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Income Tax - Case Laws
Showing 61 to 80 of 801 Records
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2022 (5) TMI 932 - ITAT PUNE
Income from house property u/s 23 - deemed rental income - estimating the fair market rent in respect of two properties owned by the assessee - Municipal Ratable Value of the impugned property or the actual rent offered by the assessee in the return of income - whether said properties were held by the assessee for its business purposes and hence, the deemed rental income thereon was no assessable as income from house property u/s 23 - HELD THAT:- AO has merely relied on the report submitted by the Assessing Officer, which is based on hearsay opinions. AO was duty bound to conduct proper investigation before rejecting the assessee’s claim of deciding Annual value based on the Annual rateable value decided by Municipal Authorities. AO has also not given any specific reasons for rejecting the Rent claimed to be earned by the assessee from the impugned flat in Siddhivinayak Park.
Thus, it is a settled proposition that , the places where Rent Control Act is not applicable, the Annual Value decided by Municipal Authorities can be a rational yardstick . In the case under consideration the DR has not brought to our notice any reason for which Municipal Value cannot be considered as Fair Rent u/s 23(1). Neither the AO nor the CIT(A) has discussed why Annual value decided by Municipal Corporation shall not be adopted as Fair Rent for the purpose of section 23(1) in this case.
As already discussed why the report submitted by the Inspector cannot be considered. Therefore, we are of the opinion that , in this case the Municipal Ratable Value of the impugned property or the actual rent offered by the assessee in the return of income , whichever is higher, shall be adopted as fair rent u/s 23(1)(a) of the Act. Assessee appeal allowed.
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2022 (5) TMI 610 - ITAT MUMBAI
Treatment of rental income under house property - Disclosure of rental income received from the property by the assessee as business receipts and the assessee has claimed the other expenditure against the business receipts - AO has recomputed the rental income under income from house property and applied the provisions of Sec. 23(1)(a) of the Act in respect of annual value of the property and assessed the total income after allowing the deduction of municipal taxes paid and deduction u/s 24(a) - HELD THAT:- On perusal of the grounds of appeal raised by the assessee, the contentions are that the assessee is a private limited company and certain statutory fixed expenditure has to be incurred even though there is no business activities.
In the course of hearing, we found that the assessee has not filed any supporting evidences to substantiate the claim except the papers/ orders filed along with the appeal memo. On perusal of the facts, prima-facie the claim of business expenses against the rental income in not a prudent practice. We are of the opinion that the CIT(A) has considered the facts, circumstances, provisions of the Act, judicial decisions, and the assessee own case for the A.Y 2010-11 of his predecessor and sustained the addition and passed the reasoned order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the assessee.
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2022 (5) TMI 42 - ITAT NAGPUR
Disallowance of interest on loan taken for acquiring few let-out flats - Income from house property - nexus of use of the loan amount for acquiring the house property - assessee claimed interest on loan taken for acquiring few let-out flats for which the assessee borrowed three loans for making re-payment of housing loan taken from India Bulls Housing Finance Ltd. (IBHFL) for acquiring the aforesaid flats - as per AO claimed home loan interest repayment was not justified properly by the assessee - HELD THAT:- Provisions of section 24(b) of the Act which state that “(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital” and in our view the Assessing Officer and the learned CIT(A) ought to have considered the claim of interest in lieu thereof. We further find that the ass has shown income under the head “Income From House Property” and the assessee is also deriving income from business and we agree with the argument of the learned Counsel that had it been interest on business loan the assessee has right to claim it from business income and computed total income (loss) would have been the same
We do not find any justification in learned CIT(A) stating that he has allowed interest claimed under section 24(b) of the Act at ₹ 1,50,000 for the reason that interest certificate does not justify for housing home loan whereas the learned CIT(A) himself has admitted that the assessee was sanctioned loan of ₹ 9.8 crore from India Bull against residential property for the four flats cited supra. It is also evident from the findings of the learned CIT(A)’s order that the assessee obtained loan from DCB Bank for repayment of this housing loan and stated that the borrower namely Mrs. Subra Subir Kumar Banerjee, have jointly been granted business loan. In view of the forgoing discussions, we are of the considered opinion that the AO as well as the learned CIT(A) ought to have accepted the claim of interest paid to DCB Bank by the assessee and consequently, we set aside the impugned order passed by the learned CIT(A) and direct the Assessing Officer to allow interest paid to DCB bank by deleting the addition made in lieu thereof and the returned income is hereby directed to be accepted. Accordingly, grounds no.1 to 4, raised by the assessee are allowed.
