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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.K. PANDA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI (Through Virtual Hearing) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2012-13 Lalita, Vs. ITO, C/o K.L. Datta & Company, Ward 42(4), Vashishtha Plaza 2, Delhi. Manu Marg, Alwar, Rajasthan. PAN: ADGPL2634Q (Appellant) (Respondent) Assessee by : Shri P.C. Parwal, CA Revenue by : Shri R.K. Gupta, Sr. DR Date of Hearing : 03.08.2021 Date of Pronouncement : 14.10.2021 ORDER
This appeal filed by the assessee is directed against the order dated 5th February, 2019 of the CIT(A)-50, New Delhi, relating to Assessment Year 2012- 13.
2 Facts of the case, in brief, are that the assessee is an individual and derives income from salary, income from house property and other sources. She filed her return of income on 28th July, 2012 declaring total income at Rs.7,97,500/-. The AO completed the assessment u/s 143(3) of the Act on 30th March, 2015
Rs.19,26,845/- wherein he made the following additions:- a) i) On account of reimbursement of medical - expenses Rs.15,000/- ii) Washing allowance - Rs.36,000/- iii) Helper Allowance - Rs.60,000/- Total - Rs.1,11,000/- b) From house property for lack of evidence - Rs.3,48,000/- c)Out of deduction on account of vehicle and interest - on vehicles which was sold Rs.6,71,350/-
3. In appeal, the ld.CIT(A) granted part relief to the assessee and sustained the disallowance of Rs.1,11,000/- on account of various allowances, an amount of Rs.2,01,405/- out of the disallowance u/s 57 of the Act in respect of depreciation and interest on vehicle, an amount of Rs.3,81,600/- out of income from house property.
Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:-
“1. That the Id. assessing officer has erred in law as well as on the facts and circumstances of the case in disallowing of reimbursement of expenses and allowances under the provision of the Income Tax Act, 1961 amounting to Rupees 110000.00 claimed against salary income as per the following details and the ld Commissioner of Income-Tax (Appeals),-15, Delhi has erred in sustaining the same:- On account of reimbursement of medical expenses 15000.00 On account of washing allowance 35000.00 On account of helper allowance 60000.00 Total 111000.00
That the Id. assessing officer has erred in law as well as on the facts and circumstances of the case in disallowing the deduction u/s 57 of the Income Tax Act, 1961 in respect of depreciation of Rupees 488632.00 and interest on vehicle loans of Rupees 182718.00 totalling to Rupees 671350.00, which are allowable to be set off against the income earned from plying of vehicles and included in the return of income and the ld Commissioner of Income-Tax (Appeals),-15, Delhi has erred in sustaining the same.
That the Id. Commissioner of Income-Tax (Appeals)-15, Delhi has erred in law as well as on the facts and circumstances of the case in issuing the direction u/s 150 (1), of the Income Tax Act, 1961 for taking the action in the hands of the appellant as per law, without providing any opportunity by way of issuing any show cause notice to the appellant, which is against the principle of natural justice, equity and fair play, thus the direction issued deserves to be quashed on this account alone. 4. That the ld. Commissioner of Income-Tax (Appeals)-15, Delhi has erred in law as well as on the facts and circumstances of the case in issuing the direction in respect of the Assessment Year 2011-12, and upon the issue which was not before him and does not arise out of the assessment order under appeal, while deciding the appeal for the Assessment Year 2012-13, thus the ld Commissioner of Income-Tax (Appeals)-15, Delhi has exceeded his jurisdiction in giving the direction u/s 150(1) of the Income Tax Act, 1961 vis-a-vis to take the action in respect of benefit of Rupees 1272000.00 for purchase of flat by the assessee in the Assessment Year 2011-12. 5. That the ld. Commissioner of Income-Tax (Appeals)-15, Delhi has issued the direction u/s 150 (1) of the Income Tax Act, 1961 in respect of the Assessment Year 2011-12, which have already barred by limitation in view of the provision of section 150(2) of the Income Tax Act, 1961, and order of hon’ble Supreme Court and others, as on the date of passing of the appellate order, thus the direction so issued is against the provision of law and decision of apex court and thus deserves to be quashed. 6. That the ld Commissioner of Income-Tax (Appeals)-15 Delhi has erred in law as well on the facts and circumstances of the case in giving the direction in respect of purchase of flat, whereby yielding a benefit of Rupees 1272000.00 to the assessee from the seller of the flat under the provision of section 56 (2)(vii)(b)(ii) of the Income Tax Act, 1961 which was not in existence in Assessment Year 2011-12 and made effective w.e.f. Assessment Year 2014-15, thus the direction so issued is against the provision of law. 7. The assessee reserves her right to add, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal.”
