Sh. Ravinder Mahajan, New Delhi V. Addl. CIT, New Delhi

ITA 5587/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3621 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 154

Judgement Text

1 ITA NO. 5587/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 5587/DEL/201 3 ( A.Y 2009-10) RAVINDER MAHAJAN 20, DOUBLE STORY MARKET, NEW RAJINDER NAGAR NEW DELHI AAAPM3109N (APPELLANT) VS ADDL. CIT RANGE-33 NEW DELHI (RESPONDENT) APPELLANT BY SH. R. S. SINGHVI, CA RESPONDENT BY SH. ATIQ AHMAD SR. DR ORDER PER SUCHITRA KAMBLE THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27/08/2013 PASSED BY CIT(A)-XXVI, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ORDER OF THE LD. COMMISSION OF INCOME TAX, (APPEALS) IS BAD IN LAW A ND ON THE FACTS OF THE CASE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. COMMISSION OF INCOME TAX, (APPEALS) IS NOT JUSTIFIE D IN REJECTING THE APPLICATION FILED U/S 154 OF THE INCOME TAX ACT, 19 61 AGAINST THE APPEAL ORDER NO. 443/2011-12 DATED 27/8/2013. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. DATE OF HEARING 01.01.2018 DATE OF PRONOUNCEMENT 31.01.2018 2 ITA NO. 5587/DEL/2013 COMMISSION OF INCOME TAX, (APPEALS) IS NOT JUSTIFIE D IN HOLDING THAT NO PRIMA FACIE MISTAKE CREPT IN THE APPELLATE ORDER. 3. RETURN OF INCOME DECLARING TOTAL INCOME OF RS.87 ,34,139/- WAS FILED BY THE ASSESSEE ON 30/09/2009. THE CASE WAS SELECTED FOR SCRUTINY U/S 143(3) OF THE INCOME TAX ACT, 1961 AND ACCORDINGLY NOTICE U/S 143(2) DATED 25/08/2010 WAS ISSUED AND SERVED UPON THE ASSESSEE ALONG WITH QUESTIONNAIRE. IN RESPONSE TO THE NOTICES ISSUED, ASSESSEES REPRESEN TATIVE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILED DETAILS. T HE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR THE ASSESSEES MAIN SOURCE OF INCOME IS FROM HOUSE PROPERTY, BUSINESS AND PROFESSION AND INCOME FROM O THER SOURCES. THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE ADDRESS OF ALL THE PREMISES WITH HIS MAIN OFFICE, BRANCHES, GODOWNS AND MANUFACTURING UN ITS AND COMPLETE RESIDENTIAL ADDRESSES. THE ASSESSEE VIDE REPLY DAT ED 1/8/2011 SUBMITTED THAT THE ASSESSEE IS NOT CARRYING OUT ANY BUSINESS IN HI S INDIVIDUAL NAME OR IN HIS INDIVIDUAL CAPACITY. THE ASSESSEE ALSO REVEALED HI S RESIDENTIAL ADDRESS WHICH IS IN HIS NAME, THE ASSESSING OFFICER OBSERVE D THAT THE ASSESSEE SUBMITTED COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2009-10 W HERE THE ASSESSEE HAS SHOWN INCOME FROM HOUSE PROPERTY FROM PROPERTY SITU ATED AT SAKET, NEW DELHI. AFTER EXAMINING THE DOCUMENTS, THE ASSESSING OFFICE R OBSERVED THAT THE ASSETS SIDE FOR BOTH THE YEARS SHOWED HOUSE PROPERTY FLAT NO. B-23, DDA FLATS GOLF APARTMENT, SAKET AND ALSO 50% SHARES IN FLAT NO. 40 2-SEA SIDE APARTMENT CO- OP HOUSING SOCIETY LTD, P BALUMARG 3 OFF PRABHA DEV I ROAD, MUMBAI AND ALSO COTTAGE NO. B-5 THE COMPLEX KNOWN AS THE CORBETT SITUATED AT KAILASH VIHAR, BRINSHIP ROADS, SHUKHATAL, NAINITAL. THE A SSESSING OFFICER FURTHER OBSERVED THAT NO INCOME WAS BEING SHOWN FROM THE SA ID PROPERTIES IN THE COMPUTATION OF