Jaikishan Shyamsunder Vaswani Vs ACIT (ITAT Mumbai)
It is noted that property situated at Flat No.72, L Block, Maker Tower, Cuffe Parade, Mumbai was actually let out to Bank of America during AY 2007-08 @ Rs.2 Lacs per month. However, this rent has drastically been reduced to Rs.25,000/- per month upon receipt of interest-free security deposit of Rs. 4 Crore from the tenant. No plausible/cogent explanation regarding drastic reduction has been placed on record. Secondly, similar addition in immediately preceding AY 2009-10 was accepted by the assessee by not preferring the second appeal and the matter had already attained finality in the preceding year. Another important factor to be noted that interest-free security deposit received by the assessee was advanced to sister concerns without any interest and no income has been reflected by the assessee against the same. The totality of the above facts lends credence to the reasoning of both the lower authorities and therefore, the conclusion that the whole exercise was a colorable device to reduce the overall tax burden, could not be said to be without any sound basis.
FULL TEXT OF THE ITAT JUDGMENT
1. Aforesaid cross-appeals for Assessment Year [AY] 2010-11 contest the order of Ld. Commissioner of Income Tax (Appeals)-28, Mumbai [CIT(A)], Appeal No. CIT(A)-28/IT-1 35/DC-1 2(2)/201 3-1 4 dated 22/02/201 6. The grounds urged by the assessee reads as under: –
1. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of income from House Property in respect of Flat No. 72, ‘L’Block, in Maker Tower, Cuffe Parade, Mumbai 400006 at Rs.2,00,000/- per month.
2. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of income from House Property in respect of office premises at Nariman Point, Mumbai at 2,00,000/- per month which was being sued by a company in which the appellant is a director.
3. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of income from House Property in respect of self-occupied flat at Sea Woods Estate Ci-op Housing Society Ltd, At Nerul, Navi Mumbai at Rs.35,000/- per month.
The grounds urged by the revenue reads as under: –
1. On the facts & in the circumstances of the case, and in law, the Ld.CIT(A) has erred in deleting the addition made by the A.O. under the head “Income from House Property” by estimating the ALV of the Shops at Hilton Centre, Navi Mumbai for 67,20,000/-.
2. On the facts & in the circumstances of the case, and in law, the Ld. CIT(A) has erred in holding that a firm running a business on the premises of the assessee (a partner of firm) is akin to the partner, being running his own business from the said ”
The assessment for impugned AY was framed by Ld. Deputy Commissioner of Income Tax-Circle 12(2), Mumbai [AO] in scrutiny assessment u/s 143(3) on 28/03/2013 wherein the income of the assessee was determined at Rs.449.23 Lacs after certain additions / adjustments as against returned income of Rs. 43.75 Lacs filed by the assessee on 30/09/201 0. The assessee being non-resident individual reflected income under the head House Property, Salary, Capital Gains and Income from other sources. As evident from grounds of appeal, the subject matter of cross appeals is certain additions under the head House Property.
2.1 During assessment proceedings, the income from several properties owned by the assessee was assessed under the head Income from House Property in the following manner: –
