PUNE ....... / APPELLANT / V S. M/S. SPAN OVERSEAS PRIVATE LIMITED, OFFICE NO. 5, AMAR AVINASH CORP. CITY, BUND GARDEN ROAD, PUNE 411001 PAN : AABCS4214N / RESPONDENT . / ITA NO . 471/PUN/2015 / ASSESSMENT YEAR : 2010 - 11 SPAN OVERSEAS PRIVATE LIMITED, (ERSTWHILE KNOWN AS SPAN OVERSEAS LIMITED), OFFICE NO. 5, AMAR AVINASH CORP. CITY, BUND GARDEN ROAD, PUNE 411001 PAN : AABCS4214N ....... / APPELLANT /VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 6, PUNE / RESPONDENT ASSESSEE BY : SHRI KETAN VED REVENUE BY : S HRI MAHENDER BISHNOI / DATE OF HEARING : 0 8 - 05 - 2017 / DATE OF PRONOUNCEMENT : 16 - 0 6 - 2017 2 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 / ORDER PER VIKAS AWASTHY, JM : TH ESE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 4, PUNE DATED 01/01/2015 FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE FACTS OF THE CASE AS EMERGING FROM RECORDS ARE: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INDENTING COMMISSION AGENT AND EXPORT AND IMPORT OF GOODS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 25 - 09 - 2010 DECLARING TOTAL INCOME AS RS.73,46,183/ - . THE CASE OF THE ASSESSEE WA S SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, FIRST NOTICE U/S. 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED TO THE ASSESSEE ON 02 - 09 - 2011. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE FOLLOWING ADDITIONS/DISALLOWANCES : I . DISALLOWANCE U/S. 14A R.W. RULE 8D RS.13,27,388/ - . II . DISALLOWANCE U/S. 23(1)(A) RS.10,00,000/ - . III . DISALLOWANCE OF COMMISSION EXPENSES RS.1,40,25,272/ - . AGGRIEVED BY THE ASSESSMENT ORDER DATED 22 - 03 - 2013, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) PARTLY ACCEPTED THE APPEAL OF ASSESSEE QUA DISALLOWANCE OF EXPENDITURE U/S. 23(1)(A) AND ALLOWED ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE TOW ARDS PAYMENT OF COMMISSION. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) , THE REVENUE , AS WELL AS , THE ASSESSEE ARE IN APPEAL BEFORE THE TRIBUNAL. 3 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 3. THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISI NG FOLLOWING GROUNDS OF APPEAL : 1 . THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DETERMINE THE ANNUAL LETTING VALUE OF THE PROPERTY BY APPLYING THE STANDARD RENT AS PER RENT CONTROL ACT, OR ADOPT THE FAIR RENT ASSESSED BY THE MUNICIPAL AUTHORITIES AS THE SAME IS BEYOND JURISDICTION. 3 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION PAID BY THE ASSESSEE AS EVIDENCE OF SERVICES RENDERED NOT ESTABLISHED. 4 . FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE ID. CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5 . THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 4. BEFORE THE TRIBUNAL THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCO ME TAX (APPEALS) ON FOLLOWING GROUNDS : I . CONFIRMING OF DISALLOWANCE U/S. 14A R.W. RULE 8D. II . CONFIRMING OF ADDITION U/S. 23(1)(A) OF THE ACT . 5. SHRI KETAN VED APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE DISALLOWANCE MADE BY ASSESSING OFFICER U/S. 14A R.W. RULE 8D. