Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 4618 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-09-2021
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
C
Assessment Year
2014-2015
Appeal Filed On
06-06-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5179/DEL/2019 (ASSESSMENT YEAR 2014-15) J.K.V.B. PROPERTIES PVT. LTD., ROOM NO.316A, CENTRAL REVENUE, BUILDING, I. P. ESTATE, NEW DELHI- 110 002. PAN AABCJ 2028H VS. DY.CIT, CIRCLE-13(2), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. SALIL AGGARWAL, SR. ADV. SH. SHAILESH GUPTA, ADV. SH. MADHU AGGARWAL, ADV. RESPONDENT BY MS. ANIMA, SR. DR. DATE OF HEARING 13.07.2021 DATE OF PRONOUNCEMENT 30.09.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 28.03.2019 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, NEW DELHI {CIT(A)} AND PERTAINS T O ASSESSMENT YEAR 2014-15. 2 ITA NO.5179/DEL/2019 JKVB VS. DCIT 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED DECLARIN G A TOTAL INCOME OF RS.1,61,70,710/-. THE CASE WAS SELECTED FOR SCRUT INY UNDER CASS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD EA RNED A RENTAL INCOME OF RS.3,00,24,690/- AND INTEREST INCOME OF R S.1,66,540/-. THE ASSESSING OFFICER FURTHER OBSERVED THAT ALTHOUG H THE RENTAL INCOME RECEIVED BY THE ASSESSEE WAS RS.3,00,24,690/- BUT WHILE CALCULATING THE INCOME FROM HOUSE PROPERTY, THE ASS ESSEE HAD SHOWN THE RENT ONLY AT RS.23,71,517/-. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD WRONGLY CLAIMED SET OFF OF BROUGHT FORWARD BUSINESS LOSSES AMOUNTING TO RS.1,74 ,540/- UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE, TH E ASSESSING OFFICER PROCEEDED TO ADD BACK AN AMOUNT OF RS.43,98 ,611/- TO THE TOTAL INCOME OF THE ASSESSEE AND COMPLETED ASSESSME NT AT AN INCOME OF RS.2,05,69,320/-. 2.1 THE ASSESSEE APPROACHED THE LD. FIRST A PPELLATE AUTHORITY CHALLENGING THE AFORESAID ADDITIONS. BEFORE THE LD. FIRST APPELLATE 3 ITA NO.5179/DEL/2019 JKVB VS. DCIT AUTHORITY, IT WAS THE ASSESSEES SUBMISSION THAT SIN CE THE PROPERTY HAD BEEN GIVEN ON RENT, THE ASSESSEE WAS UNDER AN OB LIGATION, AS PER THE RENT AGREEMENT TO PROVIDE CERTAIN SERVICES. THE ASSESSEE ALSO PROVIDED COPIES OF LEDGER ACCOUNT OF THE EXPEN DITURE INCURRED TOWARDS EARNING OF THE RENTAL INCOME AND SUBMITTED T HAT A TOTAL EXPENDITURE OF RS.63,09,173/- HAD BEEN INCURRED FOR EARNING OF THE RENTAL INCOME AND, THEREFORE, THERE WAS A DIFFERENC E IN THE TOTAL RENTAL INCOME EARNED I.E., RS,3,00,24,690/- AND THE INCOME FROM HOUSE PROPERTY OFFERED TO TAX AT RS.2,37,15,517/-. THE LD. FIRST APPELLATE AUTHORITY ALLOWED PARTIAL RELIEF TO THE A SSESSEE ON THE ISSUE. ON THE ISSUE OF THE ASSESSING OFFICER NOT AL LOWING BROUGHT FORWARD LOSSES TO BE ADJUSTED AGAINST THE INTEREST I NCOME EARNED DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE S UBMITTED BEFORE THE LD. FIRST