M/s. Intertec, New Delhi V. JCIT, New Delhi

ITA 860/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6699 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 18-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND. MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.860/DEL/2016 ASSESSMENT YEAR: 2010-11 INTERTEC FARM NO.8, DERA MANDI ROAD, MANDI VILLAGE, MEHRAULI NEW DELHI -110047 PAN NO. AAAFI2013 H VS. JCIT RANGE-24 NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. M.P. RASTOGI, ADVOCATE RESPONDENT BY MS. ASHIMA NEB, SR. DR. DATE OF HEARING: 28/08/2019 DATE OF PRONOUNCEMENT: /10/2019 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 21.12.2015 OF THE CIT(A)-34, NEW DELHI RELATING TO A.Y. 2010-11. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER :- THE CIT(A) HAS ERRED IN CONFIRMING THE AN ADDITIO N OF RS.22,40,000/- (32,00,000 LESS 30% FOR REPAIRS) TO RENTAL INCOME, WITHOUT ISSUING A PROPER SHOW CAUSE, AND WITHOUT CO NSIDERING THE PAGE | 2 SCHEDULE OF PROPERTY ATTACHED TO THE RENT DEED AND WITHOUT CONSIDERING THE CORROBORATIVE DOCUMENTS. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFAC TURING AND SALES OF WINDOW COVERING PRODUCTS, SIGNAGE SYSTEM, CRG CEILING ETC. IT FILED ITS RETURN OF INCOME ON 26.09.2010 D ECLARING TOTAL INCOME OF RS.2,04,73,052/-. THE AO DURING THE COURS E OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS SHOWN RENTAL INCOME OF RS. 28 LACS. ON BEING CALLED BY THE AO T O FILE THE DETAILS OF RENTAL AGREEMENT, THE ASSESSEE FILED TWO LEASE AGREEMENTS, THE DETAILS OF WHICH ARE AS UNDER :- (1) DATED 01.02.2008 BETWEEN THE ASSESSEE AND M/S INTER TEC BUILDING PRODUCTS (P) LTD. @ 5,00,000/- P.M. FOR A PERIOD OF 18 MONTHS FROM 01.02.2008 TO 31.07.2009. (2) DATED 15.07.2009 BETWEEN THE ASSESSEE AND M/S INTE RTEC BUILDING PRODUCTS (P) LTD. @1,00,000/- P.M. FOR A PERIOD OF 8 MONTHS FROM 01.08.2009 TO 31.03.2010. 4. THE AO ON EXAMINATION OF BOTH THE LEASE AGREEMEN TS NOTED THAT THE LEASED OUT PREMISES IS SAME AND IDENTICAL. HOWEVER, THE RENT HAS BEEN REMARKABLY LOW FOR THE LAST EIGHT MON THS OF THE FINANCIAL YEAR. ON BEING QUESTIONED BY THE AO TO E XPLAIN AS TO WHY THE RENTAL INCOME FOR THE ENTIRE YEAR SHALL NOT BE COMPUTED @ RS.5 LACS PER MONTH, THE ASSESSEE FILED THE COPIES OF THE LEASE PAGE | 3 DEED DATED 01.02.2008 AND 15.07.2009 RESPECTIVELY A LONGWITH ANNEXURES FOR THE AREA OF THE PREMISES MARKED FOR R ENTAL. 