2020 (10) TMI 1092 - AT - Income Tax

Rectification of mistake - double disallowance of Lease Rent - HELD THAT - Assessee arrived at business income after making disallowance of Lease Rent and although the assessee claimed the deduction of Lease Rent while computing Income from House Property but it resulted in net loss under the head Income from House Property and Net Taxable Income as worked out accordingly. AO has started the computation by taking the figure of income which is after making disallowance of Lease Rent and again disallowed Lease Rent therefore, it is a clear case of double disallowance of Lease Rent because the loss worked out under the head Income from House Property and consequent lesser taxable income worked out by the assessee is not given effect to by the AO. Under these facts, we accept that there is apparent mistake in tribunal order in saying that there is no double disallowance of Lease Rent - We rectify this mistake - M. P. of the assessee is allowed.

Summary

Issues:
Rectification of apparent mistakes in tribunal order regarding double disallowance of Lease Rent.

Analysis:
The M.P. filed by the assessee contended that there were apparent mistakes in the tribunal order that needed rectification under section 254(2). The learned AR of the assessee pointed out that the tribunal held there was no double disallowance made by the AO, but the computation of income showed otherwise. The AO had disallowed Lease Rent ?6 Lacs twice, resulting in a net loss under the head "Income from House Property." The DR of the revenue argued against any mistake in the tribunal order but failed to identify any errors in the arguments presented by the assessee.

Upon considering the submissions and reviewing the records, it was found that there was indeed a double disallowance of Lease Rent ?6 Lacs as claimed by the assessee. The AO had not given effect to the loss worked out under the head "Income from House Property," resulting in a lesser taxable income. The tribunal accepted the mistake in its order and allowed Ground No. 6 raised by the assessee, concerning the part disallowance of ?4,68,600 out of the total disallowance of Lease Rent ?6,00,000 made by the AO. This rectification was necessary due to the double disallowance issue discussed above. While Ground No. 6 was allowed, other grounds like Ground No. 3, 5, and 7, which were previously rejected, remained unchanged.

In conclusion, the M.P. of the assessee was allowed, and the rectification was made to address the double disallowance of Lease Rent issue. The tribunal's decision rectifying the mistake in the order ensured that the correct amount of disallowance was considered, leading to the allowance of Ground No. 6 raised by the assessee. The ultimate result of the appeal, labeled as "partly Allowed," remained the same, with only Ground No. 6 being rectified and allowed.