SH. SUDHIR KUMAR MITTAL (HUF),NEW DELHI vs. ACIT, NEW DELHI

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ITA 5782/DEL/2014Status: DisposedITAT Delhi03 July 2018AY 2011-128 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal followed the principle of consistency, referring to its own prior decision in the assessee's own case for AY 2009-10. In that prior case, the AO had accepted the declared rental income after the matter was remitted back by the Tribunal.

What were the facts?

The assessee HUF declared income from house property, including a nominal rent of Rs. 15,000/- from a sister concern, Supreme Textile. The AO, however, assessed a notional rent of Rs. 65,10,000/- based on the rent charged to other tenants, considering the partners of Supreme Textile were also coparceners of the HUF.

What were the issues?

The primary issue was the AO's determination of notional rental income from a property let out to a related party at a nominal rent. The secondary issue concerned the charging of interest under various sections of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 254,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI

This appeal is filed by the assessee against the order dated 24.9.2014 passed by Ld. CIT(A)-XXVI, New Delhi for Assessment Year 2011-12.

2.

The grounds raised in the Appeal read as under:-

i) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of AO in assessing notional rent of Rs. 65,10,000/- instead of Rs. 15,000/- as declared by the assessee from M/s

Supreme Textile under the head income from house property and accordingly made the impugned addition without appreciating the facts and circumstances of the case and without considering the submissions of assessee. ii) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of AO in making the impugned addition and framing the impugned assessment order is contrary to law and facts, void ab-initio, beyond jurisdiction and the same is not sustainable on various legal and factual grounds. iii) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of AO in charging interest u/s. 234A, 234B, 234C and 234D of Income Tax Act, 1961. iv) That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.

3.

The brief facts of the case are that assessee-HUF filed its return of income showing income of Rs. 63,40,520/-. The assessee coparceners are; Sh. Sudhir Kumar Mittal, Karta; Smt. Madhu Mittal, Member; Sh. Utsav Mittal, Member and Ms. Shivani Mittal, Member.

The assessee derives income under the heads ‘income from house property’ and ‘income from other sources’. The case of the assessee was selected for scrutiny. Accordingly, the assessment was completed on income of Rs. 1,13,37,290/-; wherein addition on account of notional rental income was done. The assessee owns a commercial property admeasuring 1800 sq. feet at E-29, South Extension, Part-II, New Delhi. Out of which; the area of 630 sq. feet shop was given to M/s M&B Footwear initially during the year and thereafter to M/s Mirza International ltd. on monthly rent of Rs. 4,60,000/- and Rs. 5,50,000/- respectively. However, the remaining area was given to M/s Supreme Textile, a sister partnership concern, on annual rent of Rs. 15,000/-. The two partners of M/s Supreme Textile are; Sh.

Sudhir Kumar Mittal; having 75% share and Sh. Utsav Mittal; having 25% share; are coparceners of the assessee HUF,. The AO was of the view that the assessee HUF has charged over nominal rent from M/s Supreme Textile because its partners are the assessee HUF’s coparceners. Therefore, the AO worked out the Annual Value of that portion of the house property; which was let out to M/s Supreme Textile, by applying the average rent received from M/s M&B Footwear and M/s Mirza International Ltd.. According to the assessee, the Annual Value of the house property let out to M/s Supreme Textile is Rs. 1,80,000/- @Rs. 15000/- per month where as the AO worked out the AV at Rs. 65,10,000/- and assessed the income of the assessee at Rs. 1,13,37,290/- vide order dated 30.10.2013 passed u/s. 143(3) of the Act. Against the assessment order, the Assessee appealed before the Ld. CIT(A), who vide his impugned order dated 24.9.2014 has dismissed the appeal of the assessee.

4.

Being aggrieved by the same, the assessee is before the Tribunal.

5.

At the time of hearing, Ld. Counsel of the assessee submitted that the issues in dispute are squarely covered by the decision of the G-Bench, ITAT, New Delhi in assessee’s own case decided on 08.04.2015 passed in (AY 2009-10) wherein the Tribunal has remitted back the issues to AO for re-adjudicate the same and pass a fresh order. He further stated that pursuant to the Tribunal’s order dated 08.04.2015, the AO observed the income as declared in the income tax return is being taken as the income from 4 the said property and accepted the taxable income as per appeal effect order dated 29.7.2015 and assessed the same at Rs. 45,39,100/- vide order 16.2.2016 passed u/s. 143(3)/254 of the Income Tax Act, 1961. In view of above, he requested that issues in dispute may be decided in favour of the assessee by accepting the declared income of Rs. 63,40,520/- as assessed income.

6.

On the contrary, Ld. DR relied upon the orders of the authorities below and reiterated on the findings of the authorities below.

7.

We have heard both the parties and perused the records, especially the impugned order as well as the decision of the G-Bench, ITAT, New Delhi in assessee’s own case decided on 08.04.2015 passed in (AY 2009-10) wherein the Tribunal has remitted back the issues to AO for re-adjudicate the same and pass a fresh order. We further note that pursuant to the Tribunal’s order dated 08.04.2015, as aforesaid, the AO accepted the taxable income as per appeal effect order dated 29.7.2015 and assessed the income at Rs. 45,39,100/- vide order 16.2.2016 passed u/s. 143(3)/254 of the Income Tax Act, 1961 in assessee’s own case for the assessment year 2009-10. For the sake of clarity, we are reproducing hereunder the relevant paragraphs of the said assessment order dated 16.2.2016 passed by the AO u/s. 143(3)/254 of the Act. 5

“....However, the assessee HUF is showing the rent received from M/s Supreme Textiles of Rs. 15,000/- as rental income which is more than the standard rent of Rs. 10,060/-. The rental expenditure debited in the P&L A/c of the M/s Supreme Textiles is also Rs. 15,000/- only as seen from the submission of P&L

A/c. The income as declared in the income tax return is being taken as the income from the said property.

In the light of the above discussion, facts of the case, the findings after due verification and on applicability of case laws referred above, the taxable income as per appeal effect order u/s. 254/250/143(3) dated 29.7.2015 of Rs. 45,39,104/-

(Rounded off Rs. 45,39,100/- was being accepted as assessed income.

Income assessed at Rs. 45,39,100/- Credit of pre-paid taxes /TDS and self assessment tax is being given while computing the tax liability. Interest as

per applicable provisions of section

1.

234A/234B/234C/234D charged and ITNS – 150 issued.” 6 7.1 After perusing the aforesaid assessment order dated 16.2.2016 relevant to assessment year 2009-10 wherein the similar issues as involved in this appeal were raised and pursuant to the Tribunal’s directions, as aforesaid, the AO has accepted the declared income as assessed income. Therefore, in our considered opinion by following the Rule of consistency, the issues in dispute need to be decided in favour of the assessee and accordingly, the declared income of Rs.63,40,520/- was assessed on the same amount and interest as per applicable provisions of section 234A, 234B, 234C & 234D of the Act shall be charged, if any.

8.

In result, the appeal of the assessee is allowed.

Order pronounced on 03-07.2018.

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