TaxTMI 
TaxTMI 
2022 (2) TMI 340
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....of the case & in Law CIT (A) has erred in upholding the A.L.V of 10th floor of property Gopal Das Bhawan, 28 Barakhamba Road, New Delhi, at Rs. 1,64,53,100/- as determined by Assessing Offices U/s 23 of Income Tax Act, on the basis of provisional Rateable value fixed by NDMC, as against the actual Rent of Rs. 88,92,600/- received by the appellant from tenant M/S ING Vysya Life Insurance Company Pvt. Ltd. in terms of Lease Agreement dt.31.08.2004 Which was always accepted in the past as the A.L.V of the Space. 2. That on the facts & in the Circumstances of the case & in law CIT(A) has erred in not dealing with Ground of Appeal No. 9 of the Appeal before him which reads as under:- " Whether on the facts and circumstances of the case and in law, the learned assessing authority had made an over pitched assessment disregarding all the cases quoted before him in defiance of the ratio of Hon'ble Supreme Court's decision in the case of Union of India vs. Kamalakshmi finance Co. Ltd. SLP No. 7717 of 1990 dated 24/09/1991 and committing a judicial impropriety in terms of the ratio of the said decision, a copy which was filed in the proceedings before him. " 3. The facts givin....
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....r computed income of the assessee company at Rs. 75,50,35,298/- against the income declared in the return income at Rs. 6,60,76,260/-. 4. Aggrieved against this, the assessee preferred appeal before the Ld.CIT(A) who partly allowed appeal of the assessee. Thereby, the Ld.CIT(A) deleted the addition made in respect of the advances received of Rs. 59,87,33,920/- and found no merit in the addition made by the A.O by disregarding the account of the assessee company and more particularly without rejecting the books of accounts u/s 145(3) of the Act. He further deleted the addition of Rs. 1,28,15,025/- related to the disallowance of the expenses related to house property, however, claimed under the head "profit and gains of the business of the assessee". The additions made on account of disallowance of compensation, disallowance of bank guarantee commission were also deleted. Further, the Ld.CIT(A) deleted the disallowance made u/s 14A of the Act and addition of Rs. 77,24,546/- made by the Assessing Officer on account of cessation/remission of liability. However, the Ld.CIT(A) in respect of the deemed income from the letting of the properties directed the Assessing Officer to take the r....
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....reasonably expected to let out. The Ld. A.O. has relied upon the valuation made by the NDMC, which was found to be higher than the actual rent received by the Appellant. On the other hand, the appellant pleads that it had long term agreement with the tenants, who are not related to it in any manner, and therefore, the actual rent received by the appellant alone may assessed as 'income from house property' in respect of such let out property. Since the valuation by NDMC is for levy of property tax and not for determining the value at which the property the property may letout. In my view, the provisions of section 23 are deeming in nature and even though the appellant may be justified to plead that the tenant was not related and the actual rent was received on the basis of written agreements, the provisions of section 23 will apply and therefore, if the annual let-table value as per clause (a) is higher than that as per clause (b), the value as per clause (a) is to be taken. Though the valuation by NDMC is for levy of property tax, however, such value is an approximate proxy for ascertaining annual lettable value. However, it is also evident that in making assessment in r....
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....see is partly allowed for statistical purposes. ITA No.3899/Del/2015 [Assessment Year : 2011-12] 16. Now, we take up the Revenue's appeal in ITA No. 3899/Del/2015 pertaining to Assessment Year 2011-12. The Revenue has raised following grounds of appeal:- 1. "Whether on the facts and circumstances of the case & in law, the ld. CIT(A) erred in deleting the disallowance of Rs. 1,28,15,025/- made on a/c of expenses not allowable under the head "Income form House Property". 2. Whether on the facts and circumstances of the case & in law, the ld. CIT(A) erred in deleting the disallowance of Rs. 37,98,932/- made on account of compensation paid to allotters. 3. Whether on the facts and circumstances of the case & in law, the ld. CIT(A) erred in deleting the disallowance of Rs. 5,06,577/- made on a/c of bank guarantee Commission paid to Bank. 4. Whether on the facts and circumstances of the case & in law, the ld. CIT(A) erred in deleting the disallowance of Rs. 24,67,387/ - made u/ s 14A r.w.r. 8D. 5. Whether on the facts and circumstances of the case & in law, the ld. CIT(A) erred in deleting the addition of Rs. 77,24,546/- made u/s 41(1) on a/c of cessation of liability. ....
