Sh. Anil Gupta, Ludhiana V. ACIT, Ludhiana

ITA 768/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0119 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.768/CHD/2015 (ASSESSMENT YEAR : 2008-09) SH. ANIL GUPTA VS. THE A.C.I.T., C/O RAJASTHAN WOOL INDUSTRIES, CIRCLE-II, G.T. ROAD, BYE PASS, LUDHIANA. LUDHIANA. PAN: AAHPG2263H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARWAL RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 28.03.2016 DATE OF PRONOUNCEMENT : 04.04.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, LUDHIANA DATED 31.8.2015, RELATING TO ASSESSMENT YEAR 2008-09. 2. THE GROUND RAISED BY THE ASSESSEE ARE AS UNDER : 1. THAT THE ORDER PASSED BY THE CIT(A)-1 IS AGAINST THE LAW AND FACTS OF THE CASE AND WITHOUT APPLICATION OF MIND. 2. THAT THE LEARNED CIT(A) HAS ERRED IN NOT EXCLUDING THE SERVICE TAX OF RS.1,37,790/- AND SECURITY EXPENSES OF 2 RS.78,000/- FROM THE GROSS RENT WHILE COMPUTING THE INCOME ASSESSABLE UNDER THE HEAD PROPERTY INCOME. 3. THAT THE LEARNED CIT(A) HAS ERRED IN NOT ALLOWIN G THE CREDIT OF RS.3,34,000/- FROM DEPOSIT OF RS. 10,75,0 00/- IN THE BANK WHILE UPHOLDING THE ADDITION U/S 68 OF T HE INCOME TAX ACT. IT HAS BEEN IGNORED THAT ONLY THE PE AK AMOUNT OF RS. 7,35,000/- WAS LIABLE TO BE ASSESSED ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT. 4. THE APPELLANT CRAVES LEAVE FOR PERMISSION TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL AT THE TIME OF HEARING. 3. THE GROUND NOS. 1 AND 4 ARE GENERAL, THEREFORE, NEED NO ADJUDICATION. 4. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS GROUND NO.2. THEREFORE, GROUND NO.2 I S DISMISSED AS BEING NOT PRESSED. 5. THE BRIEF FACTS WITH REGARD TO GROUND NO.3 ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUC TION OF SERVICE TAX AMOUNTING TO RS.1,37,790/- AND SECURITY EXPENSES AMOUNTING TO RS.78,000/- OUT OF THE PROPER TY INCOME. HE DISALLOWED THE SAME SINCE AS PER HIM, S ECTION 23(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T), PROVIDES ONLY FOR THOSE TAXES WHICH HAVE BEEN LEVI ED BY ANY LOCAL AUTHORITY AND PAID BY THE ASSESSEE. SINC E THESE WERE NOT CHARGED BY LOCAL AUTHORITY, SAME WERE ADDE D BACK TO THE INCOME OF THE ASSESSEE. 3 6. BEFORE THE LEARNED CIT (APPEALS), IT WAS STATED THAT THE ASSESSING OFFICER TOOK THE GROSS PROPERTY INCOME AT RS.15,87,030/- WHICH WAS INCLUSIVE OF SERVICE TA X RECEIVED FROM THE TENANTS, WHICH WAS TO BE REIMBURS ED IN THE GOVERNMENT TREASURY. THEREFORE, IN FACT, THE A SSESSING OFFICER HAS TAKEN THE FIGURE WRONGLY, EVEN IF THE S ERVICE TAX IS NOT ALLOWABLE, WHILE COMPUTING INCOME UNDER THE HEAD HOUSE PROPERTY, THE SAME HAS TO BE DEDUCTED FROM THE GROSS RENT RECEIVED. THE LEARNED CIT (APPEALS) DISMISSED THE GROUND QUOTING THE PROVISION OF SECTI ON 23(1) AND STATED THAT SERVICE TAX CANNOT BE DEDUCTE D OUT OF INCOME FROM HOUSE PROPERTY. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE GROSS AMOUNT OF RENT AS TAKEN BY TH E ASSESSING OFFICER INCLUDES SERVICE TAX AND ONCE THE SAME IS DEDUCTED FROM THE GROSS RECEIPT OF RENT, THERE I S NO NEED TO GIVE FURTHER ALLOWANCE OF THE SAME WHILE COMPUTING THE INCOME UNDER THE HEAD HOUSE PROPERTY . NO SUBMISSIONS WERE MADE WITH REGARD TO SECURITY EXPENSES AMOUNTING TO RS.78,000/-. 8. THE LEARNED D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ARGUMENTS WERE MADE WITH REGARD TO SERVICE TAX ONLY 4 AND NOT WITH REGARD TO SECURITY CHARGES. FROM THE FACTS, WE UNDERSTAND THAT THE ASSESSING OFFICER WHILE COMP UTING THE INCOME UNDER THE HEAD HOUSE PROPERTY STARTED THE COMPUTATION WITH AN AMOUNT OF RS.15,87,030/-, WHICH INCLUDES RS.1,37,790/- ON ACCOUNT OF SERVICE TAX. THE SERVICE TAX IS A TAX TO BE LEVIED BY A SERVICE PRO VIDER ON THE PERSON AVAILING THE SERVICES. THE SERVICE PRO VIDER COLLECTS THE SERVICE TAX FROM THE USER AND THEN REM IT THE SAME BACK IN THE GOVERNMENT TREASURY. THEREFORE, T HERE IS NO ELEMENT OF INCOME IN THE SAID AMOUNT OF SERVICE TAX. THERE ARISES NO QUESTION OF ALLOWABILITY OF SERVICE TAX UNDER SECTION 23(1) OF THE ACT. THE COMPUTATION IT SELF SHOULD START WITH THE AMOUNT OF RENT NOT INCLUDING SERVICE TAXES. IN VIEW OF THE SAME, THE ADDITION MADE BY T HE ASSESSING OFFICER IS NOT AS PER LAW AND THE SAME IS DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF APRIL, 2016. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 4 TH APRIL, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5