Ground of appeal No.1 by the assessee relates to the order of the CIT(A) in confirming the disallowance of Rs.1,11,000/-.
6. After hearing both the sides, I find the assessee has claimed deduction of medical allowance of Rs.15,000/-, washing allowance of Rs.36000.00 and helper allowance of Rs.60000.00 which were disallowed by the AO on the ground that the assessee did not furnish any reply to justify these disallowances. I find, the ld.CIT(A) upheld the action of the AO by observing as under:- “4.2 Ground No. 3 of the appeal relates to disallowance of claim of following allowances aggregating to Rs. 1,11,000/- Medical 15000 Washing Allowance 36000 Helper Allowance 60000 In the computation of total income, the above allowances have reduced from the salary income by stating "Exempt Allowance". In her submissions dated 26.02.15 filed in the course of assessment proceedings no explanation/justification regarding the above claim of 'Exempt Allowances' was filed by her. A very specific query was raised by the then Assessing Officer vide 142(1) notice dated 16.03.2015 to justify the claim of such exemptions. However, it is a matter of fact and record that assessee did not respond to the query of the Assessing Officer. As such the then Assessing Officer disallowed the claim of above exemptions from the salary income. Submissions put-forth by the assessee in this regard during the course of appellate proceedings, have been perused. Section 17(2) of the Income- tax Act, 1961, provides that any reimbursement against medical expenses to an employee by an employer up to Rs. 15,000 in a year is exempt from tax, - respective of whether it has been claimed in part or full. However, only the amount for which proper bills are submitted or Rs. 15,000, whichever is less, will be considered for exemption. So far as the facts of the case in hand are concerned, the facts, evidences and arguments put-forth clearly suggests that this is a case of medical allowance and not medical reimbursement since no such document evidencing service contract, evidence suggesting claims lodged by the assessee with her employer company seeking reimbursement of medical expenses paid by her and subsequently paid by the employer to the 4
assessee. Hence, it is conclusively proved that the amount of Rs. 15000/- is full) taxable being medical allowance and nothing else. The remaining two amounts, i.e. Rs.36,000/- and Rs.60,000/- are on account of washing allowance and helper allowance. No case was made out before the AO to justify these two claims. During the course of appellate proceedings, it has been argued that both the allowances are allowable in terms of the provisions of section 10 (14) read with Rule 2 BB. However, If is not submitted as to what is the educational and professional background/education/qualification of the assessee. Copy of her appointment letter, proving her employment with M/s Mittal Forgings & Components Private Limited and proving her nature of job with M/s Mittal forgings and Components Private Limited has not been filed. Not a single word has been uttered by the assessee either before the Assessing Officer or during the course of appellate proceedings, to prove the nature of duties performed by her during her employment with M/s Mittal Forgings & Components Private Limited. It is not known as to what is the nature of her job/duties which requires attendance in the office in specific/special/exclusive 'uniform' to be worn by her for performing her duties/during office hours in the course of her employment with the employer company.lt is also not known/made known that such uniform requires frequent dry-cleaning/specialized cleaning. It is also not made known that there are other employees in the company which requires special clothing and special cleaning. Not a single word has been uttered by the assessee to explain the nature of duties performed by her which in turn requires the services of a helper. No word has been offered to explain the nature of duties assigned to her in the course of her employment with M/s Mittal forgings & Components Private Limited Therefore, considering the facts and circumstances of the case, the deductions made from the salary income are not available to the assessee. The same have rightly been disallowed by the Assessing Officer. Arguments put-forth by the appellant during the course of appellate proceedings, also do not justify her various claims. Accordingly, the disallowance of Rs. 1,11,000/- made by the AO is hereby confirmed and this ground of the appeal is dismissed.”
It is the submission of the ld. Counsel that identical allowances were allowed by the AO in the order passed u/s 143(3) in the subsequent years. Considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore this issue to the file of the AO with a direction to decide
143(3) after obtaining necessary details from the assessee on this issue. The ground raised by the assessee is accordingly allowed for statistical purposes.
So far as ground of appeal No.2 is concerned, I find the same relates to disallowance of Rs.2,01,405/- on account of depreciation and interest on vehicles.
