Sh. Satinder Singh, New Delhi V. ITO, New Delhi

ITA 5408/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7142 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 28-12-2016
• Assessment Year: 1988-1989
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DHANANJAY KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-2 : NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NOS.5408, 5405 TO 5407/DEL/2015 ASSESSMENT YEARS : 1988-89, 1994-95, 1996-97 & 1997 -98 SATINDER SINGH, SHRI SANKALP ANIL SHARMA, G-8, JAIN BHAWAN, 18/12 PUSA LANE, WEA, KAROL BAGH,NEW DELHI. PAN: AAKPM6695F VS. ITO, WARD-19(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DHANANJAY KUMAR, ADVOCATE DEPARTMENT BY : SHRI RAJESH KUMAR, SR.DR DATE OF HEARING : 28.12.2016 DATE OF PRONOUNCEMENT : 06.01.2017 ORDER PER RAJPAL YADAV, JM: THE PRESENT FOUR APPEALS ARE DIRECTED AT THE INSTA NCE OF THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) DATED 30 TH MARCH, 2016 PASSED FOR ASSESSMENT YEARS 1988-89, 1994-95, 1996 -97 & 1997-98. ITA NOS.5408, 5405 TO 5407/DEL/2015 2 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY ARE DES CRIPTIVE AND ARGUMENTATIVE IN NATURE. 3. IN BRIEF, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ASSESSMENT ORDER AND FURTHE R ENHANCING THE INCOME WITHOUT GRANTING THE ASSESSEE A FAIR AND PRO PER OPPORTUNITY. THE BRIEF FACTS OF THE CASE ARE THAT SHRI HARI SING H (NOW DECEASED) WAS THE OWNER OF A COMMERCIAL PROPERTY BEARING NO. 17, COMMUNITY CENTRE, ASHOK VIHAR, PHASE-I, NEW DELHI. THIS LAND WAS ALLOTTED TO THE ASSESSEE BY THE DDA AND CONSTRUCTION WAS COMPLE TED IN THE YEAR 1983. THE ASSESSEE LET OUT THE FIRST FLOOR OF THE P ROPERTY TO M/S ALLIANCE BROS. (A PARTNERSHIP CONCERN CONSTITUTED B Y TWO PERSONS, I.E., BOTH THE SONS OF THE ASSESSEE) AT RS.3/- PER SQ. FT . VIDE AGREEMENT DATED 6 TH APRIL, 1983. THE FIRM M/S ALLIANCE BROS. MADE SOM E MODIFICATION IN THE PROPELRTY AND FURTHER LET OUT TO ORIENTAL BA NK OF COMMERCE @ RS.6.25 PER SQ. FT. THE ASSESSING OFFICER WHILE PA SSING THE ASSESSMENT ORDER IN THE ORIGINAL ROUND TOOK THE RENT OF THE PO RTION @ 6.25 PER SQ. FT. AND ADDED THE DIFFERENCE IN THE RETURNED INCOME OF THE ASSESSEE. ITA NOS.5408, 5405 TO 5407/DEL/2015 3 THIS ADDITION WAS AGITATED IN APPEAL AND, ULTIMATEL Y, THE DISPUTE TRAVELLED UPTO THE TRIBUNAL. THE TRIBUNAL HAS HELD AS UNDER:- 'I HAVE CONSIDERED THE ENTIRE MATERIAL PLACED ON RE CORD. IN THE CASE OF JOHN TINSON & CO. (P) LTD. (SUPRA), THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE ASSESSING OFFICER IS B OUND TO TAKE THE STANDARD RENT WHEN HE DOES NOT ACCEPT THE ACTUAL RE NT OFFERED BY THE ASSESSEE. IN THIS CASE, THE ASSESSING OFFICER FOUND THAT ACTUAL RENT OFFERED BY THE ASSESSEE WAS MUCH LOWER THAN THE REN T BEING OFFERED FOR