DCIT, Chandigarh V. M/s Akshaj Infra Pvt. Ltd., Delhi

ITA 481/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9023 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 481 TO 483/CHD/2015 A.Y: 2009-16 TO 2011-12 THE DCIT, VS SHRI AKSHAJ INFRA PVT. LTD., CENTRAL CIRCLE-1, HOUSE NO. 451, FIRST FLOOR, CHANDIGARH. BLOCK NO. 29, TRILOK PURI, DELHI. PAN: AADCK1301N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR RESPONDENT BY : NONE DATE OF HEARING : 17.10.2016 DATE OF PRONOUNCEMENT : 24.10.2016 O R D E R PER BHAVNESH SAINI,JM ALL THE APPEALS BY REVENUE ARE DIRECTED AGAINST COMMON ORDER OF LD. CIT(APPEALS) GURGAON DATED 18.02.2015 FOR ASSESSMENT YEARS 2009-10, 2010-11 AN D 2011-12 ON THE FOLLOWING COMMON GROUNDS OF APPEAL: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS GRAVELY ERRED IN GIVING THE BENEFIT OF D OUBT TO THE ASSESSEE WITH REGARD TO THE CLAIM OF, INTEREST ON BORROWED F UNDS AGAINST PROPERTY DESPITE THE FACT THAT THE ASSESSEE DURING THE COURS E OF ASSESSMENT 2 PROCEEDINGS HAD NEVER CLAIMED THE INTEREST ON THE B ORROWED CAPITAL FOR THE SAID PROPERTY UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY.' 2. THE DEPARTMENTAL APPEALS ARE BARED BY 4 DAYS. I T IS CONTENDED IN THE APPLICATION FOR CONDONATION OF DELAY THAT NOMINAL DELAY HAS OCCURRED SINCE THE DETAILS W ERE TO BE CALLED FOR FROM LD. CIT(APPEALS) CENTRAL, GUR GAON. WE ARE SATISFIED WITH THE EXPLANATION OF THE REVENU E DEPARTMENT THAT REVENUE DEPARTMENT WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING APPEAL WITHIN THE PERI OD OF LIMITATION. NOMINAL DELAY OF FOUR DAYS IS, THEREFOR E, CONDONED. 3. WE HAVE HEARD LD. DR AND PERUSED MATERIAL ON RECORD, HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING DESPITE SERVICE OF THE NOTICE. THESE APPEALS WERE HEARD ALONGWITH ASSESSE E'S APPEAL IN ITA 725/2015 FOR ASSESSMENT YEAR 2009-10 WHICH HAVE BEEN DISPOSED OF VIDE SEPARATE ORDER DAT ED 17.10.2016. SERVICE REPORT IS AVAILABLE IN THAT FI LE. IT MAY ALSO BE NOTED HERE THAT ON EARLIER OCCASIONS, A PPEAL WAS ALSO ADJOURNED ON THE REQUEST OF THE ASSESSEE. THE ASSESSEE IS, THEREFORE, PROCEEDED EX-PARTE. 4. IN ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICE R NOTED IN THE ASSESSMENT ORDER THAT PERUSAL OF THE P ROFIT & LOSS ACCOUNT FILED BY THE ASSESSEE SHOWS THAT ASSESSEE HAS SHOWN RENTAL INCOME OF RS. 1.22 CR AND 3 THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 58,37,021/ - AGAINST THE ABOVE INCOME INCLUDING DEPRECIATION. HOWEVER, ASSESSEE HAS NOT SHOWN ANY SUCH PROPERTY A S ITS STOCK-IN-TRADE. THE TDS HAS ALSO BEEN DULY DEDUCTED AGAINST THE RENT SO EARNED. CLEARLY THIS IS A CASE OF INCOME FROM HOUSE PROPERTY WRONGLY CLASSIFI ED AS BUSINESS INCOME TO CLAIM ADMINISTRATIVE AND OT