9. After hearing both the sides, I find, the assessee let out Tata Canter truck and Toyota Innova car to M/s Mittal Forgings & Components Pvt. Ltd. on a monthly hire purchase of Rs.21,000/- and Rs.25,000/- respectively. The AO disallowed the claim of deduction u/s 57 of the Act amounting to Rs.6,07,350/- on the ground that the assessee did not furnish the requisite details towards claim of depreciation and interest by filing the copies of invoice in support of purchase of vehicles, copies of rent agreement in respect of letting out of the vehicles and the loan certificate for claiming interest. I find, the ld.CIT(A) upheld the action of the AO on the ground that both the vehicles were given on rent to M/s Mittal Forgings & Components Pvt. Ltd. at very low rentals and the assessee, in the process incurred huge loss which has been utilized to set off the income from house property. According to the ld.CIT(A), no prudent person would enter into/execute any transaction to incur losses only. Since the assessee could not give any plausible explanation either before the AO or before him to justify the letting out of vehicles at lower rentals which are not sufficient to recover financial cost and depreciation cost, he upheld the action of the AO. It is the submission of the ld. Counsel for the assessee that he has filed the following details before the CIT(A) which has not been considered by him:-
10. In my opinion, the matter requires a re-visit to the file of the AO to find out as to the status in the preceding and succeeding years since the two vehicles were purchased on 27th December, 2010 and 29.09.2011 respectively. The AO may find out what is the rental income of Toyota Innova and Tata Canter in other cases to ascertain as to whether the assessee is deliberately entering into an agreement with a concern just to incur losses so as to set off the same from income from house property. The AO shall decide the issue as per fact and law and after giving due opportunity of being heard to the assessee. Ground No.2 raised by the assessee is accordingly allowed for statistical purposes.
11. So far as grounds No. 3, 4, 5 and 6 are concerned, the grievance of the assessee is to the order of the CIT(A) in giving a direction u/s 150(1) of the IT Act to the AO for taking action in the hands of the assessee as per law.
12. After hearing both the sides, I find, the assessee, in the return of income, declared income from house property against which she claimed deduction on account of payment of interest. In absence of details and documents, the AO disallowed both statutory deduction u/s 24 and interest paid on housing loan. The ld.CIT(A), after calling for a remand report from the AO, allowed the claim of statutory deduction and interest on housing loan at Rs.3,48,000/- and allowed the appeal. However, on the basis of the remand report of the AO wherein it is stated that the assessee has purchased the property on 01.07.2010 for Rs.22 lakhs, but, for the purpose of obtaining home loan against the said property, the bank has determined the value of the property at Rs.34.72 lakhs, directed the AO u/s 151 of the Act to take necessary action as per law for assessment year 2011-12 in respect of benefit of Rs.12,72,000/- obtained by the assessee at the time of purchase of property. It is the submission of the ld. Counsel that for applicability of section 150(1), the record of proceedings must be before the appropriate authority. If there are no proceedings before it or if the assessment year in question is also not a matter which would call for consideration before higher authority, section 150 of the Act will have no application. It is also his submission that such proceedings can be initiated only within the period of 149 of the Act, if any, available at the time of order which was subject matter of appeal. It is also his submission that there is no provision under the Act by which the difference between value of the property adopted by the bank for sanctioning the loan and the actual cost of the property can be subjected to tax.
12.1 I find some force in the above argument of the ld. Counsel. The assessment year involved in the instant case is 2012-13. The property was purchased on 01.07.2010 for Rs.22 lakhs. The assessee has obtained housing loan from the bank. The bank has valued the property at higher price for sanctioning the loan. Under these circumstances and in absence of any evidence with the AO or the CIT(A) that either the recipient has received any extra money or that the assessee has paid anything over and above what is stated in the sale deed, merely on the basis of valuation report by the bank for sanctioning of the loan cannot be a ground for giving a direction to the AO to reopen the assessment for another assessment year which was not the subject matter of appeal before the CIT(A). Even otherwise also, the CIT(A), in the instant case, passed the order on 5th February, 2019. On this date, the time limit for reopening of assessment u/s 149 for the assessment year 2011-12 was not available as the period of reopening the assessment for preceding six assessment years as on the date of passing of order by the CIT(A) was available only upto assessment year 2012-13. The various decisions relied on by the ld. Counsel supports the proposition that the