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2022 (5) TMI 37 - ITAT AHMEDABAD
Disallowing House property loss - AO disallowed the loss by holding that the assessee has not produced copy of rent agreement to prove genuineness of rental income - HELD THAT:- On absence of rent agreement, the assessee has placed on record confirmation of the tenant, along-with PAN number and also bank statement reflecting receipt of rent through banking channels. The same has not been disputed by the Department and therefore, in our view the assessee has adequately substantiated that the premises have been given on rent.
Municipal valuation/standard rent - Department has also not come up with any alternate figure of rent for which the property should have been let out. It has cast the upon the assessee to furnish such alternate figure albeit without disputing the fact that the assessee has received monthly rent of Rs. 30,000/- per month which has also been correctly reflected in the return of income. Section 23 of the Act deals with the method of the determination of the 'annual value' of a house property. Section 23(1)(a) defines the 'annual value' of a house property as 'the sum for which the property might reasonably be expected to let from year to year'.
AO has not disputed the receipt of monthly rent of Rs. 30,000/- as having been received by the assessee. Further, the Ld. AO has not brought anything to on record to prove that the value of rent reflected by the assessee did not reflect the 'reasonable' rent for which the property could have been let out or that the value of rent has been undervalued by the assessee. AO has simply denied the entire deduction of interest paid against rental income without bringing on record anything to dispute any of the documents furnished on record by the assessee. - Decided in favour of assessee.
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2022 (4) TMI 1016 - ITAT DELHI
Income from house property - Rental Income on property let out - rent received is after increment @ 15% and that the original rent as per agreement was reduced on account of surrender of area by the tenant. A copy of surrender lease agreement was filed - HELD THAT:- Even then the learned AO/CIT(A) alleged that the assessee did not prove that the surrender of the leased area was agreed to by both the parties. This cannot be accepted. The assessee brought to the notice of the learned AO/CIT(A) that the surrendered area is still in its possession and could not be let out to any other party as the Mall could not get success. The veracity of this assertion could be ascertained but nothing has been done.
The assessee has all along declared the rent receipt on the basis of 32634.41 sq. ft. area occupied by the tenant Reliance Mediaworks Ltd. which has been accepted by the predecessor learned AO in the assessment order framed under Section 143(3) for the assessment year 2012-13
The assessee categorically denied receipt of rent over and above what is reflected in its books of accounts. Nothing has been brought on record to contradict the version of the assessee either by the learned AO or by the learned CIT(A). We, therefore, hold that rental income which has not been received by the assessee cannot be brought to tax.
Accordingly, we delete the impugned addition made by the learned AO which has been confirmed by the learned CIT(A). - Decided in favour of assessee.
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2022 (4) TMI 713 - ITAT MUMBAI
Disallowing maintenance charges (including non occupancy charges) claimed as deduction while computing income from house property - AO held that neither Sec. 23 nor Sec. 24 provides for the deduction of expenses incurred towards Society Maintenance Charges - claim of maintenance charges against the rental income of the assessee has been disallowed on the ground that it had already claimed 30% deduction u/s. 24(a) - HELD THAT:- As decided in own case [2022 (4) TMI 641 - ITAT MUMBAI] assessee is entitled for deduction u/s. 23 of the Act apart from the standard deduction u/s. 24(a) of the Act. We direct the AO to verify the claim of deduction of the assessee of the said society maintenance charges paid by the assessee but stated to be obligation of the lessee and stated to be duly included in the gross rent received by the assessee before allowing the claim of the assessee. - Decided in favour of assessee.
