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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 27/10/2015 passed by CIT(A)-7, New Delhi for Assessment Year 2011-12.
The grounds of appeal are as under:-
“1. That the Ld. CIT (Appeal) has erred in law and on facts in holding that the A.O. was justified in making addition of Rs 80,88,000/-, under the head Income from "House Property" by invoking the provisions of section 23(1 )(a) of the Income Tax Act, 1961 and adopting the Annual value of residential house at 9, Friends " Colony, New Delhi at a notional value of Rs.80,88,000/- p.a., as against Rs 24,000/- p.a. declared by the appellant being the actual rent received/receivable. In any case, the value adopted is highly excessive and unreasonable.
2. That the Ld. CIT (Appeal) has erred in law and on facts in not appreciating the fact that the department has been consistently assessing the income from house property on the basis of the actual rent received.
That the Ld. CIT (Appeal) has erred in law and on facts in not appreciating the judicial pronouncements which have clearly laid down that the owner can never be expected to get rent exceeding the Standard Rent determined/determinable under the Delhi Rent Control Act.
That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.
5. That the Appellant craves leave to add/alter any/all grounds of appeal before or at the time of hearing of the Appeal.”
3. The assessee company filed return of income declaring income of Rs. 61,98,590/- on 27/3/2012. The Assessing Officer passed assessment order u/s 143(3) dated 16/2/2014 determining the taxable income at Rs.1,18,60,190/-. The Assessing Officer made net addition of Rs. 56,61,600/- under the head income from house property by invoking the provisions of Section 23 1A of the Income Tax Act, 1961 and adopted annual value of residential house at 9, Friends Colony, New Delhi at Rs.81,12,000/- per annum as against Rs.24,000/- per annum declared by the assessee being the actual rent received/receivable.
4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT (A). The CIT (A) by following the earlier order passed by the CIT (A) for Assessment Year 2004-05 and 2009-10, dismissed the appeal of the assessee.
The Ld. AR submitted that for A.Ys. 2004-05 to 2009-10, the Tribunal allowed the appeal of the assessee on the very same issue which is contested herein by the assessee (ITA No. 2010, 5762 to 5766/Del/2013 A.Ys. 2004-05 to 2009-10 order dated 5/9/2016).
The Ld. DR relied upon the order of the Assessing Officer and the order of the CIT (A).
We have heard both the parties and perused the material available on record. The Ld. DR could not distinguish any facts of the present Assessment Year with the earlier Assessment Years i.e. 2004-05 to 2009-10 wherein the Tribunal allowed the identical issue in favour of the assessee. The Tribunal held as under:- “10. Considering the above submissions made by the parties, and having gone through the Ld. Authorized Representative, we fully concur with the contention of Ld. Authorized Representative, which is now established proposition of law that the principle of res judicata is not applicable in the income tax Act, but the Assessing Officer is required to follow the Rule of Consistency in his/her approach on an identical issue, under similar facts and circumstances in a case of the assessee. Undisputedly, in earlier years under similar facts, the Assessing Officer even in the assessment framed u/s- 143(3) of the Act has accepted the claimed annual rent. The Tribunal in appeal for the Assessment Years 1962-63 to 1964-65 (supra) in the case of late S Mohan Singh through his legal heir vs ITO has noted that a portion of the building in question in which that assessee was residing, belong to the assessee company before us. The construction cost of the building was raised to Rs. 1,75,000/- on a covered area of 4000 square yard and municipal value of the building was Rs. 10,310/- for those years. During those years, the assessee late S. Mohan Singh, was using 7/15 portion of that building and was paying rent of Rs. 8,400/-- per year. In the Assessment Year 1970-71, the Assessing Officer in the assessment framed U/s 143(3) of the Act has accepted the income from house properly in question by way of rent receivable at Rs. 12,000/-. Again, in the assessment year 1980- 81, the Assessing Officer in the assessment framed U/s 143(3) of the Act, has accepted the ALV of the property in question at Rs. 12,000/- , again in the assessment order U/s 143(3) of the Act for the Assessment Year 1995-96, the Assessing Officer has accepted the rent form property in question at Rs. 24,000/-.
In the case of the CIT v Angael Infin (P) Ltd. (supra) stand taken by the Revenue was that assessee Company had received rent of Rs. 91,95,000/- on the premises let out by it and had also received interest free deposit of Rs. 3,22,50,000/- . The Assessing Officer noted that property had been let out to the sister concern of the assessee company and, therefore, the interest free deposit had been influenced by the rent fixed by the assessee company. He held that the premises, therefore, was not covered by Maharasthra Rent Control Act and the mandate of section 23(f)(a) of I.T. Act, 1961 is applicable. The stand of the Revenue was opposed by the assessee with the submissions that in earlier Assessment Year, the assessee was not questioned by the Department. The situation in the previous Assessment Year and the Assessment Year under consideration was not changed. The Hon'ble High Court of Bombay was pleased to hold that where in previous Assessment Year, annual value of suit property was already decided and there was no change in situation of previous Assessment Year and the Assessment Year under consideration, then Assessing Officer was not justified in adopting mandate of section 23(1 ){a) of the Act for the purpose of deciding annual value of suite property. Respectfully following the ratio laid down by the Hon'ble Bombay Hon'ble High Court in this case, we hold that Assessing Officer was not justified in violating the rule of consistency on the issue of ALV of the property in question, already accepted by the Revenue in early Assessment Years under similar facts and circumstances of the case. The Assessing Officer is thus directed to delete the additions in question made in the Assessment Years under consideration on the basis of a notional
value of Rs.73,80,000/- per annum as against Rs. 24,000/- per annum declared by the assessee being the annual rent received or receivable. The issue raised in the grounds is thus decided in favour of the assessee. Keeping in view these findings, the other contentions, raised by the Ld. Authorized Representative in his submissions have become infructuous and academic only and thus do not need any adjudication.
In the result, the appeals are allowed.”
We find that the issue contested in the present appeal is identical to the issue decided in Assessment Years 2004-05 to 2009-10 by the Tribunal. Therefore, the order of the CIT(A) is set aside and the appeal of the assessee is allowed.
In result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 13th November, 2018. Sd/- Sd/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13/11/2018 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT
ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation 13.11.2018 Date on which the typed draft is placed before the 13.11.2018 dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS
Date on which the fair order is placed before the Dictating Member for pronouncement
Date on which the fair order comes back to the Sr. 13.11.2018 PS/PS Date on which the final order is uploaded on the 13.11.2018 website of ITAT Date on which the file goes to the Bench Clerk 13.11.2018 Date on which the file goes to the Head Clerk