DCIT, Circle-21(1), New Delhi V. Religare Support Services Ltd(Formerly known as REL Infra Facilities Ltd), Noida

ITA 6740/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8816 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 08-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BARNWAL SENIOR
• Keywords: Set aside
• Section: 64; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.6740/DEL./2017 (ASSESSMENT YEAR : 2013-14) DCIT, CIRCLE 21 (1), VS. M/S. RELIGARE SUPPORT LIM ITED, NEW DELHI. (FORMERLY KNOWN AS REL INFRAFACILITIE S LTD.) D-3, P3B, DISTRICT CENTRE, SAKET, NEW DELHI 110 017. (PAN : AADCR5579B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT JAIN, ADVOCATE MS. TEJASVI JAIN, ADVOCATE MS. SOMAYA JAIN, ADVOCATE REVENUE BY : SHRI M. BARNWAL, SENIOR DR DATE OF HEARING : 15.12.2020 DATE OF ORDER : 12.01.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT, CIRCLE 21(1), NEW DELHI (HEREINAF TER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 11.08.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-38, DELHI QUA THE ASSESSMENT YEAR 2013-14 ON THE GROUND THAT :- ITA NO.6740/DEL./2017 2 ON THE FACTS AND UNDER CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DIRECTING THE AO TO CALCUL ATE THE GROSS ANNUAL VALUE (GAV) FROM 14.12.2012 TO 31.03.2013 WHICH IS VIOLATION OF SECTION 23 (1) OF THE I.T. ACT, 1961 WHICH IS A DEEMING AND GROSS ANNUAL VALUE (GAV) IS TO BE CALCULATED ON YEAR TO YEAR BAS IS. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER (AO) MA DE ADDITION OF RS.4,20,91,300/- WHILE CALCULATING INCOME FROM HOUS E PROPERTY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ANY DETAIL IN THIS REGARD AND AS SUCH, 10% OF THE COST OF ASSETS IS BE ING DEEMED TO BE THE ANNUAL VALUE OF THE PROPERTY UNDER SECTION 23 ( 1) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEALS WHO HAS PARTLY ALLOWED THE APPEA L. FEELING AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT (A), T HE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER CONTENDED THAT GROSS ANNUAL VALUE (GAV) HAS TO BE C OMPUTED ON FINANCIAL YEAR BASIS. LD. DR FILED WRITTEN SUBMISS IONS WHICH HAVE ITA NO.6740/DEL./2017 3 BEEN MADE PART OF THE JUDICIAL RECORD BUT ULTIMATEL Y LD. DR RELIED UPON THE ORDER PASSED BY THE AO AND HAS NOT CONTROV ERTED THE FACTS MARSHALED BY THE LD. CIT (A) IN THE LIGHT OF THE CA SE LAW DISCUSSED IN THE IMPUGNED ORDER. HOWEVER, ON THE OTHER HAND, LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER PASSED BY THE LD. CI T (A). 6. THE REVENUE HAS CHALLENGED THE DIRECTIONS ISSUED BY THE LD. CIT (A) TO AO TO CALCULATE GROSS ANNUAL VALUE (GAV) FROM 14.12.2012 TO 31.03.2013 IN ACCORDANCE WITH THE PRO VISIONS CONTAINED UNDER SECTION 23 (1) OF THE ACT AFTER ASC ERTAINING THE PREVAILING CAPITAL W.I.P. OF RS.85,90,06,089/- AFTE R ALLOWING DEDUCTION OF THE INTEREST EXPENDITURE IN ACCORDANCE WITH SECTION 24(B) OF THE ACT ON THE GROUND THAT IT IS VIOLATION OF SECTION 23(1) OF THE ACT WHICH IS DEEMING AND GAV IS TO BE CALCUL ATED ON YEAR TO YEAR BASIS. 