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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
Per Shri S.S. Viswanethra Ravi
This appeal by the Revenue filed against the order dated 26- 10-2012 in appeal no.289/CIT(A)-VI/Cir-5/11-12/Kol passed by the CIT(A)-VI, Kolkata for assessment year 2009-10.
The appellant Revenue filed this appeal with a delay of 136 days and the reasons stated in the affidavit are that the AO was busy with time barred cases etc. The DR submitted that the AO got
I.T.A. No. 1738/KOL./2013 Assessment year: 2008-2009 Page 2 of 6 engaged in preparation of papers in this appeal, as well as, other time-barred appeals and prayed to condone the delay in the interest of justice. The A.R. pointed out that the AO could only explain the delay from the date on which the limitation for filing appeal expired but the AO did not explain the reasons for the period between 26.10.12 and 17.01.2013. But for the reasons stated in the affidavit, we are of the opinion in the interest of justice, that the reasons submitted are reasonable, therefore the delay of 136 days condoned and appeal of the Revenue is admitted.
The brief facts of the case are that the assessee is a company and dealing in various businesses i.e. trading in jute, sarees and financing. The return of income filed on 24.09.2009 declaring Rs.80,13,330/- as its total income and it was processed under section 143(1) of the Act. Under scrutiny, notices under section 143(2), 115WE(2) and 142(1) of the Act were issued. The case of the assessee was represented by the A.R.
During the course of assessment proceedings AO found that the assessee has debited expenses of Rs.46,62,285/- from the rental income. The said expenses relating to service and maintenance charges, staff welfare and electric charges. The AO was of the view that as per the provisions of the income tax the assessee is entitled to get relief of only 30% of the rental income u/s 24(a) and taxes paid for the property. The AO computed the house property income as below:
Total Rent received Rs. 1,64,20,722/- Less: Municipal Tax paid Rs. 7,61,865/-
I.T.A. No. 1738/KOL./2013 Assessment year: 2008-2009 Page 3 of 6 Rs. l,56,58,857/- Less: Interest on loan u/s.24(b) Rs. 22,843/- Deduction u/s.24(a)@30% Rs. 46,91,657/- Income from House Prop Rs. 1,09,38,357/-
Accordingly, the expenses of Rs.46,62,285/- was disallowed and added back to the total income of the assessee
The CIT-A, in first appeal, observed that the opinion of the AO that assessee could not prove that income received by the assessee included service charges is contrary to facts on record and that the assessee could produce before him agreement with only one tenant, is also contrary to the facts on record as the said issue was discussed in detail in the assessment year 2007-08 in assessee’s own case in Appeal No. Appeal No. 1544/CIT(A)-VI/KoIICircle- 5/09-101 dated 19/10/2012 taking into consideration the finding of the Tribunal in assessee’s own case for earlier years. The CIT-A following the same deleted the addition of Rs.46,62,285/- as made by the AO.
Before us, The Ld. DR relied on the orders of AO and Ld. AR submitted that this Tribunal considered the issue on hand for earlier years and taking into consideration of the same the claim of expenses on rental income were allowed for assessment years 2002- 03, 2004-05 to to 2006-07 by the AO and relied on CIT-A’s order.
I.T.A. No. 1738/KOL./2013 Assessment year: 2008-2009 Page 4 of 6 8. We find that the assessee company earned income from rent and service charges received from tenants in respect of building constructed by it on leasehold land like earlier years. The said expenses were incurred for providing services and amenities to tenants. As per practice adopted by the assessee in earlier years the claimed expenses were reduced from the gross rent received which includes service charges. This Tribunal allowed the said expenses which was followed by the CIT(A) and the AO accepted such claims made by the assessee in earlier years. The observation of which is reproduced herein below
“9. I have carefully considered the observations of the Assessing Officer in the assessment order and submissions of the assessee. As per the orders of the Hon'ble ITAT in the case of the appellant itself the said expenses have been allowed in the earlier years. The Assessing Officer has itself also allowed the said expenditure from A. Y 2004-05 to 2006-07 u/s 143(1) and in 2002-03 in order u/s 143(3) The Assessing Officer has not brought any different facts on record to disallow the expenditure as compared to the assessment year 2002-03 and 2004-05 to 2006-07. The Assessing Officer has not analysed whether any expenditure being claimed pertains to the maintenance or not and did nor mention any legal different legal issue or distinguished it from earlier years. The Assessing Officer has not considered whether the rent agreement is consolidated or separate for rent and services. He has not mentioned what is the portion/share of rent and service charges in the gross receipts of the appellant to make any distinction from earlier years.
Therefore. following the rule of consistency and the judgment of the Hon'ble ITAT and Ld. CIT(A) in the case of the appellant itself in the earlier years the expenses of Rs.16,18,508/- is allowed to be deducted from the receipts of gross rent and service charges. The deduction u/s.23 @ 30% is to be allowed after deducting the said expenditure along with
I.T.A. No. 1738/KOL./2013 Assessment year: 2008-2009 Page 5 of 6 interest on loan disallowed by the appellant itself. This ground of appeal is allowed.
The AO even without finding any change in the facts and circumstances prevailing in the earlier years refused to follow finding of the Tribunal, followed by CIT(A) and the appellant revenue in earlier years, even in scrutiny assessments. Since the facts and circumstances of the case and the issue involved in the earlier years are same, Thus, we are of the view for computing annual value of rent u/s 23 of the Act that expenses relating to provision of amenities to tenants are allowed to be reduced from composite rent & service charges. Therefore, sole ground raised by the appellant revenue in this appeal is dismissed and the addition made by the Assessing Officer stands deleted.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 29th April, 2016.
Sd/- Sd/- (P.M. Jagtap) (S.S. Viswanethra Ravi) Accountant Member Judicial Member Kolkata, the 29th April, 2016
Copies to :(1) Deputy/Assistant Commissioner of IncomeTax,Circle-5, Kolkata,Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700 069
(2) M/s. Bagaria More Co. Ltd., 23A, Netaji Subhash Road, Kolkata-700 001
I.T.A. No. 1738/KOL./2013 Assessment year: 2008-2009 Page 6 of 6 (3) Commissioner of Income-tax (Appeals)- VIII,Kol. (4) Commissioner of Income Tax, Kolkata (5) The Departmental Representative (6) Guard File
By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Talukdar, Sr.PS(OS)