TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 1445
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....st flat booking for which sales has been made in subsequent years. 4. Under the facts and circumstances of the case the ld. CIT(A) has erred in not considering the additional evidences furnished by the assessee under rule 46A of the Income Tax Act, 1961. 5. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing." 2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) and assessment was framed vide order dated 31.03.2015. While framing the assessment, the AO made disallowance of Rs. 21,967/- while invoking all provision of section 40A(3) of the Act, assessed the income from house property at Rs. 14,11,556/- and made addition on account of advances shown against flat booking of Rs. 29,26,000/- Against this , the assessee preferred an appeal before ld. CIT (A), who after considering the submissions, partly allowed the appeal. Thereby, the Ld. CIT(A) confirmed the addition of Rs. 29,26,000/-, Rs. 21,967/-. However, directed the Assessing Officer to re-compute th....
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....le by the owner in respect therof is less than the sum referred to in clause (a), the amount of received or receivable: The case of the assessee is fully covered under clause (c) of sub section 1 of section 23 which has the following stipulation:- (I) Where the property or any part of the property is let. (ii) And was vacant during the whole or any part of the previous year. (II) And owing to such vacancy the actual rent received or receivable is less than the sum referred to in clause (a). It is submitted that all the aforesaid stipulation and parameters laid down in section 23(1)(c) are fully applicable to the facts of the case. The property of the assessee meets these conditions. The assessee has disclosed rent from letting out the part of the property namely Ramas Janki Vihar. Such rent has been disclosed at Rs. 2,64,500/-. Copies of rent agreements are available on paper book page no. 39 to 50. This is mentioned in the assessment order itself and it is undisputed fact. In view of this the second stipulation makes it clear that if the property remained vancant then the actual rent received is to be considered if the same is les....
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.... 1961 the same is also mentioned in the assessment order. In view of this the decision of the Hon'ble High Court of Delhi is of no avail. 3. Board circular is in favour of the assessee The board has issued explanatory notes on the amendments carried out by Finance act, 2001. The provisions of section 23 were amended by the Finance Act 2001. The board has issued the following clarification under Circular No. 014 of 2001 Dt. 22nd November, 2001 which goes in favour of the assessee. Circular No. 014 of 2001 DT. 22nd November, 2001 Subject Finance Act, 2001-Explanatory Notes on provisions relating to Direct Taxes Dated 22/11/2001 "29.2 The substituted section 23 retains the existing concept of annual value as being the sum for which the property might reasonably be expected to let from year to year i.e., annual letting value (ALV). However, in case of let out property, the concept of "annual rent", has been removed. The new section provided that where the property or any part of the property is let and the actual rent received or receivable is in excess of the ALV, the amount so received or receivable shall be the annual value. This ....
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....nbsp; So the assessee company has temporarily grabbed the opportunity of earning rent. It is not the regular feature of the assesse e company or business of the assessee company. The assessee company has declared rental income which has been earned by it. The income tax is levy on the income which has been earned by it. The income tax is levy on the income received and not on notional calculations. In other words the levy of income tax is for receipts and nor for notional amounts. We would also like to submit that the rental income of flats cannot be taxed on the basis of ALV because of owner is an occupant and such occupation in the course of and for the purpose of business as a builder. Therefore ALV cannot be assessed as income of the assessee company. The ld. CIT(A) has rejected the claim and explanation of the assessee in the grab of language of section 23(a) of the Income Tax Act. But he did not considered the last line that the actual rent received or receivable shall be the annual value. So in our case the actual rent received is to be considered a ALV because we have let our the part of the property during the year. So the ....
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....propriate here to reproduce the provisions of section 23 of the Act as under: " Annual value how determined. 23. (i) for the purposes of section 22, the annual value of any property shall be deemed to be- (a) The sum for which the property might reasonably be expected to let from year to year; or (b) Where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so receive or receivable; or (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owning to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable." (ii) During the appellate proceedings, it was submitted by the appellant that its case is fully covered under clause (c) of sub section 1 of section 23 which has the following stipulation:- (i) where the property or any part of the property is let. (ii) and was vacant during the whole or any part of the previous year (iii) and owning to such....
