AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2020 (8) TMI 812
X X X X Extracts X X X X
X X X X Extracts X X X X
....total loss to the tune at Rs. 1,66,15,745 /-. The case was selected for scrutiny under CASS. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee company was earning the income from property and income from investment. The assessee has shown the 'Income from House Property' and claimed deduction u/s 23 of the Act. The assessee claimed the deduction in sum of Rs. 3,36,94,037/- under the head of 'Municipal Taxes'. The assessee also claimed the some expenses and rent paid to BPT(Bombay Port Trust).The notice was given regarding genuineness of the claim. After the reply, the claim of the assessee was declined and a sum of Rs. 3,38,00,000/- was added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs. 1,21,94,830/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us. ISSUE NO.1 4. The only issue which has been raised by the revenue before us is that the CIT(A) has wrongly deleted the addition raised in sum of Rs. 3,38,00,000/- towards payment made to Mumbai Port Trust claimed by a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deduction. The Appellant has also relied on the Judgement of the Hon'ble Supreme Court in its own case and also in the case of M/s Dwarkadas Marfatia And Sons v/s Board of Trustees of the Port of Bout bay (1989) 3 SCC 293 in order to contend that BPT is authority and hence ground rent paid to BPT is in the nature of service taxes levied by a local authority and I therefore eligible for deduction u/s 23 r.w.s. 27(vi) of the Act. Fourthly, it has been argued that the deduction in respect of ground rent against the rent income has been claimed by the Appellant since the last many years and has also been allowed by the AO. In fact in AY 2010-11 the said amount of ground rent was allowed as a deduction under scrutiny assessment framed u/s 143 (3) of the Act. As such the Appellant has argued that it should be allowed the claim of deduction in respect of ground rent. Before proceeding to decide the issue it is useful to extract the relevant property shall be deemed to provisions of section 23 of the Act as follows.:- "For the purposes of section 22, be (a) a sum for which the property might reasonably be expected to let from year to year; or (b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dgement of the Hon'ble Apex Court in the case of M/s. Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay (1989) 3 SCC 293 wherein the Hon'ble Supreme Court has itself held that Mumbai Port Trust is an authority. Further the judgement in the case UP jai Nigam (supra) also supports the case of the Appellant. Further the Hon'ble Madras High Court in the case of CIT vs. R. venugopal Reddiar (1968) 58 ITR 439 (Madras) has held that taxes paid to even a local authority outside India in a foreign country is eligible for deduction u/s 23 of the Act. The High Court categorically held that there can be no rigid restraint in interpreting the expression local authority as used in section 23. On the basis of the above I find force in the argument of the Appellant that the term local authority cannot be rigidly interpreted to mean only a local government as has been interpreted by the AO in this case. As such the Mumbai Port Trust has to be treated as a local authority u/s 23 of the Act. In view of the above it has to be held that the amount of ground rent Rs. 3,36,94,037/- paid to BPT is allowable as a deduction u/s 23 of the Act. I find it fit to consider ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... raised in this regard. Therefore, the AO is directed to verify the said claim of interest and decide the allowability of the same u/s 24 of the Act in accordance with law. As such this ground no. 2.2(ii) is allowed for statistical purposes. Since the substantial grounds have been decided by me on merits, ground no. 2.3 which is a without prejudice ground pertaining to correct computation of income from house property is not adjudicated." 5. On appraisal of the above mentioned finding, the factual position is not in dispute. The assessee is the owner of the property in question and the rent received by assessee was treated as 'Income from House Property'. The assessee has also paid the ground rent charges to the BPT due to relevant previous year as well as earlier year also. The said amount was paid in pursuance of the order passed by Hon'ble Supreme Court. The question arises whether the same is allowable as a deduction against the 'Income from House Property'. It is specifically held that the payment made to the DPT is nothing to akin to the service tax levied by a local authority. The CIT(A) has considered the decision of the Supreme Court in the case of the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led to unprecedented disruption of judicial work all over the country and the order could not be pronounced despite lapse of considerable period of time. The situation created by pandemic covid-19 could be termed as unprecedented and beyond the control of any human being. The situation, thus created by this pandemic, could never be termed as ordinary circumstances and would warrant exclusion of lockdown period for the purpose of aforesaid rule governing the pronouncement of the order. Accordingly, the order is being pronounced now after the re-opening of the offices. 6.3 Faced with similar facts and circumstances, the co-ordinate bench of this Tribunal comprising-off of Hon'ble President and Hon'ble Vice President, in its recent decision titled as DCIT V/s JSW Limited (ITA Nos. 6264 & 6103/Mum/2018) order dated 14/05/2020 held as under: - 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 rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated 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 v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cial order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In ou....