2020 (7) TMI 622
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....has received leave and license fee of only Rs. 9 lakh. He noticed that on the basis of similar facts in assessment year 2012-13, the Assessing Officer had estimated the interest on interest free security deposit @ 10% and added back to the income of the assessee under the head income from other source. Therefore, following the assessment order passed in assessment year 2012-13, the Assessing Officer estimated the interest on interest free security deposit @ 10% and made an addition of Rs. 27,48,594. The assessee contested the aforesaid addition by filing appeal before the first appellate authority. 4. After considering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals) found that while deciding dispute relating to similar addition made in assessee's own case in assessment year 2012-13, the Tribunal, though, has agreed with the Assessing Officer that notional interest on security deposit has to be treated as income of the assessee, however, the quantum of such interest was reduced from 10% to 9% by the Tribunal. Following the aforesaid decision of the Tribunal, learned Commissioner (Appeals) confirmed the decision of the A....
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....unless it be repugnant to the context or meaning thereof be deemed and include heirs, executors, administrators and assignees] of the ONE PART: And ASIT C. MEHTA INVESTMENT INTERMEDIATES LIMITED, a company incorporated with limited liabilities under the Indian Companies Act, 1956 and having its Registered Office at Nucleus House, 5th Floor, Saki Vihar Road, Andheri (E), Mumbai 400072, "ACMIIL" hereinafter called "the Licensee" [which expression shall unless it be repugnant to the context or meaning thereof to mean and include its assignees of the OTHER PART Whereas 1. The licensor is a tenant of G.R. Podar Foundation having office at Podar Chambers, S.A. Brelvi Road, Mumbai 400001 hereinafter called the foundation. 2. The foundation owns a building known as Podar Chambers situation at S.A. Brelvi Road, Mumbai 400001. 3. The Licensor as such tenant is entitled to use and occupy an office unit admeasuring approx. 850 sq. ft. along with lift of 100 sq. ft. bearing office No. 67A on the third floor of the said building [hereafter referred to as "the Premises"] 4. The Licensee has requested the Licensor to grant to it the temporary license to use and occupy part of the pre....
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....hich is relevant for a leave and licence is the Indian Easement Act, 1882. Section 52 of the said Act defines a 'licence' as a right granted by one person to another to do something in or upon the grantor's immoveable property, which act would, in the absence of such a right, be unlawful. It further states that a licence must not amount to an easement or an interest in the property. Thus, a licence is only permission or a right to do something upon an immoveable property. It is solely a personal right or privilege granted to the licensee by the licensor. A licence does not confer any interest in the immoveable property. It is for this reason that a licensee cannot maintain an action for possession of the property in his own name. Thus the crux of a licence is that it is always a right or a permission and never transfers ownership of the property. Under the leave and license agreement, the legal ownership and the possession of the property remains with the licensor, the assessee in the instant case. 7.2 Let us now turn to the receipt of interest-free security deposit by the assessee in the instant appeal. A similar issue arose in Streelite Electric Corporation (supra). The fac....
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....narily, the notional interest that may accrue on security deposit would not form part of income from house property. However, where payment of the security deposit is to circumvent real rent, the same shall fall within its ambit as income from house property. Interest on the security amount of Rs. 35,00,000 will be treated as income of the assessee. Thus, in the facts, as noticed above, it is considered appropriate to hold that interest @ 9% per annum on the security amount of Rs. 35,00,000 would be just to meet the ends of justice and the same will be treated as taxable income of the assessee under the head 'Income from house property' relating to the land and building. (Paras 17 & 19) Their Lordships concluded that where the security deposit is to circumvent real rent, the same shall fall within its ambit as income from house property; in the facts and circumstances, interest @ 9% per annum on security deposit of Rs. 35,00,000, which was received by the assessee from the tenant, would be treated as taxable income of the assessee under the head 'Income from house property'. 7.3 We find that the instant case the security deposit of Rs. 2,75,00,000/- is hugely disproportionate t....
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....ction. To persuade the Tribunal to adopt, in relation to closely integrated situation, a step by step, dissecting approach, would be a denial rather than an affirmation of the true judicial process. 7.6 We find from the list of Directors of Asit C. Mehta Investment Intermediates Ltd, given to us by the Ld. counsel in response to a query by us, that the assessee (Licensor) is the Managing Director in Asit C. Mehta Investment Intermediates Ltd (Licensee). The receipt of Rs. 2,75,00,000/- by the assessee as interest-free security deposit from the licensee-company in which she herself is the Managing Director cannot be ignored while computing the annual letting value. 7.7 Respectfully following the aforesaid judgment rendered by their Lordships of the Hon'ble Punjab and Haryana High Court narrated at para 7.2 hereinbefore, we are of the considered view that the security deposit in the instant case is to circumvent real rent and the same shall fall within the ambit of 'Income from House Property'. However, taking into account the facts and circumstances of the case against the backdrop of interest rate on term deposits offered by Public Sector Banks during the relevant period, we di....
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....also, the assessee had not established on record that the interest expenditure of Rs. 1,93,400, is directly incurred for earning interest income. That being the case, we uphold the disallowance made by the Assessing Officer and confirmed by learned Commissioner (Appeals). This ground is also dismissed. 11. In ground no.6, the assessee has raised the issue of violation of rules of natural justice and in ground no.7, it has been urged that learned Commissioner (Appeals) has passed the order on conjuncture and surmises. 12. At the outset, we must observe that no submissions in respect of these grounds have been made by the assessee. Even otherwise also, on a perusal of the order passed by learned Commissioner (Appeals), we find that the assessee has been afforded reasonable opportunity of being heard in course of the appeal proceedings. Therefore, the allegation of violation of rules of natural justice is unfounded. As regards the allegation that the first appellate authority has passed the order on conjuncture and surmises, that is also without any factual basis. A reading of the appeal order would make it clear that learned Commissioner (Appeals)'s finding are based on facts and ....
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....vities ceased and no normal official work could be done. For this reason only the appeal order could not be pronounced within the period of 90 days. Being faced with a similar situation the Tribunal in case of DCIT V/s JSW Limited, ITA Nos.6264 & 6103/Mum/2018, dated 14th May 2020, after interpreting rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963 as well as various decisions of the Hon'ble Supreme Court as well as the Hon'ble Jurisdictional High Court held that keeping in view the extraordinary situation prevailing due to the pandemic, the lockdown period has to be excluded for the purpose time limit fixed for pronouncement of order as per rule 34(5). The relevant observation of the Bench in this regard is reproduced hereunder for better clarity:- "7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncem....
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....ted by any "extraordinary" circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more....