TMI Blog2016 (4) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... per maxim “audi alteram partem” but in the present 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 Ventures 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. From the aforesaid discussion we are of the view that the facts of the present case 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Id. CIT(A) has erred in deleting the addition of ₹ 3685518/- made by the Assessing Officer on account of notional income from house property in view of provision of section 23(1)(a) of the Income Tax Act 1961 by admitting additional evidence in contravention of rule 46A of Income Tax Rules, 1962. In the case of other co-owner Mrs. Amita Garg for the 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 assessment proceedings. 3. The order of Id. CIT(A) is perverse in law and on facts. 4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dated 13.11.2009 requiring the assessee to file her return of income. In response the assessee filed the return of income on 01.12.2009 declaring an income of ₹ 2,87,110/-. The said return filed u/s 153A of the Act was the same as was filed earlier u/s 139 of the Act. The assessee had shown income from house property, capital gain and other sources. The AO during the course of assessment proceedings observed that the assessee was co-owner of the property at 11, Ring Road, Lajpat Nagar-IV, New 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 ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation Technology under the lease agreement dated 12.07.2005 on monthly rent of ₹ 8,85,000/-, but the assessee had not shown any receipt from the above party for the year under consideration. However, it had offered a meager rent of ₹ 5,000/- per month from her family concern M/s Global Realty Venture Ltd. He further observed that the assessee had not brought any satisfactory reason in regard 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% holding in the said property. He, therefore, worked out the income chargeable under the head income from house property as under: Annual Value Rs.53,10,000/- Less: Property Taxes paid Rs.44973/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim higher deduction as rental payments against the profits whereas the income from the same property under the head income from 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 dispute, as raised by the appellant, pertains to the additions of ₹ 36,85,518/- made by the AO under the head Income from House property. AO has applied the provisions of section 23(1)(a) for making the additions of ₹ 36,85,518/-. In contention to that the AR has submitted that the AO has not referred the provisions of section 23(1)(c) which says where the property or any part of the property is let out and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om it. Therefore, the provisions of Section 23(1)(a) of the Act were applicable to the facts of the assessee s case which the AO has rightly invoked and the ld. CIT(A) was not justified in deleting the addition made by the AO. 11. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the AO did not doubt that the property was vacant. It was further submitted that this property was sealed by the Municipal Corporation on 09.11.2006. Therefore, it could not be leased out and remained 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 said lease agreement was for a period of 3 years. However, the assessee claimed that the said property was prematurely vac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 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 Garg vide Ground No. 3 which relates to the disallowance of ₹ 5,58,089/- made by the AO in respect of interest paid on loan, bank charges, legal expenses and telephone expenses. 17. Facts related to this issue in brief are that the AO during the course of assessment proceedings noticed that the assessee had debited an amount of ₹ 5,58,089/- towards interest paid on loan, bank charges, legal expenses and telephone expenses etc. and had claimed this amount as business expenditure. The AO 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 dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in actual was the expenditure incurred to earn the business income. He, therefore, deleted the addition made by the AO by disallowing a sum of ₹ 5,58,089/-. 20. Now the departmental is in appeal. The ld. DR reiterated the observations made by the AO and strongly supported the assessment order dated 29.12.2010. He further submitted that the assessee was not having any business activity, therefore, the interest expenses were wrongly claimed by the assessee. And the AO rightly made the disallowance. 21. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the impugned order passed by the ld. CIT(A). 22. 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 claim of the assessee was that the loans were raised for making the investment in the partnership firm and from the said firm, the assessee earned the interest income, therefore, the interest paid on the loans raised for making the investment in the partnership firm was allowable against the interest income earned. However ..... X X X X Extracts X X X X X X X X Extracts X X X X
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