Income Tax Appellate Tribunal - Jaipur
H.H. Maharoa Shri Brij Raj Singhji, Kota vs Department Of Income Tax on 18 July, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. No. 1142/JP/2011 Asstt. Year- 2008-09 PAN No. AAAHB7814B The Deputy Commissioner of H.H. Maharao Shri Brij Raj Singh Ji Income Tax, Circle-2, Kota. Vrs. (Sole owner of Estate of H.H. Maharao Shri Bhim Singh Ji, Kota), Kota.
(Appellant) (Respondent)
C.O. No. 17/JP/2012
(Arising out of I.T.A. No. 1142/JP/2011)
Asstt. Year- 2008-09
PAN No. AAAHB7814B
H.H. Maharao Shri Brij Raj Singh Ji The Deputy Commissioner of
(Sole owner of Estate of H.H. Vrs. Income Tax, Circle-2, Kota.
Maharao Shri Bhim Singh Ji, Kota),
Kota.
(Objector) (Respondent)
Department by :- Shri D.C. Sharma.
Assessee by :- Shri M.C. Bhandari.
Date of hearing : 08/07/2014
Date of pronouncement : 18/07/2014
PER: T.R. MEENA, A.M.
The appeal by revenue and cross objection by assessee arise from the order dated 28/10/2011 of Ld. CIT (A), Kota, by raising following grounds:-
Grounds in Revenue Appeal.
"On the facts and in the circumstances of the case, the Learned CIT(A) has erred in:-2
(i) allowing the appeal of the assessee, holding that the status of the assessee should be deemed as individual instead of HUF taken by A.O.;
(ii) allowing exemption u/s 10(19A) of the Act to the assessee in respect of rental income from Umed Bhawan Palace amounting to Rs. 50,61,933/- and Rs. 2,43,408/-;
(iii) holding that the receipts from ITC Ltd. Amounting to Rs.
33,34,886/- are income Under the head "income from Business & Profession" instead of "Income from other Sources" held by A.O.;
(iv) hold that income from interest on Bank FDRs amounting to Rs. 4,01,888/- is assessable as Business Income instead of Income from Other Sources held by A.O.;
(v) holding that income from commercial complex amounting to Rs. 1,61,653/- is assessable as Business Income instead of Income from Other House Property held by A.O.;
(vi) hold that income from Ummed Bhawan Garden amounting to Rs. 3,01,430/- is assessable as Business Income instead of Income from Other Sources held by A.O. and allowing deduction of Rs. 1,06,627/- against this income;
(vii) restricting the disallowance out of Business Expenses to Rs.
4,18,777/- against disallowance of Rs. 17,93,885/- made by A.O.;
(viii) the appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing.
Grounds in Cross Objection
1. That the learned Commissioner of Income Tax (Appeal) erred in law as well as on facts is not accepting also the alternative ground that besides allowing exemption u/s 10(19A), the rental income of "Ummed Bhawan Palace"
from structure and land requisitioned by Defence Department is neither accrued nor arose nor received this year, as the rental is in dispute in writ petition before Hon'ble Rajasthan High Court filed by Defence Department and quantum thereof is neither settled nor determined at all.3
Hence not taxable on this score in alternative ground also.
2. That the learned Commissioner of Income Tax (Appeal) erred in law as well as on facts in not allowing in alternative ground, the statutory deduction as allowable U/s 22 of I.T. Act, 1961 in respect of property Rental income from "Ummed Bhawan Palace" (including entire compound and structures requisitioned by Defence Department) through the entire income of "Ummed Bhawan Palace" has been held as exempt U/s 10(19A) of the I.T. Act, 1961 by the Tribunal, in case, if later on held as taxable in further appeal by the department before Hon'ble Rajasthan High Court.
Therefore, statutory deduction U/s 22 deserves to be allowed in alternative ground.
