Sri V.Akhilesh Reddy, CHENNAI V. ITO, CHENNAI

ITA 578/CHNY/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6528 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: T BANUSEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 578/MDS/2010 ASSESSMENT YEAR : 2007-08 SRI V. AKHILESH REDDY, 97, VELACHERY ROAD, CHENNAI-600 032. V. THE INCOME-TAX OFFICER, BUSINESS WARD-III(1), CHENNAI. (PAN: AEQPA3118M) A N D I.T.A. NO. 579/MDS/2010 ASSESSMENT YEAR 2007-08 MS. V. ANUPAMA REDDY, V. THE INCOME TAX OFFI CER, 97, VELACHERY ROAD, BUSINESS WARD-III(1), CHENNAI-600 032. CHENNAI. (PAN : AEYPA8553N) (APPELLANTS) (RESPONDENT) APPELLANTS BY : SHRI T. BANUSEKAR RESPONDENT BY : SHRI B. SRINIVAS O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER: I.T.A. NO. 578/MDS/2010 IS AN APPEAL AFILED BY THE ASSESSEE SHRI V. AKHILESH R EDDY AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-VIII, CHENNAI IN ITA NO. 35/09 -10 DATED 22-02-2010 FOR THE ASSESSMENT YEAR 2007-08 AND ITA NO. 579/MDS/201 0 IS AN APPEAL FILED BY I.T.A. NOS.578 & 579/MDS/2010 2 THE ASSESSEE, MS. V. ANUPAMA REDDY AGAINST THE ORDE R OF THE LEARNED CIT(APPEALS)-VIII, CHENNAI IN ITA NO. 36/MDS/2010 D ATED 22-02-2010 FOR THE ASSESSMENT YEAR 2007-08. AS BOTH THE APPEALS RELAT E TO IDENTICAL ISSUE AND ARE INTER-CONNECTED, THEY ARE DISPOSED OF BY THIS COMMO N ORDER. 2. SHRI T.BANUSEKAR, CA REPRESENTED ON BEHALF OF TH E ASSESSEES AND SHRI B. SRINIVAS, SR. DR REPRESENTED ON BEHALF OF THE REVEN UE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT BOTH THE ASSESSEES, SHRI V. AKHILESH REDDY AND MS. ANUPAMA R EDDY ARE CO-OWNERS OF A PROPERTY AT ELDORADO BUILDING, 4 TH FLOOR, NO. 112, N.H. ROAD, CHENNAI-600 034 ADMEASUING 4880 SQ. FT. WITH 2 CAR PARKING AREA AT THE BASEMENT OF THE BUILDING. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSM ENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEES HAD VIDE A RENTAL AGREEM ENT ENTERED INTO WITH M/S. THIRU AROORAN SUGARS LTD. ON 01-11-2006, FIXED THE MONTHLY RENT FROM NOVEMBER, 2006 AT ` 71,.184/- PER MONTH WHICH WORKED OUT TO ` 35,592 EACH IN THE HANDS OF THE BROTHER AND SISTER ASSESSEES. IN THE RETURN OF INCOME THE ASSESSEES HAD DECLARED THE RENT AT ` 29,126/- EACH. ON BEING QUESTIONED, IT WAS SUBMITTED THAT THE RENT AGREEMENT ENTERED INTO BY T HE ASSESSEES ON 1.11.2006 WAS SUBSEQUENTLY MODIFIED AND THE RENT WAS TO BE PA ID TO SHRI AKHILESH REDDY AT ` . 29,126/- PER MONTH, TO MS. ANUPAMA REDDY AT ` 29,126/- PER MONTH AND TO THEIR MOTHER SMT. V. MALATHI REDDY AT ` 12,932/- PER MONTH. THE AMOUNT OF ` 12,932/- PER MONTH PAID TO THE MOTHER, SMT. V. MALA THI REDDY WAS TOWARDS I.T.A. NOS.578 & 579/MDS/2010 3 AMENITIES. IT WAS THE SUBMISSION THAT SMT. MALATHI REDDY HAD DISCLOSED THIS AMOUNT IN HER INCOME-TAX RETURN AND HAD ALSO CLAIME D TDS ON THE SAID AMOUNT. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HA D GOT A CONFIRMATION LETTER FROM M/S. THIRU AROORAN SUGARS LTD., WHO CONFIRMED PAYING ENHANCED RENT OF ` 71,184/- PER MONTH VIDE AN AGREEMENT DATED 13-11-20 06. VIDE A LETTER 05-11- 2009 M/S. THIRU AROORAN SUGARS LTD. CONFIRMED THAT THE AMOUNT OF ` 71,184/- PER MONTH WAS INCLUSIVE OF THE AMENITIES, CAR PARKI NG AREA AND WATER TAX. THE ASSESSING OFFICER CONSEQUENTLY HELD THAT THE RENTAL WITH REGARD TO THE SAID PROPERTY WAS LIABLE TO BE ASSESSED AT ` 35,592/- PER MONTH EACH IN THE HANDS OF THE TWO ASSESSEES. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER DID NOT GRANT THE BENEFIT OF TDS DEDUCTED IN THE NAME OF TH E ASSESSEES MOTHER, SMT. V. MALATHI REDDY EVEN THOUGH HER INCOME HAD BEEN ASSES SED EQUALLY IN THE HANDS OF THE ASSESSEES. IT WAS THE SUBMISSION THAT HE HA D NO OBJECTION IF THE ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR R E-ADJUDICATION AND IF THE RENTAL WAS TAKEN AT ` 35,592/- THEN OBVIOUSLY BENEFIT OF THE TDS DEDUCTE D BY M/S. THIRU AROORAN SUGARS LTD. IN RESPECT OF THE INCOME OFFERED BY SMT. V. MALATHI REDDY WAS LIABLE TO BE GIVEN TO THE ASSESSEES IN PR OPORTION TO THE INCOME ASSESSED AND THE INCOME OFFERED BY THE MOTHER, SMT. V. MALATHI REDDY WAS LIABLE TO BE DELETED. 4. IN REPLY, THE LEARNED DR SUBMITTED THAT THE FACT S WERE VERY CLEAR INSOFAR AS THE ORIGINAL AGREEMENT BETWEEN THE TWO CO-OWNERS , BEING THE APPELLANTS I.T.A. NOS.578 & 579/MDS/2010 4 HEREIN, AND M/S. THIRU AROORAN SUGARS LTD. WAS FOR ` 71,184/- PER MONTH. THE OWNERS OF THE PROPERTY LEASED OUT WERE THE TWO ASSE SSEES AND CONSEQUENTLY THE INCOME BEING THE RENTAL INCOME FROM THE PROPERTY CO ULD BE ASSESSED ONLY IN THE HANDS OF THE TWO ASSESSEES. IT WAS THE SUBMISSION THAT IF THE MOTHER, SMT. V. MALATHI REDDY HAD RECEIVED ANY INCOME FROM M/S. THI RU AROORAN SUGARS LTD., IT COULD NOT BE CONSIDERED TO BE IN RELATION TO THE PR OPERTY LEASED OUT. IT WAS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEES HAD ORIGINALLY RENTE D OUT THE PROPERTY TO M/S. THIRU AROORAN SUGARS LTD. FOR A RENT AMOUNT OF ` 71,184/- PER MONTH. IT IS NOTICED THAT VIDE ANOTHER LEASE DEED DATED 13.11.20 06 THE PAYMENT OF THE RENT HAS BEEN MODIFIED TO BRING IN THE ASSESSEES MOTHER , SMT. V. MALATHI REDDY WHEREBY THE MOTHER IS GIVEN AN AMOUNT OF ` . 12,932/- PER MONTH TOWARDS CHARGES FOR AMENITIES ETC. AND CONSEQUENTLY THE REN T PAID TO THE TWO ASSESSEES WHO ARE THE CO-OWNERS OF THE PROPERTY WAS REDUCED F ROM ` 35,592/- TO ` 29,126/- PER MONTH. IT IS ALSO NOTICED THAT M/S. T HIRU AROORAN SUGARS LTD. HAS CATEGORICALLY ADMITTED THAT THE RENT PAID IS ` 71,184/- PER MONTH AND THIS INCLUDES THE PAYMENTS FOR AMENITIES, CAR PARKING AR EA AND WATER TAX. IT IS ALSO NOTICED THAT SMT. V. MALATHI REDDY, THE MOTHER OF T HE ASSESSEES HEREIN HAS OFFERED INCOME AT ` 12,932/- PER MONTH. IT IS ALSO NOTICED THAT THE A SSESSING OFFICER HAS CATEGORICALLY RAISED THE ISSUES ON WHIC H THE ASSESSEES HAVE NOT GIVEN I.T.A. NOS.578 & 579/MDS/2010 5 AN EXPLANATION WHICH ARE, (A) REGARDING THE CLAIM O F AMENITIES BY SMT. V. MALATHI REDDY IN RESPECT OF THE PROPERTY NOT OWNED BY HER A ND (B) THE ORIGINAL RENT AGREEMENT INCLUDED CHARGES FOR AMENITIES AND ALSO T HE RENT FOR THE CAR PARKING AREA PAYABLE TO THE TWO ASSESSEES. WHY SMT. V. MAL ATHI REDDY HAS NOT SIGNED THE RENTAL AGREEMENT AS GENERAL POWER OF ATTORNEY H OLDER? IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ISSUES ARE LIABLE TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION AND WE DO SO. IN THE RE-ADJUDICATION PROCEEDINGS THE ASSESSING OFFICER SHALL CONSIDER TH E PROVISIONS OF SECTIONS 22, 23 & 24 AS ALSO THE PROVISIONS OF SECTION 199 OF THE I NCOME TAX ACT, 1961. ONLY THE RENTAL INCOME IN RELATION TO THE PROPERTY RENTED OU T CAN BE ASSESSED IN THE HANDS OF THE OWNERS OF THE PROPERTY. WHEN ASSESSING THE RENTAL INCOME, THE ASSESSING OFFICER SHALL GIVE BENEFIT OF THE TDS DEDUCTED IN R ELATION TO THE RENTAL INCOME. IN THE CIRCUMSTANCES, THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 27/05/2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 27 TH MAY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE