IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : C : NEW DELHI
BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM
ITA No.1435/Del/2008
Assessment Year : 2001-02
Tera Construction Pvt. Ltd., Vs. ITO,
2802, Top Floor, Bara Bazar, Ward 16(2),
Kashmeri Gate, New Delhi.
Delhi 110006.
PAN: AAACT2579E
(Respondent)
(Appellant)
Assessee By : None
Department By : Shri T. Vasanthan, Sr. DR
Date of Hearing : 18.03.2015
Date of Pronouncement : 19.03.2015
ORDER
PER R.S. SYAL, AM:
This appeal by the assessee is directed against the order passed by
the CIT(A) on 7.2.2008 upholding the penalty of Rs.17,49,622/-
imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961
ITA No.1435/Del/2008.
(hereinafter also called `the Act') in relation to the assessment year
2001-02.
2. Before proceeding with the matter, we want to set out the relevant
facts under which this appeal has again come up before the Tribunal for
consideration and decision. The Tribunal vide its original order dated
28.3.2013 accepted the assessee's contention that the AO did not record
proper satisfaction in the assessment order before initiating penalty
proceedings u/s 271(1)© of the Act. Resultantly, the penalty was
deleted. The Revenue approached the Hon'ble Delhi High Court. Vide
its judgment dated 11.3.2014, the Hon'ble Delhi High Court vacated the
view of the Tribunal in deleting the penalty on the basis of lack of
proper satisfaction. Accordingly, the matter has been remanded for
deciding penalty on merits.
3. We have heard the ld. DR and perused the relevant material on
record. There is no appearance from the side of the assessee despite
notice. We are, therefore, proceeding to dispose of this appeal ex parte
qua the assessee.
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ITA No.1435/Del/2008.
4. Briefly stated, the facts of the case are that the assessee is a builder
and promoter. No business activity was carried on during the year
relevant to the assessment year under consideration. Some rental
income was earned apart from some interest on FDRs, etc. This rental
income was declared under the head `Income from house property' on
which deduction u/s 24 was claimed for `Other expenses', namely,
depreciation, building maintenance expenses, commission, etc. The AO
held that such expenses were not separately allowable as deduction
because the same were covered under the composite deduction allowable
under the head `Income from house property.' He, therefore, computed
the total income by assessing the rental income under the head `Income
from house property' as was declared by the assessee without allowing
any separate deduction for the expenses which were claimed by the
assessee. Penalty amounting to Rs.17,49,622/- was imposed in respect of
the disallowance of deductions claimed by the assessee against the
income under the head `Income from house property,' which the ld.
CIT(A) upheld in the first appeal.
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ITA No.1435/Del/2008.
5. At this juncture, it is relevant to mention that the assessee
challenged the additions made by the AO in the quantum proceedings.
The Tribunal, vide its order dated 28.3.2013, disposed of the assessee's
quantum appeal. A copy of such order is available on record. It can be
seen from the order passed by the Tribunal in quantum proceedings that
the assessee's contention for assessing rental income under the head
`Profits and gains of business or profession' has been rejected and,
resultantly, claim for depreciation amounting to Rs.1,83,951/-, building
maintenance expenses of Rs.22,15,072/- and commission paid for letting
out building at Rs.5,39,000/- has been rejected. The assessee's further
claim for deduction of Rs.10 lac for getting the property vacated has also
been found to be unacceptable. Similar is the position regarding
disallowance of Rs.9,15,800/- towards maintenance expenses and
Rs.70,000/- paid as architect fees in respect of building let out by the
assessee. In view of the above Tribunal order, it becomes clear that the
assessee's contention for claiming deductions towards various expenses
etc. against income from house property have been held to be not
maintainable.
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ITA No.1435/Del/2008.
6. Here is a case in which the assessee earned rental income to the
tune of Rs. 84.00 lac on which it claimed deduction u/s 24(i) for a sum
of Rs.18.75 lac. Despite that, it further claimed deduction for various
expenses and allowance in respect of let out property from which rental
income was earned. Such claim for deduction of various expenses etc.
in the computation of income under the head `Income from house
property' is patently and ex facie untenable. It is not an issue on which
two opinions can possibly be formed and the assessee chose to follow
the view favourable to it. The provisions of Chapter IV-C are simple
and plain in not admitting any deduction for expenses etc., of the nature
which have been claimed by the assessee, within its ambit. As the
assessee knowingly made a wrong claim which is patently inadmissible,
we cannot, but, uphold penalty u/s 271(1)(c) of the Act. Our view is
fortified by a recent judgment from the Hon'ble jurisdictional High
Court in CIT vs. NG Technologies Ltd. (2015) 370 ITR 7 (Del), in which
the assessee claimed deduction for loss on sale of fixed assets in its
Profit & Loss Account. The Hon'ble Delhi High Court upheld the
penalty in respect of such patently inadmissible claim. The facts of the
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ITA No.1435/Del/2008.
instant case are on all fours with that of NG Technologies Ltd. (supra)
inasmuch as here also the assessee claimed deduction for expenses and
depreciation, etc. against income from house property, which is clearly
not allowable. We, therefore, approve the view taken by the ld. CIT(A)
in affirming the instant penalty.
7. In the result, the appeal is dismissed.
The order pronounced in the open court on 19.03.2015.
Sd/- Sd/-
[C.M. GARG] [R.S. SYAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 19th March, 2015.
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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