DHANO BHULCHAND VASWANI,MUMBAI vs. ACIT 12(3), MUMBAI

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ITA 7166/MUM/2016Status: DisposedITAT Mumbai12 September 2018AY 2007-084 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the assessee's share in the AOPs was determined at a lower figure than what was added. The addition was restricted to the difference between the correct share and the income already assessed.

What were the facts?

The assessee's income was reassessed to include his share in rental income earned by two Associations of Persons (AOPs). The assessee contended that the income should be offered on an actual receipt basis and that the figures used for addition were incorrect.

What were the issues?

Whether the assessee's share of income from AOPs was correctly calculated and added to his total income. Whether income should be taxed on accrual or receipt basis for AOP income.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM

Per Manoj Kumar Aggarwal (Accountant Member)

1.

Aforesaid appeal by assessee for Assessment Year [AY] 2007-08 contest the order of Ld. Commissioner of Income-Tax (Appeals)-28 [CIT(A)], Mumbai, Appeal No.CIT(A)-28/IT-62/AC-12(3)/2013-14 dated 02/09/2016 by raising several grounds of appeal out of which the ITA.No.7166/Mum/2016 Dhano Bhulchand Vaswani Assessment Year- 2007-08 grounds of appeal

as pressed before us are Ground Numbers 3 to 5 which reads as under:-

3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the addition of the income of AOP, M/s. Vaswani Trust and M/s. Vaswani Chambers without considering the explanation submitted by the appellant. The Ld. CIT(A) failed to appreciate and ought to have held that the assessee is offering the income on actual receipt basis and same should not be added as income.

4. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming and not taking the income as assessed by respective assessing officer of the AOP namely M/s Vaswani Chamber and M/s. Vaswani Trust. As per the order dated 20/03/2013 of Vaswani Chamber and as per order dated 18/03/13 of Vaswani Trust.

5. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming and failed to appreciate and ought to have held that the assessed income of respective AOP to be added as share of income of respective AOP to be added as share of income of respective AOP. The appellant is aggrieved about confirming the assessment of rental income on accrual basis.

The assessee was subjected to reassessment proceedings u/s 143(3) read with Section 147 on 14/03/2013 wherein it has been saddled with additional income of Rs.7.48 Lacs towards his share in rental income earned by two Association of Persons [AOP], the details of which are as follows:-

No. AOP Rental Rental % of Assessee’s Assessee’s Share Income Income as Share (Rs.) Offered to per Income Tax by AOP & (Rs.) Expenditure Account (Rs.) 1. Vaswani Chambers 6,13,17,783/- 6,91,03,171/- 12.5% 86,37,896/- 2. Vaswani Trust 1,60,90,424/- 1,80,17,621/- 5% 9,00,881/- TOTAL 95,38,777/- Net Income after 66,77,144/- statutory deduction of 30% u/s 24 Income already 59,28,471/- assessed u/s 143(3) Difference as added 7,48,673/- to the income of the assessee ITA.No.7166/Mum/2016 Dhano Bhulchand Vaswani Assessment Year- 2007-08 The same, upon confirmation by Ld. first appellate authority, is being agitated before us.

2.

The only contentions as raised before us by Ld. Auhtorized Representative for Assessee [AR], Shri Vimal Punmiya, is with regard to adoption of correct figures as determined in the quantum assessment orders of the respective AOPs. The Ld. DR submitted that the matter was factual one.

3.

We have carefully heard the submissions and perused relevant material on record including quantum re-assessment orders dated 20/03/2013 & 18/03/2013 passed in the case of the two AOPs. Upon perusal, we find that the assessee’s share in those AOPs has been determined at Rs.7,37,964/- & Rs.58,15,110/- respectively, the aggregate of which comes to Rs.65,53,074/-. Since an amount of Rs.59,28,471/- has already been assessed in the hands of the assessee u/s 143(3), the impugned additions stand restricted to Rs.6,24,603/-.The order of lower authorities stand modified to that extent.

4.

The appeal stand partly allowed.

Order pronounced in the open court on 12th September, 2018.

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