HER EXPENSES BESIDES TAKING THE ADVANTAGE OF DEPRECIATI ON. THE ONUS UPON ASSESSEE TO PROVE GENUINENESS OF THE CLAIM HAS NOT BEEN DISCHARGED. THE ASSESSEE HAS N OT FILED ANY EVIDENCE WITH RESPECT TO VALUE OF FIXED A SSETS, NOR HAS SUBSTANTIATED THAT HOW CAN INCOME EARNED FR OM RENTING OF THE HOUSE PROPERTY IS HIS BUSINESS INCO ME. THE ASSESSEE HAS ALSO NOT PROVED THAT EXPENSES HAVE BEEN SPENT TO EARN RENTAL INCOME. THUS, THE SAID R ENTAL RECEIPTS ARE CHARGEABLE AS INCOME FROM HOUSE PROPE RTY AND 30% DEDUCTION UNDER SECTION 24(A) IS ALLOWED AGAINST IT. THEREFORE, RENTAL RECEIPTS SHOWN BY TH E ASSESSEE WERE ASSESSED AT RS. 86,09,468/- AS INCOM E FROM HOUSE PROPERTY. 4(I) THE FACTS ON THIS ISSUE ARE SAME IN THE REMAIN ING ASSESSMENT YEARS AS WELL EXCEPT THAT THE FIGURES AR E DIFFERENT AND ASSESSING OFFICER TREATED THE INCOME UNDER THE HEAD HOUSE PROPERTY. 4 5. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSI NG OFFICER BEFORE LD. CIT(APPEALS) AND CLAIMED BENEFIT OF INTEREST AGAINST RENTAL INCOME IN ALL THE YEARS. 6. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT SECURED LOAN FROM RELIANCE CAPITAL WAS TAKEN AGAINST THE PROPERTY ON WHICH RENTAL INCOME WAS EAR NED. NOW, AS STATED ALREADY THIS LOAN BOOKED ON 30.08.20 08 WAS FOR RS. 9.76 CR FOR PURCHASE OF SHOWROOM IN CHANDIGARH. A SHEET OF RE-PAYMENT SCHEDULE OF BAJA J AUTO FINANCE LTD. DATED 26.08.2010 BEARING AGREEMEN T DATED 12.07.2010 FOR FINANCING RS. 5.25 CR AGAINST PROPERTY MORTGAGED OF VALUE RS. 28.05 CR WAS ALSO F ILED. IN OTHER WORDS, LOAN FROM M/S BAJAJ AUTO FINANCE WO ULD PERTAIN TO ASSESSMENT YEAR 2011-12 ONWARD AS REFLEC TED IN THE SCHEDULE. 7. THE LD. CIT(APPEALS), THEREFORE, OBSERVED THAT I T APPEARS THAT LOAN HAS BEEN AVAILED BY ASSESSEE AND RENTAL INCOME ONLY HAS BEEN CLAIMED IN THE PROFIT & LOSS ACCOUNT THOUGH NEITHER RENT RECEIPTS NOR RENT/LEASE AGREEMENTS HAVE BEEN FURNISHED. DETAILS OF FIXED A SSETS HAVE NOT BEEN PROVIDED EITHER. THE ASSESSEE HAS MA DE IT A POINT TO STRESS THAT IT IS AN INFRASTRUCTURE C OMPANY WHOSE MAIN OBJECTS ARE SALE AND PURCHASE OF THE PROPERTY AND THAT LETTING OUT OF THE PROPERTY AND A LL OBJECTS CONNECTED WITH THE REAL ESTATE BUSINESS. T HE ASSESSEE, THEREFORE, CLAIMED THAT ASSESSEE HAS SHOW N 5 INCOME YEAR BY YEAR AS BUSINESS INCOME AND NOT UN DER THE HEAD 'INCOME FROM HOUSE PROPERTY. THE LD. CIT(APPEALS), CONSIDERING THESE FACTS, GAVE BENEFIT OF DOUBT TO THE ASSESSEE AND ALLOWED CLAIM OF THE ASSE SSEE. 8. THE LD. DR CONTENDED THAT LD. CIT(APPEALS) HAS N OT CONSIDERED THE FINDING OF FACT RECORDED BY THE ASSE SSING OFFICER. THE ASSESSEE DID NOT MAKE ANY CLAIM OF DEDUCTION OF INTEREST BEFORE ASSESSING OFFICER AND NO DETAILS HAVE BEEN FURNISHED, THEREFORE, ON MERE BEN EFIT OF DOUBT, APPEAL SHOULD NOT HAVE BEEN DECIDED. HE HAS, THEREFORE, SUBMITTED THAT MATTER MAY BE REMANDED TO THE LD. CIT(APPEALS) FOR PASSING THE ORDER AFRESH O N MERITS. 9. AFTER CONSIDERING SUBMISSIONS OF LD. DR AND PERUSAL OF FINDINGS OF AUTHORITIES BELOW, WE ARE OF THE VIEW THAT MATTER REQUIRES RE-CONSIDERATION AT THE L EVEL OF THE LD. CIT(APPEALS). THE ASSESSING OFFICER HAS GI VEN SPECIFIC FINDING THAT ASSESSEE HAS SHOWN RENTAL INC OME AND HAS CLAIMED EXPENSES AGAINST THE SAME INCOME INCLUDING DEPRECIATION BUT ASSESSEE HAS NOT SHOWN A NY SUCH PROPERTY AS ITS STOCK-IN-TRADE, TDS WAS ALSO DEDUCTED AGAINST RENT. THE ASSESSEE DID NOT PRODUC E SUFFICIENT EVIDENCE BEFORE ASSESSING OFFICER TO SUBSTANTIATE THAT HOW THE RENTAL INCOME WAS BUSINES S INCOME OF THE ASSESSEE SO AS TO CLAIM DEDUCTION OF THE EXPENDITURE. THE LD. CIT(APPEALS), INSTEAD OF EXAMI NING 6 THE ISSUE ON MERIT IN DETAIL WAS MERELY SWAYED BY T HE FACT THAT ASSESSEE IS AN INFRASTRUCTURE COMPANY AND DEALS IN REAL ESTATE. MAY BE, THE ASSESSEE IS DEAL ING IN REAL ESTATE BUT LD. CIT(APPEALS) IS UNDER OBLIGATIO N TO DECIDE THE APPEAL OF THE ASSESSEE STRICTLY ON MERIT S CONSIDERING THE FINDINGS OF THE ASSESSING OFFICER. THE LD. CIT(APPEALS) IS REQUIRED TO GIVE FINDING OF FACT BA SED ON THE MATERIAL PRODUCED ON RECORD. HOWEVER, LD. CIT(APPEALS) INSTEAD OF DECIDING THE APPEAL ON MERI TS GIVING SPECIFIC REASONS FOR DECISION IN THE ORDER H AS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY GIVI NG BENEFIT OF DOUBT. THE LD. CIT(APPEALS) FAILED TO N OTE THAT HE WAS NOT HOLDING CRIMINAL PROCEEDINGS AS HE IS A QUASI-JUDICIAL AUTHORITY UNDER INCOME TAX ACT AND S HALL HAVE TO DECIDE THE MATTER ON THE BASIS OF THE FACTS BROUGHT ON RECORD. THE LD. DR, THEREFORE, RIGHTLY CONTENDED THAT SINCE ASSESSEE HAS NOT MADE ANY CLAI M OF DEDUCTION OF INTEREST BEFORE ASSESSING OFFICER, THEREFORE, THIS POINT SHOULD HAVE BEEN CONSIDERED B Y CALLING FOR THE REMAND REPORT FROM THE ASSESSING OF FICER OR BY SUMMONING HIM TO REBUT THE CONTENTION OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE ARE OF TH E VIEW MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF TH E LD. CIT(APPEALS). 10. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE IMPUGNED ORDER AND RESTORE THE MATTER IN ISSUE TO T HE FILE OF LD. CIT(APPEALS), GURGAON WITH DIRECTION TO RE- 7 DECIDE THIS ISSUE STRICTLY IN ACCORDANCE WITH LAW G IVING REASONS FOR DECISION ON MERITS. THE LD. CIT(APPEAL S) SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE AS WELL AS TO THE ASSESSING O FFICER BEFORE PASSING THE ORDER. 11. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH S AINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH OCTOBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD