M/s. Gurera Industries Ltd., New Delhi v. ITO, New Delhi

ITA 6023/DEL/2016 | 2012-2013
Pronouncement Date: 29-11-2017 | Result: Dismissed

Appeal Details

RSA Number 602320114 RSA 2016
Assessee PAN AABCG3096J
Bench Delhi
Appeal Number ITA 6023/DEL/2016
Duration Of Justice 1 year(s) 3 day(s)
Appellant M/s. Gurera Industries Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 29-11-2017
Date Of Final Hearing 31-05-2017
Next Hearing Date 31-05-2017
First Hearing Date 31-05-2017
Assessment Year 2012-2013
Appeal Filed On 25-11-2016
Judgment Text
1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO. 6023/DEL/2016 A.Y. : 2012-13 M/S GURERA INDUSTRIES LIMITED VS. ITO WARD 10 (4) 601 HEMKUNT CHAMBERS C.R. BUILDING 89 NEHRU PLACE NEW DELHI NEW DELHI 110 0019 (PAN : AABCG3096J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. MANISH KUMAR ADV. DEPARTMENT BY : MS. ASHNA PAUL SR. DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-18 NEW DELHI DATED 16.9.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- I) THE AUTHORITY BELOW ERRED IN TAKING THE ANNUAL V ALUE OF HOUSE PROPERTY (INDUSTRIAL SHED) RS.23 05 590/- WITHOUT A PPRECIATING THE PROVISION OF SECTION 23 OF THE INCOME TAX ACT 1961. II) THE AUTHORITY BELOW FAILED TO APPRECIATE THE RE DUCED RENT FOR THE PURPOSE OF ANNUAL LETTING VALUE (ALV) FROM THE ANGLE OF COMMERCIAL EXPEDIENCY AND ERRED IN ASSESSING ON THE BASIS OF INITIAL 4 YEAR OLD RENT AGREEMENT WITH ALLEGED 10% INCREMENT AS 2 PER STANDARD PRACTICE WHICH IS ARBITRARY UNJUSTIFI ED AND UNCALLED FOR. III) THE AUTHORITY BELOW FILED TO APPRECIATE THE FA CT THAT REAL INCOME HAS TO BE TAXED AND IN THE FACTS OF THE CASE THE IN COME HAS BEEN ASSESSED NOTIONALLY WHICH IS BASED ON SURMISE AND C ONJECTURE. IV) THAT IN THE FACTS OF THE CASE THE CIT(A) ALSO ERR ED IN CONSIDERING THE ANNUAL VALUE @ 17 LAKHS PER ANNUM APPLICABLE FO R FY 2014- 15 ON THE RESUMPTION OF BUSINESS ACTIVITY BUT REJEC TING THE SAME @ 25000/- PER MONTH DUE TO DISCONTINUANCE OF BUSINE SS ACTIVITY (FACTORY CLOSED) WHICH IS UNJUST AND UNCALLED FOR. V) THE APPELLANT / ASSESSEE CRAVES YOUR HONOUR LEAVE TO ADD DELETE OR MODIFY ANY GROUNDS OF APPEAL DURING THE C OURSE OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE JOB WORK FOR AUTO PARTS AND OTHER ITEMS. THE ASSESS EE HAS DECLARED THE RENTAL INCOME FROM THE PROPERTY AT PLOT NO. A-4 KOSHI KOT WAN MATHURA UTTAR PRADESH. THE SAID PROPERTY WAS GIVEN ON RENT TO M/S JBM AUTO LTD. @25 000/- PER MONTH. THE AO NOTED THAT EARLIER FOR THE PERIOD 1.4.2008 TO 30.11.2008 THE RENTAL INCOME FROM THE SAME PARTY FROM THE FROM THE SAME PROPERTY WAS SHOWN AT RS. 2 25 000/- P.M. THE AO THEREFORE ASKED THE ASSESSEE TO EXPLAI N (THAT WHEN THE RENT WAS EARLIER HIGHER AND THE SECURITY DEPOSIT WAS PAID ON THE BASIS OF SUCH HIGHER RENT AND NO SPECIFIC REASON FOR SUBSTANTIAL REDUCTION OF THE RENTAL INCOME HAS BEEN FURNISHED) AS TO WHY THE RENTAL INCOME WOULD NOT BE COMPUTED AS PER THE HIGHER RATE OF RENT EARLIER SHOWN TO BE INCREASED BY 10% AS PR THE STANDARD PRACTICE FOR 3 RENTING OF PROPERTY FOR INCREASE BY 10% EVERY YEAR. THE ASSESSEE STATED THAT SUBSEQUENTLY THIS PREMISE WAS NOT USED AND THE RENT OFFERED IS AS PER SECTION 23 OF THE INCOME TAX ACT 1961 AND THE AO CANNOT COMPARE RE NT FOR UNUSED PREMISE (VACANT PREMISE) WITH RENT FOR PREMISE IN USE. HOWE VER THE AO DID NOT ACCEPT THIS EXPLANATION AND WENT AHEAD WITH COMPUTATION AS PROP OSED IN THE SHOW CAUSE NOTICE AND HELD THAT ASSESSE HAS TAKEN THE RENT IN CASH AND TO AVOID THE TAX LIABILITY THE RENTAL VALUE HAS BEEN SUBSTANTIALLY REDUCED. AS PER THE NORMAL PRACTICE IN THE RENTAL ARRANGEMENT AND AS PROPOSED IN THE SHOW CAUS E NOTICE AO ASSESSED THE MONTHLY RENTAL OF THE ASSESEE COMPANY AT RS. 2 99 4 75/-. ACCORDINGLY THE ADDITION OF RS. 23 05 950/- WAS MADE TO THE TAXABL E INCOME OF THE ASSESSEE I.E. RS. 2 99 475 X 12 = 35 93 700 (30% FOR REPAIRS) 1 078110 = 2515590 (ALREADY DECLARED) 210000 = 23 05 590) AND ASSESSED THE INCO ME AT RS. 25 62 680/- VIDE ORDER DATED 18.03.2015 PASSED U/S. 143(3) OF TH E I.T. ACT 1961. AGAINST THE ASSESSMENT ORDER DATED 18.3.2015 ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 16/09/2016 HAS PARTLY A LLOWED THE APPEAL OF THE ASSESSEE . 