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....en if a property is let out in business by an entity, the income from the property will have to be computed in terms of the principles applicable to the computation of income from house property Under Chapter IV-C of the Act. Being so the objection raised by the Assessing Officer that the deduction as claimed u/s 24(a) would be a duplication of the expenses is erroneous and unsustainable in law. It is only for this reason that in every year since FY 1995-96 to the last assessment u/s 143(3) for AY 2014-15 no such disallowance was ever made. The disallowance as made by the Assessing Officer is on a misconception of facts and law and being so merits to be annulled." 19. Ld.Sr.DR supported the assessment order and submitted that Ld.CIT(A) was not justified in deleting the disallowance. However, he conceded the fact that no such disallowance was made in any other Assessment Year. However, he contended that every Assessment Year is an independent year. 20. We have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. We do not see any infirmity into the order of Ld.CIT(A) as the Revenue itself has not made any d....
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....on the security of jewellery. The credit of a banking business is very sensitive: it largely thrives upon the confidence which its constituents have in its management. To maintain that confidence the management has often to make concessions and thereby to preserve the goodwill of the business and its relations with the clientele. The bank could have, if so advised, taken its stand strictly on its legal obligations, and could have recovered the amounts due by the constituents at the same time denying liability to make any compensation for the loss of jewellery pledged with it. But such a stand might very well have ruined its business, especially in the rural areas in which it operated. The bank had evidently two courses open: to enforce its rights strictly according to law, and thereby to lose the goodwill it had built up among the constituents, or to compensate the constituents for loss of their jewellery, and maintain its business connections and goodwill. In choosing the second alternative, in our judgment, the bank laid out expenditure for the purpose of its business. Paying to the constituents the price of the jewellery stolen in a robbery or a burglary was therefore expenditur....
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....n CIT v. Sarada Binding Works (lm] 102 ITR 187, it is the point of view of the payer which is relevant. 37. The decision in err v. Mangal Tirth Estates Ltd. [2008] 303 ITR 366/171 Taxman 435 (Mad) was a case where the Assessee therein had also followed the CCM. It was engaged in the business of construction and sale of a multi-storeyed office cum shopping complex. The Assessee had under the development agreement agreed to provide air conditioning to the shops and to also allot car park space. The Assessee claimed deduction on advertisement, sales promotion, legal charges and claimed losses in its return. The AO rejected the claim on the ground that only a portion of the expenditure related to the space already constructed could be allowed. It was held that since the Assessee had maintained the system of accounts on mercantile basis by adopting CCM, the revenue expenditure "normally, must be allowed in its entirety in the year in which it was incurred. The Assessee was held entitled to deduction of the entire legal and advertisement expenses in the year in which it was incurred." On a similar analogy, in the present case, the payment of compensation is to be allowed in full in th....
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....] 74 ITR 723 (Bom) and this Court in Regal Theatre v. CIT [1997] 225 ITR 205/(1998] 100 Taxman 116 (Delhi) and CIT v. Gautam Motors [2011] 334 ITR 326/[2010] 194 Taxman 21 (Delhi) merely because the Assessee was a cash rich company, the payment of interest cannot be disallowed as business expenditure. 71. Further as rightly pointed out, AS 2 would apply in terms of which, with the Assessee following the CCM, the expenditure incurred subsequent to the completion of the project cannot be attributed to work and had to be allowed only as revenue expenditure. Consequently, the question is answered in the affirmative in favour of the Assessee and against the Revenue." 30. In the light of the binding precedent, we do not see any infirmity into the order of Ld.CIT(A), the same is hereby affirmed. This Ground of Revenue's appeal is thus, dismissed. 31. Ground No.4 raised by the Revenue is against the deleting of addition 24,67,387/- made by the Assessing Officer by invoking the provision of section 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962 ("the Rules"). 32. Ld. Sr. DR vehemently argued that Ld.CIT(A) was not justified in deleting the addition. 33. On the contrary, L....
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....ed by the Revenue. Thus, Ground No.4 raised by the Revenue is dismissed. 35. Ground No.5 of Revenue's appeal is against the deleting the addition of Rs. 77,24,546/- made u/s 41(1) on account of cessation of liability. 36. Ld. Sr. DR supported the assessment order and submitted that Ld.CIT(A) was not justified in deleting the addition made by the Assessing Officer. He submitted that the assessee failed to provide confirmation from the third party to the fact that liability have not seized to exist. 37. On the contrary, Ld. Counsel for the assessee reiterated the submissions as made before Ld.CIT(A) and also in the Synopsis filed before this Tribunal. The submissions of the assessee are reproduced as under:- Ground No.5 - Addition u/s 41 (1) of the Act. "In respect of an addition purportedly taken under the aegis of section 41(1) of the Act. The addition is in a sum of Rs. 77,24,546/-. The Assessing Officer asked for the details of sundry creditors with their age and finding some of then static and constant for over three years invoked section 41(1) of the Act to cause the addition. Before the Ld. CIT(Appeals) it was submitted that act of the Assessing Officer is patently wro....
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....e and the finding of the A.O. that the facts of the case are different and distinguishable is not supported by any of the reasoned arguments. Keeping in view the above and following the aforesaid decisions, this ground is also allowed in favour of the appellant." 39. We do not see any reason to interfere into the findings of Ld.CIT(A) as Ld.CIT(A) has rightly followed the judgement of Hon'ble High Court of Delhi in the case of CIT vs Shree Vardman Overseas Limited 343 ITR 408 (Del.). Moreover, the Assessing Officer has not brought any material to suggest that the liabilities have seized to exist. In the absence of such material, no interference is called for. Ground No.5 raised by the Revenue is thus, dismissed. 40. Ground No.6 is against the deleting the addition of Rs. 1,35,37,730/- on account of difference in receipt in Form No.26AS in Profit & Loss Account. 41. Ld. Sr. DR supported the assessment order and submitted that Ld.CIT(A) was not justified in deleting the addition. He submitted that the Assessing Officer has given finding on fact in the assessment order that there was discrepancy in the Profit & Loss Account as per Form No.26AS and there was difference of Rs. 1,35,....
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....od of 12 months falling in the current year, however, these parties have shown in their respective TDS Statements, payment for 13 months as rent. Under the circumstances, the A.O. could have made direct enquiries with the tenant or with the TDS Authorities and could have examined the bank statement and the Lease agreement with the tenant and also the extent of income offered by the appellant in respect of same tenants in subsequent assessment years before arriving at the decision. The Ld A.O. has evidently not made such efforts. Keeping in view the above in terms of the decision of Hon'ble Delhi High Court in the case of Court On Own motion Vs Union (supra), the appellant cannot be asked the suffer on account of the errors committed by third party in filing the TDS statement. The Ld A.O. is therefore, directed to carry out enquiry from M/s Sahara and M/s EPCS to verify the actual amount of rental income for the twelve months falling in the period 01.04.2010 till 31.03.2011 and determine income of the appellant accordingly. With regard, one M/s Reliance Hyper Realty Ltd., since that party is not even a tenant, the mistake carried out by it in showing appellant as payee of rental....