Income Tax Appellate Tribunal - Mumbai
Deena Asit Mehta, Mumbai vs Dcit 4(1)(1), Mumbai on 13 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "D" MUMBAI
BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND
SHRI N.K. PRADHAN (ACCOUNTANT MEMBER)
M.A. No. 238/Mum/2018
(ITA No. 3549/MUM/2016)
Assessment Year: 2012-13
Mrs. Deena Asit Mehta DCIT-4(1)(1)
67, 3rd Block, Poddar Mumbai.
Chambers, S.A. Brelvi Vs.
Road, Fort,
Mumbai-400001
PAN No. AABPM6683L
Appellant Respondent
Assessee by : Mr. Satish Modi, AR
Revenue by : Mr. Nishant Samaiya, DR
Date of Hearing : 28/09/2018
Date of pronouncement: 13/12/2018
ORDER
PER N.K. PRADHAN, AM
By means of this Miscellaneous Application (MA), the applicant seeks rectification of the order dated 09.02.2018 passed by the ITAT 'D' Bench Mumbai (ITA No. 3549/Mum/2016) for the assessment year (AY) 2012-13. In Part-I, here-in-below, we mention the contentions of the Ld. counsel of the applicant, in Part-II, the submissions of the Ld. DR and in Part-III, the reasons for our decision.
Mrs. Denna Asit Mehta 2 MA No. 238/Mum/2018 I
2. The contentions of the Ld. counsel follow the written submission filed by the applicant before the Tribunal which is received on 28.03.2018. Therefore, we refer below the said written submission.
It is stated that the assessee as a tenant is in possession of a business premises situated at Poddar Chambers, Mumbai on a rent of Rs.5941/- per annum. The assessee had sub-leased/licensed the said premises to a company for a monthly leave and license fee of Rs.40,000/-. The net income of the assessee from the above sub-letting of Rs.4,74,059/- was returned in the return of income under the head 'Income from other sources' as the assessee was not the owner of the premises. Apart from that the assessee had also received interest-free deposit of Rs.1,00,00,000/- out of which a sum of Rs.50,00,000/- was received only on 28.03.2012 on further negotiations at the time of renewal of the agreement. It is stated that the assessee had a residential premise wherein she was residing situated at Abhilasha Building. With the intention of giving the said premises at Abhilasha for leave and licence, the assessee entered into a leave and license agreement on 31.03.2012, which was effective from 01.04.2012. The assessee had received as an advance security deposit of Rs.1,75,00,000/- on 28.03.2012 for the grant of license regarding the said Abhilasha Premises. It is stated that the security deposit of the amount of Rs.2,75,00,000/- was received by the assessee in the following manner:
Poddar Chamber: Rs.50,00,000/- March 2011 Mrs. Denna Asit Mehta 3 MA No. 238/Mum/2018 Poddar Chambers: Rs.50,00,000/- 28.03.2012 Total Rs.1,00,00,000/- for agreement effective from 01.04.2012 i.e. AY 2013-14 Abhilash Residential Flat-Rs.1,75,00,000/- 28.03.2012 Total Rs.1,75,00,000/- for agreement effective from 01.04.2012 i.e. AY 2013-14 Grant Total-Rs.2,75,00,000/-
2.1 The applicant submits that the following mistakes which are apparent from record have crept in the impugned order of the Tribunal, which needs to be rectified:
1. The Tribunal while holding that income from Poddar Chamber Premises was to be assessed under the head 'Income from House Property' has ignored the fact that the assessee is not the owner of the premises at Poddar Chamber. The assessee is a tenant of Poddar Chamber Premises and as a tenant has given the premises on leave and license basis. The provisions of section 22 is very clear that the assessee should be the owner of the premises and section 23(1) is applicable only to premises which are governed by the provisions of section 22 i.e. if the assessee is the owner of the premises. As a consequence, since the assessee is not the owner of the Poddar Chamber Premises, the provisions of section 22 and 23(1)(a) are not applicable to the assessee, hence the income being license fee cannot be assessed under the head 'Income from House Property'. As a consequence, the income has to be Mrs. Denna Asit Mehta 4 MA No. 238/Mum/2018 assessed as 'Income from Other Sources' and there is no provision similar to section 23(1)(a) u/s 56, wherein the liberty is given to the AO to doubt the reasonability of rent and assume the ALV to be deemed to be sum for which the property might reasonably be expected to let from year to year, hence the interest on security deposit cannot be assessed as rent in the hands of the assessee.
