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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: HON’BLE SHRI MAHAVIR PRASAD, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-XVI, Ahmedabad, [in short referred to as ‘CIT(A)’], Appeal No.CIT(A)-XVI/ITO/Wd.11(2)/564/11-12 dated 02/08/2013 on following grounds: - 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in conforming addition of Rs.10,88,446/- made by the Assessing Officer on the ground that Appellant has shown lower rent income in Return of Income. The Learned CIT(Appeals)
Nitish Hetal Shah Assessment Year :2009-10 ought to have appreciated that actual rent income earned and accrued to Appellant has been shown in Return of Income and no further addition is called for.
2. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding action of Assessing Officer for assessing rent income of Rs.18,14,076/- entirely in the hands of Appellant as against real income of Rs.7,25,630/- shown by Appellant without appreciating the fact that other co-owners/persons have already show their share in rent income in their respective Returns of Income belonging to other persons cannot be taxed in the hands of Appellant ignoring the fact that same was diverted to other persons by an overriding title.
We have carefully heard the arguments advanced by both the parties. We have also perused relevant material on record including documents placed in the paper book. The documents relied upon by Ld. AR has duly been considered.
3.1 Briefly stated, the assessee being resident individual was assessed for year under consideration u/s 143(3) on 15/12/2011 wherein the income of the assessee was determined at Rs.12.72 Lacs after certain adjustments as against returned income of Rs.5.10 Lacs filed by the assessee on 27/01/2010.
3.2 During assessment proceedings, it transpired that the assessee purchased a plot of land at Block No. 461,462 & 465 within local limits of Gram Panchayat, Taluka Sanathal, Distt. Ahmedabad (in short ‘property’). The share of assessee was stated to be 20% which was similar to share of other co-owners namely Mrs. Lataben H. Shah, Mrs. Darshnaben A. Patel whereas balance 40% was held by Mrs. Chaulaben D. Doshi. Later on, as per certain documents, the assessee and Mrs. Lataben became joint owner of the property. All the four had internal
Nitish Hetal Shah Assessment Year :2009-10 understanding about their respective share of investment and proportion of ownership.
3.3 Subsequently, the said property was leased out to an entity namely M/s Mahindra First Choice Wheels Ltd. on monthly rental of Rs.4,03,128/- which was equally distributed between the assessee and Mrs. Lataben. TDS was deducted in similar manner and Form 16 was issued in these two names. However, while filing the return of income, the assessee reflected rental income to the extent of his own share of 20% only and rest of the rent was stated to be distributed amongst the remaining 3 co-owners in the ratio of their respective co-ownership. At the same time, the assessee claimed full TDS credit of Rs.3,08,313/- as reflected in Form 16 which led Ld. AO to demand explanation from the assessee.
3.4 Upon perusal of documents, it came to light that the said land was actually purchased by the assessee jointly with his mother Mrs. Lataben vide sale deed dated 17/04/2008 which was later on leased out to the lessee vide lease agreement dated 02/05/2008. On the same date, the assessee and his mother entered into memorandum of understanding (MOU) with two other persons i.e. Mrs. Darshnaben A. Patel and Mrs. Chaulaben D. Doshi wherein the assessee and his mother received a sum of Rs.12.04 Lacs & Rs.6.02 Lacs from Mrs. Chaulaben D. Doshi and Mrs. Darshnaben A. Patel respectively and it was decided to share the rent in the ratio of 20% each to the assessee, Mrs. Lataben & Mrs. Darshnaben A. Patel whereas the balance 40% would belong to Mrs.
Nitish Hetal Shah Assessment Year :2009-10 Chaulaben D. Doshi. In the light of these facts, the MOU was termed as mere after thought to divert the rental income which was fortified by the fact that MOU was stated to be made on 02/05/2008 on a stamp paper dated 07/05/2008. It was noted that the assessee failed to produce the return of income of other 3 co-owners also to show that they offered rental income to tax. Therefore, the rental income of Rs.18.14 Lacs as reflected in Form 16 was brought to tax in the hands of the assessee.
The Ld.CIT(A) confirmed the stand of Ld. AO by observing that MOU would not create any right / title towards ownership of the property and therefore, there could be no case for the others to share 60% of rental income. Therefore, the stand of Ld.AO was confirmed. Aggrieved, the assessee is under further appeal before us.
The Ld. AR placed reliance on assessment framed u/s 143(3) r.w.s. 147 for AY 2010-11 on 21/10/2013 to submit that a new MOU was entered into between the co-owners on 21/10/2011 wherein the assessee and Mrs. Lataben paid a sum of Rs.35 Lacs to Mrs. Chaulaben D.Doshi which would substantiate the fact that the money was advanced by Mrs. Chaulaben D.Doshi to facilitate the purchase of property and therefore the right of Mrs. Chaulaben D.Doshi and Mrs. Darshnaben A. Patel was undisputed. Considering the same, the proportion of rent as offered by respective co-owners were accepted by Ld.AO.
Nitish Hetal Shah Assessment Year :2009-10 6. Au Contraire, Ld. DR submitted that the said assessment was framed after the date of impugned order and further the issue of TDS credit would require to be reappreciated.
Upon due consideration of factual matrix, the bench formed an opinion that considering the assessment framed for AY 2010-11 which is subsequent to the date of impugned order, it would be in the fitness of things to restore the matter back to the file of Ld.CIT(A). Therefore, the matter stand remitted back to the file of Ld.CIT(A) for re-adjudication in the light of submissions made by the assessee. The issue of TDS credit may also be delved into by Ld. CIT(A). Needless to add that reasonable opportunity of being heard shall be granted to the assessee, who, in turn, is directed to substantiate his claim.
The appeal stands allowed for statistical purposes.
Order pronounced in the open court on 04/03/2020