9911796707
TMI Blog1991 (10) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... rless Gen. Finance Investments Co. Ltd. (In short M/s Peerless) on a monthly rent of Rs. 74,000 w.e.f. 16th April, 1981. Under the terms of lease between the assessee and Jamuna Properties (P) Ltd. it was agreed that in case the tenant failed to pay rent for a period of two month the lessor, i.e., the assessee, will be entitled to attorn the sub-tenant of the premises as a direct lessee. M/s Jamuna Properties (P) Ltd. did not pay rent for the period 1st Aug., 1982 onwards and, therefore, from 1st April, 1983 the said Peerless a sub-tenant of Jamuna Properties (P) Otd., were made a direct tenant of the assessee. M/s Peerless had paid an advance equivalent to two years rent to Jamuna Properties (P) Ltd., which was being adjusted from the rent payable by Peerless to the said Jamuna Properties (P) Ltd. @ Rs. 37,000 p.m. Therefore, it was agreed between the assessee and Peerless that till the said advance was fully adjusted, Peerless would pay to the assessee only the balance, i.e., Rs. 37,000 p.m. Thus, from 1st April, 1983 till the close of the accounting year under consideration on 30th June, 1983 the assessee received Rs. 45,500 p.m., which it was entitled to receive from Jamuna P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance rent, whereas the lessee is collecting a whopping amount of 2 years rent from the sub-lessee. (d) The advance is interest free. (e) The lessee has defaulted in payment of rent w.e.f.1st Aug., 1982and despite provision for attornment in the lease deed the appellant waits till March, 1983 for taking steps to attorn the lease with the sub-tenant. (f) Despite the provision in the lease deed between the appellant and M/s Jamuna Properties (P) Ltd. To attorn the sub-tenant on the same terms and conditions as with the lessee the appellant is accepting a smaller rent from the sub-lessee. In view of the foregoing I am of the opinion that the tenancy with regard to which deduction on account of unrealised rent is being claimed is not bona fide. In these circumstances the claim of the assessee has to be rejected because the condition laid down in r. 4 have bot been fulfilled. The ITO s action in rejecting the claim for unrealised rent is, therefore, upheld." 7. the learned counsel for the assessee contended that from the circumstances narrated by the learned Deptl. Representative, on the other hand, stressed upon the circumstances mentioned above by the CIT(A). the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer that legal proceedings would be useless; and (e) the annual value of the property to which the unpaid rent relates has been included in the assessed income of the previous year during which that rent was due and tax has been duly paid on such assessed income: Provided that the deduction to be allowed on this account shall not exceed the income under the head "Income from house property" included in the total income as computed without making any deduction under this rule." 9. The learned CIT(A) has only recorded a finding about sub-cl. (a) of the aforesaid rule and he has not gone into the points raised in the other clauses and has not recorded any finding whether the rent in question can be said to be lost and irrecoverable. Therefore, we are of the view that for recording a finding on those aspects of the matter which are necessary for holding ultimately whether a deduction is allowable the assessee for the unrealised rent, the matter should go back to the learned CIT(A). Therefore, setting aside the CIT(A) s order upholding this disallowance, we restore the matter to him for a fresh decision on this issue in the light of our observations made above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble and he disallowed the excess. 12. Smt. Lila Agarwal is the Managing Director of the assessee company. In the immediately proceeding year she was paid a salary @ Rs. 3,250 p.m. From July, 1982 her salary was raised to Rs. 3,500 and then from1st Feb., 1983the salary was raised to Rs. 5,700 p.m. In her case the AO has held that a salary of Rs. 2,000 is reasonable and he disallowed the excess. Thus, in respect of these two directors a total disallowance of Rs. 51,250 has been made. 13. The third director is one Smt. Kiran Agarwal, who was paid a salary of Rs. 2,250 p.m. for the first six months and Rs. 2,500 p.m. for the next six months. The AO allowed salary @ Rs. 2,250 p.m. for the entire year and disallowed Rs. 1,500. 14. The assessee appealed to the CIT(A) who considered a salary of Rs. 3,000 p.m. for Shri H.K. Agarwal as reasonable, though the AO himself had accepted his salary at Rs. 3,250 p.m. as reasonable. Regarding Smt. Lila Agarwal and Smt. Kiran Agarwal, the learned CIT(A) uphold the disallowances as made by the AO observing that no material had been placed to show that the services rendered by these directors could justify payment of enhanced salary to them. Rega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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