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS.1,29,97,736/ - . THE ASSESSEE MADE SUO - MOTO 4 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 DISALLOWANCE OF RS.4, 35,000/ - FOR EARNING EXEMPT INCOME. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME ON INVESTMENTS MADE IN MUTUAL FUNDS. THE ASSESSEE HAS MADE INVESTMENTS IN MUTUAL FUNDS OUT OF SURPLUS/IDLE MONEY. ALTHOUGH, NO EMPLOYEES OF THE ASSESSE E COMPANY WAS EXCLUSIVELY DEDICATED FOR MANAGING THE INVESTMENTS , YET THE ASSESSEE DISALLOWED RS.4,35,000/ - TOWARDS EXPENDITURE ON EARNING TAX FREE INCOME . THE ASSESSEE IS HAVING OWN INTEREST FREE FUNDS MUCH MORE THAN THE FUNDS INVESTED IN MUTUAL FUNDS. NO BORROWINGS WERE MADE BY THE ASSESSEE FOR MAKING INVESTMENTS IN THE MUTUAL FUNDS. THE ASSESSING OFFICER HAD MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF RULE 8D( 2 )(II) & (III). THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE UTILITIES AND POWER LTD. REPORTED AS 313 ITR 340 (BOM) AND COMMISSIONER OF INCOME TAX VS. HDFC BANK LTD. REPORTED AS 366 ITR 505 (BOM). 5.1 IN RESPECT OF THE SECOND ISSUE RELATING TO ADDITION MADE U/S. 23(1)(C) OF THE ACT THE LD. AR SUBMITTED THAT THE ASSESSEE HAD PURCHASED PROPERTY ON 16 - 12 - 2009. THE PROPERTY WAS UNDER REPAIRS UP TO END OF JANUARY, 2010. THEREAFTER, THE ASSESSEE ADVERTISED IN THE NEWSPAPERS TO GIVE PROPERTY ON RENT. A COPY OF THE ADV ERTISEMENT IN THE NEWSPAPER TIMES OF INDIA TO LET OUT THE PROPERTY IS AT PAGE 87 OF THE PAPER BOOK. DESPITE BEST EFFORTS THE ASSESSEE COULD NOT RENT OUT THE PROPERTY TILL 31 - 03 - 2010. THE ASSESSEE IN PROFIT AND LOSS ACCOUNTS HAS CLAIMED AN EXPENDITURE OF RS.17,50,685/ - AS INTEREST PAID ON LOAN FOR PURCHASE OF PROPERTY. THIS INTEREST PAID WAS SHOWN UNDER THE HEAD INCOME FROM THE H OUSE P ROPERTY. THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE OF RS.10,00,000/ - FROM AFORESAID INTEREST AMOUNT . THE ASSESSIN G OFFICER FAILED TO APPRECIATE THAT 5 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 THE PROPERTY REMAINED VACANT DESPITE THE FACT THE ASSESSEE TOOK ALL REASONABLE STEPS TO LET OUT THE PROPERTY. UNDER SUCH CIRCUMSTANCES THE ANNUAL VALUE OF PROPERTY U/S. 23(1)(C) WAS CLAIMED AS NIL AND DEDUCTION OF RS.17 ,50,685/ - WAS CLAIMED U/S. 24 OF THE ACT. THE LD. AR SUBMITTED THAT WHERE THE ASSESSEE HAS FAILED TO LET OUT THE PROPERTY DESPITE BEST EFFORTS, UNDER THE PROVISIONS OF SECTION 23(1)(C) ITS ALV HAS TO BE TREATED AS NIL BEING LESS THAN THE SUM REFERRED TO I N SECTION 23(1)(A) OF THE ACT. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VIKAS KESHAV GARUD VS. INCOME TAX OFFICER REPORTED AS 160 ITD 7. BEFORE THE FIRST APPELLATE AUTHO RITY THE ASSESSEE MADE DETAILED SUBMISSIONS WHICH ARE REPRODUCED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER. THE ASSESSEE MADE ALTERNATE SUBMISSION WITHOUT PREJUDICE TO HIS PRIMARY OBJECTION AGAINST THE ADDITION THAT THE ANNUAL LETTING VALUE (ALV) SHOULD BE ESTIMATED ON RENT ACTUALLY RECEIVED BY THE ASSESSEE FROM FEBRUARY, 2011 ONWARDS AND THEREFORE, THE DISALLOWANCE MAY BE RESTRICTED TO RS.6,00,000/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) REMITTED THE MATTER BACK TO THE ASSESSING OFFICER TO DETERMINE THE ALV OF THE PROPERTY IN QUESTION BY APPLYING STANDARD RENT AS PER RENT CONTROL ACT OR BY ADOPTING FAIR RENT ASSESSED BY THE MUNICIPAL AUTHORITIES FOR THE PERIOD THE PROPERTY WAS NOT LET OUT. THE LD. AR SUBMITTED THAT UNDER THE PROVISIONS OF SECTION 251 OF THE ACT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NO POWER TO REMAND THE ISSUE BACK TO THE ASSESSING OFFICER . 6. SHRI MAHENDER BISHNOI REPRESENTING THE DEPARTMENT SUBMITTED THAT THE REVENUE HAS RAISED 5 GROUNDS IN APPEAL. GROUND NO S. 1, 4 AND 5 ARE 6 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 GENERAL IN NATURE. THE ISSUE RAISED BY THE DEPARTMENT IN GROUND NO. 2 IS CORRESPONDING TO SECOND ISSUE RAISED BY THE ASSESSEE AS GROUND NOS. 5 AND 6 IN ITS APPEAL. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SETTING ASIDE THE MATTER TO THE FILE OF ASSESSING OFFICER TO DETERMINE ALV OF THE PROPERTY BY APPLYING THE STANDARD RENT AS PER RENT CONTROL ACT, OR ADOPT THE FAIR RENT ASSESSED BY THE MUNICIPAL AUTHORITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GONE BEYOND HIS JURI SDICTION IN GIVING SUCH DIRECTIONS . AS PER PROVISIONS OF SECTION 251 OF THE ACT , T HE COMMISSIONER OF INCOME TAX (APPEALS) CANNOT REMIT THE MATTER BACK TO ASSESSING OFFICER. 6.1 IN RESPECT OF GROUND NO. 3 THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAD DISALLOWED PAYMENT OF COMMISSION OF RS.1,40,25,272/ - . THE ADDITION WAS MADE BY THE ASSESSING OFFICER AS THE ASSESSEE HA D FAILED TO SUBSTANTIATE THE PAYMENT OF COMMISSION WITH COGENT EVIDENCE. THE LD. DR SUPPORTED THE ASSESSMENT ORDER AND PRAYED FOR SETTING ASIDE THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON BOTH THE ISSUES. 7. THE LD. AR CONTROVERTING THE SUBMISSIONS MADE BY THE LD. DR SUBMITTED THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS OF INDENTING COMMISSION FOR MORE THAN 20 YEARS. THE ASSESSEE COMPANY WAS PRIMAR ILY OPERATING AS AN INDENTING AGENT FOR TRIGON GULF FZE - DUBAI. THE SALES TEAM OF THE A SSESSEE IDENTIFIES AND CONTACTS THE CUSTOMERS IN INDIA AND COLLECTS THE ORDERS DIRECTLY IN THE NAME OF THE SUPPLIER. THE SUPPLIER COMPANIES EXECUTE THE ORDERS. THE CUSTOMERS IN INDIA DIRECTLY PAY TO THE SUPPLIERS AND THEN THE ASSESSEE RECEIVES COMMISSION FOR COMPLETED ORDER. THE ASSESSEE RECEIVES COMMISSION FROM THE SUPPLIERS. IN THE INDENTING 7 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 BUSINESS MAJOR EXPENDITURE IS TOWARDS MARKETING, TRAVELLING AND EMPLOYEES COSTS. TO MANAGE THE BUSINESS THE ASSESSEE ALSO APPOINT SUB AGENTS AT DIFFERENT LOCATIO NS SO AS TO GET THE ORDERS FROM ENTIRE COUNTY . S IGNIFICANT AMOUNT OF COMMISSION IS PAID TO SUB AGENT S . FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE PAID COMMISSION TO THE TUNE OF RS.1,40,25,272/ - TO SUB AGENTS. HOWEVER, THE A SSESSING OFFICER HAS COMPLETELY DISREGARDED THE CLAIM OF THE ASSESSEE , DOUBTING THE GENUINENESS OF THE PAYMENTS MADE. IN THE EARLIER ASSESSMENT YEARS AND THE SUBSEQUENT ASSESSMENT YEARS THE DEPARTMENT HAS ACCEPTED THE CLAIM OF ASSESSEE AND ALLOWED THE PAY MENT OF COMMISSION. THE COMMISSION IS PAID THROUGH CHEQUES AFTER DEDUCTING TAX AT SOURCE. THE PAYMENT OF COMMISSION HAS NOT BEEN DISPUTED. THE ASSESSING OFFICER HAS DISALLOWED THE PAYMENT OF COMMISSION BY OBSERVING THAT THE NATURE OF BUSINESS IS QUITE S TRANGE AND THERE IS NO STRUCTURAL METHOD FOR THE PAYMENT OF COMMISSION TO AGENTS. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE FACTS OF THE CASE AND THE METHOD OF INDENTING BUSINESS CARRIED OUT BY THE ASSESSEE HAS ALLOWED THE CLAIM OF A SSESSEE WITH RESPECT TO PAYMENT OF COMMISSION. THE LD. AR OF THE ASSESSEE PRAYED FOR UPHOLDING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND DISMISSING THE APPEAL OF THE DEPARTMENT. 8. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED THE DOCUMENTS AND THE DECISION ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE DURING THE COURSE OF MAKING SUBMISSIONS. FOR THE SAKE OF C ONVENIENCE WE WILL FIRST TAKE THE APPEAL FILED BY THE ASSESSEE. THE FIRST ISSUE IN APPEAL BY THE ASSESSEE IS DISALLOWANCE U/S. 8 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 14A R.W. RULE 8D . A PERUSAL OF THE BALANCE SHEET AT PAGE 19 OF THE PAPER BOOK REVEALS THAT THE ASSESSEE HAS MADE TOTAL INVESTMENTS TO THE TUNE OF RS.17,63,52,127/ - OUT OF WHICH THE INVESTMENTS MADE DURING THE FINANCIAL YEAR 2009 - 10 IS RS.6,43,00,000/ - . AS PER BALANCE S HEET THE RESERVES AND SURPLUS OF THE ASSESSEE AS ON 31 - 03 - 2009 ARE RS.20,21,00,000/ - AND THE CLOSING BALANCE OF RESERVES AND SURPLUS AS ON 31 - 03 - 2010 IS RS.22,37,00,000/ - . THUS, THE ASSESSEE HAD SUBSTANTIAL INTEREST FREE OWN FUNDS TO COVER THE INVESTMENT S MADE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA) HAS HELD THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST - FREE AND OVERDRAFT /LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INV ESTMENTS WOULD BE OUT OF THE INTEREST - FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST - FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. SIMILAR VIEW WAS TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INC OME TAX VS. HDFC BANK LTD. (SUPRA). IN THE INSTANT CASE, THE ASSESSEE IS HAVING SUFFICIENT OWN FUNDS TO COVER THE INVESTMENTS , HENCE, THERE WOULD BE NO ELEMENT OF INTEREST FOR MAKING DISALLOWANCE UNDER THE PROVISIONS OF RULE 8D( 2 )(II). ACCORDINGLY, THE A SSESSING OFFICER IS DIRECTED TO DELETE DISALLOWANCE MADE UNDER RULE 8D(2)(II). 9. IN SO FAR AS THE DISALLOWANCE UNDER THE PROVISIONS OF RULE 8D(1)(III) IS CONCERNED THE SAME IS ON ACCOUNT OF AVERAGE OF OPENING AND CLOSING INVESTMENTS. THE LD. AR OF T HE ASSESSEE HAS FAILED TO SUBSTANTIATE ANY PERVERSITY IN THE FINDINGS OF ASSESSING OFFICER IN MAKING DISALLOWANCE UNDER CLAUSE (III) OF RULE 8D( 2 ). ACCORDINGLY, GROUND NOS. 1 TO 4 RAISED BY 9 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 THE ASSESSEE IN APPEAL ON THE ISSUE OF DISALLOWANCE U/S. 14A R.W. RULE 8D ARE PARTLY ALLOWED. 