APPELLATE AUTHORITY THAT DURING THE Y EAR UNDER CONSIDERATION, THE INTEREST INCOME EARNED COMPRISED OF INTEREST ON INCOME TAX REFUND, INTEREST FROM ELECTRICITY BOARD AND INTEREST ON FIXED DEPOSITS WHICH WERE ALL IN THE NATURE OF BUSIN ESS INCOME AND, THEREFORE, THE SAME SHOULD HAVE BEEN ALLOWED THE BE NEFIT OF SET OFF OF BROUGHT FORWARD BUSINESS LOSSES. HOWEVER, THE SUB MISSIONS OF 4 ITA NO.5179/DEL/2019 JKVB VS. DCIT THE ASSESSEE ON THIS ISSUE DID NOT FIND FAVOUR WITH THE LD. FIRST APPELLATE AUTHORITY AND THESE GROUNDS WERE DISMISSE D. 2.2 NOW, THE ASSESSEE HAS APPROACHED THIS TRIBUNAL CHALLENGING THE SUSTENANCE OF ADDITIONS/DISALLOWANC ES BY THE LD. FIRST APPELLATE AUTHORITY BY RAISING THE FOLLOWING G ROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE LEARNED ASSESSING OFFICER HAS GROSSLY ERR ED IN LAW AND ON FACTS IN ENHANCING THE INCOME FROM HOUSE PRO PERTY BY RS. 42,32,071/-. THE LEARNED CIT APPEAL HAS ALSO GR OSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION TO RS. 1 9,72,308/- INSTEAD OF DELETING THE ENTIRE ADDITION TO THE INCO ME FROM HOUSE PROPERTY. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LEARNED ASSESSING OFFICER HAS GROSSLY ERR ED IN LAW AND ON FACTS IN ENHANCING THE INCOME FROM HOUSE PRO PERTY BY WITHOUT ISSUING ANY SHOW CAUSE NOTICE FOR ENHANCING THE INCOME BY WITHOUT GIVING ANY REASON FOR HOLDING THA T NO SATISFACTORY REPLY WAS GIVEN AGAINST THIS ADDITION . 3. WHETHER ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE LEARNED LOWER AUTHORITIES HAS GROSSLY ERR ED IN LAW AND ON FACTS IN HOLDING THE INTEREST INCOME AMOUNTI NG TO RS. 1,74,540/- AS TAXABLE UNDER HEAD INCOME FROM OTHER SOURCES 5 ITA NO.5179/DEL/2019 JKVB VS. DCIT INSTEAD OF INCOME FROM BUSINESS AS DECLARED IN THE RETURN OF INCOME. 4. WHETHER ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE LEARNED LOWER AUTHORITIES HAS GROSSLY ERR ED IN LAW AND ON FACTS IN WITHDRAWING THE CLAIM OF SET OF BRO UGHT FORWARD BUSINESS LOSSES AMOUNT TO RS. 1,74,540/- AS CLAIMED U/S 72 OF THE ACT AGAINST THE INTEREST INCOME OF RS 174540/-. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY OF THE GROUNDS OF APPEAL. 3.0 THE LD. AUTHORIZED REPRESENTATIVE (AR) ON THE ISSUE OF SUSTENANCE OF ADDITION AMOUNTING TO RS.19,72,308/- OUT OF THE INCOME FROM HOUSE PROPERTY, DREW OUR ATTENTION TO A TABLE AS APPEARING IN PARA 6.6 OF THE IMPUGNED ORDER. THIS C HART IS BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE:- 3.1 THE LD. AR SUBMITTED THAT THIS CHART REPRE SENTS THE BREAK- UP OF VARIOUS EXPENSES INCURRED BY THE ASSESSEE IN EARNING THE S.NO. HEAD OF EXPENSES AMOUNT(RS. ) 1. HOUSE KEEPING EXPENSES 6,36,533/ - 2. SECURITY EXPENSES 20,41 , 048/ - 3. ELECTRICITY 9,08,342/ - 4. WAGES & SALARY 16,59,284/ - 5. REPAIR & MAINTENANCE 9,07,761/ - 6. INSURANCE 1,56,205/ - TOTAL 63,09,173/ - 6 ITA NO.5179/DEL/2019 JKVB VS. DCIT RENTAL INCOME. IT WAS SUBMITTED THAT THE LD. CIT(A) , AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, HAD DELETED THE DISALLOWANCES PERTAINING TO HOUSE KEEPING EXPENSES, SECURITY EXPENSES, WAGES AND SALARIES BUT HAD CONFIRMED THE DISALLOWANCE PERTAINING TO ELECTRICITY EXPENSES AMOUNTING TO RS. 9,08,342/-, REPAIRS AND MAINTENANCE EXPENSES AMOUNTING TO RS.9, 07,761/- AND INSURANCE EXPENSES AMOUNTING TO RS.1,56,205/-. THE LD. AR FURTHER SUBMITTED THAT THE LD. CIT(A) HAD NOT GIVEN ANY REASON FOR REJECTING THE ASSESSEES REPLY IN THIS REGARD. 3.2 THE LD. AR SUBMITTED THAT AS FAR AS THE CLAIM OF ELECTRICITY EXPENSES AMOUNTING TO RS.9,08,342/- WAS CONCERNED, T HESE EXPENSES WERE ON ACCOUNT OF ELECTRICITY COST FOR AI R-CONDITIONING SERVICES, POWER BACK-UP AND EXPENSES FOR COMMON ARE A. WITH RESPECT TO THE ASSESSEES CLAIM OF REPAIRS AND MAIN TENANCE EXPENSES, IT WAS SUBMITTED THAT THESE REPAIRS WERE M AINLY TOWARDS CIVIL AND ELECTRICAL MAINTENANCE EXPENSES WHICH WAS N ECESSARY FOR THE PURPOSE OF KEEPING THE PROPERTY IN A RENTABLE A ND LIVABLE CONDITION. WITH RESPECT TO INSURANCE CLAIM, IT WAS S UBMITTED THAT 7 ITA NO.5179/DEL/2019 JKVB VS. DCIT THE INSURANCE PREMIUM HAD BEEN PAID TOWARDS PROTECT ION OF PROPERTY FROM FIRE, EARTHQUAKE AND RIOTS AND OTHER SITUATIONS WHICH COULD PUT THE PROPERTY OF THE ASSESSEE AT RISK OF L OSS. THE LD. AR ALSO DREW OUR ATTENTION TO THE DETAILS SUBMITTED BEF ORE THE LD. CIT(A) IN THIS REGARD NAMELY LEDGER ACCOUNT OF ELEC TRICITY EXPENSES, AND REPAIRS MAINTENANCE EXPENSES AS WELL AS COPY OF THE INSURANCE POLICY. 3.3 WITH RESPECT TO THE ISSUE OF SET OFF OF BROUGHT FORWARD LOSSES, THE LD. AR SUBMITTED THAT THE INTEREST INCO ME HAD BEEN EARNED ON FIXED DEPOSITS OUT OF FUNDS WHICH HAD BEEN EARNED FROM BUSINESS ACTIVITY AND, THEREFORE, THE INTEREST ON S UCH INVESTMENT WAS ESSENTIAL FROM BUSINESS ACTIVITY AND, THEREFORE, THE BENEFIT OF SET OFF OF BROUGHT FORWARD BUSINESS LOSSES SHOULD BE ALLOWED. 4.0 PER CONTRA, THE LD. SR. DEPARTMENTAL R EPRESENTATIVE (DR) SUBMITTED THAT AS FAR AS THE ISSUE OF CLAIMING FURT HER EXPENDITURE OUT OF THE RENTAL INCOME WAS CONCERNED, THE 30% DED UCTION ALLOWED U/S 24(A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) SUBSUMES ALL DEDUCTIONS BUT EVEN THEN THE LD. CIT(A ) HAD ALLOWED 8 ITA NO.5179/DEL/2019 JKVB VS. DCIT BENEFIT OF FURTHER DEDUCTIONS TO THE ASSESSEE LOOKI NG INTO THE FACTS OF THE CASE. IT WAS SUBMITTED THAT THE AMOUNT OF ADD ITIONS SUSTAINED BY THE LD. CIT(A) WERE SUSTAINED AFTER GI VING A THOUGHTFUL CONSIDERATION TO THE ASSESSEES SUBMISSIONS AS WELL AS THE FACTS OF THE CASE, AND, IT WAS ALSO SUBMITTED BY THE LD. SR. DR THAT THE ASSESSEE COULD NOT JUSTIFY THE INCURRENCE OF ELECTR ICITY EXPENSES BY PRODUCING ANY ELECTRICITY BILL OR BY DEMONSTRATING WITH PROOF AS TO IN WHOSE NAME WAS THE ELECTRICITY CONNECTION