Delhi High Court

Smt. Kusum Ansal vs Asstt. Cit on 8 December, 2003

Equivalent citations: (2004) 91 TTJ Del 177

ORDER

P.N. Parashar, J.M.:

This appeal has been filed by the assessed against the order of Commissioner (Appeals), dated 8-11-1994, for the assessment year 1985-86.

2. Shri R.N. Sharma, appeared or behalf of the assessed. Learned Departmental Representative, Shri L.D. Mate, appeared for the department. The assessed has taken as many as three grounds of appeal which are as under :

"l.(a) That, on the law, facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in confirming the disallowance of claim for statutory deduction under section 24(l)(i)(a) of Income Tax Act, 1961, while computing the income under the head property' of certain let out commercial flats and spaces owned by the appellant.

1. (b) That, without prejudice to the foregoing ground and in the event of it being held that the rental income was not assessable under the head 'property', the same could not be brought to tax under the head 'Other sources' as well and as such should have been excluded from the assessment."

2.1 That, on the law, facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in confirming the rejection of the claim for short-term capital loss of Rs. 12,450 and instead confirming the determination of the short-term capital gain at Rs. 10,000 on sale of farm No. 17, Satbari, New Delhi, by disbelieving and disregarding the actual sale consideration of Rs. 2,25,000 as per registered sale deed by and substituting the said figure by Rs. 2,43,000 as estimated in the valuation report of Valuation Officer.

2.2 That the learned Commissioner (Appeals) has erred in ignoring the settled case law on the point that the onus to prove that the sale consideration had been understated was on the revenue and the said onus cannot be discharged by relying upon the estimate of the Asstt. Valuation Officer as to what in his opinion was or should have been the market value,

2.3 That, without prejudice, even otherwise, the difference between the actual sale price and the estimated fair market value was only Rs. 18,000, i.e., less than 15 per cent of the sale consideration.

3. That, on the law, facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in omitting to deal with the additional ground that the learned assessing officer was not justified in not allowing interest under section 214 of Income Tax Act on excess payment of advance tax which was purely a legal point without involving any investigation of facts."

3. Ground No. 1 is directed against the sustenance of disallowance of the claim for the assessed for statutory deduction under section 24(l)(i)(a) of Income Tax Act. The assessed has sold a piece of land measuring 15 bighas at plot No. 17, Satbari Village, Delhi, and had shown a loss of Rs. 8,000. The assessing officer made reference to the Valuation Officer who assessed the fair market value of the plot at Rs. 2,43,200 as against the value of Rs. 2,25,000 shown by assessed. He thus worked out short-term capital gain of Rs. 10,000. The assessing officer also disallowed the claim of the assessed being 1/6th for repairs by observing that no deduction for repairs can be allowed as no transfer deed was executed for transferring title of ownership. In appeal before the learned Commissioner (Appeals), it was submitted that if the income is to be assessed as property income, then appellant is entitled for deduction by 1/6th repairs. The learned Commissioner (Appeals) rejected the plea by observing as under :

"In view of the above discussion, I am of the view that the rental income should be assessed under the head income from other sources and if that be so, there is no room for allowance of statutory deduction relating to repairs. The appellant's contention on this score did not merit acceptance and the assessing officer's order is sustained. "

4. Before us, the learned counsel for the assessed pointed out that the assessed was owner of the property and, therefore, the claim should be allowed. He placed reliance on the decision in the case CIT v. Podar Cement (P) Ltd., Etc. (1997) 226 FTR 625 (SM)

5. On the other hand, the learned Departmental Representative submitted that the issue has been covered by the earlier decisions in the case of the assessed. In this regard, reference was made to the decision of Tribunal, Delhi 'C' Bench, New Delhi, in ITA Nos. 1652 and 1653/Del/1996 for assessment years 1982-83 and 1984-85. Reference was also made to the decision of Hon'ble Delhi High Court in the case of Sushil Ansal v. CIT (1986) 160 ITR 308 (Del).

6. We have heard the rival submissions of parties and perused the entire material available on record. The Tribunal has decided earlier appeals by following the decision of Hon'ble Delhi High Court in the case of assessed herself reported in (1986) 58 CTR (Del) 57: (1986) 160 ITR 308 (Del) (supra). That decision was subsequently overruled by the Hon'ble Supreme Court of India in the case of Podar Cement (supra) and, therefore, in view of the decision of Hon'ble Supreme Court, no significance can be attached to the decision of Hon'ble jurisdictional High Court in the case of assessed.

7. The Hon'ble Supreme Court has considered the amended provisions of section 27 of Income Tax Act and has held that the amendment is declaratory in nature and hence, the provision shall operate retrospectively. In this regard, we consider it proper to reproduce the relevant provisions of section 27 of the Income Tax Act which are as under :

"(i) an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred.

(ii) the holder of an impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate.

(iii) a member of a co-operative society, company or other AOP to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association, as the case may be, shall be deemed to be the owner of that building or part thereof.

(iiia) a person who is allowed to take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), shall be deemed to be the owner of that building or part thereof;

(iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed to be the owner of that building or part thereof;

(iv) 'annual charge' means a charge to secure an annual liability, but does not include any tax in respect of property or income from property imposed by a local authority, or the Central or a State Government;

(v) 'capital charge' means a charge to secure the discharge of a liability of a capital nature

(vi) taxes levied by a local authority in respect of any property shall be deemed to include service taxes levied by the local authority in respect of the property."

8. In view of the proposition laid down by the Hon'ble Supreme Court, in the case of Podar Cement Ltd. (supra), the amended provisions of section 27 of Income Tax Act have to be applied retrospectively which means that the income of the assessed is to be taken as income from house property as she was having possession although she was not a registered owner. Her case will be covered by the amended provision contained under section 27(3). Consequently, she is deemed to be owner and her income shall be covered under the head income from "house property" and in view of the same, she will be entitled for the deduction on account of repairs. The learned Commissioner (Appeals) has considered the entire matter including the report of the Valuation Officer of the IT department and has sustained the addition of Rs. 10,000. The learned counsel for the assessed could not substantiate this ground before us. No material is available on record to controvert the estimate worked out by the Valuation Officer. We do not find any merit to interfere in the finding of learned Commissioner (Appeals) in determining the capital gain at Rs. 10,000 on the basis of difference in the market value shown by the assessed and that worked out by the Valuation Officer. The grounds are rejected.

9. Ground No. 3 is as under :

"That, on the law, facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in omitting to deal with the additional ground that the learned assessing officer was not justified in not allowing interest under section 214 of Income Tax Act on excess payment of advance tax which was purely a legal point without involving any investigation of facts."

10. Before the learned Commissioner (Appeals), the additional ground was neither admitted nor rejected. On perusal of the order of learned Commissioner (Appeals), it is not clear as to whether this ground was pressed or not. After considering the entire material and the rival submissions of the parties made before us, we consider it proper to direct the learned Commissioner (Appeals) to ascertain as to whether this ground was taken before him or not and in case such an additional ground was taken before him, then he should decide about its admissibility on merits and as per law and if such additional ground is admitted by him, then he should adjudicate the same after affording a proper opportunity of being heard to the assessed. In view of the above, this ground is allowed for statistical purposes.

11. In the result, the appeal is partly allowed for statistical purposes.