Nishant Enclaves Pvt.Ltd., Hy, Hyderabad v. ITO, Ward-16(2), Hyderabad

ITA 1732/HYD/2011 | 2007-2008
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 173222514 RSA 2011
Assessee PAN AAACN7988B
Bench Hyderabad
Appeal Number ITA 1732/HYD/2011
Duration Of Justice 9 month(s) 17 day(s)
Appellant Nishant Enclaves Pvt.Ltd., Hy, Hyderabad
Respondent ITO, Ward-16(2), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 27-07-2012
Assessment Year 2007-2008
Appeal Filed On 10-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER ITA NO. 1732/HYD/2011 ASSESSMENT YEAR: 2007-08 NISHANT ENCLAVES PVT. LTD. APPELLANT HYDERABAD. (PAN/GIR NO. AAACN7988B/N-113) VS. INCOME TAX OFFICER WARD 16(2) RESPONDENT HYDERABAD APPELLANT BY : SHRI SAMUEL NAGADESI RESPONDENT BY : SHRI K.E. SUNIL BABU DATE OF HEARING : 24/05/2012 DATE OF PRONOUNCEMENT : 27/07/ 2012 ORDER PER ASHA VIJAYARAGHAVAN J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-V HYDERABAD DATED 18/07/2011 F OR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVEL OPMENT OF PROPERTIES AMONG OTHER OBJECTIVES. THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007- 08 CONSTRUCTED A PART OF THE BUILDING ON PROPERTY B EARING NO.8- 2-351/N/1 ROAD NO.2 BANJARA HILLS HYDERABAD AND LET OUT THE PART OF PROPERTY TO M/S. RANGOLI SAREES PVT LTD . BY VIRTUE OF TWO AGREEMENTS ONE LEASE DEED DT.1.9.2006 ANOT HER ONE ITA NO. 1732/HYD/2011 NISHANT ENCLAVES P. LTD. 2 LEAVE & LICENCE AGREEMENT DT.1.9.2006. THE LEASE CONSIDERATION WAS FIXED AT A COMPOSITE RENT OF RS.5 50 000/- PER MONTH WITH THE CONDITION THAT OBLIGATION TO PAY MONTHLY RENT SHALL COMMENCE FROM 1.12.2006. 3. THE AO WHILE COMPLETING THE ASSESSMENT U/S.143( 3) OF THE ACT DETERMINED THE ASSESSED INCOME AT RS. 15 9 6 596/-. 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE AO HA S COMPUTED THE RENT AND AMENITIES FOR 5 MONTHS AT RS.16 50 000 /- AND RS.11 00 000/- INSTEAD OF RS.13 20 000/- AND RS.8 8 0 000/- RESPECTIVELY AS PER AUDITED BOOKS OF ACCOUNTS. 5. IT WAS SUBMITTED BEFORE CIT(A) THAT THE AO HAD E RRED IN COMPUTING THE RENT FOR THE PERIOD OF FIVE MONTHS WH EREAS THE ASSESSEE HAD RECEIVED THE RENT ONLY FOR FOUR MONTHS AND AS PER AGREEMENT THE EFFECTIVE DATE IS FROM 1.12.2006 AND AS SUCH COVERING THE PERIOD FOR FOUR MONTHS ONLY DURING THE PREVIOUS YEAR. IT WAS FURTHER SUBMITTED THAT THE AO HAD NOT ICED FROM THE TDS CERTIFICATE THAT THE ASSESSEE HAD RECEIVED RENT OF RS. 27 50 000/- FOR FIVE MONTHS THOUGH THE ASSESSEE HAD CLARIFIED DURING THE ASSESSMENT PROCEEDINGS THAT T HE LESSEE HAD ERRONEOUSLY MENTIONED THE TDS FOR THE MONTH OF APRIL 2007 IN THE TDS CERTIFICATE ISSUED FOR THE FINANCIA L YEAR 2006- 07 WHICH IS UNDER CONSIDERATION. THE DEDUCTOR M/S . RANGOLI SAREES PVT LTD SAID THAT HAS PAID THE TDS ON 7.4.2 007 AND NOT BEFORE 31.3.2007 VIDE CHEQUE NO.617528 AND THE REFORE ITA NO. 1732/HYD/2011 NISHANT ENCLAVES P. LTD. 3 THAT WAS RELATED TO PAYMENT TOWARDS RENT AND AMENIT IES FOR THE MONTH OF APRIL 2007 PAID IN ADVANCE BY THEM IN FIRST WEEK. 6. THE CIT(A) HELD THAT THE LEASE DEEDS ARE EFFECTI VE FROM 1.11.06 AND THE OBLIGATION OF THE LESSEE TO PAY MON THLY RENT SHALL COMMENCE FROM 1.12.2006. THE CIT(A) HELD THA T THE PROPERTY IN QUESTION WAS TAKEN ON LEASE FROM 1.11.2 006 AND THE RENTAL STARTED FROM THE END OF FIRST MONTH . THEREFORE HE HELD THAT THE RENT FOR 5 MONTHS WAS PAID BY M/S. RA NGOLI SAREES PVT LTD FOR NOVEMBER DECEMBER 2006 JANUARY FEBRUARY & MARCH 2007. FURTHER HE HELD THAT THE PA YMENT MADE ON 2 ND MARCH 2007 PERTAINS TO FEBRUARY 2007 AND THAT MADE ON 31.3.2007 PERTAINS TO MARCH 2007. . THE CI T(A) CONFIRMED THE ORDER OF AO. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE GONE THROUGH THE RECORDS AND LEASE AGREE MENTS. WE FIND THAT THE CIT(A) HAS BEEN MISGUIDED BY THE L EASE DEED EXECUTED ON 1.9.2006. IN THIS DEED THE TERMS OF TH E LEASE HAS BEEN FIXED FOR 9 YEARS W.E.F. 2006 VIDE CLAUSE (1) ON PAGE 5 AND ALSO IN CLAUSE (2)(I) ON PAGE 6. THERE IS A TY POGRAPHICAL ERROR ON PAGE 8 WHERE ERRONEOUSLY DATE HAS BEEN MEN TIONED FROM 1 ST NOVEMBER 2006 BUT ON READING CLAUSE (2) OF THE DEE D AT PAGE 6 IT HAS BEEN SPECIFIED THAT THE DATE IS E FFECTIVE FROM 1 ST DECEMBER 2006. THE FACT THAT THE EFFECTIVE DATE O F CONSIDERATION PAYABLE IS FROM 1 ST DECEMBER 2006 IS CORROBORATED BY VIRTUE OF LEAVE & LICENSE AGREEMENT MADE ON 1 ST SEPTEMBER 2006 FOR AMENITIES. THE THREE PARAS F IRST ONE AT PAGE 3 AND SECOND ONE ON PAGE 4 PARA 3 ON PAGE 5 IN LEAVE ITA NO. 1732/HYD/2011 NISHANT ENCLAVES P. LTD. 4 & LICENSE AGREEMENT SHOW THAT THE EFFECTIVE DATE OF CONSIDERATION PAYABLE IS FROM 1 ST DECEMBER 2006. 8. THE NEXT ASPECT TO BE CONSIDERED IS THE DEDUCTOR M/S. RANGOLI SAREES PVT LTD HAS PAID THE TDS ON 7.4.2007 (AND NOT BEFORE 31.3.2007) VIDE CHEQUE NO.617528 IS RELATED TO PAYMENT TOWARDS RENT AND AMENITIES FOR THE MONTH OF APRIL 2007 AS RENT IS PAYABLE IN ADVANCE IN THE BEGINNING OF THE MONTH. FURTHER FROM THE AUDITED PROFIT & LOSS ACC OUNT WE FIND THAT RS.22 LAKHS PERTAINS TO RENT AND AMENITIES FOR THE PERIOD OF FOUR MONTHS FROM 1.4.2006 TO 31.3.2007. 9. FURTHER FROM THE BANK ACCOUNT COPY IT IS ESTAB LISHED THAT THE ACTUAL PAYMENT WAS RECEIVED FOR THE MONTH OF APRIL 2007. THE CHEQUES HAVE BEEN DEPOSITED IN THE MONTH OF APRIL 2007 HAS BEEN CREDITED ON 9 TH APRIL 2007 AS VERIFIED FROM THE BANK STATEMENT. THAT TDS HAS BEEN PAID BY M/S. RANG OLI SAREES PVT LTD ON 7.4.2007 VIDE CHEQUE NO.617528 I N ADVANCE BY THEM IN THE FIRST WEEK AS PER STIPULATED TERMS IN THE LEASE DEED AND HENCE THE OBSERVATION OF THE CIT(A) THAT THE PAYMENT S MADE ON 2 ND MARCH 2007 PERTAINS TO FEBRUARY 2007 AND THAT MADE ON 31/03/2007 PERTAINS TO MARCH 2007 IS INCORRECT. 10. HENCE IN OUR OPINION GOING BY THE TERMS OF LE ASE DEED WHERE AT ONE PLACE THERE HAS BEEN TYPOGRAPHICAL ERR OR ON PAGE 8 AS 1 ST NOVEMBER 2006 BUT THE TYPOGRAPHICAL ERROR HAS B EEN IDENTIFIED AS FROM THE OTHER CLAUSES OF THE DEED IT IS CLEAR THAT THE PERIOD OF LEASE STARTS FROM 1 ST DECEMBER 2006 AND HENCE THE ASSESSING OFFICER HAS ERRONEOUSLY COMPUTED THE RENTAL ITA NO. 1732/HYD/2011 NISHANT ENCLAVES P. LTD. 5 INCOME AND THE SAME HAS BEEN CONFIRMED BY CIT(A) W HICH IS INCORRECT. 11. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2012. SD/- SD/- (D. KARUNAKARA RAO) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD DATED: 27 TH JULY 2012. KV COPY TO:- 1) NISHANT ENCLAVES P. LTD. C/O S. DAGA & CO. CHARTERED ACCOUNTANTS 403 PAIGAH PLAZA BASHEER BAGH HYDERABAD 500 063. 2) INCOME TAX OFFICER WARD 16(2) HYDERABAD. 3) THE CIT (A)-V HYDERABAD 4) THE CIT-IV HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE I.T.A.T. HYDERABAD.