ACIT, New Delhi V. M/s. Nahid Finlease Pvt. Ltd., New Delhi

ITA 4825/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3917 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 27-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: S K TULSIAN
• Section: 143(3)

Judgement Text

PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P.SAHU, ACCOUNTANT MEMBER ITA NO. 4825/DEL/2014 (ASSESSMENT YEAR: 2010 -11) ACIT, CENTRAL CIRCLE-19, NEW DELHI. VS NAHID FINLEASE P VT.LTD., 10, 1 ST FLOOR, TODARMAL LANE, BENGALI MARKET, NEW DELHI-110011. PAN-AABCN5146L (APPELLANT) (RESPONDENT) APPELLANT BY SMT. SHEFALI SWAROOP, CIT DR RESPONDENT BY SH.S.K.TULSIAN, ADV. & MS. BHOOMIJA VERMA, ADV. DATE OF HEARING 11.01.2018 DATE OF PRONOUNCEMENT 17.01.2018 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-XII, NEW DELHI DATED 30.06.2014 FOR T HE AY 2010-11, CHALLENGING THE ORDER OF LD.CIT(A) IN RESTRICTING T HE ALV UNDER REFERENCE ONLY TO 1/3 OF THE AREA. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT IN ASSESS MENT YEAR, THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY. IT WAS FURTHER SEEN THAT THE ASSESSEE OWNED OFFICE SPACE NUMBER A- 1601 & B-1601 HAVING TOTAL SUPER BUILT UP AREA OF 5402 FT. ALONGW ITH 2 TERRACES ADMINISTERING 1256 FT APPURTENANT TO THE SAID OFFIC ES LOCATED IN 16 TH ITA NO. 4825/DEL/2014 PAGE | 2 FLOOR, STATESMAN HOUSE, B-148, BARAKHAMBA ROAD, NEW DELHI ALONGWITH 6 CAR PARKING SPACES IN THE LOWER BASEMEN T. IT WAS ALSO SEEN THAT THIS PREMISE WAS BEING USED BY VARIOUS GR OUP CONCERNS OF THE TODAY GROUP NAMELY M/S TODAY HOTELS PVT. LTD; M /S TODAY HOTELS (NEW DELHI) PVT. LTD.; M/S TODAY HOTELS (NOIDA) PVT . LTD; M/S TODAY HOTELS (ANDHRA) PVT. LTD; M/S TODAY HOTELS (CHANDIG ARH) PVT. LTD; M/S TODAY HOTELS (KARNATAKA) PVT. LTD; M/S TODAY HO TELS (MAHARASHTRA) PVT. LTD.; M/S TODAY HOTELS (PUNJAB) PVT. LTD. ETC. AS THEIR REGISTERED OFFICE. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE FAIR RENTAL VALUE NOT BE CALCULATED IN RESPECT OF ABOVE OFFICE SPACE NUMBERS LOCATED AT 16 TH FLOOR, STATESMAN HOUSE, B-148, BARAKHAMBA ROAD, NEW DELHI AS PER THE PROVISIONS OF SECTION 23 OF THE I.T.ACT, 1961. 3. THE ASSESSEE SUBMITTED THAT THERE WAS NO RENTAL INCOME FOR AY 2006-07 TO 2010-11 FROM THE PROPERTY IN QUESTION AS 1/3 OF TOTAL SPACE WAS USED BY M/S TODAY HOTELS PVT. LTD. ETC. A ND BALANCE OF THE SPACE WAS USED BY THE ASSESSEE COMPANY FOR ITS OWN BUSINESS PURPOSE FOR EXPLORING DIFFERENT PROJECTS. HOWEVER, THE MAINTENANCE AND ELECTRICITY BILLS OF THE ENTIRE SPACE OF THE P ROPERTY WAS PAID BY M/S TODAY GROUP, AS NOTED ABOVE, WHO ARE USING THIS SPACE OF M/S TODAY HOTELS PVT. LTD. JUST FOR THE PURPOSE OF ADDR ESS OF REGISTERED ITA NO. 4825/DEL/2014 PAGE | 3 OFFICE, ALTHOUGH NO ACTIVITIES HAVE BEEN CARRIED OU T BY THESE COMPANIES. 