INCOME EXCEPT THE FLAT SITUATED AT S AKET. THE INSPECTOR OF THE REVENUE DEPARTMENT MADE ENQUIRY AT SAKET PROPERTY A S WELL AS MUMBAI PROPERTY AND AFTER LOCAL ENQUIRY REPORTED THAT THE EXPECTED RENT THERE FROM RS.25,000 PER MONTH FOR SAKET PROPERTY AND EXPECTED THERE FROM RS.70,000/- PER MONTH FROM MUMBAI PROPERTY. THE ASSESSING OFFI CER ALSO RECORDED THAT MUMBAI PROPERTY IS OCCUPIED BY THE DAUGHTER OF THE ASSESSEE. ACCORDINGLY, 3 ITA NO. 5587/DEL/2013 NOTIONAL RENT FROM MUMBAI PROPERTY WAS BROUGHT TO T AX AT EXPECTED RENTAL VALUE AND EXPECTED RENTAL VALUE TAKEN AS RS.35,000/ - PER MONTH HALF SHARE LESS 20% SINCE THE FINANCIAL YEAR FOR WHICH IT IS R EQUIRED IS 2008-09 AS THE CURRENT FINANCIAL YEAR BEING 2011-12 IN THE SAME IS TREATED INCOME FROM SAID HOUSE PROPERTY. FURTHER, THE ASSESSING OFFICER MAD E ADDITION OF RS.93,240/- IN RESPECT OF SAKET PROPERTY. RS. 2,35,200/- ADDIT ION FOR MUMBAI PROPERTY AND 35,000/- FOR NAINATAL PROPERTY. THUS, ADDITION OF R S.3,63,440/- WAS MADE BY THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE SAID ASSESSMENT ORDER THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). THE CIT(A) PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE 5. THE LD. AR SUBMITTED THE ITAT IN CASE OF RAJEEV MAHAJAN & RAVINDER MAHAJAN FOR ASSESSMENT YEAR 2005-06 BEING ITA NO. 5 347 & 4750/DEL/2014 DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE ALP OF MUMBAI FLAT WAS HELD AT NIL BY THE CIT(A ) FOR ASSESSMENT YEAR 2009-10 AND THE SAME WAS NOT CHALLENGED BY THE DEPA RTMENT AS STATED IN PARA 8.1 OF THE CIT(A)S APPEAL. 8.1 DURING THE ASSESSMENT PROCEEDINGS THE LD AO RA ISED THE QUESTION OF APPLICABILITY OF SECTION 22 WHERE THE ASSESSEE HIMS ELF IS NOT CARRYING ON THE BUSINESS IN THE PROPERTIES IN QUESTION. THE ASSESSE E VIDE LETTER DT 20.12.2011 AND 23.12.2011 SUBMITTED A DETAIL REPLY AS UNDER:- THE PROPERTIES AT BANGLORE AS WELL AS HYDEREBAD ARE RENTED PROPERTIES. RENT OF RS 3000/- AND RS 2,500/- PER MONTH IS BEING RECE IVED FROM THE FIRM M/S) MITRA & BROS. THE ASSESSEE IS A PARTNER IN THIS FIR M. SECTION 22 OF THE INCOME TAX ACT PROVIDES THAT ANNUAL LETTING VALUE OF ANY P ROPERTY OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF THE BUSINESS O R PROFESSION CARRIED ON BY HIM IS NOT REQUIRED TO BE INCLUDED IN HIS TOTAL INCOME. THE VARIOUS HIGH COURTS HAS HELD THAT ALV FROM SUCH PROPERTY BEING U SED FOR THE PURPOSE OF BUSINESS OR PROFESSION IS EXEMPT IN THE HANDS OF TH E ASSESSEE. IF THE SAID 4 ITA NO. 5587/DEL/2013 PROPERTY IS IN THE OCCUPATION OF THE FIRM IN WHICH THE ASSESSEE IS ONE OF THE PARTNER, NO NOTIONAL RENTAL INCOME CAN BE ADDED IN THE HANDS OF THE ASSESSEE. THE HONORABLE ALLAHABAD HIGH COURT IN THE CASE OF C IT V MUSTAFA KHAN 276 ITR 601 AFTER DISCUSSING VARIOUS JUDGMENTS HAS HELD AS UNDERLIE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE ARGUMENTS OF THE R ESPECTIVE COUNSEL AND FIND THAT THERE IS A DIVERGENCE OF OPINION AMONGST-THE V ARIOUS HIGH COURTS ON THIS ISSUE. THE LEADING CASE, ACCEPTING THE CONTENTION O F THE ASSESSEE IS