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TMI Blog2018 (3) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in working out the Annual Value of the house property after excluding the service tax payable thereon for computing income from the house property. This finding also finds support from the fact the AO has accepted net annual value after excluding the service tax out of the gross rent receipt for computing the income from the house property in the subsequent AY. Accordingly, the service tax paid and refund of one month rent has to be deducted out of the gross Rent received from M/s with ICICI Prudential Life Insurance Co. Ltd., to arrive the Annual Value of the property. Consequentially, the addition made under the head income from the house property is deleted. - Decided against revenue - ITA No. 224/Del/2014 - - - Dated:- 26-3-2018 - Shri Sudhanshu Srivastava, Judicial Member And Shri Prashant Maharishi, Accountant Member Appellant by : Sh. Atiq Ahmed, Sr. DR Respondent by : Sh. Satyendra Jain, CA ORDER Per Prashant Maharishi, Accountant Member 1. This appeal is filed by Ld. Assistant Commissioner of Income Tax, Circle 37 (1), New Delhi [The ld AO] against the order of the CIT (Appeals) - XXVI, New Delhi [ the Ld CIT (A)] dated 21.10.2013. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings it was found by the ld AO that the TDS certificates shows higher gross receipts then what is shown in the return of income and profit and loss account. Because of the difference in the gross receipt between the two documents the Ld. Assessing Officer made an addition of ₹ 3,57,87,719/- which was deleted by the Ld. CIT (A) holding that there is no justification for making the above addition. This is challenged by the revenue by ground No.1 of the appeal. 5. The Ld. DR relied upon the order of the Ld. Assessing Officer and submitted that when there is difference between the gross receipt as per books of accounts and the TDS certificates the addition has been correctly made. 6. The Ld. AR relied upon the order of the Ld. CIT (A) and submitted that professional receipts have been correctly shown by the assessee and there are no reasons for Assessing Officer to make the above addition. 7. We have carefully considered the rival contentions. The assessee is a Senior Advocate who is maintaining regular books of accounts. During the year as per the tax Audit Report assessee has disclosed total professional receipt of ₹ 14,76,70,759/- whereas in the audit repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting Standard-2 clause (a) provides that a change in the accounting policy shall be made only if the adaptation of a different policy is required by the statute or if it is considered that the change would result in a mere appropriate preparation or presentation of the financial statement of an assessee. 7.3 I have perused the audit report submitted along with the Return of Income (ROI). I find force in the argument of the Ld. AR that the appellant has offered gross professional receipts of ₹ 14,76,56,759/- in the AY 2009-10 and ₹ 1,96,78,890/- taxed on accrual basis in the relevant AY by the AO in the AY, 2010-11 on receipt basis. I have perused the e-ROI of the relevant AY and finds that the gross receipts of ₹ 14,76,70,759/- as mentioned in the appellant's submission is shown in the ROI and not ₹ 12,96,70,759/- as taken by the AO on the basis of the Audit Report. The appellant demonstrated the mistake crept in the Audit Report with the help of the details mentioned in the e-Return and the P . L account. To which, I am convinced. The AO, as per para 4.1.5 of the impugned order has worked out the total gross receipts ₹ 16,54,68,478/-. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, I hold that there is no need to tax professional income on by applying multiplication factor to the claim of TDS credit contrary to the provisions of section 199(3) and Rule 37BA(3). In another words, there is no justification to tax professional income on accrual basis when the appellant himself has offered the same on receipt basis. Thus, the addition of professional income of ₹ 3,57,87,719/- is deleted. The AO is directed to give consequential relief. However, the AO is directed not to allow the credit of TDS in respect of which the income is not assessed in the relevant year in view of provisions of section 199(3) and Rule 37BA(3). The grounds no. 4 and 5 thus stand allowed. 8. Before us the ld AR has shown that assessee has already offered the income on gross turnover of ₹ 14.76 crores following cash system of accounting. According to the method of accounting if the tax deduction at source has been made by the client on or before 31st March but payment is not received till that date, tax deducted at source is included in the income by the assessee. Therefore, according to the method of accounting followed by the assessee, we do not find any infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of ₹ 30,68,182/-. (ii) That as the property was not fit for occupation, the tenant vide their letter dated 11.08.2008, requested to refund rent for the period from 15.07.2008 to 08.08.2008. (iii) That the appellant found the averments of the tenant correct while discussions and also did not want to loose the tenant. Therefore he return the amount of ₹ 24,54,545/- being the money for above period vide cheque no. 89140 drawn on Societe Generate Bank, Mumbai which was cashed on 14.08.2008. (iv) That moreover this amount returned to the tenant is in shape of unrealized rent to save the tenancy and is legally allowable under the Income Tax Act. (v) That the case of appellant is covered by clause (c) of sub-section (1) of Section 23 of the Income Tax Act, which provides that where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable: . Therefore the net amount received by the appellant to continue the tenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT v/s Dr. Prabha Sanghi, 139 ITD 504 supports the case of the appellant. In the case of Dr. Prabha Sanghi, the Hon'ble 1TAT, New Delhi has specifically held that two houses which were earlier let out in preceding years remained vacant wholly during the relevant year. Therefore, the ALV of these two properties which first determined u/s 23(l)(a) becomes NIL after allowing the effect of section 23(l)(c), [in another words vacancy allowance] as there is no dispute on vacancy of these properties for entire year. Thus, the ALV determined u/s 23(l)(a) will become NIL in accordance with the provisions of section 23(l)(c). Here, in the appellant's case, the property was not fit for occupation for one month after entering into lease agreement and therefore, the rent of one month was refunded. In another words, the property may be considered vacant for one month. Therefore, I am of the considered view that the effect of section 23(l)(c) has to be given in view of such facts and circumstances as mentioned in the appellant's submission. 8.2 On perusal of lease agreement entered between the appellant and M/s with ICICI Prudential Life Insurance Co. Ltd., I am of the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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