Maneklal Agarwal v. Deputy Commissioner of Income-tax
[Citation -2017-LL-0714-17]

Citation 2017-LL-0714-17
Appellant Name Maneklal Agarwal
Respondent Name Deputy Commissioner of Income-tax
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 14/07/2017
Judgment View Judgment
Keyword Tags annual letting value • net rental value • lease agreement • double taxation • rental income
Bot Summary: The appellant filed his return income for Assessment Year 1998-99, showing a total income of Rs. 67,200/-. The Deputy Commissioner of Income Tax completed the assessment of the appellant's property on 21.02.2001 under Section 143(3) of Income Tax Act, 1961 by treating the rent received by the lessees of the appellant as rental income of the appellant at Rs.7,98,000/-. 16:46:28 IST Reason: The appellant appealed before the Commissioner of Income Tax, which vide its order dated 08.01.2002, upheld the assessment order passed by the 2 Deputy Commissioner of Income Tax on the ground that it was in accordance with Section 23(1) of the IT Act. Aggrieved, the appellant moved an appeal to the Income Tax Appellate Tribunal. The High Court vide impugned common judgment and order dated 25.02.2015 allowed the Revenue's appeal and dismissed the appellant's appeals on the ground that the ITAT had recorded the finding of fact that the nature of leases executed by the assessee being bogus and structures being raised by the assessee himself and it would be proper to include the net rental value to the income of the assessee. Once it is found that the income in fact belongs to the appellant he was the right person for taxing the said income, it was permissible for the Income Tax Authorities to tax the said income at the hands of the assessee. At the same time, we also find that the Income Tax Authorities have read the same income at the hands of the wife, son and daughter-in-law of the assessee as well who, as per the department itself, wrong person.


IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(S).9315/2017 (Arising out of Special Leave Petition(C) No(s). 19387/2015) MANEKLAL AGARWAL APPELLANT(s) VERSUS DEPUTY COMMISSIONER OF INCOME TAX RESPONDENT(s) WITH CIVIL APPEAL NO(S).9316-9319/2017 (Arising out of Special Leave Petition(C) No(s). 20012-20015/2015 O R D E R Leave granted. We have heard learned counsel for parties at length. appellant filed his return income for Assessment Year 1998-99, showing total income of Rs. 67,200/-. appellant had leased out his property to his own family members, who in turn had sub-leased it to outsiders on much higher rentals. Deputy Commissioner of Income Tax completed assessment of appellant's property on 21.02.2001 under Section 143(3) of Income Tax Act, 1961 (IT ACT) by treating rent received by lessees of appellant as rental income of appellant at Rs.7,98,000/-. After allowing 1/5th as repairs, appellant's Signature Not Verified Digitally signed by ASHWANI KUMAR Date: 2017.07.20 income was assessed at Rs. 6,38,400/-. 16:46:28 IST Reason: appellant appealed before Commissioner of Income Tax (Appeals), which vide its order dated 08.01.2002, upheld assessment order passed by 2 Deputy Commissioner of Income Tax on ground that it was in accordance with Section 23(1) of IT Act. Aggrieved, appellant moved appeal to Income Tax Appellate Tribunal (ITAT). ITAT vide its order dated 11.07.2003, partly allowed appeal and directed assessing authority to determine annual letting value of property to sub-lessee on basis of municipal valuation. Revenue challenged order passed by ITAT before High Court of Andhra Pradesh & Telangana by filing appeal which was heard and decided along with four other appeals filed by appellant pertaining to four different assessment years involving similar issues. High Court vide impugned common judgment and order dated 25.02.2015 allowed Revenue's appeal and dismissed appellant's appeals on ground that ITAT had recorded finding of fact that nature of leases executed by assessee being bogus and structures being raised by assessee himself and it would be proper to include net rental value to income of assessee. Hence, present appeals. Going by nature of transaction, clear finding of fact is arrived at by authorities below that devise was made by appellant herein to show lesser income at his hand and because of this reason only he purportedly entered into lease agreement with his wife, son and daughter-in-law in respect of aforesaid property of which he is paying by letting them at very nominal rates and allowing his family members to sub-let same at much higher rents. In these circumstances, these findings of fact cannot be interfered with in present appeals. It has been held by 3 this Court in Income Tax Officer vs Ch. Atchaiah (1996) 1 SCC 417, that Assessing Authority has right to tax right person . Once it is found that income in fact belongs to appellant he was right person for taxing said income, it was permissible for Income Tax Authorities to tax said income at hands of assessee. At same time, we also find that Income Tax Authorities have read same income at hands of wife, son and daughter-in-law of assessee as well who, as per department itself, wrong person . There would be double taxation on same income at hands of two persons. In these circumstances, it will always be open to wife, son and daughter-in-law of assessee to seek redressal of taxation of income at their hands in appropriate proceedings. appeals are, accordingly, disposed of. ......................J. [A.K. SIKRI] ......................J. [ASHOK BHUSHAN] NEW DELHI; JULY 14, 2017. 4 ITEM NO.8 COURT NO.7 SECTION XII-A S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No(s). 19387/2015 (Arising out of impugned final judgment and order dated 25-02-2015 in ITTA No. 121/2004 passed by High Court Of Judicature At Hyderabad For State Of Telangana And State Of Andhra Pradesh) MANEKLAL AGARWAL Petitioner(s) VERSUS DEPUTY COMMISSIONER OF INCOME TAX Respondent(s) WITH SLP(C) No. 20012-20015/2015 (XII-A) Date : 14-07-2017 These petitions were called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ASHOK BHUSHAN For Petitioner(s) Dr. Rakesh Gupta, Adv. Mr. Ambhoj Kumar Sinha, AOR Ms. Monika Ghai, Adv. Mr. Ashwani Taneja, Adv. For Respondent(s) Mr. K. Radhakrishnan, Sr. Adv. Ms. Niranjana Singh, Adv. Mr. Shekhar Vyas, Adv. Ms. Anil Katiyar, AOR UPON hearing counsel Court made following O R D E R Leave granted. appeals are disposed of in terms of signed order. Pending application(s), if any, stands disposed of accordingly. (ASHWANI KUMAR) (MALA KUMARI SHARMA) COURT MASTER COURT MASTER (Signed order is placed on file) Maneklal Agarwal v. Deputy Commissioner of Income-tax
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