Dalhousie Properties Ltd., , Kolkata V. DCIT, Circle - 8(1), Kolkata , Kolkata

ITA 909/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8761 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-12-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHRUBAJYOTI ROY JCIT SRDR
• Keywords: Set aside
• Section: 143(3); 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 908 - 909 / KOL / 2018 ASSESSMENT YEARS : 2011-12 & 2012-13 DALHOUSE PROPERTIES LTD., 3A,HUMAYUN PLACE, LINDSAY STREET, KOLKATA-700 087 [ PAN NO.AABCD 0792 N ] V/S . DCIT, CIRCLE-8, AAYAKAR BHAWAN, P- 7,CHOWRINIGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI SOUMITRA CHOUDHURY, ADVOCATE /BY REVENUE SHRI DHRUBA JYOTI ROY, JCIT-SR-DR /DATE OF HEARING 24-12-2019 /DATE OF PRONOUNCEMENT 17-01-2020 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YEAR(S ) 2011-12 & 2012- 13 COMMISSIONER OF INCOME TAX (APPEALS)-3 KOLKATAS SEPARATE ORDERS DATED 07.05.2014 AND 15.03.2018 PASSED IN CASE NO.S 1908/CIT(A)-3/KOL/14- 15 &07/CIT(A)-3/CIR-8(1)/KOL/15-16 RESPECTIVELY INV OLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT THE ASSESSEES IDENTICAL SOLE SUBSTANTIVE GRIEVANCE CANVASSED IN THESE TWO APPEAL(S) SEEKS TO REVERSE THE LOWER ITA NOS.908-909/KOL/2018 A.YS . 11-12 & 12-13 DALHOUSIE PROPERTIES LTD. VS. DCIT, CIR- 8, KOL. PAGE 2 AUTHORITIES ACTION PARTLY ACCEPTING ITS SERVICE AN D ESTABLISHMENT CHARGES OF 6,72,619/- AND 8,33,795/- OUT OF 12,85,695/- AND 13,23,961/-, ASSESSMENT YEAR-WISE RESPECTIVELY. THERE IS NO DISP UTE BETWEEN THE PARTIES THAT THE FACTUAL BACKDROP HEREIN IS IDENTICAL IN BO TH CASES. WE THEREFORE DEEM IT APPROPRIATE TO REPRODUCE THE CIT(A) S DETAILED DISCUSSION READING AS UNDER:- 3. DECISION : GROUND NO.1 OF THE APPEAL IS GENERAL IN NATURE, HENCE NOT ADJUD ICATED UPON SEPARATELY. GROUND NO.2 & 3 OF THE APPEAL ARE REGARDING THE CLAIM FOR DEDUCTIO N OF ESTABLISHMENT CHARGES OF RS.12,85,995/-. THE BASIC FACTS OF THE CASE ARE THAT THE APPELLANT HAS LET OUT A PROPERTY NAMED STEPHEN HOUSE AT 4,B.B.D BAG (EAST).KOLKATA-700001. THE PROPERTY HAS BEEN LET OUT TO MORE THAN ONE HUNDRED TENANTS. DURING THE PREVIO US YEAR, THE ASSESSEE HAD RECEIVED COMPOSITE RENT OF RS.2,23,21,871/-. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED SERVICE CHARGES OF RS.12,85,99 5/. THESE EXPENSES ARE ON ACCOUNT OF ESTABLISHMENT EXPENSES AND ELECTRICITY C HARGES. THE AO WAS OF THE OPINION THAT THE EXPENSES ALLOWABLE U/S.24 ARE CLEA RLY DEFINED AND EXHAUSTIVE AND, MOREOVER, AS THE ASSESSEE HAS ALREADY BEEN ALLOWED A STANDARD DEDUCTION OF 30% OF THE ANNUAL VALUE, SO NO FURTHER DEDUCTION ON ACCOUN T OF SERVICE CHARGES WAS ALLOWABLE AS PER THE ACT. BEFORE ME, THE A/R OF THE APPELLANT HAS ARGUED THAT SERVICE CHARGES ARE ALLOWABLE AND IN THIS REGARD THE APPELLANT HAS PLACED RELIANC E ON THE DECISION OF THE JURISDICTIONAL ITAT IN ITS OWN CASE IN ITA NO.1714/KOL/2007 AND ITA NO.NO.1715/KOL/2007 . THE HON'BLE ITAT IN THE SAID DECISION HAS HELD A S UNDER :- 'THUS IN PRINCIPLE THE ITAT HAS AGREED THAT THE GRO SS RENT WAS LIABLE TO BE REDUCED BY THE AMOUNT OF MAINTENANCE CHARGES TO ARR IVE OR THE FIGURE OF NET RENT WHICH CONSTITUTE THE ANNUAL LETTING VALUE FOR THE PURPOSE OF COMPUTATION OF HOUSE PROPERTY INCOME. THE MATTER WAS SET ASIDE TO THE FILE OF AD TO VERIFY THE FACTS, WHETHER THE RENT RECEIVED BY THE ASSESSE E WAS GROSS RENT INCLUSIVE OF THE AMOUNTS FOR PAYMENT OF EXPENSES. THIS WAS TO BE VERIFIED ON THE BASIS OF TENANCY AGREEMENT. THE AO HAS REJECTED THE ASSES SEE'S CLAIM BECAUSE THE ASSESSEE COULD NOT PRODUCE THE TENANCY AGREEMEN T WITH THE TENANTS. IN OUR OPINION, MERELY BECAUSE THE TENANCY AGREEMENT I S NOT AVAILABLE IF CANNOT BE CONCLUDED THAT THE RENT RECEIVED BY THE ASSESSEE WAS NOT COMPOSITE RENT. THE AO SHOULD HAVE EXAMINED THE OTHER RELEVANT FACT S. WE FIND THAT IN ASSESSMENT YEAR 1996-97 IN THE ORDER PASSED U/S.143 (3) DATED 31.03.1999 THE AO HAS ALLOWED THE DEDUCTION FOR SERVICE CHARGE S CLAIMED WHILE DETERMINING THE ANNUAL LETTING VALUE FOR THE PURPOS E OF COMPUTING INCOME FROM HOUSE PROPERTY. SIMILARLY, IN THE ORDER PASSED U/S.143(3) FOR ASSESSMENT YEAR 1998-99 VIDE ORDER DATED 27.03.2001 THE AO HAS ALLOWED THE DEDUCTION OF SERVICE CHARGES OF RS.7,69,441/-FOR DETERMINING ANNUAL LETTING VALUE. ADMITTEDLY THE TENANTS ARE SAME IN THE YEAR UNDER C ONSIDERATION AS THE PROPERTY IS CLAIMED TO HAVE BEEN LET OUT 30 YEARS B ACK. IN VIEW OF ABOVE, WHEN THE DEPARTMENT HAS ACCEPTED THE RECEIPT OF COM POSITE RENT BY THE ASSESSEE IN ASSESSMENT YEAR 1996-97 AND 1998-99 AND ON THAT BASIS ALLOWING THE DEDUCTION FOR EXPENSES FOR SERVICES RE NDERED BY THE ASSESSEE FOR DETERMINING THE ANNUAL LETTING VALUE OF THE PRO PERTY, THERE WAS NO ITA NOS.908-909/KOL/2018 A.YS . 11-12 & 12-13 DALHOUSIE PROPERTIES LTD. VS. DCIT, CIR- 8, KOL. PAGE 3 JUSTIFICATION FOR TAKING DIFFERENT STAND IN ASSESSM ENT YEAR 1989-90 AND 1990- 91. IN VIEW OF ABOVE WE ALLOW THE ASSESSEE'S APPEAL AND DIRECT THE AO TO ALLOW DEDUCTION OF ESTABLISHMENT CHARGES WHILE COMPUTING THE ANNUAL LETTING VALUE OF THE PROPERTY. ON THE PERUSAL OF THE ABOVE APPEAL ORDER, IT IS OBS ERVED THAT THE HONBLE ITAT HAS GIVEN THE DIRECTION THAT FROM THE COMPOSITE RENT TH E AMOUNT OF MAINTENANCE CHARGES WAS REQUIRED TO BE REDUCED SO AS TO ARRIVE AT THE F IGURE OF THE NET RENT WHICH WOULD CONSTITUTE THE ANNUAL LETTING VALUE FOR THE PURPOSE OF COMPUTING THE INCOME FROM HOUSE PROPERTY. IN THIS CASE, IT IS OBSERVED THAT T HE COMPOSITE RENT IS RS.2,23,21,871/-. THE APPELLANT HAS RECEIVED SERVIC E AND MAINTENANCE CHARGES OF RS.6,13;376/-. THEREFORE, THE NET RENT RECEIVED IN THIS CASE IS RS.2,17.08,495/-. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDIC TIONAL TRIBUNAL IN THE CASE OF THE ASSESSEE, THE AO IS DIRECTED TO REDUCE FROM THE VAL UE OF COMPOSITE RENT THE SERVICE CHARGES RECEIVED AND THE NET RENT SHOULD BE CONSIDE RED FOR THE PURPOSES OF COMPUTING THE HOUSE PROPERTY INCOME. IN THIS CASE, THE NET RENT WOULD THEREFORE BE RS.2,17,08,495/-.THE AO TO COMPUTE INCOME FROM HOUS E PROPERTY INCOME ACCORDINGLY. IT IS OBSERVED THAT THE APPELLANT HAS RECEIVED SERVICE CHARGES OF RS.6,13,376/-.HOWEVER, THE APPELLANT HAS MADE CLAIM FOR DEDUCTION OF RS.12,85,995/-. ONLY SERVICE CHARGES TO THE EXTENT OF RS.6,13,376/-IS PART OF THE COMPOSITE RENT WHICH IS HEREBY ALLOWED AS PER THE D IRECTIONS OF THE HONBLE ITAT. THE CLAIM FOR ADDITIONAL SERVICE CHARGES OF RS.6,72,619 /-IS NOT ALLOWED TO BE REDUCED FROM THE GROSS RENT AS IT IS NOT PART OF THE COMPOSITE R ENT. THE ASSESSEE GETS PART RELIEF ON THIS ISSUE . 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL PLEADINGS. SUFFICE TO SAY, IT HAS COME ON RECORD THAT THE CIT(A) HAS PART LY REVERSED THE ASSESSING OFFICERS REASONING QUOTING SEC. 24 OF THE ACT AS A MENDED FROM TIME TO TIME REGARDING DEDUCTION ALLOWABLE IN CASE OF HOUSE PROP ERTY INCOME. HIS ONLY CASE IS THAT IT IS THE CORRESPONDING PART CLAIM THA N THE ENTIRE SUM; ASSESSMENT YEAR-WISE WHICHI DESERVES TO BE ACCEPTED TO THE EXT ENT INDICATED HEREINABOVE. WE FIND NO REASON TO SUSTAIN THE CIT(A)S FINDINGS UNDER CHALLENGE. IT IS MADE CLEAR THAT THIS ISSUE OF ALLOWABILITY OF THE IMPUGN ED CLAIM(S) IS NO MORE RES INTEGRA AS ADMITTED BY THE CIT(A) AS WELL THAT THE CO-ORDI NATE BENCH DECISION IN ASSESSEES OWN CASE (SUPRA) HAD HELD THAT THE IT S TENANTS HAVE BEEN PAYING ALL THESE SUMS IN THE NATURE OF SERVICE, ESTABLISHM ENT AND ELECTRICITY CHARGES ETC. FOR THE PAST VERY MANY DECADES WITHOUT EVEN HA VING AN EXPRESS AGREEMENT(S) TO THIS EFFECT. LEARNED DEPARTMENTAL R EPRESENTATIVE ALSO FAILS TO THROWS LIGHT ON THE FACT THAT ASSESSEES CLAIMS IN THESE TWO ASSESSMENT YEAR(S) HAS NOWHERE BEEN DOUBTED IN THE LOWER PROCE EDINGS THAT THE SAME ARE IN THE NATURE OF VERY HEAD(S) AS ACCEPTED BY THE LO WER AUTHORITIES IN ALL ITA NOS.908-909/KOL/2018 A.YS . 11-12 & 12-13 DALHOUSIE PROPERTIES LTD. VS. DCIT, CIR- 8, KOL. PAGE 4 PRECEDING AND SUCCEEDING ASSESSMENT YEARS INVOLVING BOTH SUMMARY AND REGULAR ASSESSMENTS. WE THEREFORE HOLD THAT THE ASS ESSEES IMPUGNED IDENTICAL CLAIM THAT THE SERVICE AND ESTABLISHMENT CHARGES SUMS OF 12,85,695/- AND 13,23,961/- DESERVE TO BE DEDUCTED IN ETERNITY. WE ORDER ACCORDINGLY. NECESSARY COMPUTATION TO FOLLOW AS PER LAW. THE ASSESSEE SUCCEEDS IN ITS SOLE SUBSTANTIVE GRIEVANCE THEREFOR E. 4. THESE TWO ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 17 /01/2020 SD/- SD/- ( ) () ) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP *- 17 / 01 /20 20 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-DALHOUSE PROPERTIES LTD., 3A, HUMAYUN PLA CE, LINDSAY ST. KOLKATA-87 2. /REVENUE-DCIT, CIR-8, P-7, CHOWRINGHEE SQ. KOLKATA- 69 3. 5 6 / CONCERNED CIT KOLKATA 4. 6- / CIT (A) KOLKATA 5. 9 ))5, 5, / DR, ITAT, KOLKATA 6. > / GUARD FILE. BY ORDER/ , /TRUE COPY/ 5,