5. HOWEVER, THE AO NOTED THAT IF BOTH THE LEASE AGR EEMENTS ARE READ TOGETHER ALL THE CLAUSES ARE SAME EXCEPT T HE PERIOD OF LEASE AND RENTAL INCOME. SO FAR AS THE EXPLANATION OF THE ASSESSEE THAT THE ANNEXURES FORMING PART OF THE AGREEMENT FO R THE AREA OF THE PREMISES MARKED FOR RENTAL IN THE LEASE AGREEME NTS DATED 01.02.2008 AND 15.07.2000 RESPECTIVELY ARE CONCERNE D, THE AO NOTED THAT NO SUCH ANNEXURES FORMING PART OF EACH A GREEMENT FOR THE AREA OF THE PREMISES MARKED FOR RENTAL IS MENTI ONED IN THE LEASE AGREEMENTS DATED 01.02.2008 AND 15.07.2009. HE OBSERVED THAT BOTH THE LEASE AGREEMENTS CLEARLY SPEAK THAT T HE LEASED OUT PROPERTY IS FACTORY SITE AND OFFICE PREMISES AT THE IR FACTORY AT PLOT NO.228A, UDYOG VIHAR, GREATER NOIDA. HE, THEREFORE, HELD THAT THE CONTENTION REGARDING ANNEXURES FORMING PART OF THE LEASE AGREEMENTS IS INCORRECT, AFTER THOUGHT AND MALAFIDE AND WITH CLEAR MOTIVE TO DEFRAUD THE REVENUE. THE AO ACCORDI NGLY CALCULATED THE RENTAL INCOME @ 5,00,000/- PER MONTH FOR THE ENTIRE YEAR. AFTER ALLOWING DEDUCTION U/S. 24 (A) O F THE ACT TO THE TUNE OF RS.18 LACS, THE AO COMPUTED THE RENTAL INCO ME FROM THE HOUSE PROPERTY AT RS.42 LACS. AFTER DEDUCTING THE A DMITTED RENTAL INCOME OF RS.19,60,000/-, THE AO MADE ADDITION OF RS.22,40,000/-. 6. IN APPEAL THE LD. CIT(A) UPHELD THE ADDITION MAD E BY THE AO BY OBSERVING AS UNDER :- PAGE | 4 5.3 GROUND NO, 1: 5.3.1 THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 22,40,000/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF INCOME FROM HO USE PROPERTY. THE AO HAS HELD THAT THE ASSESSEE HAS RECEIVED RENT @RS.5,00,0 00/- PER MONTH. HE HAS PLACED RELIANCE ON THE FOLLOWING PART OF RENT AGREEMENTS : WHEREAS THE LESSEE HAS APPROACHED THE LESSOR FOR THE LEASE OF FACTORY SHED , OFFICE PREMISES AT THEIR FACTORY AT PLOT NO. 28A. U DYOG VIHAR. GREATER NO IDA. 5.3.2 ON THE OTHER HAND THE ASSESSEE HAS RELIED ON THE S KETCH SHOWING THE AREA GIVEN ON RENT. 5.3.3 SKETCH AS REFERRED BY THE APPELLANT IS ONLY THE AT TACHMENT TO THE AGREEMENT, IT HAS BEEN CLEARLY MENTIONED IN BOTH TH E AGREEMENTS THAT FACTORY SHED AND OFFICE PREMISES HAS BEEN LETOUT. THE APPELLANT HAS NOT FILED ANY DOCUMENT ( OTHER THAN THE SKETCH ) TO ESTABLISH THAT ONLY OFFI CE BUILDING WAS GIVEN ON RENT DURING THE YEAR UNDER CONSIDERATION. THE OBSERVATIO N OF THE AO THAT SAME PORTION HAS BEEN LETOUT FOR BOTH THE YEARS IS CORRECT. THE RENT PAYABLE/ RECEIVABLE IS DIFFERENT AS PER R ENT AGREEMENTS. TO COME TO THE QUESTION WHETHER THE AO HAS TAKEN THE RENT RECEIVAB LE CORRECTLY, WE HAVE TO GO BY THE PROVISIONS OF SECTION 23 OF THE I T ACT. SECTIO N 23 OF THE INCOME TAX ACT 1961 STIPULATES THAT ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. THE PROPERTY UNDER CONSIDERATION WAS LET OUT (A)RS.5,Q0 ,000/- PER MONTH IN THE IMMEDIATELY PRECEDING YEAR. IF THE PROPERTY WAS LET OUT FOR RENT OF RS.5,00,000/- PER MONTH IN THE IMMEDIATELY PREVIOUS YEAR, IT CAN BE EASILY HELD THAT THE PROPERTY CAN FETCH MINIMUM RS.5,00,000/- RENT EVERY MONTH IN SUBSEQUENT YEARS. THEREFORE THE DECISION OF THE AO IS JUSTIFIED AND CONFIRMED. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THE ORIGINAL AGREEMENT THE ASSESSEE HAD LET OUT THE IND USTRIAL SHED PAGE | 5 AND THE ADMINISTRATIVE SHED @ 5 LACS PER MONTH. RE FERRING TO THE COPY OF THE LETTER ADDRESSED TO THE SUPERINTENDENT, CENTRAL EXCISE, RANGE-27, DIVISION-4, NOIDA, VIDE LETTER DA TED 01.08.2009, HE SUBMITTED THAT THE ASSESSEE HAD DULY INFORMED TH E EXCISE AUTHORITY THAT THEY HAVE VACATED CERTAIN PORTION OF THE PREMISES AT UDYOG VIHAR, NOIDA. HE SUBMITTED THAT THE PRODUC TS OF THE ASSESSEE ARE EXCISABLE. REFERRING TO PAGE-41 OF THE LEASE DEED DATED 15.07.2009, COPY OF WHICH IS PLACED AT PAGE 4 1 TO 43 OF THE PAPER BOOK, THE LD. COUNSEL FOR THE ASSESSEE DREW T HE ATTENTION OF THE BENCH TO THE SKETCH OF THE SITE PLAN AND SUBMIT TED THAT ASSESSEE HAS TAKEN ON RENT ONLY THE ADMINISTRATIVE BLOCK WHEREAS IN THE ORIGINAL SITE PLAN THE ASSESSEE HAD TAKEN BO TH THE FACTORY SHED AS WELL AS THE ADMINISTRATIVE BLOCK. 9. REFERRING TO THE LEDGER ACCOUNT OF THE LESSESEE, COPY OF WHICH PLACED AT PAPER BOOK PAGES 67 AND 68, HE DREW THE ATTENTION OF THE BENCH TO THE MONTHLY RENT CREDITED WHICH HAS GONE DOWN FROM RS.5,51,5000/- FOR THE PERIOD FROM A PRIL TO JULY TO RS.1,10,300/- FOR THE PERIOD FROM AUGUST ONWARDS . HE SUBMITTED THAT THE ASSESSMENT OF THE LESSEE HAS BEE N COMPLETED U/S.143 (3) AND NO ADDITION HAS BEEN MADE IN THEIR ACCOUNT. HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(A) IS NOT CORRECT. 10. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO AND THE CIT(A). SHE SUBMITTED THAT A COM PARISON OF BOTH THE LEASE DEEDS SHOWS THAT THE PREMISE IS SAME AND THERE IS PAGE | 6 NO REFERENCE AT ALL OF ANY SKETCH CONTAINING FACTOR Y BUILDING AND ADMINISTRATIVE BLOCK. REFERRING TO THE COPY OF THE SO CALLED SKETCHES OF THE SITE MAP PLACED AT PAGE NO.40 AND 4 4 OF THE PAPER BOOK, HE SUBMITTED THAT NEITHER OF THE SKETCH MAPS HAS BEEN NOTORISED NOR THERE ANY REFERENCE IN THE LEASE DEED S EXCEPT THE MONTHLY RENT AND PERIOD OF LEASE. FURTHER THERE IS NO WITNESS TO THE SECOND LEASE DEED MADE ON 15.07.2009. THEREFORE , THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT BORNE OU T FROM RECORD AND, THEREFORE, THE ACTION OF THE AO AND THE CIT(A) SHOULD BE UPHELD. 11. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT THERE IS NO EVASION OF TAX AND THE ASSESSEE HA S FILED CONTEMPORARY DOCUMENTS. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD.CIT( A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIN D THE AO IN THE INSTANT CASE MADE ADDITION OF RS.22,40,000/- TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE RENTAL INCOM E OF THE ASSESSEE FROM THE LEASED OUT PREMISES SHOULD BE TAK EN @ RS.5 LACS PER MONTH FOR THE WHOLE YEAR AS AGAINST THE RE NTAL INCOME TAKEN BY ASSESSEE @ 5 LACS FOR FOUR MONTHS AND RS. 1 LACS PER MONTH FOR 8 MONTHS. WHILE DOING SO THE AO NOTED FR OM