OTHER ADJOINING - PROPERTIES, HE, THEREFORE:. T AKEN THE ALV AT HIGHER VALUE AS PER THE RENT PREVAILING FOR THE SIM ILAR PROPERTY. THE HON'BLE HIGH COURT FOUND THAT PROPERTY IN QUESTION WAS GIVEN ON RENT LONG BACK AND THE ASSESSEE WAS OFFERING THE AC TUAL RENT RECEIVED. UNDER THESE CIRCUMSTANCES, THE HON'BLE HI GH COURT HELD THAT THE ASSESSING OFFICER SHOULD HAVE TAKEN THE ST ANDARD REUT. HOWEVER, THE FACTS IN THE INSTANT CASE BEFORE US AR E QUITE DISTINGUISHABLE, WHEREIN THE ASSESSING OFFICER HAS TAKEN THE ACTUAL RENT-RECEIVED FROM BANK @, RS. 6.25 PER SQ. FT. THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S ALLIANCE BROT HERS HAS BEEN HELD TO BE SHAME TRANSACTION BY THE HON 'BLE JURISD ICTIONAL HIGH COURT THERE IS NO REASON FOR AGAIN EXAMINING THE GE NUINENESS OF THE AGREEMENT WHEN THERE IS NO. CHANGE IN THE TERMS OF AGREEMENT ALREADY ENTERED INTO BY THE ASSESSEE WITH M/S ALLIA NCE BROTHERS. AS THE PROPERTY HAS BEEN LET OUR BY ASSESSEE TO M/S ALLIANCE BROTHERS AT RS.3/- PER SQ. FT., WHICH HAS BE FURTHE R LET OUT BY M/S. ALLIANCE BROTHERS TO THE BANK AT RS.6.25 PER SQ. FT ., THERE IS NO REASON FOR NOT IGNORING, THE SHAM TRANSACTION ENTE RED BY THE ASSESSEE WITH M/S ALLIANCE BROTHERS, AND THEREBY TA KING THE ACTUAL RENT RECEIVED BY M/S ALLIANCE BROTHERS FROM THE BA NK. IN ALL FAIRNESS, WE DIRECT THE ASSESSING OFFICER TO ADD TH E NET INCOME FROM HOUSE PROPERTY AS OFFERED BY M/S. ALLIANCE BRO THERS AFTER CLAIMING ALL ITS EXPENSES, IN THE NET INCOME FROM H OUSE PROPERTY OFFERED BY THE ASSESSEE THE ASSESSING OFFICER IS AL SO DIRECTED TO GIVE DUE CREDIT OF TAX BEING PAID BY M/S ALLIANCE B ROTHERS. WHILE ADDING NET INCOME FROM HOUSE PROPERTY OF M/S ALLIAN CE BROTHERS IN THE HANDS OF THE ASSESSEE. ONCE THE TRANSACTION WITH M/S ALLIANCE ITA NOS.5408, 5405 TO 5407/DEL/2015 4 BROTHERS IS HELD TO BE SHAM, NOT ONLY NET INCOME OF M/S. ALLIANCE BROTHERS IS TO BE ADDED IN THE HANDS OF THE ASSESSE E, BUT ALSO THE TAX PAID BY M/S. ALLIANCE BROTHERS IS ALSO REQUIRED TO BE GIVEN DUE CREDIT IN THE HANDS OF THE ASSESSEE. WE DIRECT ACCO RDINGLY. WE MAY FURTHER CLARIFY THAT ALL THE EXPENSES CLAIMED BY M/ S ALLIANCE BROTHERS ON ACCOUNT OF INTEREST, REPAIR, ETC., WHIL E COMPUTING INCOME FROM HOUSE PROPERTY, SHOULD BE ALLOWED AND O NLY NET INCOME OFFERED BY M/S ALLIANCE BROTHERS IS TO BE AD DED IN THE HANDS OF THE ASSESSEE. ' 4. WHILE GIVING EFFECT TO THE TRIBUNALS ORDER, THE LD. ASSESSING OFFICER HAS ALLOWED DEDUCTION OF LEASE RENT PAID BY M/S ALLIANCE BROS TO THE ASSESSEE. HE COMPUTED THE INCOME ACCORDINGL Y. THE ASSESSEE WAS NOT SATISFIED WITH THE COMPUTATION MADE BY THE ASSESSING OFFICER, HENCE, HE FILED APPEAL BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY HAS DISPOSED OF ALL THE APPEALS BY THE COMMON IMPUG NED ORDER DATED 30 