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TMI Blog2015 (12) TMI 1760X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the enhancement in rental income from Rs. 3,56,524/- to Rs. 24,48,897/- without taking into cognizance the merits of the assessment order. (2) That on the facts and in the circumstances of the case, the ld. CIT(A)-XXXVI, Kolkata, erred in fact by not sustaining the addition made on account of disallowance of brokerage u/s 48 to the tune of Rs. 4,39,419/- without taking cognizance the merits of the assessment order. (3) That on the facts and in the circumstances of the case, the ld. CIT(A)-XXXVI, Kolkata, erred in fact as well as in law by not sustaining the addition made on account of cessation of liability u/s 41(1) aggregating to Rs. 46,50,000/- without taking cognizance the merits of the assessment order. 3. Brief facts of the case are that the assessee is an individual. She derives income for the relevant assessment year under consideration from property, interest from Banks and others. The assessee has purchased 50% undivided share from the vendor, i.e. Shri Ramesh Kumar Saraogi and the same has been let out to Regency Welfare Association @ Rs. 12,000/- per annum for 99 years. She also got 3013 sq.ft from his father through a Will and she entered into an agreement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent in pursuance of the agreement dated 02.08.2008, but however, the Assessing Officer has taken a view that in the said agreement the area of centre is not mentioned, the rent value for the year 2008 cannot be applied in 2008-09. Basing on the enquiry report of the Inspector of Income Tax, the Assessing Officer fixed the rent treating as reasonable at Rs. 18,000/- per month and Rs. 9,60,000/- being annually. 4. Regarding the rent agreement dated 30.03.1978 with Regency Welfare Association, the Assessing Officer was of the view that the rent agreement entered in 1978 has not been revised till the relevant year, thereby it cannot be enforced in 2008-09, in the absence of any explanation from the assessee, the value of rent reasonably estimated at Rs. 16,000/- per month and Rs. 7,20,000/- per annum by relying on the order of ITAT, Mumbai Bench in the case of Usha Devi Agarwal -vs.- ITO reported in [1992] 41 ITD 85, and by the Hon'ble Gujarat High Court in the case of Shri Bipinbhai Vadilal Family Trust -vs.- CIT reported in [1994] 208 ITR 1005. 5. In the appellate proceedings, ld. A.R. on behalf of the assessee contended that the assessee has been receiving rent under the above he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents. He also found it unusual that the appellant has not increased the rent from August, 2002 to April, 2008. The A.O. based his estimation of rent lease charges on the report of the Inspector, failing to get any information from KMC about annual lettable value in the locality prevailing during the relevant period. In my considered opinion, rent is not always fixed on the available market rate and subsequent increase in rent is also subject to mutual understanding and settlement. It depends on the mutual understanding and convenience to settle the rent. There is nothing on record to establish that the tenants gave higher rent to the appellant over and above the agreed rent described in writing in the lease agreement. Therefore, rent claimed to have been received by the appellant and duly accounted for in her books of account cannot be disbelieved without any corroborating evidence in that respect. Further, K1:fC has not provided any information about market rent of the locality and in such situation, the only recourse with the A.O. for determination of the annual value on the location of the property was to obtain a report from the approved valuer, which has not been done in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted any period of rent, in our opinion, is not justified. Further, the Assessing Officer observed that the rent has not been revised, the assessee is expected to get higher rent in the relevant year are all on assumptions and presumptions without there being any evidence to that effect. With reference to the report of the Income Tax Inspector that, as a dubious from the Assessing Officer's assessment order that the lettable rental value in similar area in financial year 2008- 09 is a minimum of Rs. 50/- per sq.ft., but, however, the Ld. CIT(Appeals) has rightly observed that the report of the Inspector in estimating the value cannot partake the assessment of an approved valuer, but for the reason of that the Income Tax Inspector is not technical person to submit valuation report. In our view, in absence of any evidence it is just improper to fix the rent on mere assumptions and presumptions, therefore, we confirm the order of the ld. CIT(Appeals) on this issue and dismiss the ground no. 1 raised by the revenue. 8. Regarding Ground No. 2, the Assessing Officer took a view that the bill issued by M/s. Sood Realters and Developers does not bear any service tax registration. The amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopers and the amount paid by the assessee by way of cheque, therefore, the ld. CIT(Appeals) has rightly applied the principle laid down by the ITAT Pune Bench in the case of KRA Holding & Trading Pvt. Ltd. (supra). We are of the view that the ld. CIT(Appeals) was rightly justified in directing the Assessing Officer to allow the said deduction. Therefore, this ground of the Revenue's appeal is dismissed. 10. In respect of Ground No. 3, the Assessing Officer found Rs. 15,00,000/- and Rs. 31,50,000/- in the ledger account of the assessee. The contention of the assessee is that a sum of Rs. 15,00,000/- was received from her father during his life time and Rs. 31,50,000/- was received from the estate of her late father by way of a lessee to enable her to purchase house property for herself. The Assessing Officer took the view that when both the amounts reflected in the ledger account of the assessee as loan and credit shown under the head 'current liability' having ceased to exist as there is no chance of revival as the father of the assessee died long back and treating the same as trading liability by invoking the provisions of section 41(1) of the Income Tax Act and added the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not enable the debtor to say that the liability has come to an end. The principle that expiry of the period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent the creditor from enforcing the debt, has been, well settled. If that principle is applied, it is clear that mere entry in the books of account of the debtor made unilaterally without any Act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not buy itself confer any benefit on the debtor as contemplated by that Section. In the case on hand, the father of the assessee died long back, the said amount given by him as in the nature of personal loan to purchase a house property and also received from the estate of her father entered into the books of account of the assessee since long back. The assessee did not credit the said amount to her profit & loss account Therefore, in our view, scope of section 41(1)(a) is not applicable to the case on hand. Therefore, respectfully following the decision of the Hon'ble Supreme Court judgment (supra), we are of view that the ld. CIT(Appeals) rightly allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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