Smt. Priti B.Sheth, CHENNAI V. ITO, CHENNAI

ITA 877/CHNY/2009

• Counselvise Citation: 87721714 RSA 2009
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: S KASI VISWANATHAN
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NO. 877/MDS/2009 ASSESSMENT YEAR: 2006-07 SMT. PRITI B. SHETH, C/O BHAVANA B. SHETH, FLAT NO. 2A, K.G. PRASAD, OLD NO.49, NEW NO. 60, 3 RD MAIN ROAD, GANDHI NAGAR, ADYAR, CHENNAI 20. [PAN: AASPS6236Q] VS. THE INCOME TAX OFFICER, BUSINESS WARD IV(3), CHENNAI 600 034. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. KASI VISWANATHAN, C.A. REVENUE BY : DR. I. VIJAYAKUMAR, CIT - DR DATE OF HEARING : 07.09.2011 DATE OF PRONOUNCEMENT 11.10.2011 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE, FOR THE ASSESSMENT YE AR 2006-07, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) VIII, CHENNAI, DATED 18.03.2009. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE/APPELLANT IS AN INDIVIDUAL CARRYING ON BUSINESS, DERIVING INCOME FR OM HOUSE PROPERTY, HAVING INCOME FROM BUSINESS, INCOME FROM CAPITAL GAINS AND ALSO INCOME FROM OTHER SOURCES. FOR THE ASSESSMENT YEAR 2006-07, THE RETUR N OF INCOME WAS FILED ON 30.10.2006 DECLARING LOSS OF ` .79,018/-. IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN INCOME OF ` .1,84,789/- FROM LETTING OUT OF THE HOUSE PROPERTY. THIS RECEIPT INCLUDED AMENITY CHARGES OF ` .1,20,000/-. THE ASSESSEE HAD CLAIMED STATUTORY I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.877 877877 877/MDS/ /MDS/ /MDS/ /MDS/0 00 09 99 9 2 DEDUCTION ON THE AMENITY CHARGES OF ` .1,20,000/-. THE ASSESSING OFFICER HAS NOT ALLOWED THIS ON THE PREMISE THAT AMENITY CHARGES, N OT BEING A RENTAL INCOME, HAS TO BE ASSESSED ONLY UNDER THE HEAD INCOME FROM OTHER SOURCES. IN DOING SO, HE HAS RELIED ON THE DECISION OF THE HONBLE MADRAS HIGH C OURT RENDERED IN THE CASE OF M/S. TARAPORE & CO. V. CIT (2003) 259 ITR 389 (MAD) , IN WHICH IT HAS BEEN HELD THAT THE SERVICE CHARGES RECEIVED FROM THE TENANTS CANNOT BE TREATED AS PART OF ANNUAL LETTING VALUE OF A HOUSE PROPERTY. ACCORDING LY, THE STATUTORY DEDUCTION CLAIMED AT 30% ON THE RECEIPT TOWARDS AMENITIES WAS DISALLOWED. THIS ADDITION HAS BEEN CONFIRMED BY THE LD. CIT(A), AS WELL. THE ASSE SSEE IS FURTHER AGGRIEVED. 3. AFTER HEARING BOTH THE SIDES, WE HAVE FOUND THA T THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE RECEIPT OF ` .1,20,000/- IS ON ACCOUNT OF AMENITIES PROVIDED BY THE ASSESSEE TO HER TENANTS AND IT IS N OT A RENTAL INCOME OF THE HOUSE PROPERTY. THE DECISION OF THE HONBLE MADRAS HIGH C OURT ON WHICH THE ASSESSING OFFICER HAS RELIED IS DIRECTLY APPLICABLE TO THE FA CTS OF THE GIVEN CASE. THE RATIO DECIDENDI OF THE HONBLE MADRAS HIGH COURT IS THAT THE RECEIPT ON ACCOUNT OF AMENITIES WOULD NOT FORM PART OF RENTAL INCOME FROM HOUSE PROPERTY. THE CONTENTION OF THE LD. AR, THAT THE FACTS OF THE HON BLE MADRAS HIGH COURTS DECISION ARE DISTINGUISHABLE, IN AS MUCH AS IN THAT CASE THE PROPERTY LET-OUT WAS A COMMERCIAL PROPERTY, BUT IN THE GIVEN CASE IT IS RE SIDENTIAL, IS NOT ACCEPTABLE BECAUSE IT WOULD HARDLY MAKE ANY DIFFERENCE IF A PR OPERTY LET-OUT WAS A COMMERCIAL PROPERTY OR A RESIDENTIAL ONE. THE HONBLE HIGH COU RT HAS NOT MADE ANY SUCH DIFFERENTIATION. ACCORDINGLY, WE CANNOT ALLOW THIS ISSUE IN FAVOUR OF THE ASSESSEE. 4. THE NEXT ISSUE RAISED IN THIS APPEAL IS REGARDI NG INTEREST PAID ON STICKY I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.877 877877 877/MDS/ /MDS/ /MDS/ /MDS/0 00 09 99 9 3 LOANS, ` . 2,64,000/- PAID TO M/S. K.C. SHETH (HUF); ` .3,03,518/- PAID TO A NATIONALIZED, PUBLIC SECTOR BANK, NAMELY ALLAHABAD BANK, AND ` .6,720/- PAID TO TWO OTHER INDIVIDUALS, TOTALING TO ` .5,74,238/-. THE CASE OF THE ASSESSEE IS THAT THE INTEREST PAID TO ALL THE RECIPIENTS HAVE BEEN ACCOU NTED FOR BY THEM AND ALL OF THEM ARE ASSESSED TO INCOME TAX. FURTHER, INTEREST RECEI PT BY HUF HAS BEEN SHOWN IN THEIR BOOKS OF ACCOUNT FOR THE SAME ASSESSMENT YEAR , AND HAS ALSO BEEN ASSESSED TO TAX. THE HUF IS STATED TO BE A CREDITOR FOR QUIT E A NUMBER OF YEARS, STARTING FROM THE ASSESSMENT YEAR 2002-03 AND INTEREST HAS BEEN C REDITED TO ITS ACCOUNT YEAR AFTER YEAR. THE ASSESSEE HAD FILED COPIES OF STATEM ENT OF LOAN, CONFIRMATION OF THE HUF, COPY OF STATEMENT OF AFFAIRS OF THE HUF, BUT T HE ASSESSING OFFICER HAS DISALLOWED ` .4,85,165/- FROM OUT OF THE TOTAL INTEREST PAID OF ` .5,74,238/- AND HAS THUS, RESTRICTED THE DISALLOWANCE TO THIS FIGURE AN D HAS ADDED TO ASSESSEES TOTAL INCOME. BEING AGGRIEVED, THE ASSESSEE CHALLENGED TH IS ADDITION, BUT WAS NOT SUCCESSFUL BECAUSE, THE LD. CIT(A) HAS OPINED THAT ASSESSEE HAD NOT FILED PROOF AS DIRECTED BY THE ASSESSING OFFICER. 5. AFTER HEARING BOTH THE SIDES, WE HAVE FOUND THA T THE ASSESSEE HAD STATED BEFORE THE ASSESSING OFFICER THAT COPIES OF ACCOUNT FROM BANK, STATEMENT AND EVIDENCE OF RECEIPT OF INTEREST IN THE RETURNS OF T HE RECIPIENTS SHALL BE FILED BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS GIVEN FREEDOM TO THE ASSESSEE TO FILE ALL THESE PROOFS IN THE APPEAL GIVING EFFECT ORDER AS PER THE RATIO OF THE VARIOUS COURTS, BUT WE ARE NOT SATISFIED WITH THIS FINDING OF THE LD. C IT(A). IN FACT, HE WAS BOUND TO DECIDE THE ISSUE ON MERITS INSTEAD OF GIVING SUCH A DIRECTION. IT IS TRUE THAT THE ASSESSEE HAS NOT FILED THE REQUISITE EVIDENCE DURIN G ASSESSMENT PROCEEDINGS. IN I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.877 877877 877/MDS/ /MDS/ /MDS/ /MDS/0 00 09 99 9 4 THE LIGHT OF THE FINDING OF THE LD. CIT(A) GIVEN IN THIS REGARD, CONFUSION HAS ARISING, WHICH REQUIRES TO BE CLEARED. ACCORDINGLY, AFTER RE VERSING THE FINDING OF THE LD. CIT(A), WE REMIT BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT HE SHALL DECIDE THIS ISSUE AFRESH AF TER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO ALLOW HIM TO PRODUCE ANY EVIDENCE, IF HE SO LIKES OR DESIRES TO. ACCORDINGLY, WE ALLOW THIS ISSUE FOR ST ATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 11.10.2011. SD/- SD/- (DR.O.K. NARAYANAN) VICE PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER CHENNAI, DATED, THE 11.10.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.