The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance made on account of expenses not allowable under the head “Income from House property”.
The assessee Company filed its return of income declaring total income. The case of the assessee was selected for scrutiny and the assessment u/s 143(3) of the Income Tax Act, 1961 was framed vide order. The Assessing Officer while framing the assessment observed that during the year under consideration, the assessee company had been engaged in Real Estate business deriving rental income from property/ies. He recorded that on perusal of the details furnished by the assessee, the assessee had offered income with respect to certain units of Dr. Gopal Das Bhawan and did not offer income for certain Units stating that they were vacant and other were kept for self use.
It was further observed that as regard Archana Complex, the assessee offered the income for entire premises, but qua AVG Bhawan, the assessee did not offer any income claimed it, to be vacated. Therefore, the Assessing Officer called upon the assessee as to why higher value of the rent should not be treated as deemed income under the head “Income from house property” with respect to the property which was actually let out, vacant and/or kept for self uses. In response to the query of the Assessing Officer, the assessee duly filed its reply making averments in support of its claim.
The assessee reiterated the submission as made before CIT(A). He contended that NDMC had provisionally fixed the rateable value which was higher than the actual rent received by the assessee. It was due to the reason that the NDMC had assumed that the space was occupied for all 12 months of the year whereas in the case of the assessee, the space was partly let out during the year. He further contended that against this action of NDMC, a representation had been made for review which was under consideration. It was contended that subsequently, in the Financial Year 2011-12 relevant to Assessment Year 2012-13, the NDMC revised the rateable value of the 2nd floor and in this regard, the assessee’s contention was accepted. It was contended that the method adopted by NDMC did not reflect the rental value. He submitted therefore, the impugned addition deserves to be deleted.
The coram headed by President G.S.Pannu and Judicial Member Kul Bharat has held that the issue related to rateable value adopted by NDMC was under consideration for review before the Competent Authority at NDMC. This aspect is not addressed by CIT(A) therefore, we modify the order of CIT(A) and direct the Assessing Officer to consider the decision of NDMC in respect of the rateable value revised in the subsequent year and adopt the same for this year as well.
“We have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. We do not see any infirmity into the order of CIT(A) as the Revenue itself has not made any disallowance in other years. Moreover, no reason is assigned for not following the Rule of Consistency. The Revenue is under legal obligation to be consistent in its approach regarding taxability of any item. It cannot be purely on the whims and fancies of the Assessing Officer,” the tribunal vehicle addressing the issue of expenses incurred for earning rental income, said.
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