HELD. SHE R EFERRED TO THE OBSERVATIONS OF THE LD. CIT(A) ON THE ISSUE AND SUB MITTED THAT NO COGENT EVIDENCE HAD BEEN GIVEN WITH RESPECT TO ELECT RICITY EXPENSES. SIMILARLY, WITH RESPECT TO THE REPAIRS AND MAINTENAN CE EXPENSES, IT WAS SUBMITTED THAT THE ASSESSEES FURTHER CLAIM OF R S.9,07,767/- WOULD TANTAMOUNT TO DOUBLE BENEFIT TO THE ASSESSEE B ECAUSE THE ASSESSEE HAD ALREADY BEEN ALLOWED THE BENEFIT OF DE DUCTION U/S 24(A) OF THE ACT. WITH RESPECT TO THE INSURANCE POL ICY, IT WAS SUBMITTED THAT AS PER THE LD. CIT(A), THE ASSESSEE DID NOT PROVIDE ANY COPY OF THE INSURANCE POLICY TO JUSTIFY THE CLA IM. 4.1 ON THE ISSUE OF SET OFF OF BROUGHT FORWARD BUSINESS LOSSES, THE LD. SR. DR PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 9 ITA NO.5179/DEL/2019 JKVB VS. DCIT 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ISSUE OF ALLOWING DEDUCTION OF EXPENDITURE CLAIMED TOWARDS THE RENTAL INCOME AND AS SUSTAINED BY THE LD. CIT(A) IS CONCERNED, IT IS SEE N THAT WITH RESPECT TO THE ISSUE OF ELECTRICITY EXPENSES, IT IS THE OBS ERVATION OF THE LD. CIT(A) THAT NO ELECTRICITY BILL WAS PRODUCED TO SHOW AS TO IN WHOSE NAME WAS THE ELECTRICITY CONNECTION HELD. IT HAS ALS O BEEN MENTIONED BY THE LD. CIT(A) THAT THE ASSESSEE COULD NOT DEMONSTRATE THAT IT WAS OBLIGATORY ON THE PART OF TH E ASSESSEE TO PROVIDE ELECTRICITY FOR AIR-CONDITIONING SERVICES, POWER BACK-UP AND EXPENSES RELATING TO COMMON AREA. ON THE OTHER HAND , IT IS THE ASSESSEES CLAIM THAT RELEVANT DETAILS IN THIS REGA RD HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER. THE LD. AR H AS REFERRED TO THE RENTAL AGREEMENT, SPECIFICALLY CLAUSE-9(C) OF T HE RENTAL AGREEMENT, AND HAS SUBMITTED THAT THESE DETAILS WER E OVERLOOKED BY THE LD. FIRST APPELLATE AUTHORITY, AS WELL AS THE A SSESSING OFFICER. AFTER GIVING THOUGHTFUL CONSIDERATION TO THE CONTEN TION OF THE ASSESSEE IN THIS REGARD, WE DEEM IT APPROPRIATE TO H OLD THAT THE ISSUE SHOULD BE RE-ADJUDICATED BY THE LD. CIT(A) A FTER GIVING A 10 ITA NO.5179/DEL/2019 JKVB VS. DCIT PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS C ASE IN THIS REGARD. THE LD. CIT(A) IS ALSO DIRECTED TO CONSIDER AND GIV E BENEFIT OF THE ORDER OF THE ITAT DELHI BENCH IN THE CASE OF M/S TE XACO OVERSEAS PVT. LTD. IN ITA NO.4050/DEL/2009, WHEREIN IT HAS BE EN HELD THAT WHERE QUANTIFICATION OF CHARGES FOR ADDITIONAL SERVI CES WAS NOT READILY AVAILABLE, ANNUAL RENTAL VALUE OF THE PROPE RTY SHOULD BE DETERMINED AFTER REDUCING THE EXPENSES INCURRED BY THE ASSESSEE FOR RENDERING SUCH ADDITIONAL SERVICES. HOWEVER, THE AS SESSEE IS ALSO DIRECTED TO DEMONSTRATE BEFORE THE LD. CIT(A) THAT THE ELECTRICITY EXPENSES CLAIMED BY IT WERE ACTUALLY INCURRED AND T HAT THE ASSESSEE HELD THE ELECTRICITY CONNECTION IN ITS NAME BEFORE SUCH EXPENDITURE IS TO BE ALLOWED BY THE LD. CIT(A). 