3. That the learned Commissioner of Income Tax (Appeal) erred in law as well as on facts not allowed deduction of Senor Citizen quantum of exemption as provided under Schedule First of Section. 2 (Part-1) of I.T. Act, 1961 as it is allowable in the status as of "Individual", as the appellant age is more than 65 years old.
The same deserves to be allowed.
The appellant craves your honour to kindly allow to add, alter or new any ground on or before the date of hearing.
2. The first ground of appeal is against the treating the status of HUF as claimed by the assessee as individual. The learned Assessing Officer observed that the assessee filed return on 27/2/2009 declaring total income at Rs. 40,91,110/-. A note has also been given at the bottom of the acknowledgement of the return that the PAN number is allotted old, which is continued, the status is individual as deemed as per law. Late H.H. Maharao Bhim Singhji of Kota was the Ruler of the erstwhile Kota State before its 4 merger into the Union of India. Maharao Bhim Singhji expired in the year 1991. After his death, the HUF is shown to have come into existence and the assessee has filed returns in HUF status in the earlier years but as stated above now status is being claimed as of 'Individual'. The Assessing Officer gave reasonable opportunity of being heard on this issue as there is no material change in the fact during the year under consideration. After considering the assessee's reply, the Assessing Officer treated the status of the assessee as HUF.
3. Being aggrieved by the order of the learned Assessing Officer , the assessee carried the matter to the learned CIT(A), who had given detailed finding and also considered the decision of the ITAT Jaipur Bench, Jaipur in assessee's own case for A.Y. 2007-08. Accordingly, he decided the assessee's status as individual.
4. Now the Revenue challenged the issue in year under consideration but both the parties fairly accepted that this issue is covered in assessee's own case in ITA No. 610 to 613/JP/2010 in preceding years, therefore, we dismiss the revenue appeal on this ground.
5. The second ground of revenue's appeal is allowing exemption u/s 10(19A) of the Income Tax Act, 1961 (hereinafter referred to as the Act) in respect of rental income from Ummed Bhawan Palace amounting to Rs. 50,61,933/- and Rs. 2,43,408/-. The Assessing Officer observed that the assessee had rental income from Ummed Bhawan compound at Rs. 2,43,408/- 5 from the Defence Department and compensation of Rs. 50,61,933/- received from the Defence Department. The Assessing Officer gave reasonable opportunity of being heard on this issue after considering the assessee's reply. He has not treated this income exempted.
6. Being aggrieved by the order of the learned Assessing Officer, the assessee carried the matter to the learned CIT(A), who has allowed the appeal by observing as under:-
"I have gone through Assessing Officer's order, assessee's submissions, orders of Hon'ble ITAT & my predecessors order for A.Y. 2007-08. The issue is similar to Ground No. 2,3, & 4 of appeal No. 330/2009-10 for A.Y. 2007-08 in the case of assessee himself. Considering the above and in given facts and circumstances, I held the appellant "was entitled to exemption under section 10(19A) of the IT Act against the receipt of rent and compensation for..... The 'Umed Bhawan Palace'. In this view of things, issues raised in ground 4 become redundant. Thus addition of Rs. 2,43,408/- and Rs. 50,61,933/- are deleted. Ground No. 2 and 3 are accepted and ground No. 4 is dismissed."
7. Now the revenue is before us. It was argued that the assessee received rental income from Ummed Bhawan Palace, which is taxable within the Income Tax law as in past the department has not accepted the assessee's submission on the facts as well as on law, therefore, he requested to confirm the order of the learned Assessing Officer.
8. At the outset, the learned D.R. supported the order of the learned CIT(A) and argued that this issue was decided by the Hon'ble ITAT in the 6 preceding year in favour of the assessee. Therefore, he requested to confirm the order of the learned CIT(A).
9. We have heard the rival contentions of both the parties and perused the material available on the record. In past, similar additions were made by the Assessing Officer, which has been deleted by the learned CIT(A). In A.Y. 2007-08 passed in ITA No. 610 to 613/JP/2010, the Coordinate Bench decided this issue as under:-
"These two isues are decided by the ld. CIT(A) following the decision of Tribunal for assessment years 1986-87 to 1990-91 (supra). Relevant findings have been given at page 50 of the order of the Tribunal. Thereafter also the Tribunal following this order allowed the issue in favour of the assessee while deciding the issue in assessment year 2004-05. Since the issues have been decided by the ld. CIT(A) following the order of Tribunal in case of assessee for earlier years, therefore, we see no reason to interfere with the finding of ld. CIT(A) in respect of these two issues also."
By respectfully following the decision of the Coordinate Bench in assessee's own case, we do not find any reason to differ with the findings given by the Coordinate Bench on this issue. Accordingly, the Revenue's appeal on this ground is dismissed.
10. Ground No. 3 is against treating the receipts from ITC Limited amounting to Rs. 33,34,886/- as business income by the Assessing Officer. The assessee has received Rs. 33,34,886/- from ITC Limited and shown this income in the return as business income, which was treated by the Assessing Officer "income from other sources" as held in past by the department. The 7 assessee challenged this issue before the learned CIT(A), who has accepted the assessee's income under the head business and profession on the ground that in past the issue is covered by the ITAT order in assessee's own case. Both the parties have accepted the fact before us that this issue is covered in favour of the assessee in preceding orders by various decisions of the ITAT, therefore, we do not find any reason to differ with the order of the Coordinate Bench in assessees own case in preceding year. Accordingly, we dismiss the appeal of the Revenue on this ground.
11. Ground No. 4 in Revenue's appeal is against the interest on bank FDR amounting to Rs. 4,01,888/- as assessable as business income instead of income from other sources. The assessee had shown interest on FDR at Rs. 4,01,888/- under the head business and profession. The Assessing Officer assessed this income under the head income from other sources u/s 56 of the Act by considering the Hon'ble Supreme Court decision in the case of Bengal and Assam Investors Limited Vs. CIT 59 ITR 547. The learned CIT(A) had decided this issue in favour of the assessee and treated this income from business and profession. Now the Revenue is before us.
12. The learned D.R. argued that this issue is covered in favour of the revenue and in past the interest income on FDR has been held under the head "income from other sources", which has been fairly accepted by the learned A.R. of the assessee. Similar issue was involved in the past and the Coordinate Bench has decided this issue against the assessee and interest income was 8 held to be treated income from other sources and not business income. Therefore, we do not find any reason to differ with the findings of the Coordinate Bench given in the assessee's own case in A.Y. 2007-08. The appeal on this ground is allowed.
13. Ground No. 5 of Revenues' appeal is against the income from commercial complex amounting to Rs. 1,61,653/- is assessable as business income instead of income from house property. The assessee received Rs. 549/- income from house property and shop rent at Rs. 2,29,505/- and after claiming 30% standard deduction, the assessee has shown net total assessable house property income as Rs. 1,61,037/-.
14. The assessee challenged this addition before the learned CIT(A). After considering the assessee's reply, it has been held that the learned Assessing Officer did not throw any light on his reason for treating the income from a commercial complex as income from house property. Further in the appeal order for A.Y. 2005-06, similar decision of the Assessing Officer, based on his opinion that motive of the assessee was to earn rental income, was not accepted and the rental income from Sarowar Complex was treated as income from other sources. Accordingly, he deleted the addition. Now the Revenue is before us.
15. The learned D.R. vehemently supported the order the learned Assessing Officer.
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16. At the outset, the learned A.R. argued that the assessee had commercial shops in Sarowar complex, which is a business property and earned income of Rs. 1,60,653/- under the head income from business. Accordingly, the assessee had shown these receipts under the head business and profession, in earlier year, no appeal has been filed by the Revenue on this issue before the Hon'ble ITAT.
17. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee consistently showing rental income from the commercial property under the head business and profession, which has been confirmed by the learned CIT(A) not only in this year but in the preceding years also. The learned D.R. had not controverted the findings of the learned CIT(A), therefore, we confirm the order of the learned CIT(A).