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2022 (4) TMI 641 - ITAT MUMBAI
Income from house property - Addition in respect of society maintenance charges - contentions of the Ld. AR are that the claim has to be allowed in addition to the deduction u/s 24 of the Act as these are society maintenance charges, which are mandatorily incurred irrespective of the property let out or vacant - HELD THAT:- As observed that the assessee has paid society maintenance charges which is stated to be the obligation of the lessee and the same is duly included in the rent received by the assessee. In our considered view, this issue is squarely covered by the decisions of the Tribunal in the cases of Sharmila Tagore [2004 (6) TMI 591 - ITAT MUMBAI] and Bombay Oil Industries [2000 (11) TMI 1225 - ITAT MUMBAI] Respectfully following the decisions we hold that assessee is entitled for deduction u/s 23 apart from the standard deduction u/s 24(a) of the Act. We direct the AO to verify the claim of deduction of the assessee of the said society maintenance charges paid by the assessee but stated to be obligation of the lessee and stated to be duly included in the gross rent received by the assessee before allowing the claim of the assessee. - Decided in favour of assessee.
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2022 (4) TMI 492 - ITAT CHENNAI
Assessment u/s 153A - validity of the search assessment - HELD THAT:- All the additions as confirmed by Ld. CIT(A) in the impugned order are liable to be deleted since the same are not based on any incriminating material unearthed during the course of search operations. We order so. The assessee’s legal grounds succeed.
Interest on borrowed capital - assessee claimed interest in borrowed capital under the head ‘Income from House Property’ - CIT(A) held that interest on subsequent loan could be allowed provided the same was taken to repay earlier loans and deduction would be allowable only to the extent of interest on earlier loan used for acquiring the property and not on the unpaid interest on earlier loans - HELD THAT:- We concur with the findings of Ld. CIT(A) since the same are based on facts. The interest is allowable only if the loan has been utilized to acquire the property. To that extent, interest has already been allowed to the assessee. Finding no infirmity in the impugned order, on this issue, we dismiss the ground raised by the assessee.
Rental Income - We find that in case of property which has been let out for part of the year, the assessee would be entitled for vacancy allowance if the property remains vacant for part of the year. It is undisputed position that the property has remained unoccupied for part of the year. Therefore, the assessee is entitled for vacancy allowance and this addition has no legs to stand. By deleting the same, we allow the ground of appeal.
Legal grounds are concerned, we find that the assessee was subjected to search action on 11.05.2012. The assessee had already filed return of income on 14.03.2012. However, the time limit to issue notice u/s 143(2) had not expired and Ld. AO could have issued said notice by 30.09.2012. Therefore, it is not a case of concluded assessment. Rather Ld. AO was well within his right to make any addition after examination of assessee’s books of account. The legal proposition laid down by Hon’ble Delhi High Court in Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] also supports this view. No infirmity has been shown to us in the jurisdiction acquired by Ld. AO. - Decided in favour of assessee.
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2022 (3) TMI 1345 - ITAT JAIPUR
Reopening of assessment u/s 147 - Eligibility of reasons to believe - AO has proposed to assess the income being notional rent in respect of the closing stock in the commercial complex, namely, “Kreishna Square” - HELD THAT:- There is no allegation by the AO in the reasons recorded that the income proposed to be assessed in the reassessment proceedings has escaped assessment due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Even otherwise, we find that all the relevant material in respect of the issue of assessment of rental income of the unsold stock was already available with the Assessing Officer at the time of scrutiny assessment. Hence, when the original assessment was framed under section 143(3) and the reopening is after the expiry of four years from the end of the relevant assessment year then the Assessing Officer is not permitted to reopen the assessment until and unless the conditions prescribed in the proviso to section 147 are satisfied.
