2016 (12) TMI 1677 - AT - Income Tax

Undisclosed rental income from the property - Held that - It is seen that the Assessing Officer in 2012-13 AY relying upon the order pertaining to 2013-14 AY wherein admittedly rent was received by the assessee where the limited prayer of the assessee being that facts and findings pertaining to 2012-13 AY may also be considered was not opposed by the Revenue, it was considered appropriate to restore the issue back to the AO with the direction to pass a speaking order in accordance with law. Considering the facts accepted in the immediately subsequent assessment year, it is seen that the Ld.AR has not made a reference to the factual position of 2010-11 AY which has been taken note of by the AO in the year under consideration since at present stage his limited prayer is that the issue be remanded which prayer is not opposed by the Revenue. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Correctness of order dated 29.02.2016 of the CIT(A)-30, New Delhi pertaining to 2011-12.
2. Assessment of income from house property at ?16,89,734.
3. Valuation of house property and utilization of space for business purposes.

Issue 1 - Correctness of CIT(A) Order:
The assessee challenged the order dated 29.02.2016 of the CIT(A)-30, New Delhi, where the income was assessed at ?16,89,734 against Nil income declared by the appellant. The Ld.AR argued that the AO in previous years had accepted fair rental value as ?13,11,048. The issue was to be reconsidered by the AO based on previous years' assessments. The CIT(A) upheld the addition made by the AO. The Tribunal set aside the order and directed the AO to pass a speaking order after considering the facts of the preceding year.

Issue 2 - Assessment of Income from House Property:
The AO assessed the income from house property at ?16,89,734 for an office space owned by the appellant. The appellant claimed that the space was used for business purposes and should not be assessable under 'house property.' The AO found that the appellant did not carry out any business activities at the property and concluded that the fair rental value was ?34,02,400. The CIT(A) upheld the AO's decision, stating that no rent agreement was in place with the tenant and no business activity was conducted by the appellant. The Tribunal remanded the issue to the AO to pass a speaking order after considering the facts of the subsequent year.

Issue 3 - Valuation of House Property and Business Utilization:
The appellant argued that only 1/3rd of the property was leased out, and the remaining 2/3rd was used for business purposes. However, the AO found that the entire premises were used by the tenant, as no rent was paid by the tenant apart from electricity and other payments. The CIT(A) upheld the AO's decision, stating that no business activity was carried out by the appellant. The Tribunal directed the AO to pass a speaking order after considering the facts of the preceding year.

In conclusion, the Tribunal allowed the appeal for statistical purposes and set aside the CIT(A) order, remanding the issues back to the AO for reconsideration based on the facts of the subsequent year.