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TMI Blog2023 (12) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in the case of Suraj Lamps Industries [ 2011 (10) TMI 8 - SUPREME COURT] was taken, but, for the purpose of section 24(a), the right of an assessee to be entitled to receive the rental income was given precedence. Thus, the judgement which the ld. AR has relied in CIT vs. Smt. Wiran Bai Jaggi [ 2002 (8) TMI 889 - DELHI HIGH COURT] wherein the judgement of the Hon ble Supreme Court in case of CIT vs. Podar Cement [ 1997 (5) TMI 2 - SUPREME COURT] has been relied is still applicable to the case of the assessee. The observations of the Hon ble Supreme Court in the case of Podar Cement Pvt. Ltd. (supra) are worth to be reproduced to understand how the law propounded in regard to section 22 of the Act is different from the one propounded for the purpose of section 17 of the Registration Act in Suraj Lamps Industries [ 2011 (10) TMI 8 - SUPREME COURT] . Thus, furthermore, the ld. DR could not defend the argument that in the subsequent years the CIT(A) has deleted the addition made by the AO holding that the rent received by the assessee is to be assessed as income from house property. Thus, we are inclined to allow this ground no 2. Addition on account of business e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments in the complaint do not at all indicate that the money claimed to have been standing as a loan was ever given as a loan for the purpose of money lending business. In fact, in AY 2012-13, there was an issue of undisclosed income of Rs. 12 lakhs wherein the AO had made an addition of Rs. 12 lakhs on the ground that the assessee has been showing interest income from M/s Sunil Mantri Realty Ltd. on accrual basis. M/s Sunil Mantri Realty Ltd., had paid interest and deducted tax which was reflected in 26AS, but, there was lack of reconciliation. The order of ld.CIT(A) for AY 2012-13 show that there is a mention of cheque of Rs. 4,10,00,000/- given by the debtor on 01.09.2013 which could not be encashed and for which the assessee has filed the case and the ld.CIT(A) had confirmed the addition of Rs. 12 lakhs. Thus, we are of the considered view that what ld. AR has relied in regard to the previous or subsequent years about the money lending business of the assessee is not sustainable in the facts discussed above from the perspective of ld.CIT(A) and we do not consider that there is any error in the sustenance by ld.CIT(A). Accordingly, this ground is decided against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the deduction u/s 24(a) of the Act, amounting to Rs. 63,72,000/- holding that the property was sub-leasing and the rent received is income under the head other sources. 4.2 Ld. Counsel submitted that Ld. CIT(A) confirmed the addition made by the Ld. AO alleging that the evidences placed on record by the assessee do not prove the assessee as owner of the property. Ld. Counsel made reference to sub-para (i), (ii) & (iii) of para 6.1.4 at page 9 of the appeal order and for the convenience same are reproduced as under: i. "The property cannot be owned by the appellant HUF unless it is registered in its name. The same is not done in this case, therefore the appellant cannot claim to have received rent from the property which is not owned by it so far and the status of the amount received from LIC would continue to be income from subletting or sublease of the property. ii. There is no evidence of payment of Rs. 5,12,52,316/- by Sh. Ashok J Thapar karta of the appellant HUF to Ashok J Thapar (ind.) as mentioned in the one page transfer deed made by the builder. Apparently the transfer deed was recognized by the builder on 10.06.2016. iii. In the balance sheet of the appellant H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's application dated 13/04/2014. In this regard, the certificate of the builder is was also submitted. It is explained by the appellant that the property could not be shown in the balance-sheet of the appellant as the transfer certificate was not given by the builder till March 2016. However, there is no doubt that there was an agreement to sell and purchase dated 01/04/2014 and assessee was in possession of the property. There is further no doubt that the consideration of Rs. 5,12,52,316/- had been passed to seller. It is seen that the handing over of possession of the immovable property is one of the most important ingredients for applicability of section 2(47)(v) of the IT Act r.w.s 53 A of Transfer of Property Act (TOPA). Therefore, the transfer of the property was thus complete in terms of section 2(47)(v) of the IT Act. Therefore, in view of the above factual and legal position, both house tax paid Rs. 67,50,000/- and deduction u/s 24(a) of Rs. 56,97,000/- is allowable. The AO is directed to allow the same accordingly. " 4.6 Ld. Counsel referred to PB 9-11 the copy of the Agreement to Sell and Purchase dated 01.04.2014 entered into between the assessee and seller o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e money lending business of the assessee. He further referred to PB 12-18, the copy of the case petition filed by the assessee against Sh. Sunil Mantri (borrower) u/s 138 of the Negotiable Instrument Act, to contend that same proves the existences of the money lending business of the assessee. Ld. Counsel referred to PB 19-49, the copy of petition filed by the assessee before the Hon'ble High Court of Bombay against the borrower i.e. M/s Mantri Reality Ltd. 6.1 Ld. Counsel submitted that assessee is engaged in the money lending business has also been confirmed by Hon'ble ITAT, Delhi in order passed in MA for AY 2011-12 in MA No. 771/Del/2018 (in ITA No. 815/Del/2016) vide order dated 16-07-2019 (PB 80- 85) and it will be appropriate to reproduce the findings he relied as under:- "Though the interest income is treated as income from other sources, the expenses incurred by the assessee and claimed as business expenses have to be considered income from sub leasing and money lending business of the assessee." 6.2 Ld. Counsel stressed that this fact that the assessee is engaged in the business of money lending is further confirmed by Ld. CIT(A) in order for AY's 2012-13, 2013-14, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d distinguished from cases regarding taxability of income from property. 7.2 The ld. DR has defended the same by submitting that the coordinate Bench has relied on another judgement in the case CIT vs.Smt. Kamla Sondhi dated 20.02.2004, 141 Taxman 278 (Del) and CIT vs. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 (SC), but, in these two judgements, the judgement of the Hon'ble Supreme Court in the case of Suraj Lamps & Industries (supra) was not discussed and distinguished. Accordingly, he submitted that the judgement of the Hon'ble Supreme Court in the case of Suraj Lamps & Industries (supra) is binding and registration of a document is indispensable. 8. In regard to the disallowance of expenditure of Rs. 43,62,446/-, it was submitted by him that this is the disallowance made by the AO of the expenses incurred by the assessee on earning from money lending business. The assessee has claimed that he is in regular business of money lending. The facts have been examined and discussed by Ld CIT (A) in para 6.1.6, 6.1.7 and 6.1.8 of the appellate order. The Ld CIT (A) has clearly discussed that advances were given to two persons some ten years back and these were given as advances for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be entitled to receive the rental income was given precedence. As for benefit, the findings in paras 8 and 8.1 are reproduced below:- "8. We have heard the both parties and perused and considered the relevant record available with us, especially the order of the Hon'ble High Court of ITA NO.6154/Del/2013 Delhi decided in the case of CIT vs. Smt. Kamla Sondhi dated 20.2.2004 reported in 2004 141 Taxman 278 Delhi. We find that Hon'ble High Court has adjudicated the issue as under:- "ORDER The question mentioned herein below has been referred by the Tribunal. However, the notice In the respondent has yet not been effected. Anyhow, notice is not required in the instant case as the case is covered by the decision of the Apex Court in favor of the assessed. The question that has been referred by the Tribunal is as under: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that rental income from flat in a multistoreyed building is assessable in the hands of the assessed under the head 'Income from house property even though the assessed had not acquired legal title to the ownership of the said property th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is still applicable to the case of the assessee. The observations of the Hon'ble Supreme Court in the case of Podar Cement Pvt. Ltd. (supra) are worth to be reproduced to understand how the law propounded in regard to section 22 of the Act is different from the one propounded for the purpose of section 17 of the Registration Act in Suraj Lamps & Industries (supra):- "Thus the juristic principle from the view point of each one is to determine the true connotation of the term "owner" within the meaning of s.22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately - a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years? The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate the copies of these orders made available by the assessee in the paper book, it comes up that initially, the Tribunal in assessee's own case in ITA No.815/Del/2016 for AY 2011-12, order dated 26.09.2018, had considered this issue and had observed in para 5 as follows:- "5. We have perused me submissions advanced by both sides in light of records placed before us. On perusal of grounds raised by assessee before Ld. CIT (A), it is observed that assessee has not challenged the change of head by Ld.AO regarding interest income. Therefore in a way assessee has accepted interest income to be treated as income from other sources. On a query being put up by the Bench to Ld.AR, it has been submitted that consciously assessee has not disputed this issue before Ld.CIT(A) and also before this Tribunal. Therefore, in our considered opinion, the argument advanced by Ld.AR, of considering expenses incurred by assessee also for money lending activities stands rejected." 13.1 However, subsequently, in MA No.771/Del/2018, vide order dated 17.07.2019, at the behest of the assessee, this part of the order was got rectified and we consider it appropriate to reproduce para 4:- "4. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the maintenance of establishment to keep the litigation alive and, therefore, deleted the disallowance of expenditure. In AY 2012-13, the ld.CIT(A)-20, New Delhi, while dealing with the disallowance of expenses of Rs. 2,87,80,430/- by the AO, the issue was appreciated in the light of the fact that the money lending business was accepted in AY 2005-06, 2006-07, 2007-08 and 2008-09 where income of interest was shown as business income and, thus, the ld.CIT(A) in AY 2012-13 has interfered into the issue holding that the interest income from money lending of Rs. 1,15,60,000/- should have been taken as business income and, accordingly, allowed the expenditure. 13.3 Now, coming to the present assessment year, at the outset, we would like to reiterate the settled proposition of law that every assessment year is independent and there is no applicability of principle of res judicata, if the facts are distinguishable and there is evidence in that regard. In the present year 2015-16, the assessee is no more into subletting business, but, has earned income from property and has also claimed deduction u/s 24(a) of the Act which we have allowed in ground No.2. During the year, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are two entries/transactions which the appellant has termed as money lending business i e. advance against property (Birla Power] amounting to Rs. 3,87,50,000/- and advance to Sunil Mantri Developer of Rs. 3,21,18,077/- which happened much earlier may be before 10 years and interest have ceased to come against those advances. It further appears that the advances were for purchase of properties, it is not known under what circumstances and for what reasons these amounts have been given as advance for property to the developer. What has transpired between the appellant and both the persons and how the advance for property changed its money lending. Why the amount of principal and interest have not been paid back to the appellant. To consider it as money lending business would be stretching it very far. As such no income has been shown from money lending business for quite some years in the past too. The income from money lending business if any as per the Hon'ble ITAT, Delhi should be income from other sources'. However, under these circumstances there is no case for allowing business expenditure of Rs. 43,62,446/- against nothing. The action of - the Assessing Officer in di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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