Assessing Officer himself has not alleged that the income proposed to assess has escaped assessment for want of disclosure of all material facts necessary for assessment.
Thus in view of the above facts and circumstances as well as the binding precedents on the issue being decision of GKN Driveshafts (India) Ltd,[2002 (11) TMI 7 - SUPREME COURT] and CIT Udaipur vs. Hindustan Zinc Ltd. [2016 (6) TMI 1045 - RAJASTHAN HIGH COURT], we are of the considered view that the assessee deserves to succeed and the impugned order of the ld. CIT (A) for A.Y. 2010-11 is set aside.
Addition of the respective amounts by determining the ALV in respect of unsold stock of the assessee at “Krishna Square” the commercial complex - Notional ALV of the units held as stock in trade cannot be chargeable as income in the case of builder since the property is not constructed for letting out but the same is held for sale and actually was sold out on subsequent dates. Further, the builders take booking advance from several parties against the units and is under obligation to deliver possession of unsold stock to the concerned parties and such units cannot be let out by the builder. Therefore in absence of any specific provision in law ALV of stock in trade cannot be taxed. The sub-section (5) of section 23 was inserted by Finance Act 2017 with effect from 01.04.2018. The amended provision of sub section (5) of section 23 allows relaxation from taxability of ALV on unsold stock for the period upto 2 (two) years from the end of the financial year in which the certificate of completion of construction of the property is obtained. In the case of the assessee, construction of the property was completed on 31.08.2009.
Even if we consider the relaxation period upto two years as envisaged in section 23(5), the ALV on unsold stock cannot be taxed for assessment year 2010-11 and 2011-12. Accordingly,e decide this issue against the revenue and in favour of the assessee and consequently the additions made by the AO and sustained by the ld. CIT (A) for A.Y. 2010-11 and 2011-12 are deleted and the order of the ld. CIT (A) is set aside.
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2022 (3) TMI 881 - ITAT DELHI
Disallowance of loss claimed on house property - As stated assessee transferred an amount to his brother onward payment of LIC HFL but there was no evidence to corroborate the same - HELD THAT:- Assessee was one of joint account holder and the claim of house property loss was disallowed on the basis that the brother of the assessee had paid entire liability of loan. It was stated by the assessee that his share related to the loan was paid to the brother of the assessee. No inquiry has been made from the brother of the assessee. Therefore,we deem it proper to set aside the order of Ld.CIT(A) on this issue to the file of Assessing Officer to decide afresh.
Disallowance of deduction u/s 80C - HELD THAT:- Since this ground is related to Ground No.1 wherein Ground No.1 has been restored to the file of the Assessing Officer, this issue is also restored to the AO for verifying the veracity of the claim of the assessee. Thus, Ground No.2 raised by the assessee is allowed for statistical purposes.
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2022 (3) TMI 668 - ITAT PUNE
Disallowance made Rule 8D r.w.s. 14A - HELD THAT:- In the working of disallowance u/s. 14A, it was seen that Clause (iii) of Sub-rule (2) of Rule 8D is primarily applicable in assessee’s case, we find the observation of which made by the AO, in our opinion, is a satisfaction recorded by not accepting the disallowance made by the assessee on its own as it was not appropriate method. The AO arrived at such conclusion only on the examination of accounts of the assessee and held disallowance primarily under Rule 8D(2)(iii) is required to be made which clearly shows that the AO not satisfied with the accounts of assessee and proceeded to made disallowance only under Rule 8D(2)(iii) in addition to the disallowance made by the assessee, in our opinion, that the AO examined the accounts of the assessee and by recording its non-satisfaction of the assessment order proceeded to further disallowance as required u/s. 14A - ratio laid down in the case of Godrej & Boyce Manufacturing Co. Ltd. [2017 (5) TMI 403 - SUPREME COURT] which was followed by this Tribunal in the case of Caggemini Technology Services India Ltd. [2019 (3) TMI 1135 - ITAT PUNE] for A.Y. 2011-12. Thus, the arguments of ld. AR in respect of satisfaction by the AO are rejected. Thus, the order of CIT(A) is justified and the ground No. 1 raised by the assessee is dismissed.
Disallowance of valid claim u/s. 80IA - AO denied the claim u/s. 80IA(4) of the Act considering each of the unit as a separate business on stand-alone basis which did not have any profit entitled for the said deduction in the year under consideration - HELD THAT:- As explained by the assessee that all the units have huge brought forward losses as on 01-04-2009 and if profit and loss of each windmill should not be considered on stand-alone basis otherwise windmill business has no positive income entitled to deduction u/s. 80IA of the Act. The AO rejected the said explanation and by considering each windmill as a separate unit and deduction for the year under consideration was denied. CIT(A) following earlier year confirmed the disallowance made by the AO. A similar issue came up before the Tribunal in assessee‟s own case for A.Y. 2010-11 . [2019 (1) TMI 1963 - ITAT PUNE]remanded the issue to the file of AO to decide the issue in terms of the ratio laid down by the Hon‟ble High Court of Bombay in the case of CIT Vs. Hercules Hoists Ltd [2017 (6) TMI 1125 - BOMBAY HIGH COURT]
Disallowance on account of Security Expenses and Gardening Expenses, respectively as part of annual value under Income from House Property - HELD THAT:- The agreement filed before us does not convey anything that the assessee let out its property and in turn it shows contrary to the explanation offered to the AO. The assessee did not furnish any evidence showing that the license fee of ₹ 1,50,00,000/- is inclusive of security and gardening expenses and no bifurcation given in support of its contention as rightly pointed out by the CIT(A). Therefore, in the absence of such valid evidences, we find no infirmity in the order of CIT(A). AR placed on record order of Neelam Cable Manufacturing Co. [1997 (8) TMI 102 - ITAT DELHI-A]. On perusal of the same the Tribunal held no separate deduction for security service charges is provided u/s. 24 of the Act but the service charges is to be deductible while computing the annual value u/s. 23 of the Act. In the present case, as discussed above, there was no break up provided by the assessee as pointed out by the CIT(A) and also Leave and License agreement no such break up is reflected to claim gardening and security service charges for computing the annual value. Therefore, the order in the case of Neelam Cable Manufacturing Co. (supra) is not applicable. In view of the discussion made here-in-above, the impugned order passed by the CIT(A) is justified. Thus, ground No. 3 raised by the assessee is dismissed.
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2022 (3) TMI 295 - ITAT DELHI
Income from house property - Deduction u/s 23(1) - Annual mixed use charges paid by the assessee to Municipal Corporation of Delhi - whether the same is amounts to 'tax' - HELD THAT:- The definition of the 'tax' under the Delhi Municipal Corporation (Property Tax) bye Laws 2004 means and includes only building tax or vacant land tax or both, which does not include the "Annual Mixed Used Charge."
In the present case, the collection of 'mixed used charges' is for the purpose of regularizing the usage of residential premises for certain commercial purposes as prescribed under the Delhi Development Authority (Fixation of Charges For Mixed Use And Commercial Use of Premises) Regulations, 2006. The said charges is in the nature of regularization of the usage of the property, which cannot be construed as tax levied by the local authority/Municipal Corporation of Delhi - collection of the annual mixed used charge will not make any difference in the annual let out value of the property, therefore the same is not allowable as per the proviso under section 23(1) of the Income Tax Act, 1961.
We are of the view that, the CIT(A) has rightly upheld the disallowance made by the A.O. in respect of the claim made by the assessee for deduction of annual of mixed use charges paid by the assessee to Municipal Corporation of Delhi, in respect of the property of the Assessee.
