M/s AGM Promoters & Developer Pvt. Ltd., Chandigarh V. ITO, W-5(1), Chandigarh

ITA 724/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1961 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHADNERKANTA
• Keywords: Capital asset

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , !' # $ % &' , '( BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 724/CHD/2018 / ASSESSMENT YEAR : 2012-13 M/S AGM PROMOTERS & DEVELOPERS PVT LTD., H.N.48, SECTOR 27-A CHANDIGARH THE ITO, WARD 5(1), CHANDIGARH ./PAN NO: AAHCA7951J / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. SACHIN JAIN, ADVOCATE ' ! / REVENUE BY : SMT.CHADNERKANTA, SR.DR # $ % /DATE OF HEARING : 5.11.2018 &'() % / DATE OF PRONOUNCEMENT : 5.11. 2018 ')/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 27.3.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, GURGAON [HEREINAFTER REFERRED TO AS CIT(A)]. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE AC TION OF THE LOWER AUTHORITIES IN ESTIMATING THE ANNUAL LETTING OUT OF THE VALUE OF THE PROPERTY AT RS. 5,46,000/- FOR THE PURPOSE OF TAXING THE REN TAL INCOME OF THE ASSESSEE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. CO UNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE, ITA NO. 724/CHD/2017- M/S AHM PROMOTERS & DEVELOPERS P LTD., CHANDIGARH 2 PURCHASE AND CONSTRUCTION OF PROPERTIES. THAT THE H OUSES IN QUESTION WERE PURCHASED BY THE ASSESSEE FOR RESALE PURPOSE, WHICH WAS AS PER THE BUSINESS ACTIVITY OF THE ASSESSEE. HOWEVER, DURING THE PERIOD, THE SAID HOUSES WERE LYING VACANT WITH THE ASSESSEE. AS THE CUSTOMERS WERE NOT AVAILABLE, THE ASSESSEE HAS RENTED THOSE OUT AT NOM INAL RENT TO ITS EMPLOYEES. THE RENTAL INCOME SO EARNED HAS ALSO BEE N RETURNED BY THE ASSESSEE IN THE RETURN OF INCOME. THE LD. ASSESSING OFFICER ESTIMATED THE ANNUAL LETTING OUT OF THE PROPERTIES AS PER THE MAR KET RATE. THE LD. CIT(A) CONFIRMED THE ADDITION SO MADE BY THE ASSESSING OFF ICER. 4. THE LD. COUNSEL FOR THE ASSESSEE, BEFORE US, HAS SUBMITTED THAT THERE WAS NO INTENTION OF THE ASSESSEE TO KEEP THE SE PROPERTIES AS INVESTMENT AND THEREBY TO EARN RENTAL INCOME. HOWE VER, THE FACT ON THE FILE IS THAT THE ASSESSEE HAS NOT TREATED THE SAID PROPERTIES AS STOCK IN TRADE BUT CAPITAL ASSETS. UNDER THE CIRCUMSTANCES, IT CA NNOT BE SAID THAT THE AFORESAID PROPERTIES WERE BUSINESS ASSETS OR STOCK IN TRADE OF THE ASSESSEE. HOWEVER, THE FACT ON THE FILE IS ALSO THAT THE ASSE SSEE IS INDULGED IN THE ACTIVITY OF INVESTMENT IN PROPERTY AND EARNING CAPI TAL GAINS THEREON. DURING THE SHORT PERIOD, DURING WHICH THE PROPERTIE S REMAINED WITH THE ASSESSEE, SINCE ASSESSEE WAS NOT INTERESTED IN KEE PING PROPERTIES FOR A LONG TIME AND TO EARN INTEREST / RENTAL THERE UPON, THE ASSESSEE TAKING INTO CONSIDERATION HIS ACTIVITY AND INTEREST, RENTED IT OUT TO HIS OWN EMPLOYEES, THOUGH, AT A NOMINAL RENT. WHATEVER RENT HAS BEEN E ARNED BY THE ASSESSEE THAT HAS BEEN RETURNED IN THE INCOME. A PERUSAL OF THE ASSESSMENT ORDER ALSO REVEALS THAT THE ASSESSING OFFICER GOT CARRIED OUT CERTAIN INVESTIGATIONS THOUGH FIELD STAFF. DURING THE SECOND INVESTIGATIO N, IT WAS FOUND THAT THE ITA NO. 724/CHD/2017- M/S AHM PROMOTERS & DEVELOPERS P LTD., CHANDIGARH 3 ASSESSEE HAD ALREADY SOLD THE HOUSE TO ONE RETIRED COLONEL SH. S.P.S.TOOR AND OTHER TO SARDAR RAVINDER SINGH. 4. IN VIEW OF THIS, WE DIRECT THE ASSESSING OFFICER TO ASSESS THE ACTUAL RENT RECEIVED BY THE ASSESSEE ON THE AFORESAID TWO HOUSES AND NOT NOTIONAL RENT AS PER THE ANNUAL MARKET RENTAL VALUE ESTIMATE D IN THE ABSENCE OF ANY EVIDENCE THAT PROPERTIES WERE LYING VACANT OR THE A SSESSEE ACTUALLY HAD EARNED ANY RENTAL INCOME MORE THAN THAT HAS BEEN DI SCLOSED. THIS APPEAL OF THE ASSESSEE IS ACCORDINGLY TREATED AS ALLOWED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.11.2018 SD/- SD/- ( # $ % &' / ANNAPURNA GUPTA) '( / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 5.11.2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR