TMI Blog2016 (12) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of Kishan Chand Chela Ram (1980 (9) TMI 3 - SUPREME Court ). There is no other material brought on record against assessee for disallowing claim under section 24(a) of the Act. Considering the above discussion, we are of the view that authorities below were wholly unjustified in denying deduction under section 24(a) of the Act in favour of the assessee. The rental income is clearly assessable as income from house property in the case of the assessee. Therefore, assessee would be entitled for deduction under section 24(a) - ITA No. 96/CHD/2015 - - - Dated:- 3-10-2016 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER For The Appellant : Shr i Vineet Kr ishan For The Respondent : Shr i Sushi l Kumar PER BHAVNESH SAINI ,JM This appeal by assessee has been directed against the order of ld. CIT (Appeals)-I Chandigarh dated 01.12.2014 for assessment year 2011-12. 2. We have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material available on record. 3. The assessee has raised several grounds of appeal on which effectively three issues arise f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land and building situated at Plot No. 147-148, Industrial Area, Phase-I Chandigarh to M/s. Sarovar Hotels Pvt. Ltd., Mumbai. This company had demolished the whole of the old structure and constructed a hotel building on this land. The assessee had declared the amount received from M/s. Sarovar Hotels Pvt. Ltd. under the head 'Income from House Property' and had claimed deduction of 30% of the amount i.e. ₹ 57,10,796/- under section 24(a) of the Act. The Assessing Officer questioned the assessee about allowability of deduction under section 24(a) of the Act and the assessee submitted that the building was given on lease so it was eligible for deduction under section 24(a) of the Act. The Assessing Officer called for information under section 133(6) of the Act from M/s. Sarovar Hotels Pvt. Ltd. and noticed from the information received that no structure of old building existed on the said plot and there exist totally new construction which is a hotel building and M/s. Sarovar Hotels Pvt. Ltd. was claiming deduction on the said building. The Assessing Officer analyzed lease deed and inferred that right to construct on the plot was with M/s. Sarovar Hotels Pvt. Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the assessee, therefore, whatever amount is received by the assessee is for leasing out of the land, so the rent is to be assessed as 'income from other sources' and not 'Income from House Property'. The ld. CIT (Appeals) also noted that principle of res judicata does not apply to income tax proceedings and accordingly, dismissed the appeal of the assessee. 10. We have heard ld. Representatives of both the parties. The ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that information under section 133(6) of the Act allegedly received from the tenant was never supplied to the assessee and never confronted. Therefore, the same cannot be read in evidence against the assessee. He has relied upon decision of Hon'ble Supreme Court in the case of Kishan Chand Chela Ram 125 ITR 713. 10(i) The ld. counsel for the assessee further submitted that deduction under section 24(a) of the Act is statutory deduction and is not dependant upon repair of building etc., as is noted by authorities below. He has referred to the Registered Lease Deed dated 12.03.2007 between assessee and the tenant, copy of which is filed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o claim rental income under the head 'income from house property' and assessee is, therefore, entitled for statutory deduction under section 24(a) of the Income Tax Act. On the other hand, ld. DR relied upon orders of the authorities below and submitted that since assessee was not owner of the superstructure and old construction have been removed and new construction have been raised by the tenant, therefore, assessee would not be entitled for deduction under section 24(a) of the Act. 12. We have considered rival submissions. The Assessing Officer has analyzed the terms of the Lease Deed for arriving at the decision against the assessee. Section 24(a) of the Act provides, deduction from 'income from house property', income chargeable under the head 'Income from house property shall be computed after making the deduction, (a) a sum equal to 30% of annual value . It is not in dispute that property in question was let out by the assessee to M/s. Sarovar Hotels Pvt. Ltd. (tenant) vide registered Lease Deed dated 12.03.2007. According to the deed, the tenanted property consists of land and building as mentioned in the schedule-I was let out to the tenant. The S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tenant along with superstructure and at the time of vacating the property in question, assessee would be entitled for restoration of land/building with superstructure from the lessee. So long tenancy continued, tenant was entitled to enjoy the demised property, tenant could carry out any construction or repair etc. in the tenanted property. The balance sheet of the assessee also shows that in earlier year, demised property was land and building. The tenant shall have to revert back to the assessee the building and superstructure on expiry of the lease deed. Therefore, the assessee had let out land and building to the tenant with superstructure, therefore, the rental income received out of the letting out the demised property, the same income would be in the nature of income from house property. In earlier assessment years, assessee had declared rental income from the same property as income from house property which have not been disputed by the Income Tax authorities. In assessment year 2009-10, the assessee made claim of deduction of 30% under section 24(a) of the Act in computing the income. The Assessing Officer passed the scrutiny assessment order under section 143(3) dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal income earned by the assessee from the letting out of shops was assessable under the head Income from house property and not income from Profits and gains of business profession. 15. It is well settled law that principle of consistency apply to the income tax proceedings. We rely upon decision of Delhi High Court in the case of A.R.J. Securities Printers 264 ITR 276, decision of Madhya Pradesh High Court in the case of Godawari Corporation Ltd. 156 ITR 835, decision of Hon'ble Punjab Haryana High Court in the case of Vikas Chemi Gum India 276 ITR 32 and decision of Supreme Court in the case of Radhasoami Satsang Vs CIT 193 ITR 321. These fact, therefore, clearly prove on record that assessee had let out building to the tenant and at the time of expiry of the lease deed, assessee would be entitled for restoration of possession of building with super structure, therefore, merely the tenant has raised some construction over the demised property would not disentitle the assessee from claiming deduction under section 24(a) of the Act, The assessee would always be deemed to be owner of land and building so let out. Further, if the tenant is claiming deduction of deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of allowance of interest expenses of ₹ 58,91,669/- claimed under section 24(b) of the Act and payment of ₹ 40,37,979/- made to Estate Officer. The same issue is also raised in ground No. 5. The ld. CIT (Appeals) considered the issue of disallowance of interest paid of ₹ 58,91,669/- claimed under section 24(b) of the Act and against treating the interest expenditure of ₹ 40,37,979/- paid to Estate Officer as capital expenditure. The ld. CIT (Appeals) noted that since he has already given a finding that rent received by the assessee is to be assessed as 'income from other sources' therefore, assessee would not be entitled for any deduction under section 24 of the Act. However, in order to give opportunity to the assessee to prove that expenses were incurred wholly and exclusively for the purpose of earning the lease money, matter was restored to the Assessing Officer. 19. After hearing rival contentions, we are of the view the issue is covered in favour of the assessee by order of ITAT Chandigarh Bench in the case of same assessee for assessment year 2009-10 in ITA 77/2013 dated 30.05.2014 in which the Tribunal allowed deduction on this issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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