10. THE SECOND ISSUE RAISED IN THE APPEAL BY THE ASSESSEE IN GROUND NOS. 5 AND 6 I S WITH RESPECT TO ADDITION MADE U/S. 23(1)(C) OF THE ACT. THE REVENUE HAS ALSO ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE IN GROUND NO. 2 OF APPEAL . BOTH THE SIDES HAVE ARGUED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NO POWER TO REMAND THE ISSUE BACK TO THE ASSESSING OFFICER. THE POWERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) TO DECIDE THE APPEALS ARE CONTAINED IN SECTION 251 OF THE ACT. A PERUSAL OF SECTION 251(1)(A) MANDATES THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUAL THE ASSESSMENT. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NO POWER TO REMAND THE ISSUE BACK TO ASSESSING OFFICER. IN THE PRESENT CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER HAVING REJECTED THE PRIMARILY CONTENTION OF THE ASSESSEE REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER TO DETERMINE THE ALV OF THE PROPE RTY IN QUESTION BY APPLYING THE STANDARD RENT AS PER RENT CONTROL ACT, OR ADOPT THE FAIR RENT ASSESSED BY THE MUNICIPAL AUTHORITIES. THESE DIRECTIONS BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO ASSESSING OFFICER ARE CLEARLY BEYOND HIS JURISDICTION U/S. 251(1)(A) OF THE ACT. OUR VIEW IS FURTHER FORTIFIED BY THE DECISION OF AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF SURI SONS VS. ADDL. COMMISSIONER OF INCOME TAX REPORTED AS 124 TTJ 800. 11. DE HORS THE DIRECTIONS GIVEN BY THE COMMISSIONER OF INCOME TAX (APPEALS) EXCEEDING HIS JURISDICTION TO DETERMINE THE ALV OF PROPERTY IN QUESTION. IT IS AN UNDISPUTED FACT THAT THE PROPERTY REMAINED VACANT 10 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 DESPITE THE FACT THAT THE ASSESSEE TRIED TO FIND TENANT FOR THE DEMISE D PREMISES AND THE PROPERTY REMAINED V ACANT TILL 31 - 03 - 2010. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE . W HERE THE ASSESSEE INTENDED TO RENT OUT THE PROPERTY AND TOOK REASONABLE STEPS IN THAT DIRECTION BUT FAILED TO FIND SUITABLE TENANT , THE ALV OF THE PROPERTY SHOULD BE TREATED AS NIL I N TERM OF SECTION 23(1)(C) OF THE ACT. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VIKAS KESHAV GARUD VS. INCOME TAX OFFICER (SUPRA) UNDER SIMILAR CIRCUMSTANCES HAS HELD AS UNDER: 9. SECTION 23(1)(C) BY ITS LITERAL WORDING INCLUDE A SITUATION WH ERE A PROPERTY WHICH WAS VACANT DURING THE WHOLE YEAR BY SAYING THAT WHEN A PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR PART OF THE PREVIOUS YEAR ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IS LESS THAN SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE . IT GOES WITHOUT SAYING THAT A SITUATION CANNOT CO - EXIST WHEREIN THE PROPERTY IS LET DURING THE PREVIOUS YEAR AND IS ALSO SIMULTANEOUSLY VACANT FOR THE WHOLE YEAR. THE WORD LET AND VACANT ARE MUTUALLY EXCLUSIVE. TO APPRECIATE IT FURTHER, THE UNDERLYING PRINCIPLE OF THIS PROVISION HAS TO BE VIEWED WITH REGARD TO THE INTENTION TOGETHER WITH EFFORTS PUT BY ASSESSEE IN LETTING OUT THE