PERSIL EMBROIDERIES PVT. LTD., MUMBAI V. ITO 7 (3)(3), MUMBAI

ITA 5813/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4852 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWUNGSHI GINSEN
• Assessee Lawyers: K K LALKAKA
• Keywords: Additional evidence
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5813/MUM/2018 (ASSESSMENT YEAR 2011-12 ) PERSIL EMBROIDERIES PVT. LTD. 425, KALINGANDAS UDYOG BHAVAN, CENTURY BAZAR LANE, PRABHADEVI, MUMBAI- 400025. PAN: AAACP4617K VS. ITO-7(3)(3) 1 ST FLOOR, AAYAKAR BHAVAN, MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI K.K. LALKAKA (AR) RESPONDENT BY : SHRI AWUNGSHI GINSEN (CIT-DR) DATE OF HEARING : 22.04.2019 DATE OF PRONOUNCEMEN T : 22.05.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)- 13, MUMBAI [HEREINAFTER REFERRED AS LD. CIT(A)] DAT ED 16.07.2018 FOR ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (APPEALS) HAS ERRED IN SUSTAINING THE ORDER OF ASSE SSING OFFICER BY HOLDING THAT THE APPELLANT IS NOT ENTITLED TO VACANCY ALLOW ANCE UNDER SECTION 23(1)(C) OF THE INCOME-TAX ACT ALTHOUGH APPELLANT SATISFIES ALL THE REQUISITE CONDITIONS ENTITLING THE APPELLANT TO VACANCY ALLOW ANCE UNDER SECTION 23(1)(C). 2. BRIEF FACTS OF THE CASE ARE THAT INITIALLY, THE ASS ESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 28.03.2013. THE ASSESSMENT WAS REVISED BY LD. ITA NO. 5813 MUM 2018-PER SIL EMBROIDERIES PVT. LTD. 2 CIT-7, MUMBAI UNDER SECTION 263 ON 29.03.2016. THE LD CIT WHILE REVISING THE ASSESSMENT ORDER HELD THAT ORDER PASS ED BY ASSESSING OFFICER ON 28.03.2013 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON TWO ISSUES, FIRSTLY RENTAL INCOME OF RS. 8,97,052/- FROM OBERIO ACCOMMODATION WAS REDUCED FROM INCOME UNDER THE HEAD BUSINESS & PROFESSION. SECONDLY, THE ASSESSEE MAD E INVESTMENT IN KALPATARU HOMES ACCOMMODATION THAT AN AMOUNT OF RS. 84,43,900/- BUT THE ASSESSEE NOT OFFERED ANY RENTAL INCOME FROM THE SAID PROPERTY. THE ASSESSING OFFICER IN COMPLIANCE OF THE DIRECTION OF LD. CIT(A) PASSED THE FRESH ASSESSMENT ORDER UNDER SECTION 143(3) R.W .S. 263 ON 09.09.2016. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER DETERMINED THE ANNUAL LETTING VALUE (ALV) OF OBEROI WOODS ACCOMMODATION OF RS. 5,21,452/- AND AFTER GRANTING DEDUCTION @ 30% UNDER SECTION 40A AND INTEREST UNDER SECTION 24B OF RS. 5,94,852/- DETERMINED THE LOSS OF RS. 2,29,834/- ( WHICH IS NOT THE SUBJECT MATTER OF THIS APPEAL). 3. FOR SECOND PROPERTY I.E. KALPATARU HOMES, THE ASSES SING RECORDED THAT THE ASSESSEE MADE INVESTMENT OF RS. 84,43,900/-, HO WEVER, NO INCOME WAS OFFERED FROM THIS PROPERTY. THE ASSESSING OFFIC ER RECORDED THAT THE ASSESSEE HAD ADMITTED THAT THIS PROPERTY HAS BEEN L ET OUT @ RS.70,000/- P.M. IN LAST THREE YEARS. ACCORDINGLY, THE ASSESSIN G OFFICER ESTIMATED ANNUAL LETTING VALUE (ALV) OF RS. 84,000/- AND AFTE R GRANTING DEDUCTION ITA NO. 5813 MUM 2018-PER SIL EMBROIDERIES PVT. LTD. 3 UNDER SECTION 24(A) OF 30% OF RS. 2,52,000/- , THE NOTIONAL INCOME OF RS. 5,88,000/- WAS WORKED OUT AND ADDED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 4. ON APPEAL BEFORE LD CIT(A) THE ADDITION WAS CONFIR MED VIDE IMPUGNED ORDER DATED 16.07.2018. FURTHER, AGGRIEVED