TaxTMI 
TaxTMI 
2019 (4) TMI 607
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.... Without prejudice, it is submitted that it appears the Assessing Officer has not recorded Reasons for Reopening since the same are not sent alongwith notice u/s. 148 of the Act of 13-3-2012. It is further submitted that as per the Appellant no income has escaped assessment or under assessed and Sec. 147 does not apply to the facts of the case. II. On Merits: Income from Property. 1. It is submitted by your Appellant that the CIT(A) has erred in giving hearted relief in computing Income from Property at Rs. 34,01,4007- in p, of income assessed at Rs. 49,95,4467- and Income declared at Rs. 1,00,0007-actually received. 2. The addition made by the Assessing Officer and partly confirmed by the CIT(A) of Income from Property is not as per provisions of Law and not supported by evidence and the CIT(A) ought to have accepted Income as income Estimated by Municipal Corporation for Tax purposes and in view of Rent Central Act no increase in Rent can be presumed to have been earned. 3. Your Appellant further submits that CIT(A) has erred in not accepting Income claimed as Business Income and upholding it to be as Income from Properly as deci....
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....rder of the AO by sustaining the disallowance of Rs. 34,01,400/- on account of Income From House Property. 6.1 Briefly stated facts are that the assessee in the present case is a partnership firm and deriving its income by way of letting out the property on rent which was offered to tax under the head business and profession. The assessee is the owner of the building comprising of 5 floors. The assessee has given on rent its ground and 1st floor to V-Mart on a monthly rent of Rs. 3,04,999/- only. The assessee at the same time has let out its 4 floors (2nd to 5th floor) to its related party on annual rent of Rs. 1 lakh. Thus the AO found the difference in the amount of rent charged by the assessee from the unrelated and related party. Accordingly the AO determined the fair rent of the property rented out to the related party for Rs. 49,95,546/- only. 6.2 The AO also observed that the similar addition was also made to the total income of the assessee in the immediate preceding assessment year under the head income from house property instead of business income. Therefore the AO made the addition of Rs. 49,95,546.00 to the total income of the assessee by treating the fair mar....
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....vided by the assessee-firm to its lessee, rental income from let out of "premises only" was rightly taxed by the department under the head "Income from House Property" and no interference in the order of the CIT(A) on this issue is called for, which is confirmed and the ground of the appeal on this issue is dismiss.'' XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX "7. We have considered rival submission and perused the orders of the AO and the CIT(A). We find that the assessee has charged the rent of Rs.l lakh only for the second floor to fifth floor of the said property for the entire year from one of its partners, who runs a hotel business therein under the name "Sudarshan Palace". No valid reasons could be assigned on behalf of the assessee before us for charging such lower rent for second to fifth floor of the property as compared to rent of Rs. 2.69 lakhs from "VCPL" per month for two floors. In reply to a specific query from the Bench, no definite figure of the covered area let out to Sudarshan Palace could be filed before us. The CIT(A) has given a finding that it is not the appellant's case that the property was subjected to Rent Control Act or standard rent was got d....
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....are partly allowed." In view of the above, the rental income of the assessee is taxable under the head House Property at the fair market rent and not under the head Business and Profession. 12. The next issue arises for the consideration regarding the enhancement of the rent by the Ld. CIT (A) for Rs. 4,01,400/-. First of all we note that the AO made the addition of Rs. 49,95,546/- which was reduced to Rs. 34,01,400/- thus it is not a case of enhancement as alleged by the Ld. AR for the assessee. 13. Admittedly the Ld. CIT (A) enhanced the rent in parity of the order of the Tribunal in the immediate preceding year. As such in the immediate preceding the year the Tribunal to determine the fair rental value of the property has compared with rent of the V-Mart. In the year under consideration the rent of the property let out to M/s V- Mart was increased by 13.38% in comparison to the immediate preceding A.Y. i.e. 2006-07. Therefore the rent for the impugned property should also be increased in the same proportion to maintain the consistency. Thus we reject the argument of the Ld. AR for the assessee that the Ld. CIT (A) enhanced the rent without issuing the notice as manda....
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.... Opening Balance 402,089.27 Add: Profit during the year 104,956.67 507,045.94 VASOOLAL MELARAM Opening Balance 21,434,940.65 Add:Profit during the year 104,956.67 Addition during the year 5,300,000.00 Add: Salary to Partner 160,000.00 Less: Withdrawl 26,999,897.32 4,141,200.50 22,858,696.82 From the above, there remains no ambiguity that the assessee has shown contribution by the partner of the firm in the year under consideration. Now the question arises about the source of fund in the hands of the partner. Regarding this the law is settled that the partnership firm is not liable to justify the source of fund in the hands of the partner. In this connection we find support and guidance from the judgement of Hon'ble High Court of Gujarat in the case PCIT vs Vaishnodevi Refoils & Solvex reported in [2018] 89 taxmann.com 80 (Gujrat) wherein it was held as under: "In the facts of the present case, when the assessee has furnished the details with regard to the so....