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Facts
The Revenue appealed against the CIT(A)'s order which deleted an addition of Rs.1,43,50,580/- to the assessee's income, related to rental income not offered for tax. The CIT(A) had held that the deeming provision of Section 23(1)(c) was not applicable as the property was vacant and not let out.
Held
The Tribunal dismissed the Revenue's appeal as infructuous because the actual tax effect involved, calculated as the difference between assessed and returned tax liability, was Rs.45,08,614/-, which is below the CBDT's prescribed threshold of Rs.50,00,000/- for filing appeals before the ITAT.
Key Issues
1. Whether the CIT(A) erred in deleting the addition of rental income and holding Section 23(1)(c) not applicable for a vacant property. 2. Whether the tax effect in the Revenue's appeal met the CBDT prescribed threshold for filing before the ITAT.
Sections Cited
Section 23(1)(c)
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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the Revenue is directed against order dated 11.12.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is erred in directing the AO to delete the addition of Rs.1,43,50,580/ addition of Rs.1,43,50,580/- on account of rental income on account of rental income earned by the assessee but not offered to tax on the ground earned by the assessee but not offered to tax on the ground earned by the assessee but not offered to tax on the ground that that property property being bein g vacant vacant during during the the year year under under consideration? consideration? 2. Whether on the facts and circumstances of the case and in Whether on the facts and circumstances of the case and in Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is erred in holding that deeming provision of law, the Ld. CIT(A) is erred in holding that deeming provision of law, the Ld. CIT(A) is erred in holding that deeming provision of Section 23(1)(c) of the Act is not applicable in the case of Section 23(1)(c) of the Act is not applicable in the case of Section 23(1)(c) of the Act is not applicable in the case of assessee as property bein assessee as property being vacant and not let out and as such g vacant and not let out and as such estimating the market rate of vacant deemed let out property estimating the market rate of vacant deemed let out property estimating the market rate of vacant deemed let out property as worked out by the AO is not as per Law ? as worked out by the AO is not as per Law ? 3. The appellant prays that the order of the CIT(A) on the above The appellant prays that the order of the CIT(A) on the above The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Offic grounds be set aside and that of the Assessing Offic grounds be set aside and that of the Assessing Officer be restored. restored.
At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that the tax effect involved in the appeal by the Revenue is below the the tax effect involved in the appeal by the Revenue is below the the tax effect involved in the appeal by the Revenue is below the threshold limit of Rs.50,00,000/ threshold limit of Rs.50,00,000/- which is prescribed by the which is prescribed by the Central Board of Direct Taxes (in short ‘ Board of Direct Taxes (in short ‘CBDT’) vide Circular No. vide Circular No. 3/2018 dt. 20/08/2018 for filing appeal before the Income for filing appeal before the Income-tax Appellate for filing appeal before the Income Tribunal (in short ‘the Tribunal’) and therefore, this appeal is liable Tribunal (in short ‘the Tribunal’) and therefore, this appeal is liable Tribunal (in short ‘the Tribunal’) and therefore, this appeal is liable to be dismissed as infructuous. to be dismissed as infructuous.
2.1 The Ld. counsel for the assessee filed a copy of the The Ld. counsel for the assessee filed a copy of the The Ld. counsel for the assessee filed a copy of the computation sheet which is part of the assessment order. According putation sheet which is part of the assessment order. According putation sheet which is part of the assessment order. According to this computation sheet aggregate income tax liability including to this computation sheet aggregate income tax liability including to this computation sheet aggregate income tax liability including surcharge has been worked out to Rs.18,56,39994/-. Further, the surcharge has been worked out to Rs.18,56,39994/ surcharge has been worked out to Rs.18,56,39994/ Ld. counsel referred to the tax liability worked out by the assessee Ld. counsel referred to the tax liability worked out by the a Ld. counsel referred to the tax liability worked out by the a on the returned income as reflected in the return of income filed for on the returned income as reflected in the return of income filed for on the returned income as reflected in the return of income filed for the year under consideration the year under consideration, which is Rs.18,11,31,379/ is Rs.18,11,31,379/-. The Ld. counsel for the assessee has filed a chart whereas difference of the counsel for the assessee has filed a chart whereas difference of the counsel for the assessee has filed a chart whereas difference of the assessed tax liability of Rs.18,56,39,992/ assessed tax liability of Rs.18,56,39,992/- and returned income tax and returned income tax liability liability of of Rs.18,11,31,378/- Rs.18,11,31,378/ has has been been worked worked out out to to Rs.45,08,614/-. In view of this working the tax effect in the issue in . In view of this working the tax effect in the issue in . In view of this working the tax effect in the issue in dispute challenged before the ITAT is below the prescribed dispute challenged before the ITAT is below the prescribed dispute challenged before the ITAT is below the prescribed threshold of Rs.50,00,000/ threshold of Rs.50,00,000/-. Accordingly, the Ld. counsel for the d. counsel for the assessee submitted that the Revenue should not have filed this assessee submitted that the Revenue should not have filed this assessee submitted that the Revenue should not have filed this appeal and therefore, it need to be dismissed as infructuous. appeal and therefore, it need to be dismissed as infructuous. appeal and therefore, it need to be dismissed as infructuous.
