TMI Blog2014 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... m such properties and section 22 of the I.T. Act does not say anywhere that property should be held as investments as the basis of assessing the income from other sources – Relying upon assessee’s own case, the CIT (A) has rightly decided the issue in favour of the assessee with direction to treat the income from such properties as income from house property and to allow deduction u/s 24(a) of the Act – the order of the CIT(A) upheld – Decided against Revenue. Deletion on account of notional rental income vacant/leased properties – Held that:- CIT(A) followed M/s DLF Office Developers vs. ACIT [2008 (4) TMI 530 - ITAT DELHI ] - where there was an intention to let out the house property and assessee took steps to let it but could not get suitable tenant, in such cases the annual value have to be worked out u/s 23(1)(c) of the IT Act and according to this clause if the actual rent received/ receivable during the year is Nil then that has to be taken as annual value of the property in order to compute the income from property - in case of the assessee where the property remained vacant then the ALV of such property will be Nil - the notional addition made by the AO under the head " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years 1994-95, 2000-01, 2002-03 2004-05 under the similar set of facts and circumstances. 5. The Ld. Departmental Representative on the other hand basically placed reliance on the assessment order. He submitted that the expenditure was not claimed by the assessee in its profit and loss account. 6. The Ld. AR submitted that the Ld. CIT (A) has passed detail order after discussing the case of the parties and following the order of the Tribunal in the case of assessee itself on an identical issue under similar set of facts and circumstances for the assessment years 1994-95, 2000-01, 2001-02, 2002-03 2003-04. 7. Having gone through the orders of the authorities below, we find that the Assessing Officer had disallowed the claimed expenditure with this observation that out of the total development expenditure incurred on internal development, expenditure on the maintenance, billing services could not be treated as expenses for construction and development. We find that in the above cited assessment years an identical issue was raised, wherein Assessing Officer was directed to delete such disallowance with further direction to consider the same as part of work-in-pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. The next issue is with regard to 30% of sale value which, per section 5(1) of HDRUA Act has to be deposited in a separate Bank account under the control of Director, Town Country Planning, Haryana. The assessee debits on yearly basis all direct expenses for development of this colony, into the working progress account. On sale of the land or units, it credits work-in-progress: account by 30% of sale value and debits the same to profit loss account as internal development charges. This, it has done consistently, right from 1981 till date. The CIT (A) has discussed this issue in para 24 of page 23 onwards. His finding given at page 28 para (v) of his order. Now, here again the CIT(A) varies the method of accounting regularly followed and employed by the assessee and accepted by all concerned authorities right from assessment year 1982-83 to 1993-94. Having verified the details as per directions of the CIT(A); 30% has been accepted as the fair value of internal development expenses by A.O. In fact, when the matter went back in remand, CIT(A) found that the actual expenditure incurred in the year was more than 30% of the sale booked in the year. Therefore, method of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting of the assessee has not resulted in any gain to the Revenue in the year under appeal. Further, collectively, if all the years are taken into consideration, there is no gain to the Revenue. In fact, there is loss to the Revenue, if the effect of order of CIT is given in all these previous years and subsequent to the year under appeal. A chart has been filed by the assessee in re-assessment appellate proceedings in ITAT which were also heard together along with this appeal. Since in ultimate analysis. We have held that the recourse to proviso to Section 145 of the Act is uncalled for, the book results are to be accepted since there is no dispute to the income offered and expenses claimed, these directions given by CIT(A), in his order, are incorrect and the order of the AD and the CIT, Delhi (Central) New Delhi, on this ground for applying section 145 of the Act needs to be over-ruled and the return of the assessee on this point needs to be restored The income of the assessee, as returned, be accepted as such. 6. In view of the above Ld. CIT (A) was justified in deleting the disallowance. It is seen that there is no change in the facts of the appellant' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant s own case for AY 1996-97. The appellant has received income from the house properties owned by it and such properties are reflecting in balance sheet as stock in trade. The appellant has furnished the receipt of house tax payment with respect to above said properties belong to appellant and owned by it. It is noticed that the Assessing Officer has made the addition by reclassifying the income by relying upon various judgments. However, there is no dispute on the facts noted above. Taking into consideration the order of Hon ble ITAT in the appellant s own case for earlier and the decision in CIT vs. National Grindlays Bank Limited (Supra) and CIT (A) s order for the immediately succeeding years relevant to AY 2006-07, 2007-08 and 2008-09 in appellant s own case, the income received from the properties owned by the appellant s own case, the income received from the properties owned by the appellant and shown in the balance sheet as income from house property. Assessing Officer is directed to treat the income from such properties as income from house property and allow deduction u/s 24(a) of the IT Act. Hence, the addition made by the Assessing Officer of Rs.4,51,86,14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s own case for the assessment years 2006-07, 2007-08 and 2008-09. 18. In support of the ground the Ld. Departmental Representative has basically placed reliance on the assessment order. 19. The Ld. AR on the other hand reiterated the submissions made before the Ld. CIT (A) and the decisions cited and relied upon before him. 20. Considering the above submission, we find that the Ld. CIT (A) has decided the issue in favour of the assessee narrating the observation made in the cited decisions in case of M/s DLF Office Developers vs. ACIT (Supra) and other that where there was an intention to let out the house property and assessee took steps to let it but could not get suitable tenant, in such cases the annual value have to be worked out u/s 23(1)(c) of the IT Act and according to this clause if the actual rent received/ receivable during the year is Nil then that has to be taken as annual value of the property in order to compute the income from property. He has accordingly held that in case of the assessee where the property remained vacant then the ALV of such property will be Nil. Hence, no notional rent can be estimated in the case of vacant properties. 21. In abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on highest rent in respect of each building, it is seen that the properties have been given to various parties which are not related to the appellant and some of them are of International repute like GE Capital, KPMG. The rent has been charged based on the location of the property, area of lease property and timing of lease agreement. It is seen that appellant has filed copies of the all lease agreement before Assessing Officer for verification and no discrepancy in the rental income in the books of accounts, as compared to the lease agreement was pointed out by the Assessing Officer. It is not the case that appellant has received some under hand rent from the tenants. In this regard the Assessing Officer has not brought any evidence on record and no enquiry in this direction was conducted by him. Therefore, assuming the rent for all properties based on the highest lease agreement was not justifiable. As regards Assessing Officer s reliance on various judgments in the assessment order, it is seen that the facts of the said judgments are squarely different with that of the appellant s case. In the case of appellant, none of the properties have been rented out/leased to the related ..... X X X X Extracts X X X X X X X X Extracts X X X X
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