ITAT grants Senior Advocate Maninder Singh relief in tax dispute on residential properties used as law offices

The Income Tax Appellate Tribunal (ITAT) at Delhi has ruled in favour of Senior Advocate and former Additional Solicitor General Maninder Singh in an income tax dispute concerning residential properties used as law chambers for his legal practice [Maninder Singh v. Circle 61].

A coram of Vice President Mahavir Singh and Accountant Member Krinwant Sahay set aside a revision order passed by the Principal Commissioner of Income Tax (PCIT) that had questioned a 2024 assessment made by an assessing officer (AO) regarding the income declared by Singh for assessment year 2022-2023.

The tribunal held that the PCIT had exceeded his revisional jurisdiction under Section 263 of the Income Tax Act.

The PCIT had objected to the AO's decision not to charge annual letting value/ALV (yearly rent a property could reasonably be expected to earn if a residential property not being used by the owner as his residence were let out) with respect to three residential properties that Singh said were being used as law chambers.

The ITAT rejected the PCIT's reasoning that these residential properties cannot be used for professional purposes.

"Clause 15.8 of the Delhi Master Plan 2021... permits the specified profession to carry on professional activities from the residential premises, and these are as per laws. The AO has done all the verifications and enquiries on this issue. Hence, in our view, no ALV can be computed while framing assessment, which AO has rightly done," the ITAT held.

Further, the PCIT had questioned the AO's decision to allow a depreciation claim with respect to two properties.

The ITAT, however, ruled that the AO had taken a legally plausible view and that the PCIT had exceeded his jurisdiction in revising such an assessment on highly debatable issues.

"This issue is highly debatable and once the issue is debatable, the revisional order under Section 263 of the Act is not possible," the ITAT said.

The ITAT held that the PCIT could not invoke revisional jurisdiction under Section 263 merely because another view was possible.

"The present case is not one of lack of enquiry but one where detailed enquiry was admittedly conducted during the scrutiny assessment and one of the legally permissible views was consciously adopted by the AO," it observed in the October 12 ruling.

Accordingly, the tribunal allowed Singh's appeal in the matter and reversed the PCIT's revision order dated March 31, 2026.

The dispute arose from Singh's income declaration for 2022-23, during which he declared professional receipts of ₹24.39 crore and total income of ₹27.53 crore.

The PCIT had questioned the absence of ALV from three residential properties situated in Jangpura Extension, Defence Colony and Sunder Nagar in Delhi. According to the PCIT, the AO had failed to adequately verify whether the properties were being used for professional purposes.

Singh contended that the premises were used as offices for his juniors, staff and clients, considering the scale of his practice before the Supreme Court and various High Courts. He relied on Clause 15.8 of the Master Plan for Delhi, 2021, which permits specified professionals, including advocates, to carry out professional activities from residential premises, subject to conditions. The tribunal found merit in this contention and observed,

"The AO has gone into all these details and assessee filed complete details before the AO, and after going through the complete details, he has not computed the ALV, because the assessee is using these properties for his legal professional work."

The second issue concerned depreciation claimed on two properties purchased in Defence Colony and Sunder Nagar for approximately ₹48.15 crore and ₹73.83 crore, respectively. The PCIT questioned depreciation claims totalling approximately ₹8.51 crore, arguing that depreciation could not be claimed on land, but rather only on buildings.

Singh argued that both properties were purchased for composite consideration without separately allocating their purchase prices between land and the buildings thereon.

The tribunal acknowledged that during the purchase, the sub-registrar had valued the land separately and building separately for determining the valuation as per the circle rate fixed by the Delhi government. However, it pointed out that this was done for stamp duty purposes and did not constitute a division of the actual sale consideration.

It further observed that the PCIT's order did not indicate how the sale consideration for the land and buildings can be split to decide how much of the claimed depreciation is allowable.

"The learned PCIT in his revision order could not point out how will value is to be segregated and what will be the basis for disallowance of depreciation," the tribunal said.

Singh was represented by advocates Prabhas Bajaj and Rishabh Yadav.