AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 814
X X X X Extracts X X X X
X X X X Extracts X X X X
....idated order for the sake of convenience and brevity. 3. First we will deal with the appeal of the department in ITA No. 2349/Del/2012 and Cross Objection No. 250/Del/2012 of assessee in the case of Ranjana Garg. The department has taken the following grounds: "1. "The order of the Ld. CIT(Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Id. CIT(A) has erred in deleting the addition of Rs. 3685518/- made by the Assessing Officer on account of notional income from house property in view of provision of section 23(1)(a) of the Income Tax Act 1961 by admitting additional evidence in contravention of rule 46A of Income Tax Rules, 1962. In the case of other co-owner Mrs. Amita Garg for the AY 2008-09 it was submitted before CIT(A) that the property no. 11 Ring Road New Delhi was vacated by the tenant NIIT w.e.f. 31-05-06. The lease agreement was initially for a period of three years w.e.f. 12-07-05, however the premise was vacated premature due to hanging sealing drive by MCD and later on the premise was sealed by MCD on 09-11-06. The assessee has neither brought these facts to the notice of Assessing Officer nor fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vable but later on wrongly applied sec 23(1)(a). f.) AO cannot apply sec 23(1)(a) once conditions stated in sec 23(1)(c) are applicable after the amendment by Finance Act 2001 w.e.f 1/4/2002. 4. The respondent craves leave for addition, modification, alteration, amendment of any of the cross objection." 5. From the above grounds, it is crystal clear that the grievance of the department as well as the assessee relates to the determination of income from house property. 6. Facts of the case in brief are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was carried out in Rajdarbar Group of cases including the case of the assessee on 31.07.2008. The AO issued the notice u/s 153A of the Act dated 13.11.2009 requiring the assessee to file her return of income. In response the assessee filed the return of income on 01.12.2009 declaring an income of Rs. 2,87,110/-. The said return filed u/s 153A of the Act was the same as was filed earlier u/s 139 of the Act. The assessee had shown income from house property, capital gain and other sources. The AO during the course of assessment proceedings observed that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of income from House Property, the annual value of the said property should not be taken at Rs. 1,06,20,000/- and income from house property be computed accordingly." 7. The AO after considering the submissions of the assessee observed that the property in question was rented out to M/s NIIT Institute of Information Technology under the lease agreement dated 12.07.2005 on monthly rent of Rs. 8,85,000/-, but the assessee had not shown any receipt from the above party for the year under consideration. However, it had offered a meager rent of Rs. 5,000/- per month from her family concern M/s Global Realty Venture Ltd. He further observed that the assessee had not brought any satisfactory reason in regard to the non offering of income from house property as per Section 23(1)(a) of the Act which states that for the purpose of determining the income from house property, the annual value of the property shall be deemed to be sum for which the property might reasonably be expected to let from year to year. He was of the view that the property in question was fit to fetch minimum rent of Rs. 8,85,000/- per month or Rs. 1,06,20,000/- per annum. The AO held that the assessee was having 50....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot appreciated the fact that the lessee company could claim higher deduction as rental payments against the profits whereas the income from the same property under the head income from house property would entail 30% of the deduction against the same income. The assessee also produced copy of the balance sheet of M/s Global Realty Ventures ltd. along with copy of ledger account of rent paid to the assessee. 9. The ld. CIT(A) after considering the submissions of the assessee deleted the addition made by the AO by observing in para 5.3 of the impugned order as under: "5.3 I have carefully considered the submission, perused the assessment order and, evidence on record. The dispute, as raised by the appellant, pertains to the additions of Rs. 36,85,518/- made by the AO under the head Income from House property. AO has applied the provisions of section 23(1)(a) for making the additions of Rs. 36,85,518/-. In contention to that the AR has submitted that the AO has not referred the provisions of section 23(1)(c) which says "where the property or any part of the property is let out and was vacant during the whole or any part of the previous year and owing to such vacancy the ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the said concern instead of charging rent from it. Therefore, the provisions of Section 23(1)(a) of the Act were applicable to the facts of the assessee's case which the AO has rightly invoked and the ld. CIT(A) was not justified in deleting the addition made by the AO. 11. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the AO did not doubt that the property was vacant. It was further submitted that this property was sealed by the Municipal Corporation on 09.11.2006. Therefore, it could not be leased out and remained vacant. As such the provisions of Section 23(1)(c) of the Act were applicable and the ld. CIT(A) rightly deleted the arbitratory addition made by the AO. 12. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the property in question was leased out to M/s NIIT Institute of Information Technology under the lease agreement dated 12.07.2005 on a monthly rent of Rs. 8,85,000/-. The said lease agreement was for a period of 3 years. However, the assessee claimed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee in the Cross Objection. 15. In the case of Smt. Amita Garg, the facts related to the main issue raised vide Ground No. 1 in the departmental appeal is similar to the grounds taken by the assessee in its Cross objection which are worded in the same manner as were in the case of Smt. Ranjan Garg. Therefore, our findings given in the former part of this order shall apply "mutatis mutandis". 16. One another issue has been raised in ITA No. 2346/Del/2012 for the assessment year 2008-09 in the case of Smt. Amita Garg vide Ground No. 3 which relates to the disallowance of Rs. 5,58,089/- made by the AO in respect of interest paid on loan, bank charges, legal expenses and telephone expenses. 17. Facts related to this issue in brief are that the AO during the course of assessment proceedings noticed that the assessee had debited an amount of Rs. 5,58,089/- towards interest paid on loan, bank charges, legal expenses and telephone expenses etc. and had claimed this amount as business expenditure. The AO noticed that the document filed by the assessee revealed that she was not carrying on any business and profession during the year under consideration. Therefore, the said ....