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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI NARENDER KUMAR CHOUDHRY
O R D E R PER N.K. CHOUDHRY JM:
2 & 1796/Del/2022 These appeals have been preferred by the Revenue/Department against separate orders dated 07.06.2022 for A.Y. 2016-17; and 24.05.2022 for A.Y. 2017-18, passed by the Ld. Commissioner of Income tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (in short “Ld. Commissioner”), u/s 250 of the Income Tax Act, 1961 (in short “the Act”). Since common issue is involved for adjudication, both these appeals were heard together and are being disposed of by a common order for the sake of convenience.
The solitary ground, common in both the appeals, taken by the Revenue, reads as under:
“Whether on the facts and in the circumstances of the case and in law. the Ld. CiT(A) has erred in allowing the appeal of the assessee by ignoring the fact that in respect of space rent, as per the mercantile method of accounting income has to be offered to tax on accrual basis whereas the assessee has. in the notes to account, mentioned that such amount has not been accounted for since the rental income is under dispute. Such income which has accrued but not received is shown as receivable or under the head Sundry Debtor as the case may be in the Balance Sheet. It is entitled to claim it as bad and write off subsequently when it actually becomes bad as per the provisions of the Act but cannot resort to such accounting as has been done by it.”
3 & 1796/Del/2022 3. Facts of the case, in brief, are that for A.Y. 2016-17, the Assessing Officer while framing assessment u/s 143(3) of the Act, made the addition of Rs. 56,91,28,750/- on account of income from space rent on the basis of disclosure in Notes to Accounts of the Assessee. In appeal, the learned CIT(Appeals) following the order of the ITAT in Assessee’s own case for A.Y. 2012-13, deleted the addition.
Similarly, for A.Y. 2017-18 the addition of Rs. 6,46,58,000/- made by the AO on account of income from space rent has also been deleted by the learned CIT(Appeals).
Being aggrieved, the Revenue Department has preferred appeals before this Tribunal.
At the very outset, learned counsel for the Assessee submitted that the issue impugned herein, has already been decided by the Coordinate Benches of this Tribunal in favour of the Assessee in A.Ys. 2009-10, 2010-11 & 2011-12, which order has been followed by the Tribunal in A.Y. 2012-13; 2013-14 & 2014-15; and 2015-16. Ld. Counsel further submitted that the order of the Tribunal on the issue in question, has since been 4 & 1796/Del/2022 upheld by the Hon’ble Jurisdictional High Court of Delhi vide order dated 13.01.2023 in ITA no. 18/2023 for A.Y. 2013-14; and 19.1.2023 in ITA no. 36/2023 for A.Y. 2014-15 and there being no change in facts and circumstances, the same view may be adopted for the assessment years in question also.
On the other hand, learned DR opposed the submissions, but could not controvert the aforesaid factual position. He, however, contended that the Revenue has not given up its stand.
We have given our thoughtful consideration to the facts of the present case. We find that the learned CIT(Appeals) in deleting the addition in question, has followed earlier order of the Tribunal in Assessee’s own cases. We also find that the coordinate Bench of this Tribunal vide its order dated 01.09.2022, rendered in Assessee’s own case for A.Y. 2015-16 in has adjudicated the issue impugned herein, in favour of the Assessee by observing as under:
“5.2 We have given thoughtful consideration to the conclusion drawnon the issue in hand, by the Id. Commissioner in the impugned order, as well as order dated 13.09.2019 passed by the Hon'ble coordinate Bench of the Tribunal in the Assessee's own cases i.e. 3359, 2508 and 5 & 1796/Del/2022 3135/Del/2016for the assessment years 2009-10, 2010-11, 2011-12 and the order dated 22.01.2021 in ITA No. 2110/Del/2017 by the Tribunal, wherein the Hon'ble coordinate Bench, affirmed the deletion of the similar addition by the Id. Commissioner.
For ready reference, the conclusion drawn by the Hon'ble coordinate Bench vide order dated 13.09.2019 (supra) is reproduced herein below:
“12. AO made addition of Rs. 1,68,73,663, Rs.2,01,86,003 & Rs. 1,83,00,000 in AYs 2009-10, 2010-11 & 2011-12 respectively on a/c of space rent income on the basis of disclosure in Notes to Accounts of the Assessee. However, Id. CIT(A) deleted the addition on the ground that since space rent account is disputed by two Government Departments viz. National Science Centre and Crafts Museum by contesting the ownership of land attracting rent by the Assessee and claimed that they are in possession of the land and as such it is uncertain, no addition can be made.
Ld. CIT(A) has thrashed the facts in detail and by applying the decision rendered by various Hon’ble High Courts and Hon’bleSupreme Court, decided the issue in favour of the Assessee on the ground that since the dispute has not been resolved till date, the addition is not sustainable.
Assessee has brought on record documents and letter of discussion to resolve the disputes between National Science Centre & Crafts Museum and India Trade Promotion Organisation (ITPO) for non-payment of rent, available at pages 93 to 130 of the paper book, which have been duly examined by the Id. CIT(A). We are of the considered view that when income on account of space rent has not been accrued, as in the instant case due to dispute, there cannot be any rent even though entry in the books of account have been made on account of notional income. So, when the income would be received its taxability can be examined by the Revenue. Ld. DR for the Revenue has not brought on record any document if the dispute
6 & 1796/Del/2022 between the parties qua the space rent has been resolved. So, in these circumstances, we are of the considered view that there is no illegality or perversity in the findings returned by the Id. CIT (A), consequently ground no.3 in AYs 2009-10, 2010-11 & 2011-12 is determined against the Revenue. ”
5.3 Nothing contrary was brought before us to controvert the findings of the Id. Commissioner as well as of the Hon'ble coordinate Benches on the issue in hand. Even otherwise, we do not find any reason/material to controvert the findings referred above. Hence, respectfully following the decisions of the Hon'ble Coordinate Benches, we are inclined to dismiss the appeal of the Revenue Department.”
We also find that the Hon’ble Jurisdictional High Court of Delhi, on the issue in question, in Assessee’s own case vide order dated 13.01.2023 in for A.Y. 2013-14; and 19.1.2023 in ITA no. 36/2023 for A.Y. 2014-15 has decided the issue in favour of the Assessee by upholding the order of the Tribunal.
There is also no dispute that for the assessment years in question, the learned CIT(Appeals) in deleting the addition has followed earlier orders of the Tribunal. Therefore we see no reason to interfere with the orders of learned CIT(Appeals) and the same are hereby affirmed.
1796/Del/2022 stands dismissed.
Order pronounced in open court on 03.03.2023.