Sh. Nitin Johari, New Delhi V. ACIT, New Delhi

ITA 4931/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3763 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 09-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAHUL CHAURASIA

Judgement Text

ITA 4931/DEL/2014 ASSESSMENT YEAR 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4931/DEL /2014 ASSESSMENT YEAR: 2011-12 SHRI NITIN JOHARI, 2 ND FLOOR, 15 SADHNA ENCLAVE, NEW DELHI. VS A CIT, CENTRAL CIRCLE-13, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAHUL CHAURASIA, CA RESPONDENT BY: SHRI ATIQ AHMAD, SR. DR DATE OF HEARING : 11.09.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, NEW DELHI FOR ASSESSMENT YEAR 201112, WHEREIN V IDE ORDER DATED 15/06/2014, THE ASSESSEES APPEAL CHALLENGING ADDITION ON ACCOUNT OF NOTIONAL RENTAL INCOME ADDED UNDER SECTI ON 23 (4) OF THE INCOME TAX ACT, 1961 AND AMOUNTING TO RS. 1,21, 968/- WAS CONFIRMED. ITA 4931/DEL/2014 ASSESSMENT YEAR 2011-12 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS. 60 ,48,850/-. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AN D DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED TH AT THE ASSESSEE WAS OWNING ANOTHER RESIDENTIAL PROPERTY SI TUATED AT HYDERABAD. IT WAS OBSERVED THAT THE ASSESSEE HAD SH OWN A RENTAL INCOME OF RS. 1,44,000/- FROM THESE PREMISES DURING ASSESSMENT YEAR 2009 10 WHICH HAD BEEN INCREASED TO RS. 1,58 ,400/- BY THE ASSESSING OFFICER AND WAS ACCEPTED BY THE ASSES SEE, BUT FOR THE YEAR UNDER CONSIDERATION, NO RENTAL INCOME HAD BEEN SHOWN FROM THE SAID PREMISES. THE AO WAS OF THE OPINION T HAT PROVISIONS OF SECTION 23 (4) OF THE INCOME TAX ACT, 1961 WERE ATTRACTED AND NOTIONAL INCOME HAD TO BE INCLUDED IN THE INCOME OF THE ASSESSEE AS IF THE PROPERTY WAS LET OUT. THE AO PROCEEDED TO ESTIMATE THE ANNUAL RENTAL VALUE AT RS. 1,74,240 /- AND AFTER ALLOWING THE STATUTORY DEDUCTION OF 30% UNDER SECTI ON 24 (A), AN AMOUNT OF RS. 1,21,968/- WAS ADDED TO THE TOTAL INC OME OF THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT (APPEALS) WHO CONFIRMED THE NOTIONAL ADJUSTMENT. NO W THE ASSESSEE IS IN APPEAL BEFORE US AND HAS CHALLENGED THE CONFIRMATION BY RAISING THE FOLLOWING GROUNDS OF AP PEAL ITA 4931/DEL/2014 ASSESSMENT YEAR 2011-12 3 1. THAT THE ORDER DATED 05-06-2014 PASSED U/S 250 OF THE INCOME TAX ACT, BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) I, NEW DELHI IS AGAINST LAW AN D FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIE D TO UPHOLD THE ACTION OF THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-13, NE W DELHI IN MAKING AN ADDITION OF RS. 1,21,968/- BY APPLYING THE PROVISIONS OF SECTION 23(4) OF THE INCOME- TAX ACT, 1961IN RESPECT OF THE PROPERTY BEARING NO. 201, 2ND FLOOR, REGENCY SQUIRE APARTMENTS, 1-5-76, STREET NO. 8/26 HABSIGUDA, UPAL MUNICIPALITY AND MUNDAL HYDERABAD. