2021 (10) TMI 511 - AT - Income Tax

Rectification u/s 154 - Assessment of trust - contravention of the provisions of section 13(1)(c) for payment of unreasonable rent for properties owned by M.N. Navale (Bigger HUF) - Bigger HUF was a concern in which trustees of the trust had a substantial interest - whether M.N. Navale (Bigger HUF) is a person specified in section 13(3)? - violation of section 13(1)(c) - whether CIT(A) has erred in holding that the Shri M.N. Navale (Bigger HUF) does not stand in a relationship specified under section 13(3) of the Act? - HELD THAT - When we read the order of the Tribunal for assessment year 2009- 10 in conjunction with the order for assessment year 2007-08, it becomes clear that the matter has been sent back to the file of ld. CIT(A). It is the very same finding which was taken up by the assessee through proceedings u/s.154 before the ld. CIT(A). Since the original order itself on this issue has been sent back by the Tribunal, the sequitur is that the instant rectification also, flowing from the original ground, should also follow the suit. We, therefore, set-aside the impugned order and remit the matter to the file of the ld. CIT(A) for deciding it in conformity with the view taken by him in the proceedings flowing from the order of the Tribunal for the assessment year 2009-10 on this issue - Appeal is allowed for statistical purposes

Summary

Issues:
1. Interpretation of section 13(1)(c) and section 13(3) of the Income-tax Act, 1961 regarding unreasonable rent payments.
2. Application of legal provisions to properties owned by M.N. Navale (Bigger HUF) and M.N. Navale as an individual.
3. Review of the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2009-10 based on the Tribunal's decision.

Analysis:

1. The appeal by the Revenue challenged the order of the Commissioner of Income-tax (Appeals) concerning the assessment year 2009-10, specifically focusing on the interpretation of section 13(1)(c) of the Income-tax Act, 1961. The dispute revolved around whether the properties rented by the assessee from M.N. Navale (Bigger HUF) were subject to the provisions of section 13(1)(c) due to unreasonable rent payments. The Commissioner of Income-tax (Appeals) initially ruled in favor of the assessee, citing the absence of a prohibited relationship under section 13(3) with M.N. Navale (Bigger HUF). However, a subsequent assessment identified a property owned by M.N. Navale as an individual, leading to a reevaluation of the application of section 13(1)(c).

2. The Tribunal's analysis involved a comparison with a previous decision for the assessment year 2008-09, where similar issues were addressed. The Tribunal noted that the concerns raised by the Revenue for the assessment year 2009-10 mirrored those from the earlier year, prompting a reconsideration of the matter. In a consolidated order covering multiple assessment years, the Tribunal directed the issue back to the Commissioner of Income-tax (Appeals) for further review. The Tribunal emphasized the need for consistency in decision-making across related cases and instructed the Commissioner of Income-tax (Appeals) to align the judgment for the assessment year 2009-10 with the broader context of the Tribunal's rulings.

3. Ultimately, the Tribunal allowed the appeal for statistical purposes, indicating a procedural victory for the Revenue based on the need for a revised decision by the Commissioner of Income-tax (Appeals) in line with the Tribunal's directives. The order pronounced on 8th October 2021 signified the resolution of the appeal, with the matter remitted back to the Commissioner of Income-tax (Appeals) for a consistent and compliant determination in accordance with the Tribunal's guidance.

This comprehensive analysis encapsulates the legal intricacies and procedural nuances of the judgment delivered by the Appellate Tribunal ITAT Pune, shedding light on the interpretation and application of relevant provisions under the Income-tax Act, 1961.