SUNSTAR TRADING & INVESTMENT FINANCE P.LTD,MUMBAI vs. ITO WD 4(3)(4), MUMBAI

आयकर अपीलीय अिधकरण, ‘ई’ खंडपीठ मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI “E” BENCH सव"ी राजे"", लेखा सद"य एवं संदीप गोसांई, "याियक सद"य Before S/Sh. Rajendra,Accountant Member & Sandeep Gosain,Judicial Member आयकर अपील सं/.ITA No.3018/M/2011,िनधा"रण वष"/Assessment Year-2001-02 Sunstar Trading & Investments Income tax Officer Finance Pvt. Ltd. Ward-4(3)(4) 428, Kalbadevi Road Vs Aayakar Bhavan Abhay House, 1st Floor Maharshi Karve Marg Mumbai-400 002. Mumbai-400 020. PAN:AADCS 1013 P (अपीलाथ" /Appellant) (""थ" / Respondent) िनधा"रती ओर से/Assessee by : Shri Nitesh Joshi-AR राज" की ओर से/ Revenue by : Shri Aarsi Prasad (DR) सुनवाई की तारीख / Date of Hearing : 19-11-2015 घोषणा की तारीख / Date of Pronouncement : 01.01.2016 आयकर अिधिनयम,1961 1961 की धारा 254 254(1)के अ"ग"त आदेश 1961 1961 254 254 Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद" राजे" के अनुसार PER RAJENDRA, AM- Challenging the order 01.03.2011 of CIT-8,Mumbai,the assessee has filed the present appeal. Assessee-comapny,deriving income from business of textile and rent, filed its return of income on 29.10.2001,declaring income of Rs.65,120/-.The Assessing Officer(AO)completed the assessment on 29.11.2006,u/s.143(3) r.w.s.147 of the Act,determining the income of the assessee at Rs.3,44,320/-. 2.Effective ground of appeal is about addition of Rs.3,15,387/- as deemed rent.During the assessment proceedings the AO observed that the assessee was owner of 51 shops and had to pay tax on deemed rent.He rejected the claim of the assessee that during the AY.under appeal it had neither made any payment for the shops nor had received the possession of the premises.The assessee also argued that payment of Rs.1.37 crores was made between 31.03.2003 and 04.02.2204,that agreement for sale of said shops was executed on 25.03.2004.However,as stated earlier,the AO rejected the claim made by the assessee. 2.1.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).Before him,it was contended that considering the dates of payment and date of execution of sale deed the assessee could not be assessed for deemed rent for the year under appeal. After considering the submission of the assessee and the assessment order,the FAA held that the assessee and Pioneer Holding Pvt.Ltd.(PHPL)were confirming parties to the transaction, that the premises were likely to be ready for delivery of possession by 30.06.1998,that the builder Mayuresh Real Estate Management Pvt.Ltd.(MREMPL)had informed the assessee that the property was ready for possession,that the assessee had not denied the communication of the 3018/M/11Sunstar Trading & Investment-01-02

builder,that PHPL was the joint holder of the property,that PHPL had shown the half of the property as fixed assets in its balance sheet,that ownership of the property was transferred to the joint owners by the builder in the AY.2001-02,that subsequent payment by the assessee was deferment of payment on part of the assessee,that payment did not affect the title of the assessee.He further held that there was no substance in the assessee’s contention that the possession of the property was not acquired during the year under appeal and that no income from such property was assessable in its hands,that it had acquired the ownership and possession of the property during the year under consideration.Finally,he upheld the order of the AO. 2.2.Before us,the Authorised Representative(AR)contended that the assessee was joint owner of the property,that PHPL had made payment to the builder between 19.08.1997 to 22.08.2000, that the assessee had not made any payment and had not received the possession of the property,that after the possession of the property it had rented it out and shown rental income from it.He referred to the page no.20 of the paper book.TheDepartmental Representative (DR) supported the order of the FAA. 2.3.We have heard the rival submissions and perused the material before us.We find that the AO and the FAA had made the addition on account of deemed rent as they were of the opinion that the property was ready for possession during the year under consideration and the assessee should have shown deemed rent from the same,that as per the receipt of payments,issued by builder, the other joint owner had made payment by 22.08.2000,that the assessee made the payment of his share on 31.03.2003,06.12.2003,4.02.2004,that the sale deed was executed 25. 03.2004.In our opinion,if a builder informs the purchaser that property is ready for possession it would not lead to the automatic conclusion that the assessee had taken over the possession of the said property.Until and unless legal formalities related with purchase of property are not completed no final conclusion can be drawn.We find that the joint owner had taken possession of half of the property earlier than the assessee.But,it cannot be the basis to hold that the assessee had also become the owner of the property in the same year.Documentary evidences clearly prove that the assessee had not taken over the possession of the property along with the co- owner. Considering the peculiar facts and circumstances of the case,we are of the opinion that there was no justification in holding that the assessee had become owner of the property during the year under appeal.Thereofore,reversing the order of the FAA,we decide effective ground of appeal in favour of the assessee. As a result,appeal filed by the assessee stands allowed. फलतः िनधा"रती "ारा दािखल क" गई अपील मंजूर क" जाती है Order pronounced in the open court on 01st January, 2016. आदेश क" घोषणा खुले "यायालय म" "दनांक 01 जनवरी, 2016 को क" गई । (संदीप गोसांई / Sandeep Gosain) (राजे" / RAJENDRA) "ाियक सद" / JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER मुंबई/Mumbai,िदनांक/Date: 01.01.2016 व.िन.स.Jv.Sr.PS.

3018/M/11Sunstar Trading & Investment-01-02

आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1.Appellant /अपीलाथ"