The Ld. Departmental Representative (DR) however submitted The Ld. Departmental Representative (DR) however submitted The Ld. Departmental Representative (DR) however submitted that in the effect in the form No. 36 has been wo effect in the form No. 36 has been worked out to effect in the form No. 36 has been wo Rs.50,99,478/- which is marginally higher than the prescribed which is marginally higher than the prescribed which is marginally higher than the prescribed threshold limit. Therefore, the objection of the Ld. counsel for the threshold limit. Therefore, the objection of the Ld. counsel for the threshold limit. Therefore, the objection of the Ld. counsel for the assessee need to be rejected. assessee need to be rejected.
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. Though in the form No. 36 filed by the on record. Though in the form No. 36 filed by the on record. Though in the form No. 36 filed by the Revenue the tax effect has been stated Revenue the tax effect has been stated to be Rs.50,79,478/ Rs.50,79,478/- but on verification of the computation of the sheet issued along with the verification of the computation of the sheet issued along with the verification of the computation of the sheet issued along with the assessment order , the assessed tax effect liability the assessed tax effect liability has been worked has been worked out to Rs.18,56,39,994/ s.18,56,39,994/- whereas the returned tax liability is whereas the returned tax liability is Rs.18,11,31,378/- and difference of and difference of assessed tax liability and assessed tax liability and returned tax liability returned tax liability of Rs.45,08,614/- has not been disputed by has not been disputed by the Ld. DR. The difference of the assessed and the returned tax the Ld. DR. The difference of the assessed and the returned tax the Ld. DR. The difference of the assessed and the returned tax liability works out to Rs.45,08,614/ liability works out to Rs.45,08,614/- which is below the threshold which is below the threshold limit prescribed by the CBDT for filing appeal before the ITAT vide limit prescribed by the CBDT for filing appeal before the ITAT vide limit prescribed by the CBDT for filing appeal before the ITAT vide CBDT Circular (supra) (supra). The Ld. DR did not refer The Ld. DR did not refer to any of the exceptions provided in the said Circular therefore, in terms of the exceptions provided in the said Circular therefore, in term exceptions provided in the said Circular therefore, in term CBDT Circular, therefore, this appeal should not have been filed by therefore, this appeal should not have been filed by therefore, this appeal should not have been filed by the Revenue. Hence same Hence same is dismissed as infructuous. If the as infructuous. If the Revenue finds that the appeal falls in any of the exceptions provided Revenue finds that the appeal falls in any of the exceptions provided Revenue finds that the appeal falls in any of the exceptions provided in the CBDT Circular or in the CBDT Circular or due to any apparent mista due to any apparent mistake in the tax effect computation , same is found to be , same is found to be more the Rs.50,00,000/ more the Rs.50,00,000/-, then Revenue is it liberty to file a Miscellaneous Application seeking then Revenue is it liberty to file a Miscellaneous Application seeking then Revenue is it liberty to file a Miscellaneous Application seeking recall of the appeal. The appeal of the Revenue is accordingly recall of the appeal. The appeal of the Revenue is accordingly recall of the appeal. The appeal of the Revenue is accordingly disposed off as indicated above. indicated above.