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TMI Blog2013 (10) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... - The assessee has claimed 'Plot rent' paid to Cochin Port Trust as deduction while computing the income from house property – Held that:- The provisions of Income tax provide for method of computation of income under the head Income from house property - Section 24 of the Act provides for the specific deductions to be allowed from the Annual rental value determined in the manner prescribed in the Act - Sec. 24 of the Act does not provide for deduction of ground rent (plot rent) while computing the income under the head Income from house property – there was no infirmity in the decision of Ld CIT(A) on the issue. Disallowance u/s 40(a)(ia) of the Act – the assessee did not deduct tax at source from the payments made for transport and delivery charges, which attract disallowance u/s 40(a)(ia) of the Act – Held that:- The Ld CIT(A) called for a remand report from the AO - In the report, the AO recommended for disallowance of only Rs.2,52,779/- and Rs.3,47,482/- respectively for assessment years 2005-06 and 2006-07. Accordingly, the Ld CIT(A) sustained the addition to the extent recommended in the remand report and granted relief in respect of balance amounts. Still aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 40(a)(ia) of the Act. (d) the assessee has written off balances from Sundry creditors account, but did not declare it as income u/s 41(1) of the Act. AO noticed that all the above said irregularities, if corrected, would result in enhancement of income. Hence, the AO formed the belief that the income has escaped assessment and accordingly reopened the assessments by issuing notices dated 10-9- 2008 u/s 148 of the Act. In response to the said notices, the assessee filed returns of income along with covering letters, wherein the assessee requested the AO to intimate the reason for reopening of assessment. 2.1 The AO, vide his letter dated 5-8-2009, intimated the assessee about the reasons for re-opening of assessment mentioning the irregularities narrated above. The said letter reads as under:- "Sub.: Income tax Asst for Asst years 2003-04, 05-06 to 2007-08 - reg. Ref.: Your letter dated 21-7-2009. Please refer to the above. On verification of the returns filed, in computing the House Property income, you have made some deduction which is not allowable under the head house property. Likewise certain irregularities in arriving the total income under the head busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions of the assessee and accordingly contended that the order of Ld CIT(A) on this issue should be upheld. 2.5 We have heard the rival contentions and carefully perused the record. Admittedly, the returns filed for both the years under consideration have been processed u/s 143(1) of the Act. Further the reassessment notices have been issued within four years from the end of the assessment year. With regard to the contentions of the assessee that the information has been received from audit party, we agree with the decision of Ld CIT(A) that the said information can be the basis for reopening of assessment, provided that the AO has applied his mind on the issues and formed the belief about escapement of income. As pointed out by Ld CIT(A), both the assessment orders sufficiently depict the application of mind on the part of the assessing officer. Besides the above, the main contention of the assessee is that the letter dated 5.8.2009 sent by the AO cannot be considered as proper communication of reasons. We are unable to agree with the said contentions. It is a well settled proposition of law that the AO need not accurately pinpoint the quantum of escapement of income. From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the assessee, the building from which the rent was derived is situated on the land owned by Cochin Port trust. According to Ld A.R, the rent collected for the building was a composite rent consisting of rent for building and rent for land. Accordingly, it was submitted that the rental income should be segregated into building rent and plot rent. Accordingly it was submitted that the building rent alone was offered as income under the Income from house property by deducting the plot rent from the total rental income. 3.1 We have also heard Ld D.R in this regard. During the course of hearing, a specific query was put to Ld A.R as to whether the Cochin Port Trust was also a party to the rental agreement and if so whether the rental agreement provides for bifurcation of rental income into building rent and plot rent. The Ld A.R fairly conceded that the Cochin Port Trust was not a party to the rental agreement and the said agreement does not provide for bifurcation of rent. He submitted that the assessee is paying separately the plot rent to Cochin Port Trust. When it was asked whether the assessee would be liable to pay the plot rent, even if it did not receive the rental i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) CIT Vs. Crescent Export Syndicate (Order dated 3.4.2013)(Cal) (b) CIT Vs. Sikandarkhan T Tunvar (Order dated 2.5.2013) (Guj) Hence, we are unable to agree with the contentions raised by Ld A.R. Accordingly, we uphold the order of Ld CIT(A) on this issue. 5. The last issue relates to the addition made u/s 41(1) of the Act in respect of sundry creditors written off by the assessee. The AO noticed that the assessee has written off sundry creditors' balances to the tune of Rs.2,87,677/- in assessment year 2005-06 and credited the same in the Profit and Loss account. However, while computing the total income, the assessee excluded the above said amount. The AO held that the liability so written off by the assessee is assessable u/s 41(1) of the Act and accordingly assessed the same. The Ld CIT(A) also confirmed the order of the AO on this issue. 5.1 Before us, the Ld A.R submitted that the provisions of sec. 41(1) shall be attracted only if the amount so credited to the Profit and loss account represents the amounts already allowed as deduction while computing the income. He submitted that the AO has failed to show that the amount written off by the assessee was already all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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