2. The applicant submits that it is well settled possession by the decision of the Jurisdictional High Court in CIT v. Tip Top Typography that :
(a) That the Municipal rateable value is accepted as a bonafide rental value of the property,
(b) In the event the security deposit collected and refundable interest-free and the monthly compensation shows a total mismatch or does not reflect the prevailing rate or the attempt is to deflate or inflate the rent by such method, then the AO is not prevented from carrying out the necessary investigation and inquiry. He must have cogent and satisfactory material in his possession and which will indicate that the parties have concealed the real position. He must not make a guess work or act on conjecture and surmises. The inquiries that the AO can make would be for ascertaining the going rate. He can make a comparative study and make an analysis.
(c) Notional rent on the security deposit cannot be taken into account for the determination of the annual value.
Mrs. Denna Asit Mehta 5 MA No. 238/Mum/2018 2.2 The applicant submits that not following the decision of the Jurisdictional High Court constitutes mistake apparent from record. It is stated that while passing the order the Tribunal has held that interest on security deposit ought to be assessed as notional rent. Further it is stated that without going into the various conditions, as prescribed by the order of the Hon'ble Jurisdictional High Court in the case cited above, which is contrary to the decision of the Hon'ble Bombay High Court, hence it constitutes a mistake apparent from record, which needs to be rectified.
2.3 The applicant submits that it had clearly demonstrated from the Paper Book that :
(a) The entire security deposit of Rs.2,75,00,000/- was not received for the Poddar Chamber Premises and in fact, it was one of the grounds raised before the Tribunal. Out of the said amount a sum of Rs.1,75,00,000/- was towards the security deposit of Abhilasha Premises, hence the Tribunal erred in assuming that the entire deposit of Rs.2,75,00,000/- was a security deposit towards Poddar Chamber Premises, which is a mistake apparent from the record.
(b) Further from the leave and license agreement for Abhilasha Premises as filed in the Paper Book, it was clearly demonstrated that the said agreement was effective only from 01.04.2012 i.e. the subsequent year and further from the bank statement, it was clearly demonstrated that the said amount of Rs.1,75,00,000/- as security deposit for Abhilasha Premises was received only on 28.03.2012, hence the Mrs. Denna Asit Mehta 6 MA No. 238/Mum/2018 question of assuming the interest for the entire year did not arise.
However, while passing the order the Tribunal has clearly ignored the above stated fact which constitutes a mistake apparent from record, which needs to be rectified.
(c) The assessee had also brought to the notice of the Tribunal the fact that out of the sum of Rs.1,00,00,000/- received as security deposit for the Poddar Chamber Premises, a sum of Rs.50,00,000/- was received only on 28.03.2012 due to change in the terms of agreement for leave and license. The Tribunal ignored the fact that the said sum of Rs.50,00,000/- was received on 28.03.2012 and held that interest on the said amount of Rs.50,00,000/- also has to be calculated for the entire year, which constitutes a mistake apparent from record.
2.4 The applicant submits that while passing the order the Tribunal has relied on two decisions of the Hon'ble Supreme Court in the case of Vimal Chand Ghevarchand Jain & Ors v. Ramakant Eknath Jajoo and National Cement Mines Industries Ltd. v. CIT. However, the said decision relied upon were neither cited by the departmental representative nor were brought to the notice of the assessee during the course of the hearing of the appeal and hence while relying on the decisions, which are not brought to the notice of the assessee constitutes mistake apparent from the record, which needs to be rectified.
Further it is stated that the Tribunal has relied on section 52 of the Indian Easement Act, 1882 to come to the conclusion that the assessee was the owner of the Poddar Chamber Premises. It is stated that the said Mrs. Denna Asit Mehta 7 MA No. 238/Mum/2018 Act or the relevant provision were never brought to the notice of the assessee during the course of hearing, which constitutes a mistake apparent from record and further relying on the said provisions, the Tribunal ignored the fact that the assessee was a tenant of the Poddar Chamber Premises, hence the question whether the ownership of the premises got transferred by virtue of license would never arise as the assessee in the first place was a tenant herself in the said Poddar Chamber Premises.