PROPERTY, ETC. AND THEN GROSS ANNUAL VALUE IS REQUIRED TO BE DETERMINED. IF THE ASSESSE E INTENDED TO LET THE PROPERTY AND TOOK APPROPRIATE EFFORTS IN LETTING THE PROPERTY BUT ULTIMATELY FAILED TO LET THE SAME, THE ACTUAL RENT RECEIVED FROM IT WILL HAVE TO BE CONSIDERED AS ZERO BEING LESS THAN THE SUM REFERRED IN SECTION 23(1)(A) OF THE ACT . THE REVENUE HAS NOT BROUGHT ANYTHING ON RECORD IN REBUTTAL TO SAY THAT THE PROPERTY HAS NOT REMAINED VACANT FOR THE WHOLE YEAR OR WAS SELF OCCUPIED IN SOME MANNER. AS NOTED ABOVE, THE FACT THAT THE ASSESSEE HAD ON THE PREVIOUS OCCASION IN THE PRECEDING Y EAR RENTED THE PROPERTY REMAINS UN - TRAVERSED. WE ARE NOT INCLINED TO AGREE WITH THE INTERPRETATION SUGGESTED BY THE REVENUE THAT PROPERTY SHOULD BE ACTUALLY LET OUT IN RELEVANT TO PREVIOUS YEAR. THIS INTERPRETATION DOES NOT APPEAR CONSISTENT WITH THE PHRAS EOLOGY MANDATED IN S. 23(1)(C) WHICH INCLUDES A SITUATION WHERE THE PROPERTY CAN REMAIN VACANT DURING THE WHOLE OF THE RELEVANT PREVIOUS YEAR. HENCE, BOTH SITUATIONS NAMELY PROPERTY IS LET AND REMAINED VACANT FOR THE WHOLE YEAR CANNOT CO - EXIST DURING THE FINANCIAL YEAR. WE ALSO NOTE FROM A READING OF ANOTHER PROVISION I.E. SUB SECTION (3) OF SECTION 23 OF THE ACT, WHERE THE LEGISLATURES IN THEIR WISDOM HAVE USED THE WORD HOUSE IS ACTUALLY LET. THIS ALSO SHOWS THAT THE EXPRESSION PROPERTY IS LET CANNOT MEAN ACTUAL LETTING 11 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 OUT OF THE PROPERTY BECAUSE HAD IT BEEN SO, THERE WAS BE NO NEED TO USE THE WORD ACTUALLY IN SUB - SECTION (3) OF SECTION 23 OF THE ACT. APPLYING THE PURPOSIVE INTERPRETATION, THE EXPRESSION PROPERTY IS LET HAS TO BE READ IN CONTRAST TO PROPERTY IS SELF OCCUPIED TO ARRIVE AT ITS TRUE PURPORT. WE SIMULTANEOUSLY NOTE ON FACTS THAT THE PROPERTY HAS BEEN ACTUALLY LET OUT IN THE FINANCIAL YEAR 2006 - 07 AS NOTED ABOVE. IT CANNOT BE RECKONED TO BE IN THE CONTROL OF THE ASSESSEE TO LET OUT T HE PROPERTY THROUGHOUT NECESSARILY. THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF VIVEK JAIN (SUPRA) RELIED UPON BY THE REVENUE CANNOT BE READ IN A MANNER THAT IF THE PROPERTY REMAINS VACANT THROUGHOUT THE YEAR, SECTION 23(1 )(C) DO NOT APPLY AT ALL MORE SO WHEN THE PROPERTY WAS LET OUT IN PROCEEDING OR SUBSEQUENT YEAR. THEREFORE, IN THE TOTALITY OF THE CIRCUMSTANCES AND HAVING REGARD TO THE PROVISIONS OF THE ACT, WE ARE OF THE VIEW THAT THE ALV OF THE PROPERTY AT DANDE TOWERS WHICH REMAI NED VACANT FOR THE WHOLE YEAR HAS TO BE ASSIGNED NIL VALUE IN TERMS OF SECTION 23(1)(C) OF THE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) STANDS MODIFIED TO THIS EXTENT. GROUND NO.1 IS THUS PARTLY ALLOWED. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FI NDINGS OF CO - ORDINATE BENCH OF THE TRIBUNAL. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN APPEAL IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. 13. SINCE, THE GROUND NO. 2 RAISED IN THE APPEAL BY THE DEPARTMENT IS CORRESPONDING TO GROUND NOS. 5 AND 6 RAISED IN THE APPEAL BY THE ASSESSEE AND SAME HAVE BEEN ADJUDICATED HEREIN ABOVE. FOR THE DETAILED REASONS GIVEN IN PARA 10 AND 11, THE GROUND NO. 2 IN THE APPEAL OF DEPARTMENT IS PARTLY ALLOWED. 