9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 1026 - AT - Income TaxDisallowance of the standard deduction u/s 24(a) against the income declared by the assessee under the head Income from House Property - HELD THAT - We are of considered opinion that judgement of the Hon ble Supreme Court in the case of Suraj Lamps Industries (supra) is in regard to transfer and conveyance of a title for civil consequences between private parties. However, with regard to the fiscal purposes, between assessee and Revenue, where on the basis of existence of an interest in an immovable property, certain rights or interest including those right to executed further convey the title are involved, the documents like GPA, sale agreement or Will have to be considered valid and effective for all purposes for creating a liability on assessee or to give benefit to the assessee. Although in the judgement relied by the ld. AR in the case of Rita Kuchal 2015 (5) TMI 1254 - ITAT DELHI there is no specific discussion on this aspect, however, cognizance of the judgement of the Hon ble Supreme Court in the case of Suraj Lamps Industries 2011 (10) TMI 8 - SUPREME COURT was taken, but, for the purpose of section 24(a), the right of an assessee to be entitled to receive the rental income was given precedence. Thus, the judgement which the ld. AR has relied in CIT vs. Smt. Wiran Bai Jaggi 2002 (8) TMI 889 - DELHI HIGH COURT wherein the judgement of the Hon ble Supreme Court in case of CIT vs. Podar Cement 1997 (5) TMI 2 - SUPREME COURT has been relied is still applicable to the case of the assessee. The observations of the Hon ble Supreme Court in the case of Podar Cement Pvt. Ltd. (supra) are worth to be reproduced to understand how the law propounded in regard to section 22 of the Act is different from the one propounded for the purpose of section 17 of the Registration Act in Suraj Lamps Industries 2011 (10) TMI 8 - SUPREME COURT . Thus, furthermore, the ld. DR could not defend the argument that in the subsequent years the CIT(A) has deleted the addition made by the AO holding that the rent received by the assessee is to be assessed as income from house property. Thus, we are inclined to allow this ground no 2. Addition on account of business expenses - disallowance on the ground that appellant has no money lending business whereas assessee claims that the money lending business was dormant and the assessee was in litigation with the debtors to recover the principal and interest - HELD THAT - As coming to the present assessment year, at the outset, we would like to reiterate the settled proposition of law that every assessment year is independent and there is no applicability of principle of res judicata, if the facts are distinguishable and there is evidence in that regard. In the present year 2015-16, the assessee is no more into subletting business, but, has earned income from property and has also claimed deduction u/s 24(a) of the Act which we have allowed in ground No.2. During the year, the assessee has changed the receipts from LIC India from one received in the capacity as a lessee who has created the sublease to an owner who has rented the premises. Thus, certainly the expenses of the description mentioned in the assessment order could not be attributed to the income from property as standard deduction u/s 24(a) of the Act stands allowed. It appears that during assessment proceedings the assessee claimed that apart from leasing of property business the assessee is also engaged in money lending business. This was considered by the AO to be an afterthought, but, the CIT(A) has gone into the issue in a more detailed manner. As in the present assessment year there is no interest income at all either under the heads, Income from other sources or business income. The claim of the assessee is that the lending business should be accepted on the basis of consistency. However, the same cannot be accepted as ld.CIT(A) has made a very specific observation on the basis of the financials. There are only two entries which the assessee claims to be money lending business. Now, in regard to one of those the assessee has filed a copy of complaint u/s 138 of the Negotiable Instruments Act filed against Sunil Mantri Realty Ltd. and the averments of this complaint shows that the assessee had entered into an agreement on 01.01.2010 to purchase certain flats from Sunil Mantri Realty Ltd., for which payments were made, but, as that vendor could not supply the flats, the vendor had given a cheque of Rs. 4,10,00,000/- to the assessee to return the sale consideration and that cheque was dishonoured. Thus, the averments in the complaint do not at all indicate that the money claimed to have been standing as a loan was ever given as a loan for the purpose of money lending business. In fact, in AY 2012-13, there was an issue of undisclosed income of Rs. 12 lakhs wherein the AO had made an addition of Rs. 12 lakhs on the ground that the assessee has been showing interest income from M/s Sunil Mantri Realty Ltd. on accrual basis. M/s Sunil Mantri Realty Ltd., had paid interest and deducted tax which was reflected in 26AS, but, there was lack of reconciliation. The order of ld.CIT(A) for AY 2012-13 show that there is a mention of cheque of Rs. 4,10,00,000/- given by the debtor on 01.09.2013 which could not be encashed and for which the assessee has filed the case and the ld.CIT(A) had confirmed the addition of Rs. 12 lakhs. Thus, we are of the considered view that what ld. AR has relied in regard to the previous or subsequent years about the money lending business of the assessee is not sustainable in the facts discussed above from the perspective of ld.CIT(A) and we do not consider that there is any error in the sustenance by ld.CIT(A). Accordingly, this ground is decided against the assessee.
Issues Involved:
1. Disallowance of standard deduction under section 24(a) of the Income Tax Act. 2. Addition of business expenses related to money lending business. Issue 1: Disallowance of Standard Deduction under Section 24(a) of the Income Tax Act The Assessee appealed against the disallowance of standard deduction under section 24(a) amounting to Rs. 63,72,000/-. The property in question was purchased by the Assessee HUF through an Agreement to Sell and Purchase dated 01.04.2014. The Assessee had declared income from this property as "Income from House Property" after purchasing it, although it was previously sub-let to LIC of India and declared as business income. The Ld. AO and Ld. CIT(A) disallowed the deduction, arguing that the property was not registered in the Assessee's name, hence the rental income should be considered as income from sub-letting. The Tribunal held that for the purpose of section 24(a), the conveyance of title is not of much consequence. The Tribunal relied on the judgment of CIT vs. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 (SC), which held that for income tax purposes, the owner is the person who is entitled to receive income from the property in their own right. The Tribunal noted that the Assessee was in possession of the property and had paid the full consideration. Therefore, the Assessee was entitled to claim the standard deduction under section 24(a). The Tribunal allowed this ground in favor of the Assessee. Issue 2: Addition of Business Expenses Related to Money Lending Business The Assessee also appealed against the addition of Rs. 43,62,446/- on account of business expenses related to its money lending business, which the Ld. AO disallowed, arguing that the Assessee was not engaged in any money lending business during the assessment year. The Assessee contended that the money lending business was dormant due to ongoing litigation with debtors. The Tribunal noted that in previous and subsequent years, the Assessee's money lending business was accepted by the Department. However, for the assessment year 2015-16, the Tribunal found that there was no interest income, and the financial records did not support the existence of an active money lending business. The Tribunal concluded that the expenses claimed could not be attributed to any business activity during the year under consideration. Therefore, the Tribunal upheld the disallowance of these expenses. Conclusion: The appeal was partly allowed. The Tribunal permitted the standard deduction under section 24(a) but upheld the disallowance of business expenses related to the money lending business.
|