Finally, relying on the decision in the case of Streetlite Electric Corporation of the Hon'ble Punjab and Haryana High Court, it is stated that in the said case the ownership of asset was with the licensor, while in the case before the Tribunal, the assessee is not the owner of the asset, hence the said case is distinguishable on facts and not applicable to the case of the assessee, which constitutes a mistake apparent from the record.
Thus it is pleaded that a suitable order may be passed in order to rectify the above stated mistake apparent from the record in the order dated 09.02.2018.
II
3. On the other hand, the Ld. DR submits that there is no mistake apparent from the record in the order dated 09.02.2018 passed by the Tribunal. Thus it is argued by him that it is not a case which can be rectified u/s 254(2) of the Act. The Ld. DR relies on the order of the ITAT Mrs. Denna Asit Mehta 8 MA No. 238/Mum/2018 , Lucknow 'B' Bench, Lucknow in the case of Mohd. Tariq Quereshi v. DCIT (M.A. No. 35/LKW/2017 for AY 2012-13).
III
4. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decision are given below.
Let us delineate the facts briefly. In the impugned order we have stated the facts as filed by the assessee before the Ld. CIT(A) during the course of appellate proceedings. The said written submission is a part of the records. As per it, the assessee has declared Rs.4,80,000/- being leave and license fees from office premises situated in Poddar Chambers under the head 'Income from Other Sources'. The assessee is a tenant of the said premises and had granted leave and license rights to the licensee.
In the said written submission filed before the Ld. CIT(A), the assessee has stated that "it is true that the assessee had received security deposit of Rs.2,75,00,000/- from the licensee".
In the impugned order we have referred to the relevant documents filed by the assessee in the form of a Paper Book (P/B). The leave licence agreement (page 61-64 of the P/B) is made on 18.11.2004 between the assessee and Asit C. Mehta Investment Intermediates Ltd. This has been renewed by the assessee from time to time. The assessee Mrs. Denna Asit Mehta 9 MA No. 238/Mum/2018 has renewed it vide letter dated 31.01.2012 for the impugned financial year. The relevant clauses of the original 'Leave and Licence Agreement' are extracted below:
"Leave and License Agreement This leave and license agreement is made at Mumbai this 18th day of November, two thousand and four by and between:
DEENA A. MEHTA, residing at 17, Abhilasha, August Kranit Marg, Mumbai- 400036, hereinafter called "the Licensor: [which expression shall unless it be repugnant to the context or meaning thereof be deemed and include heirs, executors, administrators and assignees] of the ONE PART:
And ASIT C. MEHTA INVESTMENT INTERMEDIATES LIMITED, a company incorporated with limited liabilities under the Indian Companies Act, 1956 and having its Registered Office at Nucleus House, 5th Floor, Saki ViharRoad, Andheri (E), Mumbai 400072, "ACMIIL" hereinafter called "the Licensee"
[which expression shall unless it be repugnant to the context or meaning thereof to mean and include its assignees of the OTHER PART.
Whereas
1. The licensor is a tenant of G.R. Podar Foundation having office at Podar Chambers, S.A. Brelvi Road, Mumbai 400001 hereinafter called the foundation.
2. The foundation owns a building known as Podar Chambers situation at S.A. Brelvi Road, Mumbai 400001.
Mrs. Denna Asit Mehta 10 MA No. 238/Mum/2018
3. The Licensor as such tenant is entitled to use and occupy an office unit admeasuring approx. 850 sq. ft. along with lift of 100 sq. ft. bearing office No. 67A on the third floor of the said building [hereafter referred to as "the Premises"]
4. The Licensee has requested the Licensor to grant to it the temporary license to use and occupy part of the premises for a period of 33 (Thirty Three) months only which the licensor has agreed to do on certain terms and conditions mutually arrived at by and between them:
5. Mrs. Deena A. Mehta of the one part and M/s Asit C. Mehta Investment Intermediates Ltd. on the other part have agreed to enter into an agreement with regard to the above referred office premises to be effective from April 1, 2004.
6. M/s Asit C. Mehta Investment Intermediates Ltd. has authorized Mr. Kirit H. Vora, Whole-time Director, to sign and execute the agreement to be effective from April 1, 2004.
7. Whereas both the parties are desirous of reducing the terms and conditions into writing so as to safeguard their mutual benefits and understand their obligations and responsibilities.
NOW THIS AGREEMENT WITNESSTH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
..... ..... ..... ..... ..... ..... ..... .....
4. The License hereby granted shall effective from April1, 2004 and shall remain in force for a period of 33 months, i.e. upto and including December 31, 2006 and will end on that day under any circumstances.
5. The Licensee shall pay to the Licensor a lump sum license fee at the rate of Rs.40,000/- per month being the monthly fees for the use of said premises and for the furniture, fixtures, fitting and equipments in the said premises. This however, will not create any right, title or interest in Mrs. Denna Asit Mehta 11 MA No. 238/Mum/2018 the Licensed Premises in favour of the Licensee whatsoever. The Licensee shall not under any circumstances challenge the same in any Court of law as not being fair fees in respect of the Licensed Premises. It is also agreed that the license fee does not include any taxes payable to any statutory or other authorities. Such taxes if any, will be re-imbursed by licensee to the licensor.
6. The Licensee agrees to keep with the Licensor the sum of Rs.75,00,000/-
as security deposit, interest free, which will be refundable to the Licensee on vacating the subject Licensed Premises and on the Licensor being given peaceful possession thereof. The Licensor shall be entitled to deduct there from such amount as may be due to the Licensor on account of outstanding bills, repairs and replacement of furniture and fixtures, fees for overdue stay etc.
7. It is agreed that the fees shall be paid by the Licensee to the Licensor during the each month."
4.1 In the impugned order at para 7.1 we have held, referring to the relevant Act that under the leave and license agreement, the legal ownership and the possession of the property remains with the licensor, the assessee in the instant case.
In the impugned order, we have mentioned that as per the list of Directors of Asit C. Mehta Investment Intermediates Ltd. given to us by the Ld. counsel in response to a query during the course of clarification that the assessee (Licensor) is the Managing Director in Asit C. Mehta Investment Intermediates Ltd. (Licensee). Therefore, we have observed that the receipt of Rs.2,75,00,000/- by the assessee as interest-free security deposit from the licensee-company in which she herself is the Mrs. Denna Asit Mehta 12 MA No. 238/Mum/2018 Managing Director cannot be ignored while computing the annual letting value.
Further relying on the judgment of the Hon'ble Punjab & Haryana High Court in the case of Streetlite Electric Corporation (supra), which was filed by the Ld. DR, we came to a finding that in the instant case the security deposit of Rs.2,75,00,000/- is hugely disproportionate to the leave and license fees of Rs.4,80,000/- shown by the assessee. The said fees of Rs.40,000/- per month in the Financial Year 2004-05 still remains the same in the AY 2012-13. Contextually, we held that the two issues i.e. 'Leave & License Fee' and 'Security Deposit' in the instant appeal are inter-connected and part of the same transaction.
4.2 The Ld. counsel has referred to the decision in Tip Top Typography (supra) during the course of hearing in MA on 28.09.2018. The applicant has also referred to the above decision at para 2 of the written submission filed in MA. We clarify that the above decision was not referred by the Ld. counsel during the course of hearing on 02.02.2018 in ITA No. 3549/Mum/2016. During the course of hearing in MA on 28.09.2018, we have stated the above thing to the Ld. counsel of the applicant. A rectification cannot be made on the basis of a case law which was not referred in the original ITA, but subsequently referred in the MA.
4.3 At para 7.4 of the impugned order, we have referred to the decision of the Hon'ble Supreme Court dated 23.03.2009 in Vimal Chand Ghevarchand Jain & Ors v. Ramakant Eknath Jajoo (Civil Appeal No. 1784 Mrs. Denna Asit Mehta 13 MA No. 238/Mum/2018 of 2009) and National Cement Mines Industries Ltd. v. CIT (1961) 42 ITR 69, only to explain how to deal with construction of a commercial contract.
In the case of Inventure Growth & Securities Ltd. v. ITAT (2010) 195 Taxman 195 (Bom), the Hon'ble Bombay High Court has observed that :
"We clarify that it cannot be laid down as an inflexible proposition of law that an order of remand on a Miscellaneous Application u/s 254(2) would be warranted merely because the Tribunal has relied upon a judgment which was not cited by either party before it".
As mentioned above, the two decisions of the Hon'ble Supreme Court have been referred by us only to explain how to deal with construction of commercial contracts.