4. AGGRIEVED WITH THE ORDER OF THE LD.CIT(A) DATED 16 .9.2016 THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE REITERATED THE CONTE NTIONS REITERATED IN THE GROUNDS OF APPEAL AND PRAYED THAT THE ADDITION IN D ISPUTE MAY BE DELETED. 6. ON THE OTHER HAND LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORD ERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH RELEVANT RECORDS AVAILABLE WI TH ME. I FIND THAT ASSESSEE HAS DECLARED THE RENTAL INCOME FROM THE PROPERTY AT PLO T NO. A-4 KOSI KOTWAN 4 MATHURA UTTAR PRADESH. THE SAID PROPERTY WAS GIVEN ON RENT TO M/S JBM AUTO LTD. @ 25 000/- PER MONTH. THE AO NOTED THAT EARLIER FOR THE PERIOD 1.4.2008 TO 30.11.2008 THE RENTAL INCOME FROM THE SAME PARTY FRO M THE FROM THE SAME PROPERTY WAS SHOWN AT RS. 2 25 000/- P.M. THE AO THEREFORE ASKED THE ASSESSEE TO EXPLAIN (THAT WHEN THE RENT WAS EARLIER HIGHER AND THE SECURITY DEPOSIT WAS PAID ON THE BASIS OF SUCH HIGHER RENT AND NO SPECIFIC REA SON FOR SUBSTANTIAL REDUCTION OF THE RENTAL INCOME HAS BEEN FURNISHED) AS TO WHY THE REN TAL INCOME WOULD NOT BE COMPUTED AS PER THE HIGHER RATE OF RENT EARLIER SHO WN TO BE INCREASED BY 10% AS PR THE STANDARD PRACTICE FOR RENTING OF PROPERTY FOR I NCREASE BY 10% EVERY YEAR. THE ASSESSEE STATED THAT SUBSEQUENTLY THIS PREMISE WAS NOT USED AND THE RENT OFFERED IS AS PER SECTION 23 OF THE INCOME TAX ACT 1961 AND THE AO CANNOT COMPARE RENT FOR UNUSED PREMISE (VACANT PREMISE) WITH RENT FOR PREMI SE IN USE. HOWEVER THE AO DID NOT ACCEPT THIS EXPLANATION AND WENT AHEAD WITH COM PUTATION AS PROPOSED IN THE SHOW CAUSE NOTICE AND HELD THAT ASSESSEE HAS TAKEN THE RENT IN CASH AND TO AVOID THE TAX LIABILITY THE RENTAL VALUE HAS BEEN SUBSTAN TIALLY REDUCED. AS PER THE NORMAL PRACTICE IN THE RENTAL ARRANGEMENT AND AS PROPOSED IN THE SHOW CAUSE NOTICE AO ASSESSED THE MONTHLY RENTAL OF THE ASSESEE COMPANY AT RS. 2 99 475/- AND MADE THE ADDITION OF RS. 23 05 950/- TO THE TAXABLE IN COME OF THE ASSESSEE AND IN APPEAL LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE. I FIND THERE IS NO MERIT IN THE CASE OF ASSESSEE IN JUSTIFYING ANY RED UCTION IN THE ALV OF THE PROPERTY. THE ASSESSEE HAS CONTENDED THAT ANY TENANT WOULD LIK E TO BUY A PROPERTY AT THE VALUE TAKEN BY THE AO THAN TAKING IT ON RENT. BUT T HE VERY FACT THAT PROPERTY WAS LET OUT @ 30 00 000/- / 2 000/- I.E. 1500 PER SQMTRS. AND RENT WAS ALSO PAID FOR THE PERIOD OF 01.4.2008 FOR CERTAIN MONTHS THE CLA IM IS BELIED. THE VERY RECEIPT OF RENT JUSTIFIES ALV TO BE BASED ON SUCH RENT IN ABS ENCE OF ANYTHING TO THE CONTRARY. 5 HOWEVER CONSIDERING THE FACTUAL MATRIX OF THE CASE IN MY OPINION THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE PROPERTY WAS AGAIN LE T OUT ON RESUMPTION OF ACTIVITY @ 17 LAKHS PER MONTH THE ANNUAL VALUE WAS TAKEN AT TH AT RATE IF EVIDENCE TO THAT EFFECT IS PRODUCED. HENCE THE LD. CTI(A) HELD THAT T HE AO MAY GIVE NECESSARY RELIEF IN RE-COMPUTATION OF RENTAL INCOME SUBJECT TO VERI FICATION OF SUCH RENTAL RECEIPT IN LATER YEARS WHICH DOES NOT NEED ANY INTERFERENCE O N OUR PART HENCE WE UPHOLD THE ACTION OF THE LD. CIT(A) AND REJECT THE GROUNDS R AISED BY THE ASSESSEE. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/11/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 29/11/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES