TaxTMI 
TaxTMI 
2015 (2) TMI 168
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....)-VI, Mumbai dated 21.1.2008. In this appeal, assessee raised the following grounds which read as under: "1. The Ld CIT (A) erred in confirming the action of the Assessing Officer in assessing the income from house property at Rs. 18,28,310/- instead of Rs. 2,16,776/- as returned by the appellant. He erred in confirming the action of the Assessing Officer in including the national interest on the interest free security deposit received from the licencee of the house property in computing the annual value of the property. He further erred in not allowing the claim of the appellant for deducting an amount of Rs. 2,30,320/- representing maintenance expenses paid to the housing society in computing income from house property. 2. The Ld CIT (A) erred in not deleting the addition to the closing stock on account of unutilized Modvat credit under section 145A of the Act. He erred in not accepting the method prescribed under the guidance note issued by the Institute of Chartered Accounts of India relating to adjustments under section 145A of the Act. He further erred in ....
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....t of 1.8 Crs (Rs. 21.6 lakhs). Thus, the ALV was computed at Rs. 27 lakhs. On this issue, during the proceedings before the first appellate authority, CIT (A) considered the judgment of the jurisdictional High Court judgment in the case of CIT vs. J.K. Investors (Bombay) Ltd (248 ITR 723) and distinguished the same before confirming the order of the Assessing Officer. Aggrieved with the said decision of the CIT (A), assessee is in appeal before the Tribunal. 4. During the proceedings before us, Ld Counsel for the assessee made elaborate discussion on the applicability of the said judgment of the Bombay High Court in the case of J.K. Investors (supra). Further, he submitted the actual rent receivable on the property constitutes the reasonable rent. There is no incriminating evidence before the Assessing Officer that the assessee has deflated the rent by invoking the extraneous consideration. For this proposition he relied on another judgment of the jurisdictional High Court in the case of CIT vs. Tip Top Typography (48 Taxmann.com 191) (Bom.) as well as the decision of the ITAT, Delhi Bench in the case of CIT vs. Moni Kumar Subba (10 Taxmann.com 195) (Delhi) (FB). Further, he men....
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....h higher than the municipal rateable value of the property. It is also discouraged and unapproved by various Benches of the Tribunal that when the interest income earned by the assessee on the said security deposits deposited with the banks the same is offered to tax, the inclusion of such interest on the said deposits for the purpose of ALV amounts to double taxation. Considering the factual matrix of the present case, we are of the considered opinion that the issue raised by the assessee has to be decided in favour of the assessee. We order accordingly. 7. The second issue relates to the claim of deduction of Rs. 2,30,320/- representing the maintenance expenses paid to the societies. Relevant facts are that as per the lease agreement in connection with the property referred above, assessee has to bear maintenance, parking and watering charges. Assessee considered the said amount of Rs. 2,30,320/- is deductible at the stage of computing the ALV for the purpose of 23 of the Act. Such expenses are not to be considered for claim of deduction u/s 24 of the Act considering the absence of enabling provisions in section 24 of the Act. In support of his claim of the said expenses u/....
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....ceeds on the basis of actual rent received or receivable and therefore, all the outgoings for earning the said rental income would be admissible deduction. We find the Tribunal in the case of Bombay Oil Industries (supra) has held that maintenance charges and municipal taxes paid by the assessee are to be deducted from gross rent to arrive at the annual value. We find that in the case of Sharmila Tagore (supra), the Tribunal held that maintenance charges paid to housing society have to deducted even while computing annual letting value. Similar view has been taken in various other decisions relied on by the Ld Counsel for the assessee. The decisions relied on by the Ld CIT (A), in our opinion, are distinguishable and not applicable to the facts of the present case. 8. We find the Mumbai Bench of the Tribunal in the case of Gopichand P. Godhwani (supra), after considering the decision of the Hon'ble Bombay High Court in the case of J.K. Investors (Bombay) Ltd (2001) 168 CTR (Bom) 189 has held that for the purpose f determining annual value of the property all taxes, cesses and outgoings being liabilities of the assessee, have....
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....p; 6. Mahalaxmi Glass Works Pvt Ltd (318 ITR 116) (Bom) 11. The above list of decisions / judgments includes the order of the ITAT in the assessee's own case for the AY 2001-02 (Page 105 of the paper book). On perusal of the same we find the identical issue came up for adjudication before the Tribunal and the contents of para 4 of the said order is relevant in this regard. Considering the importance of the said para 4 is extracted as follows: "4. After hearing both the parties, we find that this issue is now covered by various decisions of the Tribunal wherein it has been held that u/s 145A, the adjustment on account of tax duty, cess or fee shall have to be made not only with respect to closing stock but also with reference to opening stock, purchases as well as sales. These decisions are Hawkins Cookers Ltd vs. ITO [ITA No.505/Mum/2004 dated 11.8.2008]; Gandhar Oil Refinery [ITA No.856/Mum/03 dated 23.3.2006]; Metal Twice P Ltd [ITA No.3857/Mum/05, dated 5.11.2008. Further, the Hon'ble Delhi High Court n the case of CIT vs. Mahavir Aluminum Ltd 297 ITR 77 (Del) has held that adjustment has to be made not only with....
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...., he mentioned that the Third Member decision was pronounced after considering the judgment of the Hon'ble Supreme Court in the case of ICDS Limited vs. CIT (350 ITR 527) (Supreme Court). 14. On the other hand, Ld DR relied on the orders of the Assessing Officer and the CIT (A). 15. On hearing both the parties we find the issue for adjudication relates to the nature of lease if it is financial lease or operating lease. This issue was decided by the Tribunal in assessee's own case on identical facts vide order of the Third Member decision of the Tribunal is placed at page 144 of the paper book. On perusal of the lease agreement it is the finding of the Tribunal vide para 14 that the ownership of the vehicle is always with the lessor being the owner and it is never be transferred / transferable to the lessee even after the termination of the lease agreement. The said para 14 of the Third Member decision is extracted as under: "14. In the present case also looking into the terms of lease deed which have been discussed above, it has to be held that the ownership of leased assets was always with the lessor. The lessor in the normal course of its b....
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....te of Chartered Accounts of India relating to adjustments under section 145A of the Act. (c) He further erred in directing the Assessing Officer to find out whether the unutilized Modvat element to be included in the closing stock is more than the Modvat balance available in the Modvat credit account occurring on the asset side of the balance sheet and to add the difference, if any, to the total income under section 145A of the Act. 4. Without prejudice to the above, the Ld CIT (A) erred in not directing the Assessing Officer to make the adjustment on account of untilized Modvat credit which to the value of opening stock of subsequent assessment year 2006-2007. 5. The Ld CIT (A) erred in not directing the Assessing Officer to make the adjustment on account of unutilized Modvat credit to the opening stock of the current assessment year consequent to the addition made to the closing stock of the earlier AY 2004-2005. 6. (a) The Ld CIT (A) erred in confirming the disallowance of lease rent Rs. 5,66,830/- on the ground that the lease ....
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.... deposit that the deposit could be invested in such a way that it yields exempt income or income subjected to lower rate of tax. Thus, the appellant would obtain a significant tax advantage by declaring low rent under income from house property. It appears that there is no other reason for obtaining an interest free deposit but to avoid tax. The interest free deposits can also be treated as rent taken in advance for the period of tenancy." The appellant objects to the above observation made by the Ld CIT (A) which is contrary to the facts of the case and in law. 3. Each one of the above grounds of appeal is without prejudice to the other." 22. The only issue raised in this appeal related to the levy of penalty u/s 271(1)(c) of the Act and the same is connected to appeal ITA No.6225/M/2008 (AY 2005-06), which is a quantum appeal. While adjudicating the said quantum appeal in the above paragraphs of this order, we have deleted the addition and granted relief to the assessee. Consequently, the penalty levied u/s 271(1)(c) in respect of the said additions is not sustainable. Therefore, the grounds raised by the asses....
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.... submitted that the employees contribution to PF and ESIC have been deposited before the due date of filing the return of income and hence the same should be allowed under section 43B on payment basis. In this regard, he relied on the judgments of the Hon'ble Bombay High Court in the case of CIT vs. Hindustan Organics Chemicals Ltd (ITA No.399 of 2012, dated 11.7.2014) (Bom) and another judgment in the case of CIT vs. Ghatge Patil Transports Ltd (ITA No.1002 and 1034 of 2012) (Bom). 29. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On perusal of the order of the CIT (A), we find para 8.3 is relevant in this regard. For the sake of completeness of this order, the said para 8.3 is extracted as under: "8.3. I have duly considered the submissions of the AR. As regards the employees contribution, the same are allowable in view of the decision of Madras High Court in the case of Sales Cooperative Spinning Mills Ltd 258 ITR 360 wherein it was held that due date includes the grace period allowed under the PR and ESIC Act. Hence, this....
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....he neighboring flat. (c) The Ld CIT (A) erred in confirming the action of the Assessing Officer in including the notional interest on the interest free security deposit received from the licencee of the house property in computing the annual value of the property and determining the income from house property at Rs. 28,80,000/-. 2. (a) The Ld CIT (A) erred in confirming the disallowance of maintenance expenses of Rs. 1,36,080/- in computing the income from house property. (b) the Ld CIT (A) erred in relying upon the CIT (A( order passed for the assessment year 2004-05, wherein the CIT (A) has held that there was no provision under the head income from house property to allow any other expenses other than specifically mentioned under section 24 of the Act. 3. (a) The Ld CIT (A) erred in confirming the addition to the closing stock ion account of unutilized Modvat Credit under section 145A of the Act. (b) The Ld CIT (A) erred in not a....
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....t are allowed for statistical purposes. 35. In the result, appeal of the assessee is partly allowed for statistical purposes. ITA No.6963/M/2011 (AY 2007-2008) (By assessee) 36. This appeal filed by the assessee on 13.10.2011 is against the order of the CIT (A)-12, Mumbai dated 21.7.2011 for the assessment year 2007-2008. In this appeal, assessee raised the following grounds which read as under: "1. The Ld CIT (A) erred in confirming the action of the Assessing Officer in assessing the income from house property at Rs. 26,26,311/- instead of a loss of Rs. 4,512/- as returned by the appellant in the return of income. 2. The ld CIT (A) erred in relying upon the order passed by the predecessor CIT (A) for the assessment years 2004-05 and 2006-07, wherein the CIT (A) has held that in cases where the Rent Control Act is not applicable, the fair rent can be determined taking into account the refundable deposits since the monthly rent received is much loss compared to the neighboring flat. 3. The Ld CIT (A) erred in confirming the action of the As....