BY THE O RDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENT REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE-COMPANY OWNED RESIDENTIAL PRE MISES IN CO- OPERATIVE SOCIETY AND KNOWN AS KALPATARU HOMES ACCO MMODATION. THE SAID RESIDENTIAL PREMISES WERE LET OUT OF MEARSK IN DIA LTD. FOR A PERIOD OF THREE YEARS FROM NOVEMBER 2006 TO OCTOBER 2009. THEREAFTER, THE PREMISES WERE LYING VACANT DURING THE ENTIRE ASSESS MENT YEAR. THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WAS OFFERED FOR TAXATION ON THE GROUND OF PROPERTY WHICH WAS LET OU T IN ASSESSMENT YEAR 2010-11 WAS VACANT THROUGHOUT THE YEAR AND THE REFORE, THE ASSESSEE WAS ENTITLED FOR VACANCY ALLOWANCE UNDER SECTION 23 (1)(C). THE ASSESSING OFFICER HAS NOT GRANTED VACANCY ALLOWANCE UNDER SECTION 23(1)(C) DESPITE FURNISHING DOCUMENTARY EVIDENCE IN THE FORM OF BROKERS NOTE AND SUBSTANTIATED THAT IT COULD NOT B E LET OUT DESPITE ALL POSSIBLE EFFORTS. THE LD. AR OF THE ASSESSEE FURTHE R SUBMITS THAT THE ITA NO. 5813 MUM 2018-PER SIL EMBROIDERIES PVT. LTD. 4 ASSESSEE HAS NOW FILED APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE VIDE APPLICATION DATED 16.04.2019. IN THE APPLICAT ION FOR ADMISSIONS OF ADDITIONAL EVIDENCES THE APPLICANT/ASSESSEE STATED THAT SUBJECT MATTER OF APPEAL IS DISALLOWANCES OF VACANCY ALLOWANCE UNDER SECTION 23(1)(C) ON THE GROUND THAT THE SAID SECTION IS NOT APPLICABLE IN VIEW OF THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN VIVEK JAIN VS. ACIT 9337 ITR 74) (AP). THE APPLICANT/ASSESSEE FURTHER STATED THAT THE ASSESSEE IS RELYING ON THE DECISION OF MUMBAI TRIBUNAL IN CASE OF INFORMED TECHNOLOGIES INDIA VS. DCIT [54 ITR 397 (MUM.)] WHE REIN THE TRIBUNAL HAS DISTINGUISHED THE DECISION OF HONBLE ANDHRA PR ADESH HIGH COURT IN VIVEK JAIN (SUPRA). THE ASSESSEE FURTHER STATED THA T IN THE FORM OF ADDITIONAL EVIDENCE, THEY ARE FURNISHING CONFIRMATI VE STATEMENT OF ALL DIRECTORS RECITING THEIR RESIDENTIAL ADDRESS TO EST ABLISH THAT THE SAID RESIDENTIAL FLAT WAS NOT USED FOR SELF-OCCUPATION. THE LD. AR OF THE ASSESSEE MADE HIS SUBMISSION ON THE LINES OF CONTEN TS OF APPLICATION. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. IN REPLY TO THE SUBMISSION OF LD . AR ON THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE, THE LD. DR SU BMITS THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION FOR ADMISS ION OF ADDITIONAL EVIDENCE. THE LD DR SUBMITS THAT NO SUFFICIENT CAUS E IS SHOWN IN THE APPLICATION AS TO WHY THESE EVIDENCES WERE NO FURNI SHED BEFORE THE LOWER AUTHORITIES. ITA NO. 5813 MUM 2018-PER SIL EMBROIDERIES PVT. LTD. 5 7. IN THE REJOINDER SUBMISSION THE LD. AR FOR THE ASSE SSEE SUBMITS THAT EXCEPT THE CONFIRMATION OF THE DIRECTORS OF THE ASS ESSEE ALL OTHER EVIDENCES WERE FURNISHED, HOWEVER, THE ASSESSING OF FICER HAS NOT DISCUSSED THOSE EVIDENCES IN HIS ORDER. 8. