CHINTAMANI ESTATES P.LTD, MUMBAI V. DCIT 6(2), MUMBAI

ITA 6376/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2153 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Depreciation
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI [BEFORE S/SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER] / I .T.A. NO.6376/MUM/2013 ( / ASSESSMENT YEAR: 2010-11 CHINTAMANI ESTATES PVT. LTD., 60-62, MIRZA STREET, MUMBAI 400 003 / VS. THE DY. COMMISSIONER OF INCOME TAX -6 (2), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI 400 020 ./ ./ PAN/GIR NO. : AAACC1939M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: S/SHRI VIJAY MEHTA AND ANUJ KISNADWALA / RESPONDENT BY: SHRI B. S. BIST (DR) / DATE OF HEARING:05.10.2015 ! / DATE OF PRONOUNCEMENT: 30.11.2015 '# / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-12, MU MBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 16- 09-2013 PASSED IN APPEAL NO.CIT(A)-12/DCIT.6(2)/IT.14/12-13 PERTAININ G TO ITA. NO.6376/MUM/2013 ASSESSMENT YEAR: 2010-11 2 ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS IN THIS A PPEAL RAISED THE FOLLOWING THREE GROUNDS: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.25,00 ,000/-RECEIVED FROM OUTGOING TENANT TOWARDS DAMAGE OF FURNITURE WH ILE VACATING THE PREEMIES. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A)ERRED IN CONFIRMING ADDITION OF RS.3,50,000/- AND RS.48,000/- RECEIVED OVER AND ABOVE REGULAR RENT FOR SPECIFIC P URPOSE SUCH AS WATER CHARGES. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.9,08, 536/- THAT WERE EITHER NOT RECEIVED OR DOUBLE ENTRIES WERE MADE IN FORM 26AS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF LEASING, LAND DEVELOPMEN T, CONSTRUCTION OF BUILDINGS, COMPLEXES ETC. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE HAS SHOWN INCOME FROM HOUSE PROPERTY AMOUN TING TO RS.12,51,36553/-. THE ASSESSEE HAS ALSO SHOWN INCOM E FROM OTHER SOURCES BY WAY OF INTEREST, RENTAL INCOME FROM LETT ING OF OFFICES AND DIVIDEND INCOME. THE ASSESSING OFFICER (HEREINAFTE R REFERRED TO AS THE AO] PASSED THE ASSESSMENT ORDER ON 16-09-2013 ASSESSING THE TOTAL INCOME OF THE ASSESSEE OF RS.19,56,35,219/- AGAINST THE RETURNED INCOME OF RS.19,17,23,846/- AFTER MAKING D ISALLOWANCE OF RS.1,97,199/- ON ACCOUNT OF INTEREST U/S 57 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT], RS.37, 06,536/- ON ACCOUNT OF DIFFERENTIAL SUM OF AIR DATA TREATING AS UNEXPLA INED MONEY U/S 69A OF THE ACT AND RS.7,368/- U/S 14A OF READ WITH RULE 8D. AGAINST THESE DISALLOWANCES MADE BY THE AO, THE ASSESSEE PR EFERRED APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) AFTER CONSIDERING THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE , CONFIRMED ALL ITA. NO.6376/MUM/2013 ASSESSMENT YEAR: 2010-11 3 THE AFORESAID THREE ADDITIONS. THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ACTION OF THE LEARNED CIT( A). 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.25,00,000/- F ROM THE OUTGOING TENANTS TOWARDS DAMAGE OF FURNITURE WHILE VACATING THE PREMISES OF THE ASSESSEE AND THE SAID AMOUNT IS NOT REQUIRED TO BE TREATED AS RENTAL INCOME. IT IS ALSO ARGUED THAT THE ASSESSEE HAS SHOWN THE ABOVE SAID AMOUNT AS INCOME FROM HOUSE PROPERTY WHEREAS T HE AO HAS WRONGLY CONSIDERED THE SAID AMOUNT AS RENTAL INCOME AND THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO, THER EFORE, THE ORDER OF THE LEARNED CIT(A) IS WRONG, AGAINST LAW AND FACTS OF THE CASE AND IS LIABLE TO BE SET ASIDE. IN SUPPORT OF HIS CONTENT IONS, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE LAW SETTLED IN (I) ADDL. CIT, SR-3, MUMBAI VS RAMA LEASING CO. (P) LTD. [(20 08) 20 SOT 505 (MUM)] AND (II) DATAR & CO. VS ITO [(2000) 67 TTJ (PUNE) 546 ITA NO.1134/PUNE/1991:AY1989-90 DATED 25 TH JUNE, 1999)]. 