14. THE ONLY GROUND LEFT FOR ADJUDICATION IN THE APPEAL OF THE DEPARTMENT IS GROUND NO. 3. IN GROUND NO. 3 THE DEPARTMENT HAS ASSAILED THE FINDINGS 12 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF COMMI SSION PAID BY THE ASSESSEE TO SUB - AGENTS IN RESPECT OF ITS INDENTING BUSINESS. THE ASSESSEE HAS MADE COMMISSION PAYMENTS TO SUB AGENTS THROUGH CHEQUE AFTER DEDUCTING TAX AT SOURCE. THE PAYMENT OF COMMISSION HAS NOT BEEN DISPUTED BY THE DEPARTMENT. THE O NLY ISSUE RAISED BY THE DEPARTMENT IS THE NATURE IN WHICH THE INDENTING BUSINESS IS CARRIED OUT BY THE ASSESSEE. THE LD. AR OF THE ASSESSEE HAS STATED AT THE BAR THAT IN THE SUBSEQUENT ASSESSMENT YEARS AND THE EARLIER ASSESSMENT YEARS THE DEPARTMENT HAS A CCEPTED AND ALLOWED THE PAYMENT OF SUCH COMMISSION. THE ASSESSMENT YEAR UNDER APPEAL IS THE FIRST YEAR WHERE THE PAYMENT OF COMMISSION HAS BEEN DISALLOWED. THE LD. AR PLACED ON RECORD COPY OF THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 2003 - 04 TO 2014 - 15. EXCEPT FOR THE ASSESSMENT YEAR 2011 - 12 THE ASSESSMENT S IN THE CASE OF ASSESSEE W ERE COMPLETED U/S. 143(3) OF THE ACT. THE ASSESSING OFFICER HAS DISALLOWED PAYMENT OF COMMISSION IN TWO ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2010 - 11 I.E. ASSESSMENT YEAR U NDER APPEAL AND ASSESSMENT YEAR 2012 - 13. IN ALL OTHER ASSESSMENT YEARS THE ASSESSING OFFICER ACCEPTED AND ALLOWED THE PAYMENT OF COMMISSION. THE LD. DR HAS NOT BEEN ABLE TO SHOW ANY CHANGE IN THE FACTS AND CIRCUMSTANCES IN THE ASSESSMENT YEAR UNDER APPEA L. THE PAYMENT OF COMMISSION HAS NOT BEEN DISPUTED. THE RULE OF CONSISTENCY HAS TO BE FOLLOWED FOR ALLOWING OR DISALLOWING ANY EXPENDITURE WHEN THERE IS NO SUBSTANTIAL CHANGE IN THE FACTS AND CIRCUMSTANCES. FURTHER, THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS CATEGORICALLY OBSERVED IN THE ORDER THAT THE ASSESSEE HAS FURNISHED ALL DETAILS REQUISITIONED BY THE ASSESSING OFFICER, VIZ. NAMES, ADDRESS, PAN , COPY OF INVOICES RAISED BY SUB - AGENTS, CONFIRMATIONS FROM SOME OF SUB - AGENTS. THE ASSESSEE HAS MADE 13 ITA NO S. 396 & 471/PUN/2015, A.Y. 2010 - 11 P AYMENT OF COMMISSION THROUGH BANKING CHANNELS AFTER APPROPRIATE TDS U/S. 194H AND TDS CHALLANS HAVE BEEN FURNISHED, THERE SHOULD BE NO REASON FOR DISALLOWING SUCH EXPENDITURE ON MERE SUSPICION. THUS, IN VIEW OF THE DOCUMENTS ON RECORD, WE DO NOT FIND ANY ERROR IN THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE ARE UPHELD. ACCORDINGLY, THE GROUND NO. 3 RAISE D IN THE APPEAL BY THE DEPARTMENT IS DISMISSED. 15. IN THE RESULT, THE APPEA L OF THE REVENUE AND ASSESSEE ARE PARTLY ALLOWED, IN THE AFORESAID TERMS. ORDER PRONOUNCED ON FRIDAY, THE 16 TH DAY OF JUNE, 201 7 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 16 TH JUNE, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 , PUNE 4. THE PR. CIT - 3, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / ASSISTANT REGISTRAR , , / ITAT, PUNE