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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER to 1829/Ahd/2019 (Assessment Years: 2013-14 to 2015-16) Zen Industries Pvt. Ltd. Vs. ITO 8th Floor, The Chambers, Opp. Ward-4(1)(4), New Gurudwara, S. G. Highway, Ahmedabad Ahmedabad [PAN No. AAACZ1598D] (Appellant) .. (Respondent) Assessee by : Ms. Urvashi Sodhan, AR Revenue by : Shri R. R. Makwana, Sr. DR Date of Hearing 10.03.2022 Date of Pronouncement 16.03.2022 O R D E R PER Ms. MADHUMITA ROY - JM:
The bunch of appeals filed by the assessee are directed against the orders all dated 10.10.2019 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad arising out of the separate order dated 23.12.2015, 23.11.2016 & 03.11.2017 passed by the ITO, Ward-4(1)(4), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2013-14 to 2015-16 respectively. Since all the appeals relate to the same issues and all are filed by the same assessee, these are heard analogously and are being disposed of by a common order.
ITA Nos.1827 to 1829/Ahd/2019 Zen Industriesc Pvt. Ltd. vs. ITO Asst.Year –2013-14 to 2015-16 - 2 - (A.Y. 2014-15):- 2. The addition of Rs. 13,42,040/- on account of electricity and diesel expenses under the head of “income from house property” made by the ITO, further confirmed by the Ld. CIT(A) is under challenge before us.
The fact of the case is this that the appellant is a private limited company engaged in the business of manufacturing and sale of Sweet Supari, Mouth freshener, Mukhwas etc. having rental income from the factory and commercial premises given on rent for A.Y. 2013-14 filed return of income declaring total income at Rs. NIL. It is the case of the assessee that in terms of the rent agreement, rent amount is inclusive of electricity charges and other charges. The appellant has further paid the electricity and diesel expenses. Therefore, electricity and diesel expenses cannot be considered as covered under 30% standard Deduction of Rental Income rather as electricity and diesel charges collected from tenants and paid on behalf of the tenants by the appellant the deduction of the same is allowable. However, such plea of the assessee was not found suitable and the same was disallowed by the Ld. AO which was further confirmed by the Ld. CIT(A). Hence, the instant appeal before us.
The Ld. Counsel appearing for the assessee Ms. Urvashi Sodhan submitted before us that the issue is squarely covered that the judgment passed by the ITAT, Lucknow Bench in the case of ACIT vs. Sunil Kumar Agarwal, reported in (2012) 20 taxmann.com 330 (Lucknow). The case is further covered by the judgment passed by the Hon’ble Delhi High Court in the case of CIT vs. R. J. Wood Pvt. Ltd., reported in to 1829/Ahd/2019 Zen Industriesc Pvt. Ltd. vs. ITO Asst.Year –2013-14 to 2015-16 - 3 - (2012) 20 taxmann.com 599 (Delhi). A compilation of judicial pronouncement has also been filed before us has also been annexed.
The Ld. DR though relied upon the order passed by the authorities below has not been able to controvert the submission made by the Ld. Counsel appearing for the assessee. Neither any contrary judgment passed by the judicial forum on the identical issue in favour of the Revenue has been relied upon by him.
We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record.
We find that the Lucknow Bench on the identical issue has observed as follows: “Where subsequent loans were raised by assessee to repay original loan raised to purchase house property those loans partook character of original loan and, therefore, interest paid on such loan would be deductible under section 24 from rental income realized from house property.”
We have carefully considered the judgment passed by the Hon’ble Delhi High Court in the case of CIT vs. R. J. Wood Pvt. Ltd. (supra); where the following observation was made in favour of the assessee: “Income from house property – Chargeable as – Assessment years 1996-97 to 2000- 01 – In respect of premises leased out by assessee, maintenance and other charges paid by assessee were to be deducted from rent while computing annual letting value of said property.”
Thus, respectfully relying upon the judgment passed by the different forums we find that the electricity and diesel expenses of Rs. 13,42,040/- paid by the assessee is allowable. In that view of the matter, to 1829/Ahd/2019 Zen Industriesc Pvt. Ltd. vs. ITO Asst.Year –2013-14 to 2015-16 - 4 - we find no merit in the disallowance made by the authorities below and the same is hereby deleted. Thus, assessee’s appeal is hereby allowed. &1829/Ahd/2019 (A.Y. 2014-15 to 2015-16):-
The identical issue involved in the case has already been dealt with by us in for A.Y. 2013-14 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the appeals preferred by the assessee are allowed.