4. THE AO DID NOT ACCEPT CONTENTION OF THE ASSESSEE THAT THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS ACTIVITY IN ASSESSMENT YEAR UNDER APPEAL AS IT IS DIFFICULT TO BELIEVE THAT IT WOULD LEFT VACANT A PRIME LOCATION IN CONNAUGHT PLACE, NEW DELHI. THE ASSESSEE HAS GIVEN ADDRESS OFFICE AT 10, TODARMAL LANE, BENGALI MARKET, NEW DELHI- 110001 AND DURING THE COURSE OF SEARCH OF TODAY GRO UP OF CASES ON 26.11.2009, IT WAS NOTICED THAT THE ABOVE PROPERTY HAS BEEN SHOWN AS MAIN OFFICE OF THE M/S TODAY HOTELS PVT. LTD. AN D WHOLE OF THIS FLOOR WAS BEING USED BY M/S TODAY HOTELS PVT. LTD. FOR ITS BUSINESS PURPOSE. DURING THE COURSE OF SEARCH, NO BUSINESS ACTIVITIES OF THE ASSESSEE WERE FOUND TO BE CARRIED OUT FROM THIS PRE MISE. M/S TODAY HOTELS PVT. LTD. HAS PAID MAINTENANCE AND ELECTRICI TY BILLS OF THE ENTIRE SPACE. THE AO, THEREFORE, HELD THAT THE ASS ESSEE HAS LET OUT THE ENTIRE AREA TO M/S TODAY HOTELS PVT. LTD. AND OTHER GROUP CONCERN OF M/S TODAY GROUP. THE AO FOLLOWING SECTION 22 & 23 OF THE INCOME TAX ACT, 1961 COMPUTED ANNUAL VALUE AT RS.68,31,000 /- AND AFTER GIVING DEDUCTION U/S 24 OF THE ACT, COMPUTED TOTAL TAXABLE INCOME AT RS.47,81,770/- UNDER HEAD HOUSE PROPERTY. ITA NO. 4825/DEL/2014 PAGE | 4 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD.CIT(A). THE ASSESSEE REITERATED THE SAME FACTS AS WERE SUBMITTE D BEFORE THE AO. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY IS IN OC CUPANT OF 2/3 OF THE AREA IN THE ABOVE PROPERTY AND CONFIRMATION HAS BEEN FILED BY M/S TODAY HOTELS PVT. LTD. THAT THE ASSESSEE HAS GIVEN ONLY 1/3 OF THE AREA IN QUESTION. THE ASSESSEE COMPANY IS HAVING R EGISTERED OFFICE AT 10, TODARMAL LANE, BENGALI MARKET, NEW DELHI-110001 BUT PROPERTY IN QUESTION IS USED FOR THE PURPOSE OF BUSINESS. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT ENTIRE PROPERTY WAS RENTED OUT TO M/S TODAY HOTELS PVT. LTD. LD.CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE AND NOTED THAT AS PER SECTION 22 OF THE I. T. ACT, THE ONLY ANNUAL VALUE OF THE PROPERTY COULD BE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY EXCEPT SUCH PORTI ON OF SUCH PROPERTY WHICH THE ASSESSEE MAY OCCUPY FOR THE PURP OSE OF ANY BUSINESS AND PROFESSION CARRIED OUT ON BY HIM, PROF ITS WHEREOF ARE CHARGEABLE TO TAX. IT WOULD NOT MEAN THAT INCOME I S ACTUALLY TAXED. LD.CIT(A) FOUND THAT THE ASSESSEE COMPANY HAS LEASE D OUT 1/3 OF THE AREA TO M/S TODAY HOTELS PVT. LTD. AND RETAINED 2/3 AREA FOR ITS OWN BUSINESS PURPOSE. THE AO WAS ACCORDINGLY DIRECTED TO RESTRICT THE ADDITION TO 1/3 OF THE AREA WHICH IS LET OUT BY THE ASSESSEE TO M/S TODAY HOTELS PVT. LTD. THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED. ITA NO. 4825/DEL/2014 PAGE | 5 6. LD. COUNSEL FOR THE ASSESSEE RE-ITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE HAS SUBMITTED THA T IN AY 2013-14, THE AO PASSED AN ORDER U/S 143(3) DATED 28.12.2015 ON THE SAME MATTER IN ISSUE AND THE ASSESSEE MADE THE SAME SUBM ISSIONS THAT IT HAS LEASED OUT APPROXIMATELY 1/3 OF THE TOTAL AREA IN DISPUTED PROPERTY. THE AO HELD THAT M/S TODAY HOTELS PVT. L TD. HAD MADE PAYMENT OF RS.13,11,048/- TOWARDS MAINTENANCE CHARG ES ON BEHALF OF ASSESSEE FOR UTILIZATION OF THE AREA. THE SAME WAS TREATED AS FAIR RENTAL VALUE OF THE AREA USED BY M/S TODAY HOTELS P VT. LTD. AND INCOME FROM HOUSE PROPERTY WAS ACCORDINGLY COMPUTED ON THE SAME AFTER DEDUCTION. HE HAS FURTHER SUBMITTED THAT IN AY 2011-12, THE SAME MATTER REACHED TO ITAT, DELHI BENCH IN THE CAS E OF THE ASSESSEE IN ITA NO.2954/DEL/2016 AND THE TRIBUNAL VIDE ORDER DATED 07.12.2016 RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR RECONSIDERATION. IN THIS YEAR ALSO, THE ASSESSEE P LEADED THAT ONLY 1/3 OF TOTAL SPACE HAS BEEN USED BY M/S TODAY HOTELS PV T. LTD. AND THE BALANCE SPACE IS USED BY THE ASSESSEE COMPANY FOR I TS OWN BUSINESS PURPOSES. THE RELIANCE WAS ALSO PLACED UPON THE AS SESSMENT ORDER FOR AY 2012-13 & 2013-14, THEREFORE, THE AO IS DIR ECTED TO PASS AN ORDER AFRESH. LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE AO IN VIEW OF THE DIRECTIONS OF THE TRIBUNAL PASSED THE A SSESSMENT ORDER ITA NO. 4825/DEL/2014 PAGE | 6 U/S 143(3)/254 ON 28.11.2017 FOR AY 2011-12 AND ACC EPTED THE EXPLANATION OF THE ASSESSEE THAT RETABLE VALUE OF T HE PROPERTY IN QUESTION COMES TO RS.10,37,184/- WHICH WAS TREATED AS INCOME FROM HOUSE PROPERTY AND DEDUCTION U/S 24 OF THE ACT HAVE BEEN ALLOWED. LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE ISSUE IS COVERED BY ORDER OF ITAT FOR AY 2011-12 AS THE AO A CCEPTED THE CLAIM OF THE ASSESSEE IN AY 2011-12 & 2013-14, THEREFORE, DEPARTMENTAL APPEAL HAS NO MERITS. 7. ON THE OTHER HAND, LD. DR MOVED APPLICATION FOR ADJOURNMENT IN FOUR CASES INCLUDING PRESENT ONE. HOWEVER, CONS IDERING THE FACTS OF THE CASE AS NOTED ABOVE, WE DO NOT FIND ANY JUSTIFI CATION TO ADJOURN THE MATTER ON THE REQUEST OF THE LD. DR. REQUEST FO R ADJOURNMENT REJECTED. 8. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ORDER OF THE TRIBUNAL AND THE ASSESSMENT ORDER FOR AY 2011-12 & 2013-14, IT IS CLEAR THAT THE CLAIM OF THE ASSESSEE HAS BEEN ACCEP TED BY THE AO IN SET ASIDE PROCEEDINGS FOR AY 2011-12 THAT THE ASSES SEE LEASED OUT ONLY 1/3 OF THE SPACE IN PROPERTY UNDER CONSIDERATI ON FOR WHICH RENTAL VALUE WAS COMPUTED BY THE AO. THE FINDINGS OF THE LD.CIT(A) ARE THUS SUPPORTED BY THE STAND OF THE AO TAKEN IN AY 2 011-12 & 2013- ITA NO. 4825/DEL/2014 PAGE | 7 14. ONCE THE AO ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE LEASED OUT ONLY 1/3 OF THE AREA IN PROPERTY IN QUES TION, THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN DIRECTIN G THE AO TO COMPUTE ONLY LETTING VALUE OF 1/3 PROPERTY IN QUESTION. AC CORDINGLY, THE APPEAL OF THE DEPARTMENT IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.01.2018. SD/- SD/- (L.P.SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATE:-17 TH JANUARY, 2018 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI