Anjali Gill, Chandigarh V. ITO, Chandigarh

ITA 927/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77148 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Salary income; Competent authority
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.927/CHD/2013 ASSESSMENT YEAR : 2009-10 MS. ANJALI GILL, VS THE INCOME TAX OFFICER, HOUSE NO. 27, WARD 1(3), SECTOR 2-A, CHANDIGARH. CHANDIGARH. PAN : AAUPG4012G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 04.06.2014 DATE OF PRONOUNCEMENT : 19.06.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DA TED 03.07.2013 AGAINST THE ORDER PASSED UNDER SECTION 1 43(3) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH IS BAD IN LAW AND IS BEYOND ALL THE CANNONS OF LAW AND JUSTICE. 2. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH HOL DING THE INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF INCO ME FROM HOUSE PROPERTY AS DECLARED BY THE ASSESSEE AND THEREBY DI SALLOWING THE CLAIM U/S 24(A) AT RS. 2,63,768/- OF THE INCOME TAX ACT, MORE SO WHEN THE ASSESSEE MAKING THE PAYMENT TO THE APPELLANT HAS DEDUCTED TAX AT SOURCE U/S 194-1 IS BAD IN LAW AND NEEDS TO SET -ASIDE. 2 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELE TE ANY OF THE GROUNDS AT ANY TIME BEFORE THE SAID APPEAL IS HEARD AND DECIDED. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST CLAIM OF DEDUCTION UNDER SECTION 24(A) OF THE ACT AT RS. 2,63,68/-. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD ELECTRONICA LLY FILED THE RETURN OF INCOME ON 30.09.2007 DECLARING TOTAL INCO ME OF RS. 11,91,700/-. THE ASSESSEE HAD DECLARED INCOME FROM SALARY, HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE ASSESSEE HAD DECLARED SUM OF RS. 615,457/- UNDER THE HEAD INCOM E FROM HOUSE PROPERTY. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FROM THE DETAILS FILED BY THE ASSESSEE WAS OF THE VIEW THAT THE INCOME SHOWN UNDER THE HEAD HOUSE PROPERT Y WAS ACTUALLY INCOME FROM OTHER SOURCES I.E. INTEREST RE CEIVED ON DEPOSITS, PARKED WITH TWO PARTIES NAMELY M/S UNIVER SAL BUILDWELL PVT. LTD. AND M/S VIPUL LTD. A SUM OF RS. 10,00,00 0/- WAS DEPOSITED WITH M/S UNIVERSAL BUILDWELL PVT. LTD. AN D A SUM OF RS. 40,04,756/- WAS DEPOSITED WITH M/S VIPUL LTD. AGAIN ST BOOKING OF DIFFERENT UNITS IN THE PROJECT FLOATED BY THE SAID CONCERNS. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE TE NANTS AND THE RENT RECEIVED FROM THEM DURING THE ASSESSMENT PROCE EDINGS. THE ASSESSING OFFICER NOTED THAT AS PER THE TDS CERTIFI CATE THE PAYMENTS MADE BY THE SAID BUILDER COMPANY HAD BEEN SHOWN BY THE ASSESSEE AS RENTAL INCOME. ONE OF THE COMPANY M/S UNIVERSAL BUILDWELL PVT. LTD. HAD EVEN SHOWN THE PAYMENTS MAD E TO THE ASSESSEE AS INTEREST AND DEDUCTED THE TAX AT SOURCE UNDER SECTION 194A OF THE ACT BUT THE OTHER COMPANY M/S VIPUL LTD . HAD SHOWN THE PAYMENTS TO THE ASSESSEE AS RENT AND DEDUCTED T AX UNDER SECTION 194-I OF THE ACT. IN RESPECT OF M/S UNIVER SAL BUILDWELL 3 PVT. LTD. THE ASSESSEE BEFORE THE ASSESSING OFFICER CONCEDED THAT THE SAID PAYMENTS MAY BE TAKEN AS INTEREST INCOME A S THERE IS NO RENT DEED. THE SAID INCOME WAS THUS, ASSESSED UNDE R THE HEAD INCOME FROM OTHER SOURCES AGAINST WHICH THE ASSES SEE IS NOT IN APPEAL. 5. HOWEVER, IN RESPECT OF PAYMENT RECEIVED FROM M/S VIPUL LTD., THE CLAIM OF THE ASSESSEE WAS THAT THERE WAS NO LEASE AGREEMENT OR RENT DEED BUT THE TDS CERTIFICATE ISSU ED BY M/S VIPUL LTD. CLEARLY REFLECTED THE NATURE OF PAYMENT AS RENT AND TAX WAS DEDUCTED UNDER SECTION 194-I OF THE ACT. THE A SSESSING OFFICER SOUGHT INFORMATION FROM M/S VIPUL LTD. UNDE R SECTION 133(6) OF THE ACT AND THE COMPANY WAS ASKED TO SPEC IFICALLY GIVE THE NATURE OF PAYMENT WITH EVIDENCE. THE SAID COMP ANY WAS ALSO DIRECTED TO FURNISH COPY OF LEASE AGREEMENT ENTERED ON BEHALF OF THE ASSESSEE AND THE INSTRUMENT OF TRANSFERRING THE PROPERTY IN THE NAME OF THE ASSESSEE. SIMILAR LETTER WAS WRITTEN T O THE ASSESSEE ON THE SAME DAY CALLING FOR THE SAME INFORMATION. NEITHER THE ASSESSEE NOR M/S VIPUL LTD. FURNISHED THE REQUISITE INFORMATION AND DOCUMENTS. ON THE BASIS OF DOCUMENT FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER CAME TO THE CONCLUS ION THAT THE PAYMENTS RECEIVED BY THE ASSESSEE FROM M/S VIPUL LT D. WERE NOTHING BUT INTEREST INCOME AGAINST DEPOSITS MADE B Y THE ASSESSEE WITH THE SAID PARTY. IT WAS FURTHER OBSERVED BY TH E ASSESSING OFFICER THAT THE RENTAL INCOME COULD NOT ARISE TO T HE ASSESSEE UNLESS AND UNTIL THE PROPERTY WAS READY FOR USE BY THE ASSESSEE AND RENTED TO THE TENANTS. FURTHER, THE ASSESSEE W AS IN RECEIPT OF FIXED AMOUNT OF RS. 51,025/- PER MONTH CREDITED TO HIS ACCOUNT WHICH WAS EQUAL TO THE INVESTMENT RETURNED AGREED U PON BY M/S 4 UNIVERSAL LTD. TILL THE PROPERTY WAS READY FOR POSS ESSION. IN VIEW THEREOF, THE SUM OF RS. 459,225/- WAS TREATED AS IN COME FROM OTHER SOURCES. THE SAID ORDER OF THE ASSESSING OFF ICER WAS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS). 6. SHRI M.R.SHARMA APPEARED FOR THE ASSESSEE AND SH RI AKHILESH GUPTA APPEARED FOR THE REVENUE AND PUT FORWARD THEI R RIVAL CONTENTIONS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD DECLARED INCOME UNDER THE HEAD IN COME FROM HOUSE PROPERTY. CERTAIN INCOME WAS RECEIVED FROM TWO DIFFERENT PROPERTIES IN GURGAON, HARYANA. IN RESPECT OF THE F IRST PROPERTY BOOKED FROM M/S UNIVERSAL BUILDWELL LTD., THE ASSES SEE WAS RECEIVING MONTHLY CHEQUES WHICH WERE CLAIMED TO BE RENT BY THE ASSESSEE BUT DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSEE AGREED THAT THE SAME BE ASSESSED AS INCOME FROM OTHER SOURCES. THE ASSESSEE WAS ALSO IN RECEIPT OF A SUM OF RS. 51,025/- PER MONTH FROM M/S VIPUL LTD. WHICH IT CLA IMED TO BE RENT RECEIVED FROM THE SAID CONCERN. THE BASIS FOR THE CLAIM OF THE ASSESSEE WAS THE TDS CERTIFICATE ISSUED BY THE PAYER M/S VIPUL LTD., WHO HAD DEDUCTED TAX AT SOURCE ON THE S AID PAYMENTS UNDER SECTION 194-I OF THE ACT AND CLAIMED THE SAME TO BE RENT PAYMENT. THE ASSESSEE HAD ENTERED INTO AN AGREEMEN T WITH M/S VIPUL LTD., WHO AND DEPOSITED RS. 40,04,756/- AND W AS PROVISIONALLY ALLOTTED UNIT NO. 30 ON THE GROUND FL OOR OF TOWER-B OF VIPUL TECH SQUARE AS PER MEMORANDUM OF UNDERSTAN DING MADE ON 06.07.2006. THE ASSESSEE HAS PLACED ON RECORD A BUYER AGREEMENT DATED 26.03.2007 BETWEEN M/S VIPUL LTD. A ND THE ASSESSEE AND M/S CLASSIC REAL ESTATE DEVELOPERS PVT . LTD. AS PER 5 THE SAID AGREEMENT, IT WAS AGREED BETWEEN THE PARTI ES THAT THE PREMISES BEARING OFFICE/SHOP NO. 30 IN TOWER-B MEAS URING APPROXIMATELY SUPER BUILD-UP AREA OF 145.86 SQ.MTR. ON GROUND FLOOR AS DETAILED IN ANNEXURE-A ANNEXED TO THE AGRE EMENT @ RS. 2550.80 PER SQ.FT. INCLUSIVE OF IDC CHARGES WOULD B E ALLOTTED TO THE ASSESSEE. THE TOTAL CONSIDERATION FIXED WAS RS . 40,04,756/-. FURTHER AS PER CLAUSE-7 OF THE SAID AGREEMENT, IT W AS AGREED THAT THE ALLOTTEES HAD PAID TO THE DEVELOPERS SUM OF RS. 37,50,000/- BEING BOOKING AMOUNT OF THE SAID PREMISES AND THE R ECEIPT THEREOF WAS ADMITTED AND ACKNOWLEDGED BY THE DEVELOPERS. F URTHER, THE ALLOTTEE AGREED TO PAY THE BALANCE CONSIDERATION IN INSTALLMENTS AS DETAILED IN ANNEXURE-B IN FAVOUR OF M/S VIPUL LTD. BY CHEQUE /DEMAND DRAFT AS PER CLAUSE-8 OF THE AGREEMENT. AS PER CLAUSE-19, THE POSSESSION OF THE PREMISES WAS TO BE DELIVERED TO THE INTENDING ALLOTTEE PROVIDED ALL THE AMOUNTS DUE AND PAYABLE WERE PAID IN TIME UNDER THE AGREEMENT. AS PER CLAUSE-22 , THE DEVELOPERS AGREED THAT IT SHALL EXECUTE THE SALE DE ED AND REGISTER IT IN FAVOUR OF INTENDING ALLOTTEE WITHIN A REASONA BLE TIME AFTER COMPLETION OF CONSTRUCTION AND GRANT OF OCCUPANCY C ERTIFICATE BY THE COMPETENT AUTHORITY OF THE SAID PREMISES AND AL SO AFTER RECEIPT OF FULL SALE CONSIDERATION FROM THE ALLOTTEE. AS P ER THE PAYMENT SCHEDULE ANNEXED TO THE SAID AGREEMENT, THE ASSESSE E WAS TO PAY SUM OF RS. 37,50,000/- ON REGISTRATION AND RS. 2,54 ,756/- INCLUDING IDC CHARGES WITHIN 30 DAYS OF ALLOTMENT. THE TOTAL PAYMENT THUS, TO BE PAID WAS RS. 40,04,756/-. IN T HE PAPER BOOK, THE ASSESSEE HAS ANNEXED A COPY OF LETTER OF M/S VI PUL LTD. DATED 03.07.2007 AT PAGE 4 OF THE PAPER BOOK IN WHICH IT IS INFORMED THAT THE UNIT HAS BEEN LEASED TO M/S DELL INTERNATI ONAL SERVICES 6 PVT. LTD. AND A CHEQUE OF RS. 3,06,150/- DATED 31.0 5.2007 TOWARDS PAYMENT OF INTEREST FREE RENT SECURITY DEPOSIT WAS ENCLOSED. 8. ANOTHER DOCUMENT FILED BY THE ASSESSEE IS THE DE ED OF ADHERENCE DATED 26.05.2009 PLACED AT PAGES 9 TO 14 OF THE PAPER BOOK. UNDER THE SAID DEED OF ADHERENCE BETWEEN M/S DELL INTERNATIONAL SERVICES PVT. LTD. AND THE ASSESSEE, IT IS AGREED THAT M/S VIPUL LTD. ENTERED INTO A LEASE DEED DATED 10.0 8.2007 WITH THE FIRST PARTY I.E. M/S DELL INTERNATIONAL SERVICE S PVT. LTD. WITH RESPECT TO AN AREA MEASURING 285484 SQ.FT. OF CHARG EABLE AREA. THE ALLOTTEE I.E. THE ASSESSEE HAD ACQUIRED THE UNI T NO. 30 OF GROUND FLOOR AND IT WAS AGREED THAT THE ALLOTTEE SH ALL ADOPT AS A LESSOR OF THE FIRST PARTY WITH REGARD TO THE SAID U NIT IN PLACE AND INSTEAD OF M/S VIPUL LTD. THE ASSESSEE HAS ALSO PL ACED LETTER DATED 09.03.2009 RECEIVED BY THE ASSESSEE FROM M/S DELL INTERNATIONAL SERVICES PVT. LTD. IN RESPECT OF THE SAID PORTION. VIDE SAID LETTER, IT WAS AGREED THAT MONTHLY RENT W OULD BE DIRECTLY PAID TO THE ASSESSEE THEREAFTER SUBJECT TO COMPLETI ON OF CERTAIN FORMALITIES. 9. THE PLEA OF THE ASSESSEE BEFORE US IS THAT ADMIT TEDLY THE ASSESSEE HAS RECEIVED THE SAID PAYMENTS AS RENT DUR ING THE YEAR FROM M/S VIPUL LTD. WHO IN TURN HAD ISSUED TDS CERT IFICATE IN VIEW OF THE PAYMENT OF THE RENT WHICH IS PLACED AT PAGE 15 OF THE PAPER BOOK. ANOTHER ASPECT TO BE NOTED IN THE PRES ENT CASE, CONVEYANCE DEED EXECUTED BETWEEN M/S VIPUL LTD., TH E DEVELOPER AND THE ASSESSEE DATED 12.05.2009 UNDER WHICH THE S AID PROPERTY WAS CONVEYED TO THE ASSESSEE FOR SUM OF RS. 40,04,7 56/- BEING UNIT NO. 30 ON GROUND FLOOR OF TOWER-B HAVING SUPER AREA OF 1570 SQ.FT. IT WAS PUT TO THE LD. AR FOR THE ASSESSEE T IME AND AGAIN AS 7 TO WHEN THE SAID PROPERTY WAS COMPLETED AND THE POS SESSION HANDED OVER. HOWEVER, LD. AR FOR THE ASSESSEE TIME AND AGAIN PLACED RELIANCE ON THE FORM NO. 16 ISSUED BY M/S VI PUL LTD. AND THE LEASE AGREEMENT BETWEEN M/S VIPUL LTD. AND M/S DELL INTERNATIONAL SERVICES PVT. LTD. FOR THE PROPOSITIO N THAT THE ASSESSEE HAD RECEIVED RENT AND NOT INTEREST FROM M/ S VIPUL LTD. HOWEVER, NO COPY OF THE LEASE AGREEMENT BETWEEN M/S VIPUL LTD. AND M/S DELL INTERNATIONAL SERVICES PVT. LTD. WAS F ILED ON RECORD. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRCUMST ANCES, WHERE THE PERUSAL OF THE AGREEMENT BETWEEN M/S VIPUL LTD. THE ASSESSEE AND M/S CLASSIC REAL ESTATE DEVELOPERS PVT. LTD. CLEARL Y REFLECT THAT THE ASSESSEE HAS MADE AN ADVANCE PAYMENT FOR THE PU RCHASE OF UNIT IN THE PROJECT TO BE DEVELOPED BY M/S VIPUL LT D. ALONGWITH THE DEVELOPER, SINCE THE TOTAL SALE CONSIDERATION W AS PAID IN ADVANCE, THE AMOUNT OF INTEREST DUE ON SUCH SALE CO NSIDERATION WAS PAID TO THE ASSESSEE MAY BE IN THE FORM OF RENT . HOWEVER, UNDER THE PROVISIONS OF THE INCOME TAX ACT, THE SAM E DOES NOT PARTAKE NATURE OF RENT AS THE PROPERTY IN QUESTION HAD NOT COME INTO EXISTENCE. TILL THE PROPERTY DOES NOT COME IN TO EXISTENCE, THERE IS NO MERIT IN THE CLAIM OF THE ASSESSEE. IN VIEW THEREOF, WE ARE IN CONFORMITY WITH THE ORDERS OF THE AUTHORITIE S BELOW THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS ON ACCOUNT OF IN TEREST DUE ON THE ADVANCE PAYMENTS MADE BY THE ASSESSEE AND IS NO T IN THE NATURE OF INCOME FROM RENT. IN VIEW THEREOF, THE S AID AMOUNT IS ASSESSABLE AS INCOME FROM OTHER SOURCES AND ONLY SU CH EXPENDITURE WHICH IS RELATABLE TO EARNING OF SUCH I NTEREST INCOME IS ALLOWABLE AS DEDUCTION UNDER SECTION 57 OF THE I NCOME TAX ACT AND NO DEDUCTION IS ALLOWABLE UNDER SECTION 24A OF THE ACT. 8 REJECTING THE CLAIM OF THE ASSESSEE, WE DISMISS THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH JUNE, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.