THE TWO AGREEMENTS THAT THE VARIOUS CLAUSES OF BOTH THE AGR EEMENTS ARE SAME EXCEPT THE PERIOD OF LEASE AND THE RENTAL INCO ME. ACCORDING TO THE AO THERE IS NO SUCH ANNEXURE FORMING PART OF EACH PAGE | 7 AGREEMENT FOR THE AREA OF THE PREMISES MARKED FOR R ENTAL. WE FIND THE CIT(A) UPHELD THE ACTION OF THE AO WHICH HAS BE EN REPRODUCED IN THE PRECEDING PARAGRAPH. IT IS THE S UBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ORIGINAL LEASE AGREEMENT WAS FOR THE FACTORY SHED AND THE ADMINISTRATIVE BUI LDING WHEREAS THE SECOND LEASE AGREEMENT IS ONLY FOR THE ADMINIST RATIVE BUILDING FOR WHICH THE RENTAL INCOME OF THE ASSESSEE HAS GON E DOWN. IT IS THE SUBMISSION OF THE LD. DR THAT THE PREMISES ARE SAME AS PER BOTH THE LEASE AGREEMENTS AND THERE IS NO REFERENCE WHATSOEVER OF ANY SITE PAN IN EITHER OF THE AGREEMENTS. WE FIND M ERIT IN THE ARGUMENTS ADVANCED BY THE LD. DR. A PERUSAL OF BOTH AGREEMENTS SHOWS THAT ALL CLAUSES EXCEPT THE PERIOD OF LEASE A ND RENTAL INCOME ARE SAME AND IDENTICAL. THERE IS ABSOLUTELY NO MENTION OF ANY SKETCH CONTAINING THE FACTORY SHED AND ADMINIST RATIVE BUILDING IN ANY OF THE AGREEMENTS. FURTHER THE SECO ND AGREEMENT DOES NOT BEAR THE SIGNATURE OF ANY WITNESSES ALTHOU GH THE AGREEMENT SAYS THAT IT WAS SIGNED IN THE PRESENCE O F THE WITNESSES. WE, THEREFORE, HOLD THAT THE EXPLANATIO N OFFERED BY THE ASSESSEE IS NOT BORN OUT OF RECORDS. THE SO CALLED SKETCHES ARE NOT SIGNED BY THE NOTARY. THEREFORE, THESE DOCUMENTS I N OUR OPINION ARE ONLY SELF SERVING. THE LETTER ADDRESSED TO THE EXCISE SUPERINTENDENT ALSO CAN BE TERMED AS SELF SERVING, SINCE THE COPY OF LETTER WHICH IS PLACED AT PAGE 63 OF THE PAPER B OOK, DOES NOT BEAR THE SEAL OF THE EXCISE DEPARTMENT WHERE AS THE PREVIOUS LETTER DATED 30.10.2006 ADDRESSED TO THE EXCISE DEP ARTMENT BEARS THE SEAL OF THE DEPARTMENT ALONGWITH THE DESIGNATIO N OF THE PERSON WHO HAS RECEIVED IT. THEREFORE, IT IS ONLY A PIECE OF PAPER PAGE | 8 MENT FOR SELF SERVING. IN VIEW OF THE ABOVE DISCUSS ION AND IN VIEW OF THE DETAILED ORDER PASSED BY THE CIT(A) ON THIS ISSUE, WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY THE SAME IS U PHELD AND THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 13. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.10.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 30.10.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 22.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.10.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 30.10.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30.10.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 30.10.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 30.10.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.1 0.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER