2018 (4) TMI 443 - AT - Income Tax

Addition of difference in working of capital gain - Held that - As could be seen from the materials on record, AO has only considered the difference in value in respect of three properties where he found the assessee s value to be more than the value of the Government approved valuer. However, as observed by the learned Commissioner (Appeals), in respect of other properties, the value of the assessee is less than the value determined by the Government approved valuer. Therefore, if assessee s valuation vis a vis valuation of the Government approved valuer is considered in totality, the assessee s value in respect of properties is less than the Government approved valuer. Disallowance of expenditure incurred towards legal and professional charges - Held that - The claim of business expenditure on account of legal and professional charges was disallowed solely for the reason that income from the said property is assessed under the head income from house property. However, it has been submitted before us by AR that only a part of the property was let out and other part is used for business purpose. Aforesaid factual aspect has not been examined by the Departmental Authorities. We are inclined to restore the issue to the file of the Assessing Officer for verifying assessee s claim that part of the property is also used for business. If assessee s claim is found to be correct, the expenditure incurred towards legal and professional charges should be allowed. Ground is allowed for statistical purposes.

Summary

Issues:
1. Deletion of deemed rent addition
2. Recalculation of capital gains
3. Disallowance of legal and professional charges

Deletion of Deemed Rent Addition:
The Revenue challenged the deletion of deemed rent addition amounting to ?4,89,46,330. The Assessing Officer determined the deemed rental income based on previous assessments and inter-se disputes between tenants. The Commissioner (Appeals) deleted the addition following Tribunal decisions favoring the assessee in earlier years. The Tribunal upheld the deletion, citing consistent rulings in the assessee's favor in previous cases. The ground raised by the Revenue was dismissed.

Recalculation of Capital Gains:
The Revenue contested the deletion of an addition of ?1,06,821 due to a difference in working of capital gains. The Assessing Officer reduced the indexed cost of acquisition based on government-approved valuer values. The Commissioner (Appeals) found discrepancies in the valuation approach and deleted the addition. The Tribunal agreed with the Commissioner, noting that the Assessing Officer's consideration was limited to a few properties. As the overall valuation by the assessee was lower than the government valuer's, the addition was unwarranted. The Tribunal upheld the Commissioner's decision, and the ground raised by the Revenue was dismissed.

Disallowance of Legal and Professional Charges:
The assessee appealed the disallowance of ?2.41 lakh for legal and professional charges. The Assessing Officer disallowed the claim as the property generated income under the head house property. The Commissioner upheld the disallowance. The Tribunal noted that part of the property was used for business purposes, not just rental income. The issue was remanded to the Assessing Officer to verify the business usage claim. If substantiated, the expenditure should be allowed. The assessee's appeal was allowed for statistical purposes.

In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was allowed for statistical purposes. The Tribunal's decision was pronounced on 28.03.2018.