5.1 AS FAR AS THE ISSUE OF EXPENDITURE ON REPAI RS AND MAINTENANCE EXPENSES IS CONCERNED, THE FACT REMAINS THAT THE CIVIL AND ELECTRICAL REPAIRS WHICH THE ASSESSEE HAS CARRIE D OUT AND ARE BEING CLAIMED TO THE TUNE OF RS.9,07,761/- IS IN AD DITION TO THE DEDUCTION OF 30% U/S 24(A) ALREADY ALLOWED TO THE A SSESSEE ON THE GROSS RENTAL INCOME. WE AGREE WITH THE OBSERVATION O F THE LD. CIT(A) THAT THE 30% STATUTORY DEDUCTION U/S 24(A) OF THE A CT WOULD 11 ITA NO.5179/DEL/2019 JKVB VS. DCIT SUBSUME ALL REPAIRS AND MAINTENANCE EXPENSES. THERE FORE, WE DO NOT FIND ANY FORCE IN THE CONTENTION OF THE ASSESSE E ON THIS ISSUE AND WE DISMISS THE GROUND. AS FAR AS THE PAYMENT TO WARDS INSURANCE POLICY IS CONCERNED, THE LD. CIT(A) HAS M ADE AN OBSERVATION THAT THE COPY OF INSURANCE POLICY WAS NO T MADE AVAILABLE. HOWEVER, IN PAPER BOOK, INSURANCE POLICY HAS BEEN SUBMITTED AT PAGES 90 & 91 AND WE NOTE THAT IT IS A COMPREHENSIVE INSURANCE POLICY. HOWEVER, SINCE THE LD. CIT(A) DID NOT HAVE THE BENEFIT OF EXAMINING THIS INSURANCE POLICY, WE AGAI N DEEM IT FIT TO RESTORE THIS CLAIM OF THE ASSESSEE TO THE FILE OF T HE LD. CIT(A) TO BE CONSIDERED AFRESH AND TO BE ALLOWED PROPORTIONATE LY AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE IN THIS REGARD. 5.2 AS FAR AS THE ISSUE OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS AGAINST INCOME FROM OTHER SOURCES IS CONCERNED , THE PROVISION OF SECTION 72 ARE VERY CLEAR THAT BROUGHT FORWARD BU SINESS LOSS CAN ONLY BE SET OFF AGAINST BUSINESS PROFIT. THE ASSESS EE ITSELF HAS SHOWN THE INTEREST INCOME IN ITS COMPUTATION AS INCO ME FROM OTHER SOURCES. ADMITTEDLY AND UNDISPUTEDLY, THE INTEREST INCOME COMPRISES OF INTEREST ON INCOME TAX REFUND AMOUNTIN G TO 12 ITA NO.5179/DEL/2019 JKVB VS. DCIT RS.64,097/-, INTEREST FROM ELECTRICITY COMPANY AMOU NTING TO RS.1,99,110/- AND INTEREST ON FIXED DEPOSIT AMOUNTI NG TO RS.83,333/-. IT IS NOT COMING OUT FROM RECORDS THAT THE FIXED DEPOSITS WERE MAINTAINED BY THE ASSESSEE OUT OF SOM E BUSINESS NECESSITY AND APPARENTLY THE FIXED DEPOSITS WERE MA DE OUT OF SAVINGS FROM RENTAL INCOME WHICH THE ASSESSEE HAS IT SELF OFFERED TO TAX UNDER INCOME FROM HOUSE PROPERTY. INTEREST FROM ELECTRICITY COMPANY AND INTEREST FROM INCOME TAX REFUND ARE ESS ENTIALLY AGAIN INCOME FROM OTHER SOURCES. THEREFORE, AS PER THE PROVISIONS OF SECTION 72 OF THE ACT, THE LOWER AUTHORITIES HAVE R IGHTLY DISALLOWED THE SET OFF OF BROUGHT FORWARD BUSINESS LOSSES. THER EFORE, WE FIND NO REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT( A) ON THE ISSUE AND WE DISMISS THE GROUNDS RAISED IN THIS REGARD. 6.0 IN THE FINAL RESULT, THE APPEAL OF T HE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30 TH SEPTEMBER, 2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 30/09/2021 PK/PS 13 ITA NO.5179/DEL/2019 JKVB VS. DCIT COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