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....project Rama's Janki Vihar is not a single property as claimed by the appellant but consisted of a number of independent flats/showrooms and the provisions of section 23 are to be applied to each of these individual flat/showroom and not to be entire project as one unit or property. (v) It may be mentioned that the amendment in section 23 of the Act was explained by circular no. 14/2001 dated 22/11/2001 wherein it was stated that: " The new section provides that where the property or any part of the property is let and the actual rent received or receivable is in excess of the ALV, the amount so received or receivable shall be the annual value. This will be the case even if the property (or part of the property) was vacant for a part of the year, but the actual rent received or receivable during the year is still higher than the ALV. Where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy, the actual rent received or receivable is less than the ALV, the sum so received or receivable shall be the annual value. In case the actual rent received or receivable during th....
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....a 13] As far as the alternative argument that the assesee itself is occupier, because it holds the property till it is sold, is concerned, there is no merit in this submission. While there can be no quarrel with the proposition that 'occupation' can be synonymous with physical possession, in law, when Parliament intended a property occupied by one who is carrying on business, to be exempted from the levy of income tax was that such property should be used for the purpose of business. The intention of the lawmakers, in other words, was that occupation of one's own property, in the course of business, and for the purpose of business, i.e. an active use of property, (instead of mere passive possession) qualifies as 'own' occupation for business purposes. This contention is, therefore, rejected. [para 14] Thus, the assessee was liable to pay income tax on the annual letting value of unsold flats owned by it under the head 'income from house property'. [para 14] (vii) It was the alternate contentions of the appellant that it is a builder and developer and has given flats on rent on temporary basis and because the owner is an occupant and such occupation was in the c....
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.... Rs. 21,17,333/- which includes ALV of the showroom at Rs. 4,80,000/- and of B-404 at Rs. 1,96,574/-. It was submitted that in respect of B-404 at Rs. 1,96,574/-. It was submitted that in respect of B-404 and shops 'B' block, the rent agreemts were furnished before the AO, as per which, the rent received by the appellant from these portions of the house property was only of Rs. 2,64,500/- as these were let out only for part of the year, against which the AO has calculated rent of these properties for the whole year as under at Rs. 6,76,574/-: Showrooms rent @ 40000/-per month Rs. 4,80,000/- B-404 rent @ 11.68 per sqft. Rs. 1,96,574/- Total Rs. 6,76,574/- (xi) In view of the above contention of the appellant, the assessment record was examined and it was observed that the showroom at ground floor admeasuring 400 sq. ft. and B-404 were let out for the period 06/10/2011 to 05/09/2012 and 01/01/2012 to 31/11/2012 on a monthly rent of Rs. 15,000/- as Rs. 16,500/- respectively and not for the whole year as taken by the AO. The AO is directed to re-compute the ALV of these showrooms/flats in view of the provisions of section 23 of the Act accordin....
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.... Claims are also made for deduction of expenses in large amounts shown to have been paid in cash, often with a view to frustrating investigation as to the identity of the recipients and the genuineness of the claim. To plug these loopholes, I propose to provide that payments made in businesses and professions to relatives or associates concern will have to pass the test of reasonableness in order to qualify for deduction. Further, I propose to provide that payments made in amounts exceeding Rs. 2,500 after a date to be notified later will be allowed as a deduction only if these are made by crossed cheques or by crossed bank drafts." Thus the very purpose of introducing this new section was to have a check over the dishonest assessee who wants to make false deduction on account of expenditure incurred in cash. The speech clearly lays stress that in order to ascertain the identity of the recipients and the genuineness of the expenditure, the aforesaid provision was brought on statute. In other words, if the identity of the recipient and the genuineness of the expenditure is established, the spirit of the provision would stand complied with. The genuineness ....
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.... record. Ld. CIT (A) rejected the claim of the assessee in para 3.2.2 by observing as under. "3.2.2 Determination: (i) The brief facts of the case are that during the year under consideration., the appellant has made cash payment of JVVNL for electricity expenses in violation of the provisions of section 40A(3) of the Act and consequently, the AO made addition of Rs. 21,967/- u/s 40A(3) of the Act. During the appellate proceedings, it was submitted by the appellant that JVVNL is a government agency and there is no doubt about the identity of the payee and the genuineness of the transactions is not doubted by the AO and thus the AO was not justified in making the said disallowance u/s 40A(3) of the Act. In support of its contention, the appellant relied upon a number of judicial pronouncements. (ii) I have duly considered the submission of the appellant, assessment order and the material placed on record. I have also considered the judicial pronouncement relied upon by the appellant and found them to be distinguishable on fact. Further, these judicial pronouncements were pertaining to the period prior to amendment made in Rule 6DD by the ....
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....by the notary public. Since no sale deed was executed, as a matter of abundant caution a power of attorney was also executed in favour of Shir Azad Hussain on 28.02.2009 itself. This power of attorney was registered with sub-registrar, Jaipur on 20.02.2009 itself. A copy of the power of attorney is available on paper book page no. 3 to 8. Further the assessee though its direction Shir Gauri Shankar Chhipa also executed a will in favour of Azad Hussain in respect of this flat. A copy of the will executed on 20.02.2009 duly attested by the Notary Public is also available on paper book page no. 9 to 11. The submission of the assessee is that all these documents namely the allotment letter, the possession letter, the power of attorney and the will are strong documentary evidences establishing that the flat no. B-104 stood transferred to Shri Azad Hussain on 20.02.2009 itself i.e. in Assessment Year 2009-10. As all these papers were not available at the stage of assessment proceedings as such these could not be furnished before the ld. Assessing Officer. Since these papers are at the root of the issue are strong material for deciding the same, therefo....
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....ccountant the amount of Rs. 28,24,000/- continued to be carried forward a booking advance in the books of accounts of the assessee from 2009-10 onwards to Assessment Year 2012-13, whereas this should have been transferred to sale account. The mistake has been rectified in Financial Year 2014-15 i.e. in Assessment Year 2015-16 wherein the sale has been booked. The mistake has occurred mainly on account of the fact that no sale deed was executed and only power of attorney was given to Shri Azad Hussain. This was done by Shri Azad Hussain to avoid stamp duty and registration charges for registering the property first in his name and then again in the name of the purchaser. Since Shri Azad Hussain was intending to put the flat to sale and which he actually did as is apparent from the sale deed dated 01/05/2012. So he wanted to avoid registration of sale expenditure for him. In these circumstance only power of attorney and other documents were executed. However as far as the assessee is concerned the flat no. B-104 was sold to him for a um of Rs. 28,24,000/- and which has been duly accounted for in the books of accounts. Since the tr....
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.... issue. But the ld. CIT(A) refused to admit these additional evidences by saying that assessee is not falling in any circumstances under rule 46A of the Income Tax Rules, 1962. In this regard our submission is only that the paper submitted in form of copy of allotment letter (paper book page no. 1) copy of possession letter (paper book page no. 2) copy of power of attorney (paper book page no. 3 to 8) and other papers (paper book page no. 9 to 11) are relevant and are in relation to question to be decided and ground to be decided in appeal, therefore falls under the clause (4) of the Rule 46A and the assessee has also claimed that these papers were not available with him during the course of assessment proceedings and were subsequently obtained from the Azad Hussain who has executed the sale deed. Therefore, he falls under clause (c) and (d) of clause (1) of rule 46A. Therefore, these addition evidences should be considered for deciding the appeal. We also rely on the following case laws in this regard:- (i) Electra (jaipur) Pvt. Ltd. Vs. IAC 26 ITD 236 If evidence produced by assessee is genuine, reliable and proves assessee's case than as....