In the impugned order we have referred to and relied on the decision in Streetlite Electric Corporation (supra), which was filed.
4.4 Regarding the contentions of the Ld. counsel that the entire security deposit was not received for the Poddar Chamber Premises, we may mention here that in the written submission filed by the assessee before the Ld. CIT(A), it has been stated in paragraph 1 that the assessee had declared Rs.4,80,000/- being leave and license fees from office premises situated in Poddar Chambers and it is further stated in paragraph 2 that "it is true that the assessee had received security deposit of Rs.2,75,00,000/- from the licensee".
Mrs. Denna Asit Mehta 14 MA No. 238/Mum/2018 4.5 Also taking into account the facts and circumstances of the case against the backdrop of interest rate on term deposits offered by the Public Sector Banks during the relevant period, we have directed the AO to estimate interest on security deposits @ 9% in place of 10% on the amount of Rs.2,75,00,000/- done by him and bring the resultant amount as well as the leave and license fees to tax under the head 'Income from House Property'.
4.6 A perusal of the above facts clearly indicate that the applicant has not pointed out any mistake apparent from the record. A mistake apparent on the record must be an obvious mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. This view is supported by the decision of the Hon'ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), Master Construction Co. P. Ltd. v. State of Orissa, AIR 1966 SC 1047, Karam Chand Thapar & Bros. (Coal Sales) Ltd. v. State of U.P. (1976) Tax LR 1921, 1927 (SC) and CCE v. ASCU Ltd., (2003) 9 SCC 230, 232.
In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. The Hon'ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [AIR 1970 SC 1273] that the power to review is not an inherent power. It must be conferred by law Mrs. Denna Asit Mehta 15 MA No. 238/Mum/2018 either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act as held in CIT v. Globe Transport Corpn. [1992] 195 ITR 311 (Raj) (HC), CIT v. Roop Narain Sardar Mal [2004] 267 ITR 601 (Raj) (HC), CIT v. Devilal Soni [2004] 271 ITR 566 (Raj) (HC), Jainarain Jeevraj v. CIT [1980] 121 ITR 358 (Raj.) (HC), Prajatantra Prachar Samiti v. CIT [2003] 264 ITR 160 (Orissa) (HC), CIT v. Jagabandhu Roul [1984] 145 ITR 153 (Orissa) (HC), CIT & Anr. v. ITAT & Anr. [1992] 196 ITR 640 (Orissa) (HC), Shaw Wallace & Co. Ltd. v. ITAT & Others [1999] 240 ITR 579 (Cal) (HC), CIT v. Suman Tea & Plywood Industries Pvt. Ltd. [1997] 226 ITR 34 (Cal) (HC), ITO v. ITAT & Anr. [1998] 229 ITR 651 (Pat.) (HC), CIT & Anr. v. ITAT & Anr. [1994] 206 ITR 126 (AP) (HC), ACIT v. C. N. Ananthram [2004] 266 ITR 470 (Kar) (HC).
4.7 In the case of CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom), their Lordships of the Hon'ble Bombay High Court have held:
"Under s. 254(2) of the IT Act, 1961, the Tribunal may, 'with a view to rectifying any mistake apparent from the record', amend any order passed by it under sub-s (1) within the time prescribed therein. It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the IT Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. In the present case, in the first order, there is no mistake which is apparent from the record at all. The Tribunal was required to decide whether the commission payment of Rs.54,000 was deductible under s. 37. After examining the circumstances, the Tribunal came to a conclusion that it was not so deductible. The Tribunal cannot, in exercise of its power of rectification, look into some other Mrs. Denna Asit Mehta 16 MA No. 238/Mum/2018 circumstances which would support or not support its conclusion so arrived at. The mistake the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself. The Tribunal has, patently, far exceeded its jurisdiction under s. 254(2) in redeciding the entire dispute which was before it, in this fashion, and the Tribunal has committed a gross and inexplicable error. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment."
5. In view of the factual scenario and position of law delineated hereinbefore, the present MA, being devoid of merit, is dismissed.
Order pronounced in the open Court on 13/12/2018.
Sd/- Sd/-
(MAHAVIR SINGH) (N.K. PRADHAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 13/12/2018
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A)-
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
BY ORDER,
//True Copy//
(Sr. Private Secretary)
ITAT, Mumbai