2023 (12) TMI 274 - AT - Income Tax

Enhancing Income from House Property under the head PGBP - rent received was offered for tax by the assessee under the head Income from House Property - Whether CIT (A) erred in not granting 30% deduction on the gross rent at the time of reducing the corresponding gross rental Income which was taxed under the head PGBP? - HELD THAT - Prima facie on verification of the facts and evidences substantiating the claim, the total income as per the computation of income is Rs. 36,84,300/-. The Ld. AR demonstrated the Acknowledgement of ITR- 3 filed for A.Y 2020-2021 A.Y 2021 22 along with the computation of income disclosing the rental income under Income From house Property . Further the Ld.AR highlighted on the Tax Audit report U/sec 44AB of the Act along with the Form. 3CB CD in support of the Income from business and profession and the total income cannot exceed Rs. 38,69,300/-. Prima facie, we find there is no dispute on the disclosure of income and cannot be taxed twice and the revenue has been accepting consistent accounting system adopted by the assessee. Accordingly, we considering the facts and circumstances, set-aside the order of the CIT(A) on the disputed issue of sustaining the addition made by the CPC and direct the assessing officer to delete the addition and allow the grounds of appeal in favour of the assessee.

Summary

Issues Involved:
The appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi / CIT (A) passed under sections 154 and 250 of the Act.

Grounds of Appeal:
1. The Ld. CIT (A) confirmed the CPC's action of enhancing Income from House Property under the head PGBP.
2. The Ld. CIT (A) confirmed the addition of Income From House Property as PGBP without acknowledging the rent was already taxed.
3. The Ld. CIT (A) did not grant a 30% deduction on the gross rent when reducing the corresponding gross rental Income taxed under PGBP.

Facts of the Case:
The assessee, a doctor, earned income from house property, business & profession, and other sources. The return for A.Y 2021-22 showed total income of Rs. 36,84,300/-, later processed with additions under business and profession income. The rectification petition was dismissed, leading to an order u/s 154 of the Act.

Appeal and Tribunal Decision:
The assessee appealed to the CIT(A), who partially granted relief but sustained CPC's addition of Rs. 18,32,000/- under business income. The Tribunal found the CIT(A) erred in treating rental income as business income and taxing it twice. The Tribunal noted the consistent accounting system and accepted disclosures, directing the deletion of the CPC's addition.

Conclusion:
The Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the assessing officer to delete the addition, favoring the assessee.

Order Date:
15.11.2023