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Asstt. Commissioner of Income Tax, Central Circle-12, New Delhi Versus Smt. Amita Garg and Vica-Versa and Deputy Commissioner of Income Tax, Central Circle-5, New Delhi Versus Ranjana Garg and Vica-Versa

2016 (4) TMI 814 - ITAT DELHI

Determination of income from house property - Held that:- The assessee claimed that the said property was prematurely vacated by the tenant and remained vacant. However, nothing is brought on record to substantiate that the lease agreement was not in existence for the year under consideration and what were the reasons for vacating the premises. In the present case, it is noticed that the assessee claimed that the premise was vacated premature due to hanging sealing drive by MCD and later on the .....

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resent case, it appears that opportunity was not given to the AO while admitting the fresh evidences, if any. In the instant case, it is also noticed that the assessee on the one hand claimed that the premise was sealed on the other hand it claimed that a portion of the property was given on rent to M/s Global Realty Ventures Ltd. @ ₹ 5,000/- per month and the said company was taking care of the rented property. From the said submissions, it is not clear that when M/s Global Realty Venture .....

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se were not appreciated by the ld. CIT(A) in right prospective. Therefore, we set aside the impugned order and remand the issue back to the file of the ld. CIT(A) for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

Interest paid on the loans raised for making the investment in the partnership firm - Held that:- In the present case, it is noticed that the claim of the assessee was that the loans were raised for ma .....

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d and that there was a direct nexus between the investment made in the partnership firm and interest bearing loans raised. We, therefore, in the absence of clear facts available on record, deem it appropriate to set aside this issue also to the fie of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - ITA No. 2346/Del/2012, CO No. 255/Del/2012, ITA No. 2347/Del/2012, CO No. 256/Del/2012, ITA No. 2349/Del .....

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2012 for the assessment years 2008- 09 and 2009-10 of ld. CIT(A)-XXI, New Delhi. 2. Since the issue involved is common in the appeals of the department and the Cross Objection of the assessee. Therefore, these are being disposed off by this consolidated order for the sake of convenience and brevity. 3. First we will deal with the appeal of the department in ITA No. 2349/Del/2012 and Cross Objection No. 250/Del/2012 of assessee in the case of Ranjana Garg. The department has taken the following g .....

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AY 2008-09 it was submitted before CIT(A) that the property no. 11 Ring Road New Delhi was vacated by the tenant NIIT w.e.f. 31-05-06. The lease agreement was initially for a period of three years w.e.f. 12-07-05, however the premise was vacated premature due to hanging sealing drive by MCD and later on the premise was sealed by MCD on 09-11-06. The assessee has neither brought these facts to the notice of Assessing Officer nor filed any documentary evidence in this regard during the course of a .....

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gned assessment order is bad in law as the assessment as well as additions or computation of income has not been framed/made on the basis of any material seized pursuant to an action taken under section 132 of the Act in the case of Rajdarbar Group which itself makes the assessment contrary to law, illegal leading to be quashed. 3. That Ld AO has erred in law as well as in facts in raising Ground no.-2 on admitting additional evidence because: a.) He has failed to notice that there was no additi .....

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a new fact brought to him during the course of discussion as rent was declared in the earlier years from NIIT who did not pay subsequent rent, as property was sealed by MCD and required to be vacated, d.) AO himself noticed at para 4.1 as informed that NIIT has vacated w.e.f 1/6/2006 and property remained vacant till 30/11/2007 and subsequently one room was let out to a group company for proper watch and upkeep of the property and wrongly concluded merely on doubts to apply sec 23(1)(a). e.) AO .....

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ration, amendment of any of the cross objection. 5. From the above grounds, it is crystal clear that the grievance of the department as well as the assessee relates to the determination of income from house property. 6. Facts of the case in brief are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was carried out in Rajdarbar Group of cases including the case of the assessee on 31.07.2008. The AO issued the notice u/s 153A of the Act d .....

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ew Delhi. The said building was earlier given on rent to M/s Institute of Information Technology on lease on a monthly rent of ₹ 8,85,000/-. However, for the year under consideration no rental receipt had been shown from the above tenant, instead of this, the property was let-out to a family concern M/s Global Realty Venture Ltd. for meager rent of ₹ 5,000/- per month. The AO asked the assessee a detailed questionnaire as under: 1. The details filed by you suggest that you along with .....

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month. 2. As per the provisions of Section 23 of the I.T. Act, 1961, the annual value of any property shall be deemed to be- (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 receivable 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) Where the property or any part of the property is let .....

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ing Road, Lajpat Nagar-IV, New Delhi is ₹ 1,06,20,000/-. As per the provisions of the I.T. Act, income from House Property is chargeable on the basis of Annual value of the property. 4. You are, therefore, requested to show cause as to why for the purpose of computation of income from House Property, the annual value of the said property should not be taken at ₹ 1,06,20,000/- and income from house property be computed accordingly." 7. The AO after considering the submissions of .....

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gard to the non offering of income from house property as per Section 23(1)(a) of the Act which states that for the purpose of determining the income from house property, the annual value of the property shall be deemed to be sum for which the property might reasonably be expected to let from year to year. He was of the view that the property in question was fit to fetch minimum rent of ₹ 8,85,000/- per month or ₹ 1,06,20,000/- per annum. The AO held that the assessee was having 50% .....

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submitted that the assessee is the co-owner with Smt. Amita Garg of the property No. 11, Ring Road, New Delhi, which is admeasuring about 725 sq. yds. having ground floor, first floor, second floor, third floor and part of roofs nearly admeasuring approximately 30,000 sq. ft. and the entire building was leased to M/s NIIT Institute of Information Technology at a monthly rent of ₹ 8,85,000/- for running a coaching institute but the same was vacated by NIIT and since then it was lying vacan .....

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the same AO and a meager consideration of ₹ 5,000/- per month had been charged from this concern which had been assessed by the same AO who did not consider the areas of lease while making drastic comparison of the rentals. It was further submitted that the AO while framing the assessment in the case of M/s Global Realty Ventures Ltd. had himself assessed the rental expenses claimed by it @ ₹ 5,000 per month only. It was contended that the addition was made by the AO without going t .....

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house property would entail 30% of the deduction against the same income. The assessee also produced copy of the balance sheet of M/s Global Realty Ventures ltd. along with copy of ledger account of rent paid to the assessee. 9. The ld. CIT(A) after considering the submissions of the assessee deleted the addition made by the AO by observing in para 5.3 of the impugned order as under: 5.3 I have carefully considered the submission, perused the assessment order and, evidence on record. The disput .....

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h vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in section 23(1)(a), the annual value should be deemed to be the amount so received or receivable" and therefore addition is liable to be deleted as per section 23(1)(c). After analyzing the facts and arguments of the AR and AO, I am of the considered opinion, that section 23(1)(c) states that if any person has let out the property in past and in subsequent year it was vacant du .....

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ause (b) of section 23(1) are not applicable and the gross annual value shall be actual rent received or receivable. In the present case deeming provision of Chapter IV (Income from House Property) of the Income Tax Act will not be applicable. Therefore, AO has wrongly applied the provisions of section 23(1)(a). In a judgment given by the Hon ble High Court of Delhi in the case of CIT v Modi Industries Ltd. (No.4) [1993] 200 ITR 350 (Del), the actual rent received or receivable from the properti .....

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ot before the AO. It was further submitted that there is a contradiction in the observation of the ld. CIT(A) who on the one hand stated that the premises was vacated on the other hand stated that it was given on rent @ ₹ 5,000 per month. It was further submitted that when M/s Global Realty Venture Ltd. was taking care of the property then service charges were to be paid to the said concern instead of charging rent from it. Therefore, the provisions of Section 23(1)(a) of the Act were appl .....

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ined vacant. As such the provisions of Section 23(1)(c) of the Act were applicable and the ld. CIT(A) rightly deleted the arbitratory addition made by the AO. 12. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the property in question was leased out to M/s NIIT Institute of Information Technology under the lease agreement dated 12.07.2005 on a monthly rent of ₹ 8,85,000/-. The s .....

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premise was sealed by MCD on 09.11.2006, the said fact has been mentioned by the ld. CIT(A) in para 5.3 of the order dated 14.03.2012 passed in the case of co-owner Smt. Amita Garg. However, these facts were not brought by the assessee before the AO and nothing is mentioned in the impugned order of the ld. CIT(A) that new evidences were admitted under Rule 46A of the Income Tax Rules, 1962. It is well settled that nobody should be condemned unheard as per maxim audi alteram partem but in the pre .....

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Ltd. was taking care of the property then why the service charges were not paid to the said company, on the contrary, the rent was received. It is also not clear when the property in question was sealed on 09.11.2006 as mentioned in para 5.3 page no. 6 of the order dated 14.03.2012 by the ld. CIT(A) in the case of Co-owner of the property then how it was given on rent to M/s Global Realty Ventures Ltd. 13. From the aforesaid discussion we are of the view that the facts of the present case were n .....

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Objection. 15. In the case of Smt. Amita Garg, the facts related to the main issue raised vide Ground No. 1 in the departmental appeal is similar to the grounds taken by the assessee in its Cross objection which are worded in the same manner as were in the case of Smt. Ranjan Garg. Therefore, our findings given in the former part of this order shall apply mutatis mutandis . 16. One another issue has been raised in ITA No. 2346/Del/2012 for the assessment year 2008-09 in the case of Smt. Amita Ga .....

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noticed that the document filed by the assessee revealed that she was not carrying on any business and profession during the year under consideration. Therefore, the said amount was disallowed. 18. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that she had earned income of ₹ 5,50,114/- as interest on capital from partnership firm which was shown as income from business and profession in the profit and loss account and computation of income. It was further .....

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the interest income of ₹ 5,50,114/-. Therefore, the interest expenses incurred to earn interest income should have been allowed as per the provisions of Section 28 as well as 37 of the Act. It was contended that the AO had not considered the facts that the income was earned by way of interest by the assessee and the said income had been earned throughout the year on balance invested in partnership firm. Therefore, the presumption of the AO that no business activity was done during the year .....

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Raja Narsingirji (1973) 91 ITR 544 (SC) Matubai Chunilal Patel Vs CIT 66 ITR 408 (Guj) 19. The ld. CIT(A) after considering the submissions of the assessee observed that apart from the other income, an amount of ₹ 5,50,114/- was received by the assessee as interest from the partnership firm M/s Nagar Panchwati and as per the provisions of Section 28 (v) of the Act, the interest received by the partner from the firm was a business income. He further observed that the AO had disallowed the e .....

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