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2022 (2) TMI 1054 - ITAT DELHI
Income from house property - Annual value determination - addition of Deemed Rent of house properties lying vacant for whole of the year - deemed annual value @ 5% of value of investment in house property was calculated by ld. CIT(A) - Rejection of assessee contention that properties were not let in past years and letting in future years does not entitle the assessee to relief granted in section 23(1)(c) - HELD THAT:- We find that the AO has computed 10% of the value of investments in house property whereas the ld. CIT(A) reduced the amount to 5% of the value of investments. Both decisions are on ad-hoc basis. The rent realized by the assessee in the subsequent years is on record with all the evidences. Hence, we deem it proper to refer the matter back to the file of the AO to compute the income from house property as per the municipal value in accordance with the provisions of Section 23(1) of the Income Tax Act, 1961. Appeal of the assessee is allowed for statistical purpose.
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2022 (2) TMI 1053 - ITAT DELHI
Income from house property - computation of standard rent - ALV of the property is the value for which the property might reasonably be expected the let during the year or actual rent receipt whichever is higher - HELD THAT:- We find that the AO was under the wrong impression that equal rate of rent should be charged from all the tenants disregarding the time, location and the facilities enjoyed by each tenants. Once, the revenue comes to a conclusion that the rent received by the assessee is less than the ALV, it is for the revenue to obtain the details of the ALV from the competent authorities to prove that the rent receivable by the assessee is less than the ALV. In this case, the revenue failed to do so instead they have embarked upon a flat rate of determination of rent.
CIT(A) also failed to utilize the opportunity of obtaining the details of ALV from the district authorities while denying the standard rent received by the assessee. The entire action of the revenue simmers down to determination of a notional rent without any support of the Uttar Pradesh Urban Building (Regulation of Letting, Rent and Eviction) Act, 1972. Hence, the action of the revenue authorities cannot be sustained. Assessee appeal allowed.
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2022 (2) TMI 340 - ITAT DELHI
Income from house property - higher value of the rent be treated as deemed income under the head “Income from house property” with respect to the property which was actually let out, vacant and/or kept for self uses - HELD THAT:- We find that contention of the assessee was that the issue related to rateable value adopted by NDMC was under consideration for review before the Competent Authority at NDMC. This aspect is not addressed by Ld. CIT(A) therefore, we modify the order of Ld.CIT(A) and direct the Assessing Officer to consider the decision of NDMC in respect of the rateable value revised in the subsequent year and adopt the same for this year as well. This ground of assessee’s appeal is allowed in terms stated herein above.
Expenses incurred for earning rental income - CIT-A deleted the addition - HELD THAT:- We do not see any infirmity into the order of Ld.CIT(A) as the Revenue itself has not made any disallowance in other years. Moreover, no reason is assigned for not following Rule of Consistency. The Revenue is under legal obligation to be consistent in its approach regarding taxability of any item. It cannot be purely on the whims and fancies of the Assessing Officer. The Ground No.1 of Revenue’s appeal is dismissed.
Disallowance of compensation paid to allottees - HELD THAT:- We find that the similar issue was decided by the Hon’ble High Court of Delhi in assessee’s own case [2019 (3) TMI 1272 - DELHI HIGH COURT] answered question of law in favour of the Assessee and against the Revenue by holding that the conclusion recorded by the ITAT that the compensation was paid by the Assessee for 'extraneous consideration' is perverse and contrary to the record - Decided against revenue.
Addition of bank guarantee commission paid to Bank - HELD THAT:- Issue decided in own case that 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..
Addition u/s 14A r.w. Rule 8D - HELD THAT:- We find that Ld.CIT(A) gave a finding on fact that the assessee had not earned any exempt income. Therefore, in the light of the judgement of Hon’ble High Court of Delhi in the case of CIT vs Holcim India Pvt.Ltd [2014 (9) TMI 434 - DELHI HIGH COURT] (Del.), we hereby dismiss the ground raised by the Revenue.
Addition u/s 41(1) on account of cessation of liability - CIT-A deleted the addition - HELD THAT:- CIT(A) has rightly followed the judgement of Hon’ble High Court of Delhi in the case of CIT vs Shree Vardman Overseas Limited [2011 (12) TMI 77 - DELHI HIGH COURT] 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.
Addition on account of difference in receipt in Form No.26AS in Profit & Loss Account - HELD THAT:- 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 [2013 (3) TMI 316 - DELHI HIGH COURT] the appellant cannot be asked the suffer on account of the errors committed by third party in filing the TDS statement. 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 income, cannot be the basis for making addition in the hands of appellant - Decided against revenue.
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2022 (1) TMI 1361 - ITAT PUNE
Income from house property - Addition on account of notional income in respect of the unsold flats - unsold 37 flats shown as stock in trade - assessee filed return showing income from such business and also engaged in the business of property development - HELD THAT:- In the present case that there is no dispute that the profits of the business of construction by the assessee are chargeable to income-tax. Therefore, in our view that the unsold 37 flats are occupied by the assessee are as owner; business of construction is carried on by the assessee; the occupation of the flats is for the purpose of business; and profits of such business are chargeable to Income-tax.
Thus, in our opinion, all the four conditions provided in exclusion clause in section 22 of the Act are to be excluded, therefore, we hold that no addition on account of deemed rent on unsold 37 flats can be made in the hands of the assessee. DR did not dispute that the assessee recognized the unsold flats as stock-in-trade but however relied on the order of CIT(A). Thus, the order of CIT(A) is not justified and it is set aside. Thus, the grounds raised by the assessee are allowed.
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2022 (1) TMI 1206 - ITAT AHMEDABAD
Income from house property - deduction under section 24 denied - HELD THAT:- We note that the learned CIT (A) had confirmed the order of the AO denying the deduction under section 24 of the Act after placing reliance on the order of Chennai tribunal in case of of Anjuman-E Himayath- E-Islam [2021 (4) TMI 1176 - MADRAS HIGH COURT] for A.Y.2009-10. However we find that the order which has been relied upon by the learned CIT (A) has been challenged before the Hon’ble Madras High Court, [2021 (4) TMI 1176 - MADRAS HIGH COURT]where Hon’ble bench reversed the order of the Tribunal.
Thus deduction u/s 24(a) is allowable to the assessee. Hence, the ground of appeal of the assessee is allowed.
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2022 (1) TMI 1041 - ITAT PUNE
Income from house property OR business income - Addition towards deemed rent on unsold vacant flats and shops held by the assessee as stock-in-trade - HELD THAT:- As decided in M/S. COSMOPOLIS CONSTRUCTION, SHAH KHANDELWAL JAIN & ASSOCIATES [2018 (9) TMI 1621 - ITAT PUNE] House property can result in respect of unsold flats held by a builder as stock in trade at the year-end. While disposing off the above referred case, the Tribunal observed that income from unsold flats could be considered only under the head "Profits and Gains from business or profession" and not "Income from House Property".
CIT(A) considered these observations of the Tribunal qua the inclusion of income, if any, under the head "Business Income" and directed to include deemed annual value as business income in the impugned order. He however, did not appreciate that the Tribunal nowhere held for the inclusion of the deemed rental income under the head "Profits and Gains from business or profession". It simply directed that income, if any, from unsold flats held as stock in trade can be considered only as "Business Income".
In the ultimate analysis, the Tribunal eventually deleted the addition. It is but natural that if a particular income is to be taxed under a specific head, the computational mechanism governing that head only can come into play. There is no provision under the head "Profits and Gains from business or profession" which deems the rental income from unsold flats held as stock as 'Business income'. Considering the above factual and legal position, we are of the considered opinion that the addition made by the AO and as sustained in the first appeal, is not called for - Decided in favour of assessee.