4. ON THE OTHER HAND, THE LEARNED DR HAS ARGUED THA T THE ASSESSEE HAS RECEIVED THE SAID AMOUNT OF RS.25,00,000/- IN L IEU OF THE LEASE AGREEMENT AND HAS RIGHTLY BEEN TREATED AS RENTAL IN COME; THEREFORE, THE PRESENT APPEAL IS LIABLE TO BE DISMISSED. 5. AFTER HEARING THE RIVAL CONTENTIONS AND PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, IT CAME INTO THE NOTICE THAT I T IS NOT IN DISPUTE THAT THE AMOUNT OF RS.25,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE ON ACCOUNT OF COMPENSATION FOR DAMAGE PERTAINING TO FURNITURE UTILIZED BY ITS TENANT. THE TENANTED PREMISES WAS REQUIRED TO BE HANDED OVER BACK TO THE ASSESSEE UNDER THE SAME SIT UATION VIDE ITA. NO.6376/MUM/2013 ASSESSMENT YEAR: 2010-11 4 WHICH THE SAME WAS TAKEN OVER BY THE TENANT. THE O NLY QUESTION WHICH IS REQUIRED TO BE DECIDED IS THAT WHETHER THI S AMOUNT OF RS.25,00,000/- IS RENTAL INCOME OR THE INCOME FROM HOUSE PROPERTY. THIS QUESTION HAS BEEN ANSWERED BY THE MUMBAI CO-OR DINATE BENCH OF THE TRIBUNAL IN THE CASE TITLED AS ADDL. CIT, SR -3, MUMBAI VS. RAMA LEASING CO. (P.) LTD., [ (2008) 20 SOT 505 (MUM.)] AND IN DATAR & CO. VS ITO [(2000) 67 TTJ (PUNE) 546 ITA NO.1134/PUNE /1991 DATED 25 TH JUNE,1999)] BY HOLDING THAT COMPENSATION RECEIVED BY THE ASSESSEE CANNOT BE TREATED AS RENTAL INCOME. IN TH E FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT IS APPARENT T HAT THE AMOUNT OF RS.25,00,000/- HAS NOT BEEN RECEIVED AS RENT; WHERE AS THE SAME HAS BEEN RECEIVED AS COMPENSATION TOWARDS DAMAGE OF FUR NITURE. THEREFORE, IN THE SAID CIRCUMSTANCES AND IN VIEW OF THE SETTLED LAW MENTIONED ABOVE, THE SAID AMOUNT IS NOT LIABLE TO B E TREATED AS RENTAL INCOME AND NOR WOULD FALL IN THE OTHER HEAD OF INCO ME I.E. INCOME FROM OTHER SOURCES. THE AMOUNT SO RECEIVED IS LIA BLE TO BE REDUCED FROM THE GROSS BLOCK OF FURNITURE AND THE ASSESSEE WOULD BE ENTITLED FOR DEPRECIATION ON THE REDUCED BLOCK OF FURNITURE AND FIXTURES. A.O. IS DIRECTED ACCORDINGLY. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6. SO FAR AS THE SECOND AND THIRD GROUND ARE CONCER NED, THE CLAIM OF THE ASSESSEE TO THE TUNE OF RS.48,000/- AS WATER CHARGES AND AN AMOUNT OF RS.3,50,000/- ON ACCOUNT OF REPAIR AND MA INTENANCE CHARGES AND ALSO IN CONNECTION WITH THE DOUBLE ENTR IES MADE IN FORM NO.26AS FOR AN AMOUNT OF RS.9,08,536/-, NO DOUBT, T HE RECEIPTS ARE ALSO NOT IN THE FILE AND DOES NOT CLEARLY SPEAKS AB OUT THE PERIOD FOR WHICH THE SAID AMOUNT BELONGS TO. LD. A.R. ALSO PLA CED ON RECORD RECONCILIATION STATEMENT OF ACTUAL RENT RECEIVED VI S--VIS AIR ITA. NO.6376/MUM/2013 ASSESSMENT YEAR: 2010-11 5 INFORMATION. IT APPEARS THAT LOWER AUTHORITIES HAV E NOT PROPERLY APPRECIATED THE SAME. IN THE INTEREST OF JUSTICE W E RESTORE GROUND NO.2 & 3 TO THE FILE OF A.O. FOR DECIDING AFRESH AS PER LAW. GROUND NOS. 2 AND 3 OF THE ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015 SD/- SD/- (R. C. SHARMA) (AMARJIT SINGH) ' / ACCOUNTANT MEMBER %& ' /JUDICIAL MEMBER ' ( MUMBAI; )' DATED : 30 TH NOVEMBER, 2015 . & . ./ LK DEKA LK DEKA LK DEKA LK DEKA , ,, , SR. PS SR. PS SR. PS SR. PS !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A) 4. * / CIT 5. +,- & &./ , ./! , ' ( / DR, ITAT, MUMBAI 6. -01 2 / GUARD FILE. $ / BY ORDER, + & //TRUE COPY// % / $& ' (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI