Smt. Zarine Naushir Cambatta, Ahmedabad V. The Dy.CIT.,Circle-12, Ahmedabad

CO 216/AHD/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8428 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: ANIL R SHAH
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 1746/AHD/2010 ASSESSMENT YEAR :2007-08 & C.O. NO. 216/AHD/2010 ASSESSMENT YEAR :2007-08 DY. COMMISSIONER OF INCOME- TAX, CIRCLE-12, AHMADABAD SMT. ZARINE NAUSHIR CAMBATTA CAMBATTA CENTRA; BHARAT BOBBINS LTD PREMISES, RAKHIAL ROAD, AHMADABAD V/S . V/S . SMT. ZARINE NAUSHIR CAMBATTA CAMBATTA CENTRA; BHARAT BOBBINS LTD PREMISES, RAKHIAL ROAD, AHMADABAD DY. COMMISSIONER OF INCOME-TAX, CIRCLE-12, AHMADABAD PAN NO. A C QPC0894E (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI D. K. SINGH, SR.D.R. /BY ASSESSEE SHRI ANIL R. SHAH, A.R. /DATE OF HEARING 04 . 0 3 .201 3 /DATE OF PRONOUNCEMENT 30.04.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE AND THE C.O. OF THE ASSE SSEE, EMANATED FROM THE ORDER OF CIT(A)-XX, AHMEDABAD, DATED 15.02 .2010 FOR A.Y. 2007-08. THE ISSUES AND ARGUMENTS IN REVENUES APPEAL AND AS SESSEES C.O. ARE SAME. THEREFORE, WE ARE DECIDING BOTH IN A CONSOLI DATE ORDER FOR THE SAKE OF CONVENIENCE. THE SOLE GROUND OF REVENUES APPEAL I S AGAINST DELETING THE ITA NO. 1746/AHD/10 & C.O. NO. 216/AHD/10 A.Y. 07-08 PAGE 2 ADDITION OF RS.11,79,871/- MADE BY THE A.O. ON ACCO UNT OF INCOME FROM HOUSE PROPERTY. 2. THE A.O. OBSERVED THAT THE APPELLANT HAD SHOWN R ENTAL INCOME RS.1,47,467/- IS 11% SHARE IN THE PROPERTY AT MISTR Y CHAMBERS. THE RENT RECEIVED HAD REMAINED SAME FOR LAST THREE YEARS I.E . FOR F.Y. 2004-05, 2005- 06 & 2006-07. IN CASE OF CAMA MOTORS, DURING F.Y. 2004-05, THE ASSESSEE RECEIVED RS.45,000/-, WHICH WAS INCREASED TO RS.1,8 0,000/- DURING F.Y. 2005- 06 AND REMAINED SAME DURING F.Y. 2006-07. THERE WA S AN INCREASE IN THE RENT @ 300%. ACCORDINGLY, THE LD. A.O. INCREASED 3 00% IN ALL NINE TENANTS WHERE THE RENT HAD REMAINED SAME. SR. NO. TENANT RENT RECEIVED IN F.Y. 2004-05, 05-06 AND 06-07 300% OF COL. NO.3 1 2 3 4 1 PREMIER AUTO LTD 42900 128700 2 KORES INDIA LTD 48528 145584 3 DEWDROP CREATIONS 114600 343800 4 -DO- 54000 162000 5 ATE MARKETING 127560 382680 6 SHELTER PHARMACY 70680 212040 7 NAUSHIR MISTRY 7200 21600 8 STD BOOTH 18000 54000 9 GUJARAT MEDICRAFT 78375 235125 TOTAL 1685529 THE A.O. HAD TAKEN A FAIR MARKET VALUE OF RENT OF H OUSE PROPERTY AT RS.16,85,529/- AFTER ALLOWING THE DEDUCTION U/S.24 OF THE IT ACT. THE DIFFERENCE OF RS.11,79,871/- HAD BEEN ADDED IN THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY THE A.O. ITA NO. 1746/AHD/10 & C.O. NO. 216/AHD/10 A.Y. 07-08 PAGE 3 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) WHO HAD ALLOWED THE APPEAL. THE OPERATIVE PORTION OF THE ORDER IS AS U NDER: 5.2 I HAVE CONSIDERED THE FACTS OF THE CASE, OBSER VATION OF THE AO IN THE ASSESSMENT ORDER AND SUBMISSION MADE BY THE APPELLANT. I FIND THAT THE AO HAS CALCULATED THE RENT INCOME ON ESTIMATE BASIS AND NO CONCRETE EVIDENCES TO SUPPORT FINDING HAS BE EN GIVEN IN THE ASSESSMENT ORDER WHILE ESTIMATING 300% INCREASE IN RENT INCOME. THERE ARE 6 CO-OWNERS OF THE PROPERTY OF MISTRY CHA MBERS AND THE APPELLANT