Case Number: ITA 1423/DEL/2019
Appellant: Delta Colonizers Ltd., New Delhi
Respondent: DCIT, Circle-7(1), New Delhi
Assessment Year: 2014-15
Case Filed On: February 20, 2019
Order Type: Final Tribunal Order
Date of Order: May 31, 2023
Pronounced On: May 31, 2023
The appeal was filed by Delta Colonizers Ltd. against the order of the Commissioner of Income Tax (Appeals)-34, New Delhi, dated November 28, 2018, for the assessment year 2014-15. The case revolves around the tax arrears dispute under Section 24 of the Income Tax Act, concerning the disallowance of deductions claimed by the assessee.
The appellant, Delta Colonizers Ltd., located at B-2/309, Tara Nagar, Old Palam Road, Kakrola, New Delhi, with PAN AABCD 5609 G, was represented by Shri Gaurav Jain, Advocate, and Shri Sudarshan Roy, Advocate. The appellant challenged the disallowance of Rs. 5,76,000/- made by the Assessing Officer (AO) on account of a 30% deduction claimed under the head income from house property against rent for fixtures, fittings, and amenities, which were treated as income from other sources by the AO.
The respondent, represented by Shri Pankaj Khanna, CIT(DR), contended that the principle of res judicata does not apply to tax proceedings. Therefore, the allowance of the claim in previous assessment years does not automatically entitle the assessee to the same claim in the subsequent assessment year 2014-15.
The case was heard by Shri Chandra Mohan Garg, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, of the Income Tax Appellate Tribunal, Delhi Bench ‘B’. The Tribunal examined the merits of the case, taking into account various judicial decisions and the factual matrix presented by the appellant.
The Tribunal noted that the assessee had purchased a furnished residential flat at a lump sum price, including the value of common amenities, facilities, and fittings. The rent received for the use of the premises and amenities was initially treated as income from house property in the previous assessment years 2012-13 and 2013-14. The Tribunal also considered the CIT(A)’s reversal of the AO’s decision for the assessment year 2013-14, which allowed the assessee’s claim.
The Tribunal referred to several judicial precedents, including the judgment of the Hon’ble Calcutta High Court in CIT vs. Shambhu Investment P. Ltd. 249 ITR 47 (Cal.) and the Hon’ble Supreme Court’s dismissal of the civil appeal in the same case. The Tribunal also considered judgments from the Hon’ble Karnataka High Court in CIT vs. Velankani Information Systems P. Ltd. 265 CTR 250 (Kar.) and the ITAT Hyderabad Bench in DDIT vs. Shri G. Raghuram ITA No. 6/Hyd/2010.
The Tribunal found that the premises and amenities were inseparable and could be used together only by the owner or lessee. The rental income from amenities was deemed to be incidental to the letting of the building, making it eligible to be taxed under the head income from house property. The Tribunal emphasized the rule of consistency, as the facts and circumstances of the assessment years 2012-13 and 2013-14 were identical to those of the assessment year 2014-15.
The Tribunal concluded that the rental income from amenities should be treated as income from house property and allowed the assessee’s claim for deduction under Section 24(a) of the Act. The appeal of the assessee was partly allowed on ground no. 2 and partly allowed for statistical purposes on ground no. 3, with directions to the AO to consider only those investments which yielded exempt income during the year for computing disallowance under Rule 8D of the Income Tax Rules, 1962.
In the result, the appeal of Delta Colonizers Ltd. was partly allowed. The order was pronounced in the open court on May 31, 2023.
Signatories:
(PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER
(CHANDRA MOHAN GARG) JUDICIAL MEMBER
Date: 31st May, 2023
Assistant Registrar: NV
Copy of the Order is forwarded to:
BY ORDER
Assistant Registrar, ITAT, New Delhi
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