TH MARCH, 2016. THE LD.CIT(A) WAS OF THE VIEW THAT TH E TRIBUNAL IN A WAY DID NOT BELIEVE THE TENANCY BETWEEN THE ASSES SEE AND M/S ALLIANCE BROS AND, THEREFORE, UPHELD THE RENTAL VAL UE OF THE PROPELRTY @ 6.25 PER SQ. FT. THE TRIBUNAL HAS ONLY DIRECTED THE ASSESSING OFFICER TO GRANT DEDUCTION OF EXPENDITURE, I.E., IN TEREST EXPENDITURE OR ANY OTHER EXPENDITURE INCURRED BY M/S ALLIANCE BROS . ACCORDING TO THE LD.CIT(A), WHEN IT IS TO BE ASSUMED THAT TENANC Y BETWEEN M/S ALLIANCE BROS. AND THE ASSESSEE WAS A SHAM TRANSACT ION, THEN, LEASE ITA NOS.5408, 5405 TO 5407/DEL/2015 5 EXPENSES CLAIMED BY M/S ALLIANCE BROS. CANNOT BE AN EXPENDITURE WHICH IS TO BE ALLOWED. IF THAT BE SO, THEN, AGAIN , THE RENT WILL BE LESSER IN THE HANDS OF THE ASSESSEE BECAUSE LEASE R ENT OF RS.3 PER SQ. FT. WOULD BE ALLOWED IN THE HANDS OF M/S ALLIANCE BROS. AND THE REMAINING AMOUNT WOULD BE ONLY 3.25 PER SQ. FT. UND ER THIS CONSTRUCTION, THE LD.CIT(A) HAS ENHANCED THE ANNUAL LETTING VALUE AND, ACCORDINGLY, ENHANCED THE TAXABLE INCOME OF THE ASS ESSEE. 5. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. I FIND THAT THE LD. F IRST APPELLATE AUTHORITY HAS NOT GIVEN ANY NOTICE TO THE ASSESSEE FOR THIS P ROPOSED ENHANCEMENT. THE APPEAL WAS OF THE ASSESSEE. HE C OULD NOT BE PUT IN MORE DISADVANTAGEOUS POSITION THAN THE POSITION IF HE HAD NOT FILED THE APPEAL. IF, IN HIS APPEAL HE HAS TO BE PUT IN MORE DISADVANTAGEOUS POSITION BY EXERCISING THE CO-TERMINUS POWER OF THE ASSESSING OFFICER BY THE CIT(A), THEN, NOTICE OUGHT TO HAVE BEEN GIVE N TO THE ASSESSEE BY THE LD.CIT(A). IN OTHER WORDS, HAD THE APPEALS O F THE ASSESSEE WERE DISMISSED BY THE LD. FIRST APPELLATE AUTHORITY, THE N, THE ASSESSEE WOULD NOT BE IN A MORE DISADVANTAGEOUS POSITION THAN THE ONE BY VIRTUE OF THIS IMPUGNED ORDER. CONSIDERING THIS ASPECT, I ALL OW ALL THESE APPEALS ITA NOS.5408, 5405 TO 5407/DEL/2015 6 FOR STATISTICAL PURPOSES. I RESTORE ALL THESE ISSUE S TO THE FILE OF THE CIT(A). THE LD. FIRST APPELLATE AUTHORITY SHALL RE -ADJUDICATE THE ISSUES AFTER CONFRONTING THE ASSESSEE AS TO WHY THE DEDUCT ION OF LEASE EXPENSES CLAIMED BY M/S ALLIANCE BROS. SHOULD NOT B E DISALLOWED IN THE HANDS OF THE ASSESSEE WHILE DETERMINING THE ANN UAL LETTING VALUE. APART FROM THIS ISSUE, ALL OTHER ISSUES AGITATED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER WILL BE RECONSIDERED BY THE CI T(A). THE OBSERVATIONS MADE BY ME WILL NOT IMPAIR OR INJURE T HE CASE OF THE ASSESSING OFFICER/CIT(A) AND WILL NOT CAUSE ANY PRE JUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 6. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2017. SD/- [RAJPAL YADAV] JUDICIAL MEMBER DATED, 6 TH JANUARY, 2017. DK ITA NOS.5408, 5405 TO 5407/DEL/2015 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.