THAT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V RASIKLA L BALABHAI [1979] 119ITR 303. THE MADRAS, ORISSA, PATNA,'KERALA AND GUJARAT HIGH COURTS ARE OF THE VIEW THAT WHEN A FIRM CARRIES ON BUSINESS, IT IS BU SINESS CARRIED ON BY THE PARTNERS OF THAT FIRM. THE INCOME FROM HOUSE PROPER TY OWNED BY AN ASSESSEE AND USED IN BUSINESS CARRIED ON BY THE PARTNERSHIP FIRM IN WHICH THE ASSESSEE IS A PARTNER WOULD QUALIFY FOR EXEMPTION A S PROVIDED IN SECTION 22 OF THE ACT THESE HIGH COURTS HAVE DISSENTED FROM TH E VIEW OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT V. K.N. GURUSWAMY [19 84] 146 ITR 34, ON WHICH STRONG RELIANCE HAS BEEN PIACED BY COUNSEL FO R THE REVENUE'. 6. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) A ND THE ASSESSING OFFICER . 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IN CASE OF RAJEEV MAHAJAN & RAVINDER MAHA JAN FOR ASSESSMENT YEAR 2005-06 BEING ITA NO. 5347 & 4750/DEL/2014 IN PARA 11 & 12 THE ITAT OBSERVED AS FOLLOWS:- 11. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ID. CIT(A) WHILE DECIDING THE ASSE SSEES APPEAL FOR THE ASSESSMENT YEAR 2009-10 ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE FLAT AT MUMBAI WAS SELF-OCCUPIED, THEREFORE, IT S ALP WAS AT NIL. THE SAID FINDING OF THE ID. CIT(A) HAS NOT BEEN CHALLEN GED BY THE DEPARTMENT. IT IS ALSO AN ADMITTED FACT THAT THE ADDITION FOR T HE YEAR UNDER CONSIDERATION IN RESPECT OF THE FLAT AT MUMBAI WAS MADE BY THE AO ONLY 5 ITA NO. 5587/DEL/2013 ON THE BASIS OF THE FINDINGS GIVEN FOR THE ASSESSME NT YEAR 2009-10. SINCE THE ADDITION FOR THE SAID ASSESSMENT YEAR I.E. ASSE SSMENT YEAR 2009-10 HAS BEEN DELETED BY THE LD. CIT(A) AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. THEREFORE, THE ADDITION SUSTAINED F OR THE YEAR UNDER CONSIDERATION WAS NOT JUSTIFIED PARTICULARLY WHEN T HERE IS NO CHANGE IN THE FACTS FOR THE YEAR UNDER CONSIDERATION VIS-A- VIS T HE FACTS INVOLVED IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10. ACCOR DINGLY, THE ADDITION SUSTAINED BY THE ID. CIT(A) IS DELETED. 12. THE FACTS OF THE CASE OF SH. RAVINDER MAHAJAN IN I T A NO. 4750/DEL/2014 FOR THE ASSESSMENT YEAR 2005-06, ARE IDENTICAL AS WERE INVOLVED IN THE CASE OF SH. RAJIV MAHAJAN, NEW DELH I (SUPRA). THEREFORE, FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHA LL APPLY MUTATIS MUTANDIS. ONCE THE ALP IS DECLARED AS NIL FOR ASSESSMENT YEAR 2009-10 AND THE SAME IS SET ASIDE, NOTHING REMAINS IN THE MATTER WH ICH SHOULD HAVE BEEN TAKEN INTO CONSIDERATION BY THE CIT(A). THE CIT(A) HAS N OT TAKEN INTO CONSIDERATION, THE ORDER PASSED BY HIS PREDECESSOR. THEREFORE, TH E ORDER OF THE CIT(A) IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 31/01/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 6 ITA NO. 5587/DEL/2013 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 02/01/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 02/01/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 31.01.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 3 1 .01.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.