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES. FIRST WE SHALL DECIDE THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. DURING THE ASSESSMENT, THE ASSESSEE CONTENDED THAT THE PROPERT Y WAS LET OUT TO M/S MAERSK INDIA LIMITED FOR THREE YEARS FROM OCTOBER 2 006 TO OCTOBER 2009 AND THAT THEY ARE ENTITLED FOR VACANCY ALLOWAN CES UNDER SECTION 23(1)(C). THE CONTENTION OF ASSESSEE WAS NOT ACCEPT ED BY ASSESSING OFFICER. THE ASSESSING OFFICER DETERMINED THE ALV B Y TAKING A MONTHLY RENTAL VALUE OF RS. 70,000/- HOLDING THAT THE ASSES SEE HAS ADMITTED THAT PROPERTY WAS LET OUT IN LAST THREE CONSECUTIVE YEAR S. THE ASSESSING OFFICER HAS NOT SPECIFIED AS TO HOW AND ON THE BASI S OF WHICH DOCUMENT, HE HAS COME TO THE CONCLUSION OF ACCEPTING/ADOPTING A RENTAL VALUE OF RS. 70,000/- PER MONTH. BEFORE THE LD. CIT(A), THE ASSESSEE AGAIN URGED THAT THE SAID RESIDENTIAL PREMISES WAS LET OUT TO M EARSK INDIA LTD. FOR A PERIOD FROM NOVEMBER 2006 TO OCTOBER 2009. THEREAFT ER, PREMISES WERE LYING VACANT DURING THE ENTIRE ASSESSMENT YEAR, NO INCOME WAS OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THA T THE ASSESSEE IS ENTITLED FOR VACANCY ALLOWANCE. THE LD. CIT(A) ALSO NOT ACCEPTED THE CONTENTION OF ASSESSEE AND NOT ALLOWED THE VACANCY ALLOWANCE BY ITA NO. 5813 MUM 2018-PER SIL EMBROIDERIES PVT. LTD. 6 FOLLOWING THE DECISION OF HONBLE ANDHRA PRADESH HI GH COURT IN VIVEK JAIN ACIT (SUPRA). 9. BEFORE US, THE LD. AR OF THE ASSESSEE VEHEMENTLY SU BMITTED THAT THE ASSESSING OFFICER DESPITE GRANTING SUFFICIENT EVIDE NCE HAS NOT ALLOWED THE VACANCY ALLOWANCE, THE PROPERTY REMAINED VACANT FOR WHOLE OF THE YEAR AND THAT THE ASSESSEE FURNISHED SUFFICIENT EVI DENCES TO SUBSTANTIATE ITS CONTENTIONS. BEFORE US, THE ASSESSEE HAS FILED APPLICATION FOR ADDITIONAL EVIDENCE, FURNISHED THE COPY OF CONFIRMA TION OF DIRECTORS OF THE ASSESSEE-COMPANY CONFIRMING THAT THEY WERE NOT RESIDING AT THE ADDRESS GIVEN ON CONFIRMATION LETTER AND THAT THE K ALPATARU HOMES ACCOMMODATION WAS LYING VACANT DURING THE ENTIRE PE RIOD FROM 01.04.2010 TO 31.03.2011. THE ASSESSEE HAS ALSO FUR NISHED THE COPY OF LATTER OF ESTATE CONSULTANT DATED 02TH MAY 2011 AND THE COPY OF THE ELECTRICITY BILLS FROM MARCH 2010 TO 2011. 10. CONSIDERING THE RELEVANCY OF EVIDENCE QUA THE SUBMI SSION OF ASSESSEE BEFORE THE ASSESSING OFFICER, THE LD. CIT(A) AS WEL L AS BEFORE THE TRIBUNAL THAT KALPATARU HOMES ACCOMMODATION PREMISE S WERE LYING VACANT THROUGHOUT THE ENTIRE PERIOD. THE ASSESSEE H AS ALSO FURNISHED THE COPY OF ELECTRICITY BILL FROM APRIL 2010 TO MARCH 2 011 SHOWING NEGLIGIBLE CONSUMPTION OF ELECTRICITY, BESIDES THAT THE ASSESSEE HAS ALSO FILED COPY OF CONFIRMATION BY KAMLA THAKKAR, BROKER CERTIFYING THAT HE HAS BEEN CONTINUOUSLY MAKING EFFORT FOR LEASING OUT THE DEMISE ITA NO. 5813 MUM 2018-PER SIL EMBROIDERIES PVT. LTD. 7 PREMISES. THEREFORE, ON CONSIDERING THE RELEVANCY OF EVIDENCE FURNISHED BY ASSESSEE, WE ADMIT THE ADDITIONAL EVIDENCE AND R ESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER TO CONSIDER THE ADDIT IONAL EVIDENCE AS WELL AS OTHER EVIDENCES FURNISHED BY ASSESSEE AND PASS T HE ORDER AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT BEFORE PA SSING THE ORDER, THE ASSESSING OFFICER SHALL GRANT OPPORTUNITY TO THE AS SESSEE. IN THE RESULT, GROUND OF APPEAL RAISED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22/05/2019. SD/- SD /- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 22.05.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI