SRI KRISHNA CHANDRA KESARWANI, ALLAHABAD v. JT.CIT, RANGE-1, ALLAHABAD

ITA 151/ALLD/2019 | 2011-2012
Pronouncement Date: 16-03-2021 | Result: Allowed

Appeal Details

RSA Number 15120714 RSA 2019
Assessee PAN ADAPK7404M
Bench Allahabad
Appeal Number ITA 151/ALLD/2019
Duration Of Justice 1 year(s) 3 month(s) 14 day(s)
Appellant SRI KRISHNA CHANDRA KESARWANI, ALLAHABAD
Respondent JT.CIT, RANGE-1, ALLAHABAD
Appeal Type Income Tax Appeal
Pronouncement Date 16-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 16-03-2021
Last Hearing Date 25-01-2021
First Hearing Date 25-01-2021
Assessment Year 2011-2012
Appeal Filed On 02-12-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH SMC ALLAHABAD [ THROUGH VIRTUAL COURT ] BEFORE SHRI VIJAY PAL RAO JUDICIAL MEMBER I . T . A . NO . 151 /ALLD/20 19 ASSESSMENT YEAR: 20 11 - 12 SRI KRISHNA CHANDRA K ESARWANI SAHSON ALLAHABAD V S . THE JOINT COMMISSIONER OF INCOME TAX RANGE 1 ALLAHABAD PAN: ADAPK7404M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI PRAVEEN GODBOLE CA RESPONDENT BY SHRI A.K. SINGH SR. D.R. DATE OF HEARING 11/02 /2021 DATE OF PRONOUNCEMENT 16 /03 / 2021 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.09.2019 OF CIT(A) FOR THE ASSESSMENT YEAR 2011 - 12 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THAT IN ANY VIEW OF THE MATTER ASSESSMENT ORDER DATED 21.03.2014 PASSED U/S 143(3) OF THE IT ACT AND BY SUCH ORDER RENTAL INCOME AS ENHANCED BY THE ASSESSING OFFICER WITHOUT ANY MATERIAL BROUGHT ON RECORD AND HIS ACTION AS MAINTAINED BY THE COMMISSIONER OF INCOME TAX (APPEAL) IGNORING THE CORRECT FACTS IS HIGHLY UNJUSTIFIED INCOR RECT AND BAD BOTH ON THE FACTS AND IN LAW. 2 - THAT IN ANY VIEW OF THE MATTER THE ADDITION OF RS. 75 395/ - AS ENHANCED/MADE BY THE ASSESSING OFFICER UNDER THE HEAD RENTAL INCOME AS PER PARA 7 OF THE ASSESSMENT ORDER AND HIS ACTION AS CONFIRMED BY THE COMMISS IONER OF INCOME TAX (APPEAL) IS TOTALLY ITA NO. 151/ALLD/2019 2 INCORRECT AND UNWARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 - THAT IN ANY VIEW OF THE MATTER THE ADDITION OF RS. 75 395/ - ON COUNT OF RENTAL INCOME AS MADE AND MAINTAINED BY THE TWO LOWER AUTHORITIES IS IN CORRECT SPECIALLY WHEN THE SAID RENTAL INCOME PAID TO THE APPELLANT BY M/S KESARWANI HOSPITAL & RESEARCH INSTITUTE PVT. LTD HAS BEEN ACCEPTED IN THEIR CASE VIDE THE ORDER DATED 25.03.2014 PASSED U/S 143(3) OF THE IT ACT HENCE THERE IS NO JUSTIFICATION TO ENHANCE AND ADD THE SAID RENTAL INCOME INTO THE HANDS OF THE APPELLANT. 4 - THAT IN ANY VIEW OF THE MATTER IN PREVIOUS AND SUBSEQUENT YEAR SUCH DECLARED RENTAL INCOME FROM THE HOSPITAL HAS BEEN ACCEPTED THEREFORE THERE IS NO JUSTIFICATION TO ENHANCE ADD AN D CONFIRM THE SUCH INCOME IN THE PRESENT YEAR BECAUSE SIMILAR RENTAL INCOME FROM THE SAID HOSPITAL PAID TO OTHER CO - OWNER HAS BEEN ACCEPTED HENCE THE ADDITION IS LIABLE TO BE DELETED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5 - THAT IN ANY VIEW OF THE M ATTER THE APPELLANT RESERVES HIS RIGHT TO TAKE ANY FRESH GROUND BEFORE HEARING OF THE APPEAL. IT IS THEREFORE RESPECTFULLY PRAYED THAT A SUITABLE ORDER MAY KINDLY BE PASSED AND RELIEF BE ALLOWED ACCORDINGLY. 3. IN THIS APPEAL THE ONLY ISSUE ARISES FOR CONSIDERATION AND OBJECTION BEFORE THE TRIBUNAL IS REGARDING THE ADDITION OF RS. 75 395/ - WAS MADE BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RET URN OF INCOME ON 10.10.2011 DECLARED TOTAL INCOME OF RS. 22 47 185/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN RENTAL INCOME OF RS. 9 000/ - IN RESPECT OF PROPERTY GIVEN ON RENT TO M/S KESARWANI HOSP ITAL & RESEARCH INSTITUTE PVT. LTD. IN WHICH THE ASSESSEE ALONG WITH THE OTHER CO - OWNER S A RE DIRECTORS AND SHAREHOLDERS . THE A.O. FURTHER NOTED THAT SINCE ITA NO. 151/ALLD/2019 3 1995 THERE IS NO INCREASE IN THE RENTAL INCOME AND ACCORDINGLY HE PROCEEDED TO DETERMINE THE FAIR M ARKET RENTAL VALUE. THE ASSESSING OFFICER TOOK A COMPARABLE INSTANCE OF A PROPERTY SITUATED AT L OWTHER ROAD DHARBHANGA COASTAL AT A DISTANCE OF 100 YARD FROM THE PROPERTY WHICH IS LET OUT TO DEBT RECOVERY TRIBUNAL (DRT) FOR A RENT @ 8.78 PER SQ.FT . THE ASSESSING OFFICER APPLIED THE SAID RATE OF RENT IN THE CASE OF THE ASSESSEE AND DETERMINED THE ANNUAL LETTING VALUE (ALV) OF THE PROPERTY IN QUESTION AT RS. 15 74 184/ - . A FTER ALLOWING THE DEDUCTION U/S 24 (1) THE INCOME FROM HOUSE PROPERTY WAS COMP UTED A T RS. 10 26 029/ - THE 1/13 TH SHARE OF THE ASSESSEE COMES TO RS. 81 695/ - AS AGAINST RS. 6 300/ - SHOWN BY THE ASSESSEE. ACCORDINGLY DIFFERENCE OF RS. 75 395/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT (A) BUT COULD NOT BE SUCCEED . 4. BEFORE THE TRIBUNAL T HE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS ONE OF THE CO - OWNER S IN THE PROPERTY IN QUESTION WHICH WAS GIVEN ON RENT TO M/S KESARWANI HOSPITAL & RESEARCH INSTITUTE PVT. LTD. IN THE YEAR 1995. THE TOTAL RENT OF THE PRO PERTY SINCE THE YEAR 1995 IS RS . 1 17 000 PER ANNUM. THE SHARE OF THE ASSESSEE IN THE RENT IS RS. 9000 PER ANNUM. HE HAS FURTHER SUBMITTED THAT IN THE CASE OF SHRI SURESH CHAND KESARWANI ONE OF THE CO - OWNER OF THE PROPERTY THE LD. CIT (A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HOWEVER THE CIT (A) HAS NOT ACCEPTED THE SAID DECISION AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE. HE HAS REFERRED TO THE ORDER OF THE CIT (A) AND ASSESSMENT ORDER IN CASE OF SHRI SURESH CHAND KESARWANI. THE LD. AR HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT DISPUTE D THE ACTUAL RENT RECE IVED BY THE ASSESSEE WHICH WAS AGREED UPON BETWEEN THE PARTIES IN THE YEAR 1995 WHICH WAS ACCEPTED BY THE ASSESSING OFFICER IN THE EARLIER ASSESSMENT YEAR 2010 - 11. ONLY FOR THE YEAR UNDER CONSIDERATION THE ASSESSING OFFICER HAS FIRST TIME ITA NO. 151/ALLD/2019 4 MADE THIS ADDITI ON. HE HAS FURTHER POINTED OUT THAT THE ASSESSING OFFICER HAS TAKEN THE ANNUAL LETTING VALUE BY ADOPTING THE RATE IN RESPECT OF THE OTHER BUILDING WITHOUT CONSIDERING THE OTHER FACTORS INFLUENCING THE RATE OF RENT BEING THE AREA THE TIMING OF THE AGREEMENT FOR LETTING OUT OF THE PROPERTY AS WELL AS THE DIFFERENCE OF THE LOCATION OF TWO PROPERTIES. THE LD. AR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS MADE AN ADDITION WITHOUT DETERMINING THE FAIR MARKET RENTAL VALUE OF THE PROPERTY IN QUESTION IN TERMS OF THE PROVISIONS OF SECTION 23 (1) OF THE INCOME TAX AC T. T HE DECIS ION OF THE ASSESSING OFFICER IS ARBITRARY AND JUSTIFIED. HE HAS PLEADED THAT THE ADDITION MADE BY THE A SSESSING OFFICER MAY BE DELETED . 5. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT THE PROPERTY HAS BEEN GIVEN TO THE RELATED PARTY BEING THE COMPANY IN WHICH THE OWNERS OF THE PROPERTY ARE DIRECTORS AND SHAREHOLDERS. THERE IS NO WRITTEN AGREEMENT BETWEEN THE RELATED PARTIES BUT THE ASSESSEE HAS CLAIM ED ONLY ORAL RENTAL AGREEMENT. FURTHER THE DECISION OF THE LD. CIT (A) IN THE CASE OF SURESH CHAND KESA RWANI CANNOT BE TAKEN AS BINDING PRECEDENT AS THE REVENUE DID NOT CHALLENGE THE SAID ORDER DUE TO LOWER TAX EFFECT BELOW THE THRESHOLD LIMIT OF THE MONETARY LIMIT PROVIDED BY THE CBDT. HE HAS REFERRED TO THE ORDER OF THE CIT (A) AND SUBMITTED THAT THE LD. CIT (A) HAS CONSIDERED THE SAID ORDER DATED 06.09.2018. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL MATERIAL ON RECORD. THE ASSESSING OFFICER HAS TAKEN THE ANNUAL LETTING VALUE OF THE PROPERTY IN QUESTION BY TAKING A N INSTANCE OF PROPERTY LET OUT TO DRT FOR A RENT @ 8.78 PER SQ.FT. THE RELEVANT FINDINGS OF THE ASSESSING OFFICER ARE IN PARA 7 ARE AS UNDER: 7. 1 HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE REPLY MENTIONED IN PARA 6. BUT NOT CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE. PROVISIONS OF INCOME TAX ACT CANNOT BE INTERPRETED AS PER INTENTION OF ANY INDIVIDUAL BUT AS PER INTENTION OF PARLIAMENT. AS PER PROVISIONS CONTAINED IN SEC.23 OF THE I.T.ACTL961 THE ANNUAL VALUE FOR THE PURPOSES OF SEC.22 OF ANY PROPERTY SHALL BE DEEMED TO BE - ITA NO. 151/ALLD/2019 5 (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 RECEIVA BLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A) THE AMOUNT SO RECEIVED OR RECEIVABLE; OR (C) ............................... THE ALV OF ANY BUILDING IS BASED ON WHAT RENT IT MIGHT GET NOT THE RENT RECEIVED. THE BUI LDING IN QUESTION IS SITUATED ON LOWTHER ROAD IN DARBHANGA CASTEL AREA AND IS HAVING AREA OF 1600SQ. YARD. THE COMPARABLE BUILDING WHICH IS ALSO SITUATED IN THE DARBHANGA CASTEL AREA ON PANNA LAL ROAD AT A DISTANCE OF 100 YARDS INSIDE THE ROAD AND IS OC CU PIED BY DEBT RECOVERY TRIBUNAL (DRT). THE DRT IS PAYING RENT @ RS 8.78/ - PER SQ. FT. CONSIDERING ALL ASPECT OF THE CASE THE FAIR RENT OF THE BUILDING IN QUESTION OCCUPIED BY KESARWANI HOSPITAL & RESEARCH INSTITUTE P. LTD IS COMPUTED AT THE RATE OF THE RENT PAID BY DRT . THE ASSESEE COULD NOT FURNISH THE CONVEYANCE DEED AND SO THE EXTENT OF BUILDING ACTUALLY CONSTRUCTED BEFORE TAKING INTO POSSESSION BY HOSPITAL IS NOT KNOWN THEREFORE IT IS ASSUMED THAT TOTAL BUILDING BELONGS TO OWNERS WHO HAVE LEGAL TITLE OV ER THE PROPERTY. THE ALV OF THE BUILDING OCCUPIED BY THE KESARWANI HOSPITAL & RESEARCH INSTITUTE P. LID OF W HICH ASSESSES IS A CO - OWNER IS BEING COMPUTED AS UNDER - TOT AL AREA 1600( AS PER SUBMISSION OF ASSESSEE}X 9 SQ. FT = 14400 SQ.FT. THUS FAIR RENT OF BUILDING IN QUESTION =RS 8.78X 14400= RS 126432/ - PER MONTH. THUS ALV OF THE BUILDING IN QUESTION = RS 15 17 184/ - (R S 1 26 432X 12) LESS DEDUCTION U/S 24{ L)I E 30% OF RS 15 17 1 84/ - =RS 4 55 155/= INCOME FROM HOUSE PROPERTY - =RS 10 62 029/ - THE SHARE OF ASSES SEE RS_ 10 62 029/13 - RS 81 695/ - THE ASSESSEE HAS SHOWN HIS INCOME FORM HOUSE PROPERTY AT RS 6 3007 - THERE FORE DIFFERENCE 'OF RS 81 695 - RS 6 300 I.E RS 75 395 IS ADDED TOWARDS INCOME FROM HOUSE PROPERTY OF THE ASSESSEE. SUBJECT TO OBSERVATION ABOVE THE INCOME OF ASSESSEE IS COMPUTED AS UNDER: - 1. INCOME FROM BUSINESS RS 10 64 4467 - 2. INCOME FROM HOUSE PROPERTY AS SHOWN RS 6.300/ - AS DISCUSSED IN PARA 7 RS 75 3957 - RS 81 695/ - 3. INCOME FROM OTHER SOURCE RS 12 76 439/ - 4. GROSS TOTAL I NCOME RS 24 22 580/ - 5. DEDUCTION UNDER SECTION 80C RS 1 00 000/ - - TOTAL INCOME' - RS 23 22 580/ - ITA NO. 151/ALLD/2019 6 ASSESSED ACCORDINGLY AT TH E TOTAL INCOME OF RS. 23 22 560/ - . CHARGE INTEREST U/S 234D . NOTICE OF DEMAND AND CHALLAN ARE BEING ISSUED. 7 . THOUGH THE ASSESSING OFFICER HAS TAKEN THE ALV AS THE RATE OF RENT IN RESPECT OF A BUILDING SITUATED IN THE AREA HOWEVER THE ASSESSING OFFICER HAS NOT GIVEN THE ASSESSEE A FAIR OPPORTUNITY TO RAISE THE OBJECTION AGAINST ADOPTING THE SAID RATE OF RENT AS FAIR MARKET RENTAL VALUE OF THE PROPERTY IN QUESTION WHILE DETERMINING THE ALV OF THE PROPERTY. THERE IS NOT DISPUTE THAT IN CASE THE ASSESSING OFFICER FINDS THAT THE RENTAL INCOME SHOWN BY THE ASSESSEE IS NOT IN THE PARITY OF THE REASONABLE EXPECTED SUM FOR LETTING OUT OF THE PROPERTY IN TERMS OF SECTION 23 (1) OF THE INCOME TAX ACT. T HE ASSESSING OFFICER CAN PROCEED TO DETERMINE THE ANNUAL LETTING VALUE. THE ANNUAL LETTING V ALUE OF THE PROPERTY IS THE SUM WHICH IS REASONABLY EXPECTED TO BE FETCHED BY LETTING OUT FOR THE PROPERTY FROM YEAR TO YEAR BASIS. THUS THE REASONABLE AND PROPER CRITERIA FOR DETERMINING THE ANNUAL LETTING VALUE IS THE FAIR MARKET RENTAL FOR WHICH THE PROPERTY CAN BE REASONABLY LET OUT FROM YEAR TO YEAR. THE ASSESSING OFFICER HAS THOUGH ADOPTED THE RATE OF RENT AS IT WAS AGREED UPON BETWEEN THE PARTIES IN RESP ECT O F PROPERTY IN THE VICINITY H OWEVER THE ASSESSEE DID NOT GIVE THE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AGAINST SUCH ADOPTION OF THE ANNUAL LETTING VALUE. THE ASSESSING OFFICER HAS ALSO NOT TAKEN THE FACTS WHICH MIGHT HAVE INFLUENCED THE FAIR MARKET RENTAL VALUE OF THE PROPERTY BEING THE DIFFERENCE IN THE LOCALITY OF THE PROPERTIES THE AREA LET OUT ADVANTAGE AND DISADVANTAGE IF ANY ATTACHED TO THE PROPERTIES. THEREFORE THE ASSESSING OFFICER HAS ADOPTED THE SAID RENT WITHOUT EVEN GIVING A SHOW CAUSE NOTICE TO THE ASSESSEE. THE LD. CIT (A) THOUGH CONFIRMED THE ORDER OF THE ASSESSING OFFI CER HOWEVER THE COMPARABLE OF THE RATE ADOPTED BY THE ASSESSING OFFICER NOT BEEN EXAMINED BY THE LD. CIT (A). ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE MATTER IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR RE - ADJUDICATION OF THE SAME AFTER GIVING AN APPROPRIATE OPPORTUNITIES OF HEARING TO THE ASSESSEE AND THEN DETERMINING ITA NO. 151/ALLD/2019 7 THE ANNUAL LETTING VALUE STRICTLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 23 (1) OF THE INCOME TAX ACT. 8 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH 2021. SD/ - ( VIJAY PAL RAO ) ALLAHABAD JUDICIAL MEMBER DATED: 16 /0 3 /2021 A.K. PS COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR I.T.A.T. 6. GUARD FILE BY ORDER (I.T.A.T. ALLAHABAD) TRUE COPY