TMI Blog2021 (3) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... ly shown the said income under the head income from house property as the assessee had fulfilled all the basis conditions of Section 22 of the Act for treating the income under the head income from house property , therefore, it was rightly held that the assessee was also entitled for deduction U/s 24(a) and 24(b) of the Act. No new facts or circumstances have been brought before us in order to rebut or controvert the findings so recoded by the ld. CIT(A). Therefore, we find no reasons to interfere into or deviate from the findings recorded by the ld. CIT(A). Hence, these grounds raised by the revenue stand dismissed and the order passed by the ld. CIT(A) qua these issues stand affirmed. N.P. on declared sales - Assessee excluded the rent receipts from the net profit - HELD THAT:- In NP rate chart the NP has been shown at ₹ 77,23,674/- which includes rent receipts. However, in the above chart which has now been filed by the assessee which excludes the rent receipt from the net profit claimed by the assessee. Thus, in our view, the assessee had rightly excluded the rent receipts from the net profit as from the financial statements i.e. from the computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Grounds of assessee s appeal in ITA No. 1311/JP/2019 1. Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in holding the income received on leasing of land and building to be assessed under the head income from house property and consequently allowing the deduction U/s 24 of the I.T. Act, 1961 ignoring the facts of the case that the land in question was allotted to the assessee on concessional rate for specific purpose of public interest and terms and conditions. There was a prohibition of further renting it public interest and terms and conditions. There was a prohibition on further renting it out. 2. Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in holding the income received on leasing of land and building under the head income from house property and consequently allowing the deduction u/s 24 of the I.T. Act, 1961 ignoring the facts of the case that the assessee flouted all the terms and conditions of numerous authorities just to reap benefits. As per the norms of allotment the total area to be sublet was not to exceed 40% of the total built up area, while the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced below: 6. The submission of the assessee has been considered carefully but the same is not acceptable. Vide notification No. 3(63) 4D/3/2005 dated 05/08/2007 of the Urban Development Housing Department subletting of the premises by news papers was allowed on fulfillment of certain conditions such as: (i) registration of newspaper should be older than 30 years and is regularly published in Rajasthan which is not the case with this news paper. (ii) the total area sublet by an institution would not exceed 40% of the total built-up area vide submission dated 17/11/2017 the assessee has rented out 46.4% of the total built up area, thus clearly contravening provisions of above said notification. Further, there is an incorrect figure in calculation of 46.60% as rented area to FIITZee Ltd. is wrongly taken at 20000 sqr.feet in place of correct figure 20500 sqr feet as per the lease deed dated 12/03/2010, thus the actual rented out area is 47.57%. (iii) institution will be required to seek prior permission of JDA/UIT for any type of subletting, it has been observed no prior permission was sought. Therefore, from the above discussion, it is clear that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d expenses vouchers and all relevant record were produced and duly examined by the Ld. AO and no discrepancy was point out by the Ld. AO in respect of maintenance of books of accounts . Further the Ld. AO has duly accepted the books of accounts and action u/s. 145 was not taken by the Ld. AO. As such books of accounts was not rejected as provided u/s. 145. 4. Further submitted due to instruction No. 8 of 2017 dated 29.09.2017 issued by CBDT for conducting assessment proceedings the Ld. AO vide letter No. ITBA/Com/F/17/2017-18/1006681108(1) dated 05.10.2017 has informed the assessee to intimate her intention to participate in assessment proceedings electronically. The assessee has filed his intention to pass the assessment order electronically. The Ld. AO in spite of request to finalized assessment proceedings electronically has completed assessment proceedings manually, as such the Ld. AO has not followed the direction as per direction issued by CBDT. As such in the circumstances assessment order has been finalized against the direction of CBDT and assessment order deserved to be quashed. In the case of Sunita Finlease Ltd. Vs. DCIT (2008) 8 DTR 183 (Bilaspur ITAT), it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Neelam Cable Manufacturing Co. vs. ACIT (1997) 59 TTJ 476 (Delhi ITAT), it has been held as under: Rental income received by the assessee from the leasing out of factory godowns and industrial sheds is assessable as income from property and not as income from business . In the case of New Paris Complex vs. ACIT (2004) 89 TTJ 684 (Coch.), it has been held as under: Since the assessee-firm was carrying on the business of constructing and running shopping complex-cum-lodging house and not the business of banking, rent received by it by letting out a functionally independent portion of a building to a bank was assessable as income from house property . vi) As such looking to above facts the Ld. AO is totally unjustified to treat the income from house property as income from other sources and also unjustified in not allowing standard deduction u/s. 24 of ₹ 3335135/-. 6. We have considered the rival submissions and carefully perused the material placed on record. After appreciating the facts of the present case, we noticed that the assessee had given building at 3A, D.L. Tower, Vidhya Ashram Institutional Area, JLN Marg, Jaipur on lease to FIIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pact the decision regarding charging of income under particular head of income and if some violations have been done by the assessee related to some other Act, then in that eventuality, the action for such violation can be taken under that Act only. 6.2 Since in the present case, the A.O. has failed to pin point any violation of any condition regarding chargeability of income under the head income from house property . Therefore, in our view, the A.O. was not competent to treat the income earned by the assessee from rentals to be considered under the head income from other sources . More particularly when the assessee had fulfilled all basic conditions for treating the income under the head income from house property as enumerated in Section 22 of the Act. We have also meticulously gone through the orders passed by the revenue authorities and we found that the ld. CIT(A) while dealing with these amounts have elaborately discussed the provisions of Section 22 of the Act and the ingredients contained therein for treating the income earned by the assessee by giving portion of the property on rent and had rightly concluded that the assessee had correctly shown the said income un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng government advertisements rates. Such an argument of the assessee is self contradictory and not acceptable. By no stretch of imagination can one think of giving a discount of 50% in any business. On further perusal of market practices, it was gathered that a discount of around 25-30% is given to hawkers and distributors. Even if we consider maximum discount of 25% it comes out to be ₹ 1,66,27,500/- still sales are concealed to an amount of ₹ 2,40,02,905/- (4,98,82,500 - 2,40,02,905). Thus, amount of ₹ 2,40,02,905/- needs to be added back to the total income. 8. On the other hand, the ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) which are contained at para No. 3.2.1 of the order of ld. CIT(A) and the same are reproduced below: 3.2.1 Submission made by the appellant 7. Submission against addition of ₹ 2,40,02,905/-: i) That the trading results as per books of accounts are as under: Particulars Asstt. Year 2013-14 Asstt. Year 2014-15 Asstt. Year 2015-16 Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Judgment of the High Court is set aside . In the case of ACIT vs. Govind Ram Kakwani 90 TTJ 981 (Jabalpur ITAT), it has been held as under:- No trading addition was warranted as the assessee's books of accounts were not rejected and proviso to s. 145 was not applied and the AO has accepted the purchase and sales . In the case of ITO vs. Dr. Kailash Sharma Sons (2004) 84 TTJ 955 (Jd.), it has been held as under: When the AO did not point out any specific mistake in the books of account and did not reject the same but made addition and the Department is not challenging the finding of the CIT(A) that the provision of s. 145 could not be invoked, additions cannot be made on estimate basis . In the case of Sri Venkatraju Modern Boiled Raw Rice Mill vs. ACIT (1997) 57 TTJ (Hyd.) 493, it has been held as under: Without first rejecting books maintained by assessee showing cost of construction, the AO was not justified in making reference to valuation cell and then addition on that basis under s. 69 . In the case of CIT Vs. Pratap Singh, Amrosh Singh, Rajendra Singh (1993) 200 ITR 788 (Raj. SC), it has been held as under: In respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larger credit AO was not justified in making addition on the basis of higher value shown n those statements that the stock discussed in the books of account particularly when no apparent mistake was noticed in the books of account maintained by the assessee'. In the case of Technical Glass Industries Vs. ACIT (2004) 91 TTJ (Agra) 561, it has been held as under: Stock hypothecated to bank having been shown on mare estimate basis in order to obtain overdraft facilities without any physical verification, difference in value of stock as hypothecated to the bank and as shown in books of assessee could not be made subject-matter of addition . The assessee has maintained regular books of accounts and books were duly audited. GP rate was better in comparison to last years. Books of accounts duly examined by Ld. AO and no discrepancy were notice by Ld. AO further books of accounts has not rejected, hence addition on the basis of circulation certificate is totally unjustified. In the case of ACIT Vs. Shankar Exports (2011) 64 DTR 409 (Jpr.) (ITAT), it has been held as under: When each and every details have been kept by the assessee, regular books of accounts are ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the A.O. had estimated the sale figures without rejection of books of account and the circulation certificate filed before RNI was only on estimation basis and is on a higher side so as to obtain a better rate of advertisement, therefore, the same should not have been made the basis by the A.O. for making additions. It was also submitted by ld AR that the circulation certificate did not show right and correct position of sale and in alternative, the assessee also contended that the entire sale of ₹ 2,40,02,905/- was wrongly treated as income by the A.O. and in that eventuality, the addition at the most could have been made on the basis of net profit rate. 10.1 The ld. CIT(A) after considering the contentions of both the parties had correctly held that the circulation certificate was part and parcel of the documents of the assessee record, therefore, the same was rightly made as basis for calculating the income of the assessee. However, the alternative plea raised by the assessee was considered to be genuine and therefore, only net profit declared by the assessee @ 14.26% was considered for the purpose of additions. The ld. CIT(A) after considering the decisions of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt for the last five years wherein the rent receipts had been excluded from the total income of the assessee and the same is reproduced below: Particulars Asstt. Year 2010-11 Asstt.Year 2011-12 Asstt. Year 2012-13 Asstt. Year 2013-14 Asstt. Year 2014-15 Asstt. Year 2015-16 Sales 43,083,639.00 50,451,600.00 27,157,826.00 38,616,717.00 69,664,917.00 54,159,849.00 Gross Profit 11,591,818.00 10,477,244.00 5,449,367.00 7,083,939.00 14,733,205.00 11,768,745.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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