CHANDRA PRAKASH VERMA,AGAR MALWA vs. ITO, NFAC , DELHI
What did the Tribunal hold?
The Tribunal held that the reimbursement amount for expenses incurred on behalf of BPCL explained the source of the capital introduction. The lease rent of Rs. 1,14,000 was directed to be assessed as income from other sources.
What were the facts?
The assessee's capital account showed an increase of Rs. 14,87,613. The assessee explained this as reimbursement from BPCL for lease registration fees, stamp duty, and municipal corporation fees, along with lease rent received for land leased to BPCL.
What were the issues?
Whether the increase in the assessee's capital account was sufficiently explained by reimbursements and lease rent, and how the lease rent should be taxed.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
This appeal by assessee is directed against the order dated 08.09.2023 of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi for A.Y.2018-19. The assesse has raised following grounds of appeal as under:
“1. On the facts and circumstances of the case and in law the learned Commissioner of Income tax (Appeals) "the CIT(A)" erred in making an addition of Rs.14,87,613 by allegedly treating as alleged income from unexplained sources.
ITANo.441/Ind/2023 Chandra Prakash Verma 2. On the facts and circumstances of the case and in law the learned the CIT(A) erred in not considering the additional evidences submitted during the course of appeal proceedings and holding it as not admissible. The Appellant submits that the documents submitted ought to have been admitted in the interest of justice.
3. The Appellant craves leave to add, amend any or all grounds at the time of hearing.”
The solitary issue raised by the assesse in this appeal is regarding the addition made by the AO on account of increased in the capital account of the assessee of Rs.14,87,613/-. Ld. AR of assesse has submitted that the assessee is running Petrol Pump of BPCL and has executed lease deed in favour of the Petroleum Company on 13.02.2016. At the time of registration of the lease deed the assessee paid registration fees of Rs.4,87,872/- and stamp duty of Rs.6,50,496/- on behalf of BPCL. The said amount was reimbursed by the BPCL during the year under consideration which has resulted increase in the capital account of the assessee to the extent of Rs.11,38,368/-. He has referred to the confirmation of BPCL placed at page no.5 of the paper book whereby the registration fees, stamp duty and Municipal Corporation fees total amounting to Rs.13,73,613/- has been reimbursed by the BPCL to the assesse. Ld. AR has thus submitted that the remaining amount in the increase of capital account of the assessee pertains to the lease rent received by the assesse from BPCL against lease out of the land. He has referred page no.8 of the paper book and submitted that a sum of Rs.1,14,000/- has been credited to the capital account of the assessee on account of rent received from BPCL which was offered to tax under the head income from house property as per computation of income at page no.3 & 4 of the paper book. Thus, Ld. AR has submitted that the increase in capital account is nothing but the amount received from ITANo.441/Ind/2023 Chandra Prakash Verma BPCL on account of reimbursement of registration charges and stamp duty as well as lease rent receipt.
On the other hand, ld. DR has relied upon orders of the authorities below and submitted that the assesse could not produce relevant documents before the authorities below to explain source of increase in the capital account of the assessee. He has further submitted that the lease rent received from the BPCL are against the lease out of the land and not house property therefore, the said income of Rs.1,14,000/- is required to be assessed as income from other sources.
In rejoinder the Ld. AR has submitted that the assessee has no objection if the addition of Rs.1,14,000/- on account of lease rent received from BPCL is assessed as income from other sources.
We have considered rival submissions as well as relevant material on record. Ld. AO has made an addition of Rs.14,87,613/- on account of increase in the capital account of the assesse. The assesse has now demonstrated from the registration certificate of lease deed that a sum of Rs.4,87,872/- was paid towards registration fees and Rs.6,50,496/- was paid towards stamp duty.
The said amount has been reimbursed by the BPCL to the assessee vide confirmation certificate dated 21st April 2023 whereby the ITANo.441/Ind/2023 Chandra Prakash Verma BPCL has confirmed that a sum of Rs.13,73,613/- has been reimbursed to the assessee on 28th April 2017. The details of the reimbursement have given in the letter issued by BPCL are as under:
“Details for reimbursement are as under:
Sr. No. Details of payment Amount 1 Lease registration fee 487872 2 Stamp duty 650496 3 Fees of Municipal Corporation 235245
Total 1373613 5.1 Thus, to the extent of the amount received towards reimbursement of the earlier expenditure incurred by the assessee on behalf of BPCL the source of introduction of the capital has been explained by the assessee as this amount is reflected in the capital account of the assessee placed at page no.8 as under:
ITANo.441/Ind/2023 Chandra Prakash Verma 5.2 We further note that capital account of the assessee is also showing credit of BPCL rent of Rs.1,14,000/- which was received by the assessee towards lease rent of the land leased out in favour of the BPCL. Accordingly the source of increase in the capital account is established from the undisputed record being amount reimbursed and paid by BPCL. Since the lease rent received by the assessee is not separately reflected in the computation of income therefore, as per the concession given by the Ld. AR of the assessee the said amount of Rs.1,14,000/- is directed to be assessed as Page 5 of 6
ITANo.441/Ind/2023 Chandra Prakash Verma income from other sources instead of income from house property and consequently deduction if any claim by the assessee u/s 24 of the Act against the said income shall not be available to the assessee. Ld. AO is directed to verify relevant record and then assessed land lease rentals as income from other sources.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 15.04.2024.
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