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2022 (1) TMI 779 - ITAT MUMBAI
Income from House Property - as per the lease and licence agreement the property was let out for a monthly rent and the assessee has received interest free refundable security deposit - whether the departmental authorities can substitute the actual rent received by the assessee by computing notional rent? - HELD THAT:- In case of J.K. Investors (Bom) Ltd [1999 (7) TMI 675 - ITAT MUMBAI] the Tribunal has held that the benefit of the security deposit does not accrue to the lessor at the time of receipt, but only on utilization of the same. The Bench observed, when the income derived on utilization of the security deposit is otherwise taxable, there is no justification to hold that the assessee received the security deposit anticipating that certain benefit would be received. See case of CIT vs Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT].
In case of Shri Owais Hussain vs ITO [2018 (5) TMI 1817 - ITAT MUMBAI] has followed the decision of Hon’ble High Court in case of Tip Top Typography (supra) and has directed the assessing officer to compute the deemed rent as per municipal rateable value. The Hon’ble Court has held that based on cogent material the assessing officer must come to a definite conclusion that parties have concealed the real position. The Hon’ble Court has further held that Municipal rateable value cannot be discarded straightaway, unless, there is cogent and reliable material to do so. Thus, the ratio that follows from the aforesaid decisions is: the assessing officer cannot determine notional rent based on estimation / guess work. In the facts of the present appeal, the assessee has furnished the municipal rateable value which is much less than the rental income offered - AO has not brought any concrete evidence on record to demonstrate that parties have concealed the real position. That being the case, no further addition can be made to the rental income by computing notional rent based on the interest free security deposit. In view of the aforesaid, we delete the addition made by the assessing officer. - Decided in favour of assessee.
Disallowance u/s 14A - HELD THAT:- As emerging from record reveals that during the year under consideration, the assessee has not earned any exempt income. Therefore, in absence of any exempt income earned by the assessee, no disallowance under section 14A r.w.r.8D can be made. This is a fairly well settled legal principle enunciated in a number of judicial precedents including the decision of the Hon’ble jurisdictional High Court in case of Principal Commissioner of Income-tax vs M/s Ballarpur Industries Ltd [2016 (10) TMI 1039 - BOMBAY HIGH COURT].
Disallowance of interest expenditure - from the material on record as found that the entire borrowings were from related parties and the assessee was used as a conduit for availing the loan from Mercator Ltd and lending to AHM Investments Pvt Ltd thus, alleging that the assessee was unable to establish that the interest expenditure was incurred for the purpose of business - HELD THAT:- The factual matrix clearly reveal that before the departmental authorities, the assessee failed to furnish any evidence to demonstrate that the interest expenditure claimed as deduction was incurred for the purpose of business. This the factual position remains unaltered even before us. The onus is entirely on the assessee to establish on record that the interest expenditure claimed as deduction was incurred for the purpose of business. The assessee having failed to do so, the claim cannot be allowed. Accordingly, we do not find any reason to differ with the view expressed by the learned first appellate authority. This ground is dismissed.
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2022 (1) TMI 689 - ITAT PUNE
Income from house property - assessability of notional income from the unsold flats held as ‘stock in trade’ in the case of the assessee whose business is construction and sale of residential properties - Addition u/s 22 r.w.s. 23(4) on account of deemed rent in respect of unsold units held as stock in trade by the appellant company - as argued the appellant company had held these unsold units as stock in trade and hence, as these units were occupied by the assessee for its business purpose, there was no reason to tax the annual value of such unsold units u/s 22 - HELD THAT:- No change in facts and law subsequent to the decision of Kumar Properties and Real Estate [2021 (4) TMI 1163 - ITAT PUNE] was brought to our notice. Hence, we have no reason to take a different view from the view taken by the Coordinate Bench of this Tribunal in the case of Kumar Properties and Real Estate (P.) Ltd. (supra). Therefore, we are of considered opinion that the Assessing Officer was not justified to assess the annual value of unsold flats for the year under consideration. Accordingly, we direct the Assessing Officer to delete the addition as made by him in the assessment order. Thus, the issue raised in the grounds of appeal stands allowed.
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