Southern Realtors & Towers Private Limited, Hyderabad V. Dy. Commissioner of Income Tax , Central Circle-3(2), Hyderabad

ITA 607/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0100 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Opportunity of being heard; Assessment record
• Section: 143(3); 263; 154; 2

Judgement Text

ITA NO 607 OF 2018 SOUTHERN REALTORS AND TOWERS P LTD HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.607/HYD/2018 (ASSESSMENT YEAR: 2013-14) M/S. SOUTHERN REALTORS & TOWERS PRIVATE LIMITED HYDERABAD PAN:AAJCS1895B VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 3 (2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SHRI Y.V.S.T. SAI, CIT(DR) O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE PR. CIT (3), HYDERABAD U/S 263 OF THE ACT, DATED 1.2.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY DERIVING INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES, FILED ITS RETURN OF INCOME FOR THE A.Y 201 3-14 ON 29.09.2013 DECLARING AN INCOME OF RS.1,81,67,710/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AFTE R MAKING AN ADDITION OF RS.2,22,750 TO THE RETURNED INCOME. SUB SEQUENTLY, THE CIT PERUSED THE ASSESSMENT RECORDS BY INVOKING THE PROVISIONS OF DATE OF HEARING : 08.11.2018 DATE OF PRONOUNCEMENT: 06.12.2018 ITA NO 607 OF 2018 SOUTHERN REALTORS AND TOWERS P LTD HYDERABAD. PAGE 2 OF 6 SECTION 263 AND OBSERVED THAT THERE WERE CERTAIN DI SCREPANCIES WHICH ARE AS FOLLOWS: 3. ON EXAMINATION OF THE ASSESSMENT RECORD, DISCRE PANCIES ARE NOTICED IN THE FOLLOWING ISSUES: A) AS SEEN FROM THE AGREEMENT ENTERED WITH THE TENANTS , THE MUNICIPAL TAX SHALL BE PAYABLE BY THE TENANTS AND A S SUCH THE CLAIM OF MUNICIPAL TAX OF RS.3,57,524 NEEDS TO BE D ISALLOWED. B) THE ASSESSEE RECEIVED MAINTENANCE CHARGES FROM TENA NTS OF RS.9,55,856/-. SINCE THE ASSESSEE HAD CLAIMED EXPEN DITURE FOR MAINTENANCE ETC., AT 30% OF RENT RECEIVED (RS.6 7,06,931) AGAINST THE ACTUAL EXPENDITURE OF RS.17,25,575/- AS PER P&L A/C, THE INCOME OF RS.9,55,856 NEEDS TO BE ADDED TO TOTAL INCOME. C) AS SEEN FROM COMPUTATION, THE ASSESSEE CLAIMED TDS OF RS.25,58,898 ON THE INCOMES BUT THE INCOME WAS OFFE RED SHORT AS UNDER: INCOME AS PER TDS CLAIM (C OMPUTATION) INCOME OFFERED AS PER RETURN INCOME SHORT OFFERED KALANIKETAN 2,20,32,522 2,05,18,259 15,14,263 MY TIME TRAVELCY 7,74,341 4,92,768 2,81,573 YKM HOTELS 6,14,297 4,98,028 1,16,269 YKM HEALTH 6,38,825 4,98,028 1,40,797 SHORT 20,52,902 HENCE, THE SHORT INCOME OF RS.20,52,902 NEEDS TO BE ADDED TO THE TOTAL INCOME THEREFORE, THE CIT WAS OF THE OPINION THAT THE ASSE SSMENT ORDER PASSED U/S 143(3) DATED 23.12.2015 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, HE PROPO SED TO REVISE THE SAME U/S 263 OF THE ACT. THE ASSESSEE SUBMITTED ITS EXPLANATION AS UNDER: 5. THE CASE WAS POSTED FOR HEARING ON 28.09.2017. THE ASSESSEE STATED THAT THE DEDUCTIONS CLAIMED ARE IN ORDER AND SUBMITTED EXPLANATIONS AS UNDER: A) MUNICIPAL TAX OF RS.3,57,524 WAS NOT PAID BY THE TE NANT BUT PAID BY THE ASSESSEE ON 26.03.2013 VIDE SBI CHEQUE NO.614252, RS.58,274/- AND NO.614254 RS.2,99,250. A S THE TAXES ARE ACTUALLY PAID BY IT, THE ASSESSEE CLAIMED THAT DEDUCTION IS ALLOWABLE U/S 23(A). B) STANDARD DEDUCTION (30% OF RENT RECEIVED) IS ALLOWE D AS ADHOC/FLAT DEDUCTION ON NET ANNUAL VALUE U/S 24(A). THERE IS NO LINK OF EXPENDITURE INCURRED. AS SUCH 30% DEDUCT ION IS ALLOWABLE WHETHER AMOUNT SPENT OR NOT. WITH REGARD TO MAINTENANCE CHARGES, DETAILS ARE AS UNDER: ITA NO 607 OF 2018 SOUTHERN REALTORS AND TOWERS P LTD HYDERABAD. PAGE 3 OF 6 BUILDING & MAINT. CHARGES RS.3,95,256 ELECTRICITY CHARGES RS. 72,757 SALARY RS.3,00,000 SECURITY CHARGES RS.4,04,634 TOTAL RS.11,72,647 MAINTENANCE CHARGES RECEIVED IS RS/9,55,856. THUS, THERE IS DEFICIT OF RS.2,16,791 WHICH IS NOT EVEN CLAIMED FR OM THE INCOME. NEITHER MAINTENANCE CHARGE NOR EXPENDITURE INCURRED IS TO BE CONSIDERED U/S 24. C) THERE IS NO MISMATCH OF INCOME AS PER RETURN OF INC OME AND TDS DETAILS. TDS ON RENT WAS DEDUCTION U/S 194I WHE REAS TDS ON MAINTENANCE CHARGE WAS DEDUCTED U/S 194C. RENT MAINTENANCE TOTAL RENT AS PER RETURN RENT AS PER 26AS MY TIME TRAVELEX 4,92,768 2,81,573 7,74,341 4,92,768 4,92,768 YKM HOTELS 4,92,752 1,21,545 6,44,297 4,92,768 4,92,768 YKM HEALTH 5,19,907 1,18,918 6,38,825 4,98,028 5,19,907 IN CASE OF KALANIKETAN, RS.33,31,378 WAS RECEIVED F ROM THE LESSEE DURING THE MONTH OF JUNE, 2012 WHICH IS INCL USIVE OF RENT (RS.17,41,402/-) AND SERVICE TAX (RS.15,89,976/-). 3. THE CIT HOWEVER, WAS NOT CONVINCED WITH THE ASSESSEES CONTENTIONS AND THEREFORE, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO REDO THE SAME IN ACCORDAN CE WITH LAW AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND AFTER DUE VERIFICATION OF SUBMISSIONS MADE BY THE A SSESSEE. AGGRIEVED BY THE REVISION ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE COPY OF THE LETTER DATED 11.02.201 5 FILED BY THE ASSESSEE BEFORE THE AO WHICH ARE PLACED AT PAGES 12 AND 13 OF THE PAPER BOOK WHEREIN THE INFORMATION REGARDING TH E MUNICIPAL TAX PAID BY THE ASSESSEE, THE MAINTENANCE CHARGES A ND THE DETAILS OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE ITA NO 607 OF 2018 SOUTHERN REALTORS AND TOWERS P LTD HYDERABAD. PAGE 4 OF 6 ARE FURNISHED. PAGES 14 IS THE COPY OF THE MUNICIPA L RECEIPTS AND PAGE 15 IS THE ASSESSEES SUBMISSIONS TO THE AO GIV ING THE DETAILS CALLED FOR BY THE AO INCLUDING THE RECONCILIATION O F THE RECEIPTS AND TDS AS PER 26AS. ON PAGE 18 IS THE NOTICE OF TH E AO DATED 9.2.2017 U/S 154 OF THE ACT TO RECTIFY CERTAIN MIST AKES IN THE ASSESSMENT ORDER AND AT PARA 2 THEREOF IS THE ISSUE WITH REGARD TO THE MAINTENANCE CHARGES RECEIVED FROM THE TENANTS A ND THE EXPENDITURE ON MAINTENANCE CLAIMED AGAINST THE SAME . PAGE 19 TO 20 IS THE INFORMATION SUBMITTED BY THE ASSESSEE AFT ER WHICH 154 PROCEEDINGS WERE DROPPED. THEREFORE, THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAD VERIFIED AND APP LIED HIS MIND TO THE INFORMATION AND THE RELEVANT ISSUES AND THER EFORE, THE ASSESSMENT ORDER IS NOT ERRONEOUS AND PREJUDICIAL T O THE INTERESTS OF THE REVENUE. HE RELIED UPON THE DECISION OF THE TRIBUNAL AT MUMBAI IN THE CASE OF NARAYAN TATU RANE VS. ITO REP ORTED IN (2016) 70 TAXMANN.COM 227 (MUM.TRIB) WHEREIN IT WAS HELD THAT THE COMMISSIONER U/S 263 CANNOT DIRECT THE AO TO CA RRY OUT FISHING AND ROVING ENQUIRIES WITH AN OBJECTIVE OF S UBSTITUTING HIS VIEWS WITH THAT OF THE AO. THE LEARNED COUNSEL FURT HER SUBMITTED THAT THE PR. CIT HAD ALSO NOT BROUGHT OUT AS TO HOW THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. THEREFORE, THE REVISION ORDER IS NOT S USTAINABLE. 5. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE PR. CIT. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT TO EXERCISE JURISDICTION U/ S 263 OF THE ACT, ITA NO 607 OF 2018 SOUTHERN REALTORS AND TOWERS P LTD HYDERABAD. PAGE 5 OF 6 TWIN CONDITIONS OF THE ASSESSMENT ORDER BEING ERRON EOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE ARE TO BE SATISFIED. IF THE AO DOES NOT MAKE ANY ENQUIRY AND ALLOWS DEDUCTI ONS CLAIMED BY THE ASSESSEE, THEN IT MAY BE CAN BE SAID THAT TH E ASSESSMENT ORDER IS ERRONEOUS. BUT, IN THE CASE BEFORE US, IT IS CLEAR THAT THE AO HAD CALLED FOR THE DETAILS DURING THE ASSESSMENT PROCEEDINGS AND HAD FURTHER ISSUED A NOTICE U/S 154 AND AFTER B EING SATISFIED, HAS DROPPED THE 154 PROCEEDINGS. THEREFORE, IT IS C LEAR THAT THE AO HAS APPLIED HIS MIND TO THE INFORMATION FILED BY THE ASSESSEE AND THEREFORE, THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS. THE ISSUES RAISED BY THE CIT AS THE MISTAKES/DISCREPANCIES ARE OF FACTUAL NATURE AND NO T AGAINST THE LAW, THEREFORE, FOR THIS REASON ALSO, THE ASSESSMEN T ORDER CANNOT BE SAID TO BE ERRONEOUS. 7. FURTHER, WE ALSO AGREE WITH THE CONTENTION OF TH E LEARNED COUNSEL FOR THE ASSESSEE THAT THE CIT CANNO T DIRECT THE AO TO REDO THE ASSESSMENT WITHOUT POINTING OUT THE ERRORS COMMITTED BY THE AO AND WITHOUT GIVING A FINDING AS TO HOW THE ASSESSMENT ORDER IS ERRONEOUS. FROM THE LITERAL REA DING OF THE ORDER U/S 263, WE FIND THAT THE CIT POINTED OUT CER TAIN DISCREPANCIES AND THEN SUBSEQUENTLY REPRODUCED THE ASSESSEES SUBMISSIONS AND THEN DIRECTED THE AO TO REDO THE AS SESSMENT. THUS, THERE IS NO FINDING WHATSOEVER, AS TO WHETHER THE ASSESSEES CONTENTIONS WERE ACCEPTABLE TO HIM OR NOT AND AS TO HOW THE ASSESSMENT ORDER IS ERRONEOUS. THEREFORE, THE REVIS ION ORDER PASSED BY THE PR. CIT IS NOT SUSTAINABLE. THE ASSES SEES APPEAL IS ACCORDINGLY ALLOWED. ITA NO 607 OF 2018 SOUTHERN REALTORS AND TOWERS P LTD HYDERABAD. PAGE 6 OF 6 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 6 TH DECEMBER, 2018. VINODAN/SPS COPY TO: 1 CH. PARTHASARATHY & CO. 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1 ASHOK NAGAR, HYDERABAD 500020 2 DY.CIT, CIRCLE 3(2), 7 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 3 PR. CIT (3) HYDERABAD 4 THE DR, ITAT HYDERABAD 5 GUARD FILE BY ORDER