DCIT 2(2)(2), MUMBAI V. NRB BEARING LTD, MUMBAI

ITA 7008/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8725 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 13

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SRI MAHAVIR SINGH, VP AND SRI RAJESH KUMAR , AM ./ ITA NO. 7008 / M UM/ 2017 ( / ASSESSMENT YEAR S 2013 - 14 ) THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(2)(2), ROOM NO.545, 5TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400 020 / VS. M/S NRB BEARINGS LTD. 15, DHANPUR BUILDING, SIR P.M. ROAD FORT , MUMBAI - 400 001 ( / APPELLANT) ( / RESPONDENT) . / PAN NO. AAACN 3479 P / APPELLANT BY : SHRI DHARMESH SHAH, AR / RESPONDENT BY : MS. KAVITA KAUSHIK, DR / DATE OF H EARING : 22.07. 2020 / DATE OF PRONOUNCEMENT : 22.07.2020 / O R D E R , / PER MAHAVIR SINGH, VP : THIS APPEAL OF REVENUE IS ARISING OUT OF THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)] - 15 , MUMBAI , [ IN SHORT CIT(A) ] , IN ITA NO . IT - 170/16 - 17/106/17 - 18 DATED 01.09.2017. THE ASSESSMENT WAS FRAMED BY THE DY. COMMISSIONER OF INCOME TAX (IN SHORT DCIT ) FOR THE A.Y. 2013 - 14 VIDE ORDER DATED PAGE | 2 ITA NO . 7008/MUM/2017 NRB BEARINGS LTD ; AY 13 - 14 28.03.2016 UNDER SECTION 143(3) OF THE IN COME - TAX ACT, 1961 (HEREINAFTER THE ACT). 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN HOLDING THAT ANNUAL LETTABLE VALUE (ALV) SHOULD BE BASED ON MUNICIPAL RATEABLE VALUE WITHOUT APPRECIATING THE FACT THAT ALV HAS TO BE TA KEN AS PER THE DEEMING PROVISION OF SECTION 23(1) OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND: - WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ALV SHOULD BE BASEDON MUNICIPAL RATE ABLE VALUE WITHOUT APPRECIATING THE FACT THAT AS PER THE DEEMING PROVISION OF SECTION 23(1) OF THE ACT, ALV IS HIGHER OF THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET OUT FOR YEAR TO YEAR OR ACTUAL RENT RECEIVED? 3. BRIEF FACTS ARE TH AT THE ASSESSEE HAS LEASED FLAT NO.5 IN SHANGRILA BUILDING TO TATA SKY LTD. FOR A MONTHLY RENT OF 1.25 LACS. THIS FLAT WAS, PRIOR TO LEASING TO TATA SKY LIMITED, LEASED TO DEUTSCHE BANK AT A MONTHLY RENT OF 3,12,500/ - . THE ASSESSEE RECEIVED SECURITY DEP OSIT O F 3.85 CRORES FROM TATA SKY LIMITED AND RENT WAS FIXED AT A SUM OF 1.75 LACS. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT , ASSESSED THE MONTHLY RENT AT THE RATE OF 3,12,500 / - AND A DIFFERENCE OF 16,50,000/ - TO THE RENT RECEIVED DECLARED BY THE ASS ESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AGGRIEVED, PAGE | 3 ITA NO . 7008/MUM/2017 NRB BEARINGS LTD ; AY 13 - 14 ASSESSEE PREFERRED THE APPEAL BEFORE CIT(A), WHO RELYING ON THE EARLIER YEAR DECISION REMANDED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER DIRECTING THE ASSESSING OFFICER TO CONSI DER THE ALV BASED ON MUNICIPAL LETTABLE VALUE. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE TRIBUNAL. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE LEARNED SR. DEPARTMENTAL REPRESENTATIVE BOTH AGREED THAT THIS ISSUE IS SQUARELY COVERED BY TRIB UNALS DECISIONS IN ASSESSEES OWN CASE IN ITA NO. 3481/MUM/2012 AND ORS. DATED 31.07.2017 FOR ASSESSMENT YEAR 2008 - 09, 3770 & 3785/MUM/2014 AND ORS. DATED 15.03.2020 FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 & IN ITA NO. 3758/MUM/2016 AND ORS. DATED 16.09.2 019 FOR ASSESSMENT YEAR 2011 - 12. WE NOTED THAT THE CIT(A) HAS CONSIDERED THIS ISSUE VIDE PARA 3.3 AS UNDER: - 3.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THIS IS A RECURRING ISSUE IN APPELLANTS CASE. THIS ISSUE WAS CONSIDERED BY ITAT FOR A.Y. 2007 - 08 IN ITA NO. 672/MUM/2011 IN PARA 9 OF THE ORDER WHICH IS AS UNDER: 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDERS WE FIND THAT THE AO AS WELL AS CIT(A) HAVE DRAWN ADVERSE INFERENCE FOR ENHANCING THE ALV, MAINLY ON THE GROUND THAT, FIRSTLY, THE ASSESSEE HAS TAKEN INTEREST FREE DEPOSIT FROM THE PAGE | 4 ITA NO . 7008/MUM/2017 NRB BEARINGS LTD ; AY 13 - 14 TENANTS AND IF SUCH DEPOSITS WOULD NOT HAVE BEEN TAKEN, THEN THE RENTAL VALUE WOULD HAVE BEEN MORE; AND SECONDLY, THE MARKET RATE AT WHICH THE FLAT WAS RENTED TO M/S FUTURA PO LYSTER LTD. WAS MUCH HIGHER THAN THE RENT RECEIVED FROM ASSESSEE FROM ITS OTHER TENANTS I.E. CENTURION BANK AND JOHNSON & JOHNSON. NOW THE JURISDICTIONAL HIGH COURT HAS DISCUSSED SIMILAR KIND OF CASES IN DETAIL IN CASE OF TIP TOP TYPOGRAPHY AND HAVE LAID D OWN VERY DETAILED PROPOSITION ON THE DETERMINATION OF ALV. THE HON'BLE HIGH COURT HAVE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT, MUNICIPAL VALUATION RATE FOR DETERMINING THE ALV IS ALSO AN ACCEPTED METHOD OF VALUATION, WHICH ON FACTS AND IF CIRCUMSTANC ES OF THE CASE CAN BE APPLIED. THEY HAVE EVEN DISCUSSED WHETHER, ANY ADVERSE EFFECT HAS TO BE DRAWN IN THE CASES WHERE INTEREST FREE DEPOSITS HAVE BEEN ACCEPTED. THUS, IN WAKE OF THE SAID JUDGMENT OF HON'BLE BOMBAY HIGH COURT WE ARE OF THE OPINION THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO TO DETERMINE THE ALV AS PER THE GUIDELINES PROPOSED AND LAID DOWN BY THE JURISDICTIONAL HIGH COURT PAGE | 5 ITA NO . 7008/MUM/2017 NRB BEARINGS LTD ; AY 13 - 14 AND AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS CASE. ACCORDINGLY, GROUND NO.2 IS TREAT ED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. IN THE ABOVE PARA ITAT HELD THAT AS PER THE BOMBAY HIGH COURT IN CASE OF TIP TOP TYPOGRAPHY, MUNICIPAL VALUATION RATE FOR DETERMINING THE ALV IS ALSO AN ACCEPTED METHOD OF VALUATION. HENCE, AO WAS DIRECTED TO COMPUTE ALV BASED ON MUNICIPAL RATEABLE VALUE. HOWEVER, IF MRV IS LESS THAN THAT RENT OFFERED BY TATA SKY LTD., WHICHEVER IS HIGHER MAY BE TAKEN INTO CONSIDERATION GROUND OF APPEAL IS ALLOWED SUBJECT TO ABOVE COMPUTATION. 5. AS THE ISSUE IS SQUARELY COVERED, WE FIND NO INFIRMITY IN THE DIRECTION OF THE CIT(A) AND HENCE, THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 6. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE MADE BY ASSESSING OFFICER FOR NON - DEDUCTION OF TDS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.2: - WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF ASSESSEE IN RELATI ON TO DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE PAGE | 6 ITA NO . 7008/MUM/2017 NRB BEARINGS LTD ; AY 13 - 14 ACT FOR NON - DEDUCTION OF TDS AT SOURCE WITHOUT APPRECIATING THAT ASSESSEE HAD NO DEDUCTED REQUISITE TDS ON THE AMOUNT CREDITED TO THE RESPECTIVE EXPENSES ACCOUNT? 7. BRIEF FACTS ARE THAT THE ASSESSEE MADE PR OVISION I.E. YEAR - END PROVISION FOR EXPENSES OF 1,79,70,000/ - AS PER ANNEXURE 3 OF AUDIT REPORT. THE ASSESSEE HAS NOT DEDUCTED ANY TDS ON THE YEAR - END PROVISION. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT DEDUCTED ANY TDS HENCE, AS PER THE PROVISION OF SECTION 40(A)(IA) OF THE ACT, HE DISALL OWED THE SAME. THE ASSESSING OFFICER ALSO NOTED THAT THE SIMILAR DISALLOWANCE HAS BEEN MADE IN ASSESSMENT YEARS 2007 - 08 AND 2010 - 11 AND EVEN , CIT(A) HAS CONFIRMED THE ADDITION IN ASSESSMENT YEAR 2008 - 09 VIDE HIS ORDER DATED 01.03.2012. AGGRIEVED, ASSESSEE PREFERRED THE APPEAL BEFORE CIT(A) , WHO DELETED THE DISALLOWANCE BY RELYING ON TRIBUNALS DECISION FO R ASSESSMENT YEAR 2008 - 09 IN ITA NO.3481/MUM/2012 VIDE ORDER DATED 31.07.2017. THE CIT(A) NOTED THAT THE ASSESSEE HAS DEDUCTED TDS AND PAID TO THE GOVERNMENT EXCHEQUER BEFORE FILING THE RETURN OF INCOME AND HENCE, THERE IS NO DISALLOWANCE REQUIRE D UNDER SECTION 40(A)(IA) OF THE ACT. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE TRIBUNAL. 8. BEFORE US NOW , THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE LEARNED SR. DEPARTMENTAL REPRESENTATIVE AGREED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE , AS THE ASSESSEE HAS ALREADY DEDUCTED TDS AND PAID TO THE GOVERNMENT EXCHEQUER BEFORE FILING OF RETURN OF INCOME AND THIS PAGE | 7 ITA NO . 7008/MUM/2017 NRB BEARINGS LTD ; AY 13 - 14 FINDING OF CIT(A) IS NOT CONTESTED BEFORE US. THIS ISSUE HAS BEEN CONSIDERED BY TRIBUNAL IN ASSESSMENT YEAR 2008 - 09 IN ASSESSEES OWN CASE VIDE PARA 17 IN ITA NO.3481/MUM/2012 VIDE ORDER DATED 31.07.2017. AS THE ISSUE IS COVERED AND IT IS NOT IN DISPUTE D THAT THE ASSESSEE H AS NOT DEDUCTED TDS OR PAID TO THE GOVERNMENT EXCHEQUER BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME . IN VIEW OF THIS FACT, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED HE DISALLOWANCE AND WE CONFIRM THE SAME. 9. IN THE RESULT, THE APPEAL OF R EVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 22.07. 2020 . SD/ - SD/ - ( / RAJESH KUMAR) ( / MAHAVIR SINGH ) ( / ACCOUNTANT MEMBER ) ( / JUDICIAL MEMBER) , / MUMBAI, DATED: 22.07 . 2020 , . / SUDIP SARKAR, 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. / GUARD FILE. / BY ORDER, //TRUE COPY/ / (ASSTT. REGISTRAR) , / ITAT, MUMBAI