M/s Cimsys Research (I) Pvt. Ltd., Kolkata V. ITO, WD-11(4), KOLKATA, Kolkata

ITA 697/KOL/2015

• Counselvise Citation: 69723514 RSA 2015
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SARFARAZUL TAUHEED
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC , KOLKATA (BEFORE SHRI P. M. JAGTAP , ACCOUNTANT MEMBER ) ITA NO. 697 /KOL/201 5 : ASSTT. YEAR : 2010 - 2011 M/S. CIMSYS RESEARCH (I ) PVT. LTD. PAN: A A BCC 2581L VS ITO, WARD - 11(4 ) , KOLKATA (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI SOUMITRA CHOWDHURY, ADVOCATE RESPONDENT BY : SHRI S.M.SARFARAZUL TAUHEED , JCIT, SR.DR DATE OF HEARING : 11 .09 .2015 DATE OF PRONOUNCEMENT : 16 .09 .2015 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISS IONER OF INCOME - TAX (APPEALS) - 9 , KOLKATA DATED 31 .03.2015 FOR THE ASSESSMEN T YEAR 2010 - 11 AND THE SOLITARY ISSUE RAI SED THEREIN RELATES TO THE ADDITION OF RS. 6,24,376/ - MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) BY WAY OF DISALLOWANCE OF PERMISSION FE ES PAID BY THE ASSESSEE TO WBEIDC . 2. T HE ASSESSEE IN THE PRESENT CASE IS A COMPANY. A PIECE OF LAND BELONGING TO TH E WEST BENGAL ELECTRONICS INDUSTRIES DEV ELOPMENT CORPORATION LTD. (WBEIDC ) WAS TAKEN BY IT ON LEASE. ON THE SAID LAND, A BUILDING WAS CONSTRUCTED BY THE ASSESSEE COMPANY AND THE SAME WAS LET OUT TO MNCS AND OTHER COMPANIES. SINCE THIS LETTING OUT WAS NOT P ERMITTED AS PER THE TERMS OF THE LEASE DEED, A PERMISSION WAS SOUGHT BY THE ASSESSEE FROM WBEIDC FOR THE SAME. ALTHOUGH THE PERMISSION AS SOUGHT BY THE ASSESSEE COMPANY WAS GIVEN BY WBEIDC, IT WAS SUBJECT TO A SUM OF RS.2/ - PER SQ.FT. TO BE CHARGED BY THE ASSESSEE COMPANY FROM THE TENANTS, WHICH WAS TO BE PAID TO WBEIDC. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY COLLECTED A TOTAL RENT OF RS.1,06,28,435/ - , WHICH WAS INCLUSIVE OF AN AMOUNT OF RS.6,24,376/ - 2 ITA NO. 697 /KOL/201 5 M/S. CIMSYS RESEARCH (I) PVT.LTD. ASSESSMENT YEAR: 2010 - 11 RECEIVED FROM THE TENANTS TOWARDS CHA RGES TO BE PAID TO WBEIDC. IN T HE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION , WHILE COMPUTING THE INCOME FROM HOUSE PROPERTY, THE SAID AMOUNT OF RS.6,24,376/ - WAS REDUCED BY THE ASSESSEE TO DETERMINE THE ANNUAL VALUE OF THE PROPERTY UNDER SECT ION 23(1)(B) OF THE ACT. ACCORDING TO AO, THE ONLY DEDUCTION PERMISSIBLE UNDER SECTION 23(1)(B), WHILE DETERMINING THE ANNUAL VALUE OF THE PROPERTY, WAS PAYMENT MADE TOWARDS TAXES LEVIED BY ANY LOCAL AUTHORITY. HE, THEREFORE, DISALLOWED THE DEDUCTION CLAIM ED BY THE ASSESSEE UNDER SECTION 23(1)(B) ON ACCOUNT OF PERMISSION FEES OF RS.6,24,376/ - PAID TO WBEIDC. 3. THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF PERMISSION FEES WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A). ALTHOUGH IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS THAT A SIMILAR ISSUE WAS DECIDED BY HIS PREDECESSOR IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS, THE LD. CIT(A) NOTED THAT THE APPEAL FILED BY THE DEPA RTMENT AGAINST THE ORDER OF HIS PREDECESSOR IN ASSESSEE S OWN CASE FOR THE A.Y.2004 - 05 WAS PENDING BEFORE THE TRIBUNAL. HE FURTHER NOTED THAT THE DEDUCTION PERMISSIBLE UNDER SECTION 23(1)(D) WAS VERY LIMITED AND THE PERMISSION FEES PAID BY THE ASSESSEE TO WBEIDC WAS NOT FALLING WITHIN THE LIMITED SCOPE OF SECTION 23(1)(B). HE, THEREFORE, UPHELD THE ACTION OF THE AO IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PERMISSION FEES UNDER SECTION 23(1)(B). AGGRIEVED BY THE ORDER OF THE LD. C IT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4 . I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE RELEVANT RECORDS . AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD BEFORE ME THE COPIES OF THE ORDERS OF THE LD. 3 ITA NO. 697 /KOL/201 5 M/S. CIMSYS RESEARCH (I) PVT.LTD. ASSESSMENT YEAR: 2010 - 11 CIT(A) PASSED IN ASSESSEE S OWN CASE FOR A.Y. 2004 - 05 TO A.Y. 2007 - 08 ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PERMISSION FEES UNDER SECTION 23(1)(B). HE HAS ALSO PLACED ON RECORD A COPY OF THE ORDER OF THE TRIBUNAL DATED 21.05.2013 PASSED IN ITA NO.576/KOL/2012 DISMISSING THE APPEAL OF THE REVENUE FOR A.Y. 2004 - 05, ALTHOUGH ON A TECHNICAL GROUND OF LOW TAX EFFECT. IT IS THUS CLEAR THAT A SIMILAR DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF PERMISSION FEES UNDER SE CTION 23(1)(B) HAS BEEN ALLOWED IN THE EARLIER YEARS I.E. FROM A.Y. 2004 - 05 AND 2007 - 08 AND THE MATTER HAS REACHED ITS FINALITY. KEEPING IN VIEW THIS POSITION BORNE OUT FROM THE RECORD AND FOLLOWING THE PRINCIPLES OF CONSISTENCY, I HOLD THAT THE SIMILAR DE DUCTION CLAIMED BY THE ASSESSEE FOR PERMISSION FEES FOR THE YEAR UNDER CONSIDERATION DESERVES TO BE ALLOWED. I ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW DEDUCTION ON ACCOUNT OF THE PERMISSION FEES. 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2015. SD/ - ( P.M.JAGTAP ) ACCOUNTANT MEMBER DATED: 16 /09 / 2015 TALUKDAR/SR.PS COPY OF ORDER FORWARDED TO: 1 M/S. CIMSYS RESEARCH (I) PVT. LTD. , 56D, MIRZA GHALIB STREET, 2 ND FLOOR, KOLKATA 7 00 01 6 2 ITO, WARD - 11(4 ) , KOLKATA - 16 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA 4 ITA NO. 697 /KOL/201 5 M/S. CIMSYS RESEARCH (I) PVT.LTD. ASSESSMENT YEAR: 2010 - 11