18. Ground No. 6 of Revenue's appeal is against Ummed Bhawan Garden amounting to Rs. 3,01,430/- is assessable as business income instead of income from other sources and allowing deduction of 1,06,727/-. The learned A.O. observed that as per annexure-C, attached with the return of income, the assessee had declared receipt from garden at Rs. 3,01,430/- against which expenses of Rs. 1,01,430/- had been claimed. However, no documentary evidence had been furnished to substantiate the claim of expenses, therefore, he made the addition of Rs. 3,01,430/- in the income of the assessee as business source.
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19. The assessee challenged this addition before the learned CIT(A), who had allowed the appeal in favour of the assessee on the basis of his predecessor's order for A.Y. 2007-08.
20. Now the Revenue is before us and the learned D.R. vehemently supported the order of the learned Assessing Officer.
21. At the outset, the learned A.R. submitted that this addition is repeatedly made in preceding year and the learned CIT(A) had allowed the appeal in favour of the assessee. The assessee's books of account are audited whatever expenses incurred by the assessee had been claimed against the income. This income always has been shown under the head business income and not income from other sources. He drawn our attention on page Nos. 202 and 203 of assessee's paper book and by considering the Hon'ble ITAT decision on consistency, no separate view should be taken, is no material change in facts and legal position on this issue.
22. We have considered the submissions of both the sides, facts and past history of the case, the learned CIT(A) as well as ITAT has accepted the assessee contention on the basis of consistency as well as nature of receipts. Therefore, we confirm the order of learned CIT(A).
23. Ground No. 7 of Revenue's appeal is against disallowance out of business expenses of Rs. 4,18,777/- against the disallowance of Rs. 17,93,885/-. The learned Assessing Officer observed that the assessee had incurred expenses under various head for earning of income as well as for 11 business purposes. The total expenditure incurred were Rs. 20,93,885/- out of which only Rs. 3,00,000/- had been allowed and remaining amount of Rs. 17,93,885/- was disallowed on the basis of reasoning given in earlier years as in A.Ys. 1997-98 to 1999-2000, 2002-03 and 2004-05.
24. The assessee challenged this issue before the learned CIT(A), who had allowed the appeal partially by following his predecessor's order in preceding years and ITAT order dated 31/7/2007and he restricted this addition at Rs. 4,18,777/- being 20% of total claim of Rs. 20,93,885/-.
25. Now the Revenue against the order of the learned CIT(A) is before us. The learned D.R. supported the order of the learned Assessing Officer.
26. At the outset, the learned A.R. placed reliance upon the order of the learned CIT(A) at page No. 21 paragraph 4.92 and ITAT order at page No. 184 in ITA No. 147 & 148/JP/2005 in ground NO. 8, which has been decided by the Hon'ble Bench on page Nos. 90 and 91 and disallowance is restricted 20% of total expenses claimed by the assessee, therefore, he requested to follow the earlier order of Hon'ble ITAT.
27. We have considered the rival submissions of both the parties and perused the material available on the record. The present issue has already been decided by the Coordinate Bench in ITA No. 147 & 148/JP/2005 for A.Y. 2001-02 and 20% expenses have been estimated by the Coordinate Bench. The facts are identical during the year under consideration. Thus, we confirm the order of the learned CIT(A).
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28. With regard to the cross objection filed by the assessee, which has not been pressed before this Bench, so the same is hereby dismissed as not pressed.
29. In the result, the appeal of the Revenue is partly allowed and cross objection stands dismissed.
Order pronounced in the open court on 18/07/2014.
Sd/- Sd/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, Dated : 18th July, 2014 * Ranjan Copy forwarded to :- 1. The DCIT, Circle-2, Kota. 2. H.H. Maharao Shri Brij Raj Singh Ji, Kota. 3. The CIT (A) 4. The CIT 5. The D/R
Guard file (I.T.A. No. 1142/JP/2011 & .C.O. No. 17/JP/2012) By Order, AR ITAT Jaipur.