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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आयकर अपीऱीय अधिकरण “एच” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI श्री शक्तिजीि दे,न्मायमक सदस्म एवुं श्री भनोज कुभाय अग्रवार, रेखा सदस्म के सभक्ष । BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आमकय अऩीर सं./I.T.A. No. 1085/Mum/2015 (नििाारण वषा / Assessment Year: 2006-2007) STERLING & WILSON PROPERTY INCOME TAX OFFICER – DEVELOPERS PVT. LTD. 1(3)(2), बिाम/ Room No. 564, 5th Floor, C/o. Kalyaniwalla & Mistry, Army & Navy Building, 3rd Floor, Aayakar Bhavan, M.K. Road, Vs. 148, M.G. Road, Mumbai – 400 020. Fort, Mumbai – 400 001. स्थामी रेखा सं./जीआइआय सं ./PAN/GIR No. AAACS6320E (अऩीराथी /Appellant) (प्रत्मथी / Respondent) : अऩीराथी की ओय से / Appellant by : Shri M.M. Golvale & Mrs. Hetal Jhakharia, AR’s प्रत्मथी की ओय से/Respondent by : Shri K.C. Kanojia, DR
सुनवाई की िायीख / : 27/10/2016 Date of Hearing घोषणा की िायीख / : 11/11/2016 Date of Pronouncement आदेश / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
The aforesaid appeal by assessee for Assessment Year [AY] 2006-07 is directed against the order of Commissioner of Income Tax (Appeals)- 3 [CIT(A)], Mumbai dated 19/01/2015 on the following grounds of appeal:-
2 ITA No.1085/Mum/2015 Sterling & Wilson Property Developers P. Ltd. Assessment Year 2006-2007 1. The learned Commissioner of Income Tax (Appeals) erred in restricting deduction on account of maintenance charges, while computing income under the head “Income from House Property”, to Rs. 1,22,956/-, as against the appellant’s claim for Rs. 3,74,100/- 2. The learned Commissioner of Income Tax (Appeals) erred in not considering the correct facts as regards the various flats given out on leave and licence basis. 3. Without prejudice to ground no.1 above, the appellant submits that the learned Commissioner of Income Tax (Appeals) erred in restricting deduction for municipal taxes (actually paid during the year) to Rs.61,920/- as against the appellant’s claim for Rs. 2,06,028/-. 4. The learned Commissioner of Income Tax (Appeals) erred in holding that an amount of Rs 7,70,986/- being stamp duty actually paid during the year was not allowable, as no claim had been raised in the Return of Income. 5. The appellant submits that the learned Commissioner of Income Tax (Appeals) failed to consider that the claim for the deduction to be allowed in the current year was only an alternative claim to the appellant’s primary submission that the same be allowed in Assessment Year 2005-06. 6. The learned Commissioner of Income Tax (Appeals) failed to consider the provisions of section 43B, while confirming the above mentioned disallowance of Rs. 7,70,986/-.
Facts qua the dispute are that the assessee is a Private Limited Company who filed its Return of Income for impugned AY declaring loss of Rs.26,22,364/-. The assessee is engaged in the business of Property Developers / Civil Engineers. The case was taken up for scrutiny assessment u/s. 143(3) wherein loss was determined at Rs.23,38,264/- vide Assessing Officer [AO] order dated 26/12/2008. The assessee has credited ‘leave and license fees’ [in short ‘lease income’] of Rs.5,50,433/- to Profit & Loss Account but offered only an amount of Rs.3,00,000/- on the premises that balance amount of Rs.250,433/- was already offered to tax on ‘receipt basis’ in earlier years. Qua this income, assessee claimed maintenance charges of Rs.3,74,100/-. AO relying upon various judicial pronouncements treated the same as assessable under the head ‘Income from House Property’ against which assessee was eligible for statutory deduction of 30% only under Section 24. The assessee agitated the matter before CIT(A) which was partly allowed vide order dated 19/01/2015. The assessee
3 ITA No.1085/Mum/2015 Sterling & Wilson Property Developers P. Ltd. Assessment Year 2006-2007 contended that maintenance charges are admissible as deduction. CIT(A) noted that these charges pertained to four properties as per details given below: Flat No. Amount(Rs.) 704 0 (since recovered from tenant) 1101 1,22,956 1102 46,000 1202 1,22,956 Godown 82,188 Total 3,74,100
CIT(A) concluded that since the assessee offered lease income of Rs.3.00 Lacs against Flat No. 1101 only during the year in question, he was entitled for deduction of Rs.1,22,956/- only. Accordingly, he partly allowed the claim of the assessee. Similar proportionate relief was provided from Municipal Taxes totaling Rs.1,23,000/-. Another ground agitated by assessee was with respect to stamp duty expenditure of Rs.7,70,986/- debited to Profit & Loss Account in AY 2005-2006 but being remaining ‘un-accrued’ and unpaid, hence not allowed in AY 2005-06 as per provisions of Section 43B. The same, since been incurred and paid, was claimed before CIT(A) but dismissed by CIT(A) on the ground that no such directions for allowability were given by predecessor CIT(A) in order for AY 2005-2006. Aggrieved, the assessee is in appeal before us. 3. Ground No. 1 to 3 pertains to claim of the assessee with respect to maintenance charges against lease income. The assessee has not contested the assessability of lease income under the head ‘Income from House property’ and hence, the only dispute is with respect to allowability of impugned charges/taxes from lease income which has been disallowed by revenue primarily on the ground that the assessee has offered income only against one property. First of all, to delve into the matter properly, we find that the assessee has debited a sum of Rs.3,74,100/- in Profit & Loss Account under the head ‘Sterling Seaface Maintenance Charges’, the break-up of which is as follows:-
4 ITA No.1085/Mum/2015 Sterling & Wilson Property Developers P. Ltd. Assessment Year 2006-2007 Flat No. Maintenance Charges (Rs.) Municipal Taxes (Rs.) 704 0 (since recovered from tenant) 0 (since recovered from tenant) 1101 61,036 61,920 1102 46,000 Nil 1202 61,036 61,920 Godown Nil 82,188 Total 1,68,072/- 2,06,028/-
Therefore, we find that CIT(A) has erred in allowing two deductions to the extent of Rs.1,22,956/- & Rs.61,920/- separately on account of maintenance charges and municipal taxes respectively which pertained to Flat No. 1101 whereas in fact the total amount pertaining to Flat No. 1101 was, in fact, Rs.1,22,956/- inclusive of municipal taxes. Further, when Income is calculated under the head House Property, then besides statutory deduction of 30% u/s 24, an assessee is entitled only for deduction with respect to taxes levied by any local authority. Therefore, society maintenance charges levied by the Society which is not a local authority are not at all allowable to the assessee. Therefore, we held so and accordingly, maintenance charges of four flats amounting to Rs.1,68,072/- are not allowable under the head ‘Income from House Property’. Further, the assessee has contended that Godown has been used by assessee for business purposes and therefore, we restore this matter to file of AO for limited purpose of verifying assessee’s claim that the godown was used for business purpose during impugned AY or not and if so, allow the deduction for municipal taxes under the head ‘Business Income’. So far as regarding, municipal taxes for four properties are concerned, a combined perusal of Statement of Total Income for AY 2006-07 & 2005-06 strengthens the claim the assessee that lease income has been offered on receipt basis as per TDS certificates to avoid mismatch of TDS credit. Therefore, we held that municipal taxes relating to four properties are allowable under the head ‘Income from House Property. The appeal of the assessee against Ground Nos. 1 to 3 is partly allowed.
5 ITA No.1085/Mum/2015 Sterling & Wilson Property Developers P. Ltd. Assessment Year 2006-2007 4. Qua 43B disallowance, we find that assessee had filed return of income for AY 2006-07 on 06/11/2006 whereas the 43B claim of the assessee for AY 2005-06 amounting to Rs.7,70,986/- has been disallowed by AO vide order dated 05/12/2007 and affirmed by CIT(A) order dated 25/03/2009. Therefore, there was no occasion with the assessee to claim the same in statement of total income. Therefore, this matter is also restored to AO for limited purpose of verifying the 43B payment made by the assessee and allow the same to the extent of Rs.7,70,986/-, if the same has not been allowed in AY 2005-06 consequent to Tribunal’s order. The ground nos. 3 to 6 of the assessee is allowed for statistical purposes. In nutshell, the appeal of the assessee is partly allowed. 5. Order pronounced in the open court on 11th November, 2016 Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) न्मायमक सदस्म / Judicial Member रेखा सदस्म / Accountant Member भुंफई Mumbai; ददनांक Dated : 11.11.2016 PS:- Pooja K. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent 2. आमकय आमुति(अऩीर) / The CIT(A) 3. आमकय आमुति / CIT – concerned 4. ववबागीम प्रयियनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai 5. गार्ड पाईर / Guard File 6. आदेशाि सार/ BY ORDER, उप/सहायक पुंजीकार (Dy./Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai
6 ITA No.1085/Mum/2015 Sterling & Wilson Property Developers P. Ltd. Assessment Year 2006-2007
Sr. No. Details Date Initials Designation 1 Draft dictation sheets are attached Self Types Sr.PS/PS on Computer by Member 2 Draft dictated on Sr.PS/PS 3 Draft Placed before author Sr.PS/PS 4 Draft proposed & placed before JM/AM the Second Member 5 Draft discussed/approved by JM/AM Second Member 6 Approved Draft comes to the Sr.PS/PS Sr.PS/PS 7 Order pronouncement on Sr.PS/PS 8 File sent to the Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head clerk 10 Date on which file goes to the AR 11 Date of Dispatch of order Checked on Particulars Citations Reproduction