GURPARTAP SINGH KAIRON,CHANDIGARH, INDIA vs. INCOME TAX OFFICE, WARD-2(1), , CHANDIGARH, INDIA

Whether upholding of addition of Rs.5,97,172/- in the hands of the Assessee tantamount to double taxation, and is therefore, bad in law and liable to be quashed.

Whether the order passed by Ld. CIT(A) is contrary to documentary evidence on record and premised on conjectures and surmises.

That the levy of consequential interest and penalty is bad in law since the addition proposed in unsustainable in law.

That the appellant craves to add, amend, or alter grounds of appeal before the appeal is finally heard and disposed off.”

Briefly, the facts of the case are that the assessee filed his return of income declaring income of Rs. 40,25,939/- on 27.03.2018. The return of income was processed and in terms of intimation under section 143(1) dated 05.12.2018, an addition of Rs. 20,65,050/- was made under the head “income from House Property” and demand of Rs. 8,58,081/- was raised on the assessee.

Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) wherein the appeal was partly allowed and addition of Rs. 5,97,172/- was sustained and against the addition so sustained, the assessee is in appeal before us.

During the course of hearing, the ld AR submitted that Ld. CIT (A) has erred in upholding addition of Rs, 5,97,172/- without considering the facts and circumstances of the case. The addition to returned income of assessee amounting to Rs. 20,65,050/- has been made on account of certain rental income reflecting in Form 26AS of the assessee. However, the rental income reflecting in Form 26AS does not belong to him as the subject property for which the rent was accrued does not belong to the assessee.

It was further submitted that the rent pertains to the property at SCO 114- 115, Sector 34A, Chandigarh which is owned by M/s Capital Estate, a partnership firm, in which the assessee is a partner. The copy of the title deed of the property along with the latest property tax demand bill available at that time in the name of the firm, M/s Capital Estate is placed on record and is forming part of the paperbook Volume 1 at Page No. 28-34. 7. It was submitted that a part of the said premises had been led out to M/s India Infoline Limited (NFL Securities Limited) by way of leave and license agreement between Capital Estate and M/s IIFL Securities Limited dated

2014. The copy of the leave and license agreement is placed on record and is forming part of the Paper book Volume 1 at Page No. 35-45. 8. It was further submitted that the assessee had inadvertently claimed the credit for TDS credited to his account due to automatic import of data from the software. While noticing the discrepancy from the intimation u/s 143(1), the assessee tried to correct the data in the TDS return of IIFL Securities Limited to show the correct particulars of landlord. However, M/s IIFL Securities Limited had vacated the premises in the year 2016 and therefore, the assessee could not get the requisite corrections in the TDS return and that is why even as on date, Form 26AS of the assessee is still showing the credit of Rs, 5,97,172/- and a copy of updated Form 26AS is placed on record and forms part of the Paperbook Volume 1 at Page No. 50-53. 9. It was further submitted that M/s Capital Estate has already included this rental income in their tax return filed for the AY 2017-18. To establish the fact that the said firm has included the rental income amounting to Rs. 5,97,172/- erroneously, the following documents are placed on record and form part of the paperbook- (1) Balance sheet and Profit and Loss account showing a rental income of Rs. 50,55,072/- in total at Page No. 54-58 of Paperbook Volume 1. The bifurcation is as follows:

It was submitted that the correction in Form 26AS of the assessee could not be affected as the tenant company had already vacated the premises in year 2016 and could not be contacted. The assessee had inadvertently claimed the TDS. It is further submitted that M/s Capital Estate has not claimed the credit of TDS deducted as the same in not reflecting in their Form 26AS.

In support, reliance was placed on the decision of Hon'ble High Court of Andhra Pradesh in the case of Commissioner of lncome-tax-1 v. Bhooratnam & Co. [2013] 357 ITR 396 (Andhra Pradesh), Hon'ble High Court of Delhi in the case of Commissioner of lncome-tax-15 v. Relcom and Hon'ble High Court of Calcutta in the case of Commissioner of Income-tax, Central-ll, Kolkata v. Ganesh Narayan Brijlal Ltd. (2017) 244 taxmann 14 (Cal).

It was submitted that upholding the addition of Rs, 5,97,172/- will tantamount to double taxation as the M/s Capital Estate has already included the rental income in the Income Tax return filed and therefore the same has already been offered for taxation. Further, M/s Capital Estate has not claimed the TDS as the same is not appearing in their Form 26AS. The addition in the hands of the assessee will lead to the rental income being taxed twice. Therefore, the addition is bad in law and liable to be quashed.

It was submitted that the assessee had already submitted the documentary evidence during the first appeal proceedings. The leave and license agreement between M/s Capital Estate and M/s India Infoline Ltd (IIFL) was provided to the Ld. CIT to substantiate the fact that the M/s Capital Estate was the Licensor and not the assessee. The Assessee is a partner in M/s Capital

Per contra, the Ld. DR relied on the order of the lower authorities and our reference was drawn to the findings of the ld CIT(A) which read as under:

We have heard the rival contentions and purused the material available on record. The matter relates to taxability of rental receipts from property situated at SCO 114-115, Sector 34A, Chandigarh. Basis perusal of the title deed of the property, it is noted that the property is in name of M/s Capital Estate. During the financial year relevant to impugned assessment year 2017-18, M/s Capital Estate has shown rental receipts from various tenants of the said property totaling to Rs. 50,55,072/- which includes Rs. 10,70,000/- from Artex Informatics Solutions Ltd, Rs 23,52,900/- from Catholic Syrian Bank Limited, Rs 5,97,172/- from IIFL Securities Ltd, and Rs 10,35,000/- from various other small tenants. Both Catholic Syrian Bank Limited as well IIFL Securities Ltd while deducting TDS on rental payments has submitted the PAN details of the assessee instead of M/s Capital Estate and the same later on, got reflected in Form 26AS of the assessee and basis the same, the assessee while filing his return of income has claimed the TDS credit and at the same time, rental receipts were not shown in assessee’s return of income but were shown in the return of income filed by M/s Capital Estate. Given the mismatch in the income offered

We find that the ld CIT(A) has adopted a piecemeal approach whereby in respect of the same property having multiple tenants, he has allowed the relief in so far as Catholic Syrian Bank is concerned and when it comes to IIFL Securities, he has denied the claim of the assessee. In our view, where the property is in the name of M/s Capital Estate as demonstrated by the title deed, the whole of the rental receipts of Rs 50,55,072/- have been shown in the books of M/s Capital Estate and which has been duly offered to tax as evident from its return of income, merely the fact that TDS return filed by IIFL Securities Ltd couldn’t be revised and the rental receipts continue to appear in Form 26AS cannot be held against the assessee. The TDS return and Form 26AS are filings in compliance with the TDS provisions and when it comes to determining the real income and the person in whose hands the real income is to be brought to tax, the same is subject to necessary examination and verification especially where the assessee is challenging the fact that such rental receipts doesn’t belong to him but belong to M/s Capital Estate and has been wrongly captured in his Form 26AS basis the data/input by another party on whom he has no control. In the instant case, we find that the assessee has duly demonstrated that he is not the real owner of the said rental receipts and such receipts actually belongs to M/s Capital Estate who had already reflected and offered the same in its return

In the result, the appeal of the assessee is allowed.

""यथ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File