7. WE HAVE PERUSED THE ORDER PASSED BY THE LD. CIT (A) WHO HAS THRASHED THE FACTS QUA THE ISSUE IN QUESTION IN THE LIGHT OF THE CASE LAW RELIED UPON BY THE PARTIES TO THE APPEAL A ND HAS FOUND THAT GAV HAS NOT BEEN COMPUTED IN ACCORDANCE WITH THE PR OVISIONS OF SECTION 23(1)(A) OF THE ACT. 8. FOR READY PERUSAL, PROVISIONS CONTAINED U/S 23(1 )(A) OF THE ACT ARE EXTRACTED AS UNDER :- ITA NO.6740/DEL./2017 4 23. (1) FOR THE PURPOSES OF SECTION 22, THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR 9. PERUSAL OF THE ASSESSMENT ORDER GOES TO PROVE TH AT THE AO WITHOUT BRINGING ON RECORD ANY EVIDENCE OF THE QUAN TUM OF RENT REALIZABLE BY THE ASSESSEE QUA THE PROPERTY IN QUES TION PROCEEDED TO TAKE AD HOC RATE OF 7% OF THE VALUE OF PROPERTY IN QUESTION TO BE ITS ANNUAL VALUE. SO, WE ARE OF THE CONSIDERED VIEW TH AT GAV COMPUTED BY THE AO BY IGNORING THE PROVISIONS CONTA INED U/S 23(1)(A) OF THE ACT IS NOT SUSTAINABLE IN THE EYES OF LAW. 10. LD. CIT(A) HAS ALSO TAKEN INTO ACCOUNT THE DECI SION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN SUNIL KUMAR SAHA VS. ITO, WARD 55 (1), KOLKATA (2015) 64 TAXMANN.COM 109 W HEREIN IT IS HELD THAT, ESTIMATION OF NOTIONAL RENT BY THE AO WITHOUT GIVIN G BASIS FOR THE SAME WAS LIABLE TO BE REJECTED . IT IS ALSO HELD BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF UNIVERSAL PRECISION SCREWS VS. ACIT (2016) 69 TAXMANN.COM 368 THAT, WHEN IT IS PROVED THAT ONCE A TERM LOAN HAD BEEN TA KEN FOR ACQUIRING OR CONSTRUCTING PROPERTY WHICH FETCHED IN COME UNDER THE HEAD INCOME FROM HOUSE PROPERTY, INTEREST ON SUCH LOAN HAD TO BE ALLOWED AS DEDUCTION U/S 24(B) OF THE ACT . ITA NO.6740/DEL./2017 5 11. KEEPING IN VIEW THE AFORESAID FACTS, LD. CIT (A ) RETURNED THE FOLLOWING FINDINGS :- 4.3 I HAVE CAREFULLY PERUSED THE SUBMISSIONS OF AP PELLANT AND THE ASSESSMENT ORDER ON THIS GROUND OF APPEAL. THE APPELLANT ACQUIRED 23,991.5 SQ.FT OF A BUILDING NAMED 'THE CA PITAL' AT PLOT NO.C-70, IN BANDRA KURLA COMPLEX FOR A CONSIDE RATION OF RS.70,81,68,900/- ON JANUARY 28, 2011 FROM THE BUIL DER M/S WADHWA GROUP HOLDINGS PRIVATE LIMITED. THIS PROPERT Y WAS UNDER CONSTRUCTION IN FY 2011-12 AND WAS DISCLOSED BY APPELLANT UNDER THE HEAD 'CAPITAL WORK IN PROGRESS' IN ITS AU DITED FINANCIAL STATEMENTS FOR THAT YEAR. SUBSEQUENTLY, T HE APPELLANT ON APRIL 11, 2013 I.E. IN AY 2014-15 RECEIVED A LETTER DATED MARCH 30, 2013 FROM M/S WADHWA GROUP HOLDINGS PVT. LTD., THE OWNER OF THE AFORESAID BUILDING, STATING THAT AS THEY HAD OBTAINED THE OCCUPATION CERTIFICATE FROM MUMBAI METROPOLITAN REG ION DEVELOPMENT AUTHORITY ('MMRDA') TILL THE 17TH FLOOR OF THE BUILDING ON DECEMBER 14, 2012, THE APPELLANT WAS GR ANTED PERMISSION TO OCCUPY THE 10TH FLOOR OF THE BUILDING W.E.F.. MARCH 30, 2013. FURTHER, AS THE SAID PROPERTY WAS ACQUIRE D BY THE APPELLANT WITH INTENT TO SELL THE SAME WAS DISCLOSE D UNDER THE HEAD SCHEDULE 20 OTHER CURRENT ASSETS- ASSETS HELD FOR SALE IN ITS AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED M ARCH 31, 2013 RELEVANT TO AY 2013-14. THE APPELLANT HAS REPEATEDL Y STATED THAT IT HAD NOT RECEIVED PERMISSION TO OCCUPY THE PROPER TY BEFORE 30.03.2013; HENCE, THE PROVISIONS OF SECTIONS 22 AN D 23(1) OF THE IT ACT, 1961, WITH RESPECT TO COMPUTATION OF NOTION AL INCOME WERE WRONGLY APPLIED BY AO. APPELLANT HAS ALSO RELI ED ON A NO. OF JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS SUBMIS SIONS. HOWEVER, THE FACTS OF THE CASES RELIED UPON BY APPE LLANT CAN BE DISTINGUISHED FROM THE FACTS OF THE IMPUGNED CASE. IN THIS REGARD, EVEN THOUGH THE OWNER WAS GRANTED PERMISSION TO OCC UPY THE BUILDING WITH EFFECT FROM MARCH 30, 2013 IT IS ALSO A FACT THAT THE OWNER OF THE AFORESAID BUILDING HAD OBTAINED THE OC CUPATION CERTIFICATE FROM MUMBAI METROPOLITAN REGION DEVELOP MENT AUTHORITY ('MMRDA') TILL THE 17TH FLOOR OF THE BUIL DING ON DECEMBER 14, 2012. HENCE, ASSESSING OFFICER IS DIR ECTED TO COMPUTE GROSS ANNUAL VALUE OF THE PROPERTY U/S 23(1 ) FROM DECEMBER 14, 2012 TO MARCH 31, 2013 IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 23(1) AFTER ASCERTAINING THE PREVAILING CAPITAL W.I.P. OF RS.85,90,06,089/- AFTER ALLOWING DEDUCTION OF THE INTEREST EXPENDITURE IN ACCORDANCE WITH SECTION 24(B) OF THE ACT. WITH THESE REMARKS GROUND OF APPEAL 3 AND ITS SUB-GROUNDS ARE PARTLY ALLOWED. 12. AFORESAID FINDINGS RETURNED BY THE LD. CIT (A) ARE BASED UPON THE FACTS FACTUALLY DEALT WITH ON RECORD WHERE IN THE ASSESSEE ITA NO.6740/DEL./2017 6 CONTENDED THAT SINCE HE (ASSESSEE) HAS NOT RECEIVED THE PERMISSION TO OCCUPY THE PROPERTY BEFORE 30.03.2013, THE PROVI SIONS OF SECTION 22 AND 23 (1) OF THE ACT IN REGARD TO NOTIONAL INCO ME WAS WRONGLY APPLIED BY THE AO. 13. HOWEVER, LD. CIT(A) REACHED THE CONCLUSION ON F ACTS THAT THOUGH ASSESSEE WAS GRANTED PERMISSION TO OCCUPY TH E BUILDING W.E.F. 30.03.2013 BUT HE HAD OBTAINED THE OCCUPATIO N CERTIFICATE FROM MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORI TY (MMRDA) TILL 17 TH FLOOR OF THE BUILDING ON 14.12.2012. IN THESE CIRCUMSTANCES, LD. CIT (A) HAS RIGHTLY DIRECTED TO COMPUTE THE GAV OF THE PROPERTY IN QUESTION UNDER SECTION 23(1) FROM DECEMBER 14, 2012 TO MARCH 31, 2013 AFTER ASCERTAIN ING THE PREVAILING CAPITAL W.I.P. OF RS.85,90,084/-. SO, F INDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER, APP EAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 12 TH DAY OF JANUARY , 2021. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 12 TH DAY OF JANUARY, 2021 TS ITA NO.6740/DEL./2017 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-38, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.