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT WHILE IT WAS UNDISPUTED THAT THE ASSESSEE WAS OWNING THE IMP UGNED PROPERTY DURING THE YEAR UNDER CONSIDERATION, IT WA S ALSO A FACT THAT THE SAID PROPERTY WAS LYING VACANT DURING THE PREVIOUS YEAR RELEVANT TO THE YEAR UNDER APPEAL AND NO BENEFIT WA S DERIVED THEREFROM. IT WAS SUBMITTED THAT IN ABSENCE OF ANY REAL INCOME TO THE ASSESSEE, THERE WAS NO CAUSE FOR IMPUTING ANY N OTIONAL RENTAL INCOME THERE FROM. IT WAS SUBMITTED THAT INCOME M EANS REAL INCOME AND NOT FICTIONAL INCOME. IT WAS ALSO SUBMI TTED THAT THE ASSESSEE WAS CONTEMPLATING SALE OF THIS PROPERTY AN D, THEREFORE, THE SAME WAS LYING VACANT SO THAT THE SAME COULD BE SOLD WITHOUT ANY DELAY. THE LD. AUTHORISED REPRESENTATIVE PLACED ON RECORD A COPY OF THE ADVERTISEMENT PUBLISHED BY THE ASSESSEE IN THE ITA 4931/DEL/2014 ASSESSMENT YEAR 2011-12 4 DECCAN CHRONICLE, HYDERABAD EDITION ON 03/06/2011 T O SUBSTANTIATE THE CLAIM THAT THE HOUSE WAS INDEED LY ING VACANT AND STEPS WERE BEING TAKEN FOR SALE OF THE SAME. 4. THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE, IN R ESPONSE, VEHEMENTLY ARGUED THAT THE ADDITION ON ACCOUNT OF N OTIONAL RENTAL INCOME HAD BEEN CORRECTLY MADE AND SUBMITTED THAT THE ADDITION MAY BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. THE LD. CIT (APPEALS) HAS D ISCUSSED THE ISSUE IN PARAGRAPH 4 OF THE IMPUGNED ORDER AND HAS NOTED THAT ALTHOUGH ONLY REAL INCOME IS TO BE TAXED UNDER THE INCOME TAX ACT, THERE WERE CERTAIN EXCEPTIONS TO THIS RULE AND ONE OF THE EXCEPTIONS WAS TAXATION OF INCOME FROM HOUSE PROPER TY. THE LD. CIT (APPEALS) HAS NOTED THAT INCOME FROM HOUSE PROP ERTY IS TAXED ON THE BASIS OF ITS ANNUAL VALUE AND IF THE ASSESSE E HAS ONLY ONE HOUSE PROPERTY THEN THE ANNUAL VALUE OF SUCH HOUSE PROPERTY IS TAKEN AS NIL EVEN THOUGH IT MIGHT HAVE BEEN LYING V ACANT. HOWEVER, THE ANNUAL VALUE OF THE SECOND PROPERTY IS TO BE TAXED MANDATORILY. THE LD. CIT (APPEALS) HAS FURTHER NOTE D THAT SINCE THE IMPUGNED PROPERTY AT HYDERABAD WAS THE SECOND P ROPERTY, THE ANNUAL VALUE OF SAID PROPERTY WAS CHARGEABLE TO TAX ITA 4931/DEL/2014 ASSESSMENT YEAR 2011-12 5 IRRESPECTIVE OF THE FACT WHETHER IT WAS LYING VACAN T OR WAS GIVEN ON RENT. THE LD. AUTHORISED REPRESENTATIVE, ALTHOUG H, ASSAILED THE ADJUDICATION BY THE LD. CIT (APPEALS), HE COULD NOT POINT OUT ANY LEGAL INFIRMITY IN THE REASONING AND FINDING SO ARR IVED AT BY THE LD. CIT (APPEALS). IN THE CIRCUMSTANCES WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LOWER AUTHORITIE S AND DISMISS THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 6. IN THE FINAL RESULT THE APPEAL OF THE ASSESSEE S TANDS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 31ST OCTOBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR