TaxTMI 
TaxTMI 
2018 (3) TMI 1574
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.... The Ld. CIT(A) has erred in deleting the addition of Rs. 18,09,631/- made by the A.O. on account of rental receipts under the head income from House Property by relying solely on the submissions of the assessee without considering the observation of the A.O. that the assessee had been unable to provide any documentary evidence whatsoever to establish that the rent received was refunded back and if at all then under what terms & conditions. 4. The Ld. CIT(A) has erred in deleting the addition of Rs. 18,09,631/- made by the A.O. on account of rental receipts by holding that the gross receipts include service tax ignoring the terms & condition of license agreement vide which in addition to the license fees the licensee was to pay service tax. 5. The Ld. CIT(A) has erred in deleting the addition of Rs. 18,09,631/- made by the A.O. ignoring the observation of the A.O. that the rental receipts have been calculated as per the 26AS statement. 6. The Ld. CIT(A) has erred is not appreciating that the deduction of service tax payments from the rent receipts is not allowable as per the proviso of section 23(l)(c) of the I.T. Act, 1961. 3. The two issues raised by revenue before us ....
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....the above addition vide para No. 7 as under :- "7.1 I have carefully considered the facts of the case and the submissions of the appellant. The AO, based on TDS information, assessed the corresponding professional income, on accrual basis, in the relevant year. Whereas the appellant's contention is that since he has offered professional receipts for tax on cash/receipt basis as he follows cash system of accounting; therefore, charging of certain professional income on accrual basis amounts to double taxation to the extent of the sum offered on receipt basis in subsequent year. The Ld. AR further argued that the AO is thus not justified in changing the accounting system and charging professional income on accrual basis in the relevant year, particularly when the books of account have not been rejected u/s 145 and the fact that the AO has charged professional income, under scrutiny, in earlier years and subsequent years on cash/receipt basis. 7.2 The entire provisions regarding the method of accounting were contained in section 145. As per that section, the income under the head "Profit and gains of business or profession" or "Income from other sources" shall be computed acc....
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....im, which according to me is not justified at all particularly when the AO has accepted the accounting method not only in this year but in preceding and subsequent years under scrutiny. 7.4 The Ld. AR further demonstrated that the appellant has offered, in aggregate, Rs. 16,73,35,649/- (Rs. 14,76,56,759/- in AY 2009-10 plus Rs. 1,96,78,890/- in the AY 2010-11) for tax corresponding to the TDS claims made in the relevant AY and therefore, there is no suppression of professional receipts taken together for both years. The Ld. AR submitted that, alternatively, in case Rs. 1,96,78,890/- including [TDS is taxed in AY 2009-10 on accrual basis, then the consequential relief may be given in the AY 2010-11 to avoid double taxation. I have given a deep thought on the entire issue and came to conclusion that in case the professional income of Rs. 1,96,78,890/- including TDS is charged to tax on accrual basis in this year, then the corresponding professional income offered on receipt basis in subsequent year have to be reduced/revised accordingly. At most, there may be some gain of interest u/s 234B/C with consequential payment of interest u/s 244A. I do not see this exercise resulting subs....
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....to that assessee was due to receive sum of Rs. 28,329,547/- during the year. Against this assessee has shown the income of Rs. 2,57,44,579/-. It resulted into difference of Rs. 25,84,968/-. In form No. 26AS also the total rental income received by assessee was also shown at Rs. 2,81,70,822/-. Therefore, the Assessing Officer made an addition of Rs. 18,09,631/- to the income from house property. The Ld. CIT (A) deleted the above addition for the reason that the rent of one month has been paid back to the tenant through banking channel. Furthermore, the gross rent received from tenant included the service tax amount, which was not to be considered as annual letting value of that particular house. 10. The Ld. DR relied upon the order of the Assessing Officer and the Ld. AR relied upon the order of CIT (A). 11. We have carefully considered the rival contentions. The difference of amount shown in form No. 26AS and annual rent shown by the assessee has been held to be on account of service tax as well as rent of one month returned back to the tenant. The difference has been properly reconciled by the assessee before the Assessing Officer. The ld CIT (A) deleted the addition holding as ....
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.... Service Tax department. The landlords are simply the facilitator of receiving the Service Tax from the tenant and paying to the Service Tax department. Therefore the amount of Service Tax paid by the tenant to the Service Tax department has wrongly disallowed by the learned Assessing Officer and deserved to be deleted. (ix) That the copy of the letter dated 03.03.2011 submitted to the learned Assessing Officer reconciling the rent received, copy of ledger account of the books of accounts of the appellant, letter of the tenant ICICI Prudential Life Insurance Co. Ltd. and bank statement of Societe Generate Bank, Mumbai proving the payment of Rs. 24,54,545/- to the tenant, were filed on 19.11.2012 for ready reference and marked as ANNEXURE- "E" (Page 28 - 30). From these your honour can also verify the true facts and evidences which were already filed with the learned AO and decide accordingly. Your honour is, therefore, respectfully prayed to kindly delete the additions of Rs. 18,09,631/- made by the learned AO under the head Income from House Property in her assessment order dated 01.06.2011 on the basis of earlier submissions, above submissions, ground, evidences and facts a....