Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI N. K. BILLAIYA & SH. YOGESH KUMAR US
ORDER PER YOGESH KUMAR US, JM
This appeal is filed by the assessee against the order dated 28/12/2018 passed by the CIT(A)-33, New Delhi for Assessment Year 2014-15.
The facts in brief are that, the assessee is a private limited 2. company and is assessed to tax year after year. The assessee is in the business of manufacture of sign boards and trading in reflective sheets, vinyl and allied items. The assessee Company filed return of income on 05/10/2014 declaring an income of Rs. 1,87,62,640/- after claiming deduction of Rs. 79,66,615/- u/s 80IC of the Income Tax Act in the computation of income. The questionnaire were served upon the assessee along with notice u/s 142(1) of the Act dated 26/4/2016, further the case was selected through CASS for examining the details. The assessment order has been concluded by way of Order dated 29/11/2016 disallowing of Rs. 18,00,000/- claimed as rent and further adding sum of Rs. 3,86,887/- on account of late payment of Employee Share of PF by computing total income at Rs.2,09,49,530/-.
As against the assessment order dated 29/11/2016, the assessee has preferred the appeal before the CIT(A). Vide order impugned dated 28.12.2018, the Ld. CIT(A) has allowed the appeal regarding late payment of Employee Share PF and also allowed the payment of rent up to 12.05.2013 but the payment of rent between 13.05.2013 to 30-09-2013 has not been allowed by making following observation: ‘In terms of sub section (47) of section 2 of the IT Act, the sale occurred on 13.5.2013 and the assessee had become the owner of the property. On these facts, the payment of rent between 13.05.2013 and 30-09-2013 cannot be held justifiable. The payment of rent upto 12.05.2013 is deductable. Thus assessee gets relief of 3,00,000/- (for the month of April) and Rs. 1,16,129/- (up to 12.5.2013). The total relief is worked out at Rs. 4,16,129/-.’
Aggrieved by the order impugned dated 28/12/2018, passed by CIT(A) -33, the assessee has preferred the present appeal on following grounds:-
1) That in the absence of actual encashment of cheque of the earnest money paid in relation to the tenanted property in occupation of the assessee, the presumption of the Assessing Officer that the assessee had become the owner of the property on the date of the MOU, is based on surmises and conjectures and consequently the disallowance of the rent of Rs. 18,00,000/- paid to the owners of the property till the date of actual realization of cheques by the Assessing Officer and Rs. 13,83,871/- out of Rs. 18,00,000/- sustained by the CIT (Appeals), is arbitrary, unjust and at any rate very excessive.
2) That the CIT (Appeals) has erred on facts and under the law in holding that in terms of Section 2(47) of the Income- tax Act, 1961 (the Act), the sale of the property has taken place on the date of MOU (unregistered) on 13th May 2013 without considering the date of actual encashment of cheques of the earnest money, i.e. 13th September 2013 and consequently the disallowance of rent paid by the assessee in respect of the tenanted property already in assessee’s occupation, is arbitrary, unjust, bad in law and very excessive.
3) That various observations made by the Assessing Officer and CIT (Appeals) are based on surmises and conjectures not tenable under the law.
4) That the above grounds of appeal are independent and without prejudice to one another.
We have heard the Ld. AR and Ld. DR, gave our thoughtful consideration. The assessee has been inducted as tenant of the subject property vide rent agreement dated 25.03.2013 on rent of Rs. 3 lacs rupees per month. During the year under consideration, i.e. 2014-15 with an intention to purchase the very same property, entered into an agreement to sell on 13-05-2013 with its owners ie. Mr. Ravinder Nath Haisja and Mr. Dharmveer Hasija, for total sale consideration of Rs. 5,50,00,000/-. As a part of Sale consideration, two cheques dated 13/5/2013 have been issued, total amounting to Rs. 5,00,00,000/- in favour of the owners. The said two cheques issued by the assessee have not been encahsed within its validity. Further, on 13/09/2013 the assessee had made the actual payment of Rs. 5,00,00,000/- as part (90%) sale consideration by way of RTGS to both the vendors proportionately.
The agreement to sell has been executed on 25.03.2013 but the consideration has not been passed as per the terms of the agreement by encashing the cheques mentioned thereon. The actual part sale consideration (90%) has been passed only on 13.09.2013 by way of RTGS. Thus, the finding of the CIT(A) that ‘sale had occurred on 25.03.2013 and the assessee had become the owner of the property’ is factually incorrect. Thus in the present case, the rent paid by the Assessee to the owners in respect of the subject property, prior to actual part payment of Sale consideration by way of RTGS is allowable. For above said reasons, we are of the opinion that both Ld. A.O and the CIT (A) have erred in disallowing said rent.
In result, the appeal filed by the assessee is allowed.