MRS. ARCHANA BHALLA,NEW DELHI vs. DCIT, NEW DELHI

PDF · subscribers
ITA 4564/DEL/2012Status: DisposedITAT Delhi03 March 2016AY 2007-084 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 noted a previous order in a related case (Randhir Singh Bhalla & Family (HUF)) which dismissed the departmental appeal against assessing income in individual hands. Therefore, the protective assessment in the hands of the assessee as AOP was deleted.

What were the facts?

The assessee reported income from various sources including rental income from joint properties. The AO proposed to tax this income in the hands of an AOP instead of the individual assessee, citing a similar case for AY 2006-07. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether income from joint properties should be assessed in the hands of an AOP or as individual income, and the application of the rule of consistency in assessment.

Which sections of the Income-tax Act were involved?

Section 23(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI

Before: SHRI S.V. MEHROTRA : & SHRI SUDHANSHU SRIVASTAVA :

For Appellant: Shri R.S. Singhvi CA &, Shri Satyajeet Goel CA, Shri S.L. Anuragi DR
Hearing: 17/02/2016

This is assessee’s appeal against the order dated 5.03.2012, passed by the ld. CIT(A)-XI, New Delhi, relating to A.Y. 2007-08.

2.

Brief facts of the case are that assessee had filed return showing income of Rs. 15,95,532/-, which was derived from house property, business, income from capital gain and other sources. The AO observed that assessee was engaged in the business of leasing, financing and trading in shares in her proprietorship concern namely M/s BPOS Leasing. The assessee was also owner of a property at Mulund, Maharashtra, which all the 2 ITA 4564/Del/2012 co-owners were developing and selling of as joint co-owners. The co-owners had converted the land @ Rs. 1,450/- per sq. ft. based on the market price prevailing in that period to stock in trade. Besides, rental income was also received from tenants occupying the property which was also offered to tax by assessee. Rental income of Rs. 2,222/- had been shown by assessee being 21% share of total rental income from the properties situated at Muland, Mumbai. The AO noted that in the case of Shri R.S. Bhalla, who was also having the rental income from joint property at Muland, Mumbai, provisions of sec. 23(1)(a) of the Income-tax Act were invoked in AY 2006-07 and after making inquiries from BMMC, income from house property had been assessed at Rs. 11,48,683/- representing the 37% share attributable to Shri R.S. Bhalla. Accordingly, AO assessed income from house property at Rs. 6,51,955/-. The AO required the assessee to explain as to why income shown from activity of sale/ development of joint property and divided proportionately among co-owners may not be treated as income of AOP.

3. The AO, after considering the detailed submissions, held, that income shown by assessee in her individual hands was to be taxed in the status of AOP. Accordingly, AO assessed the income shown by assessee from joint property at Muland, Mumbai in the hands of assessee on protective basis and substantially in the status of AOP.

4.

Ld. CIT(A) dismissed the assessee’s appeal on this count. Being aggrieved, the assessee is in appeal before us and has taken following grounds of appeal:

1. That under the fact and circurnstances of the case, the Authorities below were not justified to make assessment in the 3 ITA 4564/Del/2012 hands of the appellant on protective basis and. not on substantive basis ignoring the past history of the case and protective assessment having been made in violation of Rules of Consistency to be adopted by the lower authorities ..

2. That the authorities below were not justified to delete the share of income of the appellant in joint properties in Mulund Maharashtra since they had hold that the said income is assessable in the hands of R.S.Bhalla and Others AOP and the action of the lower authorities amounts to double taxation of the same income.

3.

That the assessee craves the right to add, amend, delete or substitute any ground of appeal 4. That the orders of the lower authorities as framed are against the facts of the case and bad in law.”

5. At the time of hearing, ld. counsel filed before us a copy of Tribunal’s order dated 20.11.2012 rendered in departmental appeal being in the case of Randhir Singh Bhalla & Family (HUF), for AY 2007-08, dismissing the departmental appeal by confirming the action of CIT(A), quashing the proceedings initiated u/s 148 for making assessment in the hands of AOP. Thus, now the substantive assessment of the income returned from Muland properties, Mumbai has to be made in the hands of Archana Bhalla as individual, as returned by her and not in the hands of AOP. Thus, the assessee’s appeal deserves to be allowed and the protective assessment made in the hands of assessee deserves to be deleted.

4 ITA 4564/Del/2012 6. In the result, assessee’s appeal is allowed accordingly. Order pronouncement in open court on 03/03/2016.

More judgments on Section 23(1)(a)

All 272 judgments and leading authorities on Section 23(1)(a) →

Recent GST High Court judgments

Search GST case law →