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TMI Blog2018 (9) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... into deciding the same such as, location of the property, area under rent, the age of the building, the nature of the business surrounding the property. In an immovable property even a small distance of location can make a big difference if one property is situated at a prime location at an important junction and the other does not enjoy any such advantage. These aspects cannot be standardised by applying a mathematical formula. Commissioner compared the two most variable factors by merely taking the proportion of the two sets of properties between RMC taxes and the rentals received or receivable. The starting point for making further inquiry itself was erroneous. Income from other sources - Held that:- As noticed the correspondence between the AO and the assessee during the course of assessment proceedings in the earlier portion of his order. Considerable attention was given to the question of assessee's income from other sources and the expenditure claimed by the assessee in order to earn such income. In particular, the entire breakup of such expenditure was before AO. AO having asked for details, the assessee supplied full details of property tax expenses, electricity expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso examined the petitioner's computation of income from other sources and the expenditure claimed by the petitioner to have been incurred for earning such income. The Assessing Officer issued notice dated 4.8.2015 asking the petitioner to provide the following details : 3. Brief description about nature of your business. 4. Bills/vouchers for expenses claimed. 5. Please explain the reasons for claiming high ratio of refund of TDS/Advance tax. 6. Please justify your claim for deduction u/s. 57 of the I.T. Act. 7. Please explain how the amounts of incomes/receipts in respect of which you have claimed credit of TDS Certificates (as per form No.26AS) are shown in your return of income for the year under consideration. 22. Please furnish the copy of the following accounts as appearing in your books of account: Sr. No. Nature of expenses Amount(Rs.) 1 Property Tax Exp. 1,15,95,495/2 2 Electricity Exp. 39,78,674/3 3 Legal and prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty Tax Expenses b) Electricity Expenses c) Legal Professional Expenses d) House Keeping Expenses e) AMC Cost f) Security Services Charges 5. The Assessing Officer called further details such as property tax expenses, receipts of security expenses, receipts of house keeping expenses, receipts of professional charges paid and receipts of electricity expenses, which all were supplied by the petitioner. 6. The Assessing Officer after such scrutiny passed the order of assessment on 9.3.2016 in which he disallowed the petitioner's claim of interest expenses of ₹ 4.04 crores with which we are not directly concerned. With respect to the petitioner's declaration of rental income as well as petitioner's computation of income from other sources which would include the receipt as well as expenditure, the Assessing Officer made no major changes. 7. To take such order of assessment in suo motu revision, the Commissioner has issued the impugned notice in which he has cited the following grounds : The Assessment for A.Y. 201314 was finalized u/s.143 (3) of the Act on 09/03/2016 determining total income at ₹ 1,63,24,030/wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch order, you are hereby given an opportunity of being heard in the matter. In this connection you are requested to attend this office on 16012018 at 5:30 PM. alongwith your written submission. 8. The petitioner opposed such notice by filing a detailed reply dated 9.2.2018. In such reply, the petitioner contended that the order of assessment is neither erroneous nor prejudicial to the Revenue. It was therefore, not open for the Commissioner to exercise revisional powers. The petitioner made detailed submissions with respect to the two grounds sought to be pressed in such notice. With respect to the first of the two grounds, the petitioner contended that the annual rental charges of a property cannot be made the basis for assessing the rent received by the assessee in a particular year. In any case, annual rental value of two properties cannot be compared for assessing rent receivable for the respective properties. With respect to the second ground raised by the Commissioner, the petitioner contended that the issue was thoroughly examined by the Assessing Officer during the original assessment proceedings. The assessee had satisfied the Assessing Officer about the correctness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds are valid and germane. A similar property in the same locality has fetched much higher charges in case of another entity engaged in the same business. There is thus the starting point to suggest that the petitioner had not correctly declared the rental charges for its properties. Regarding the second issue, counsel submitted that same was completely unrelated and independent of the first one. The petitioner had diverted greater expenditure towards income from other sources. Proper allocation should have been done and part of the expenditure should have been diverted for earning income from house property. 11. Having heard the learned advocates for the parties and having perused the documents on record, we may peruse the reasons recorded by the Commissioner for issuing the impugned notice minutely. The Commissioner relied on two factors. In first one, he suggests that the petitioner had shown gross annual rent of ₹ 3.46 crores. The petitioner had paid monthly taxes of ₹ 1.15 crores (rounded off) for such property. Such property was a single mall situated in Rajkot. The petitioner had leased out the units situated in such property out of which it had earned rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompared the two most variable factors by merely taking the proportion of the two sets of properties between RMC taxes and the rentals received or receivable. In our opinion the starting point for making further inquiry itself was erroneous. 14. Coming to the second issue, we have noticed the correspondence between the Assessing Officer and the assessee during the course of assessment proceedings in the earlier portion of his order. Considerable attention was given to the question of assessee's income from other sources and the expenditure claimed by the assessee in order to earn such income. In particular, the entire breakup of such expenditure was before the Assessing Officer. The Assessing Officer having asked for details, the assessee supplied full details of property tax expenses, electricity expenses, legal and professional expenses, security charges, etc. It was after such detailed inquiry, the Assessing Officer made no additions. This was thus clearly a case of full inquiry having been made by the Assessing Officer before he made up his mind. This is not a case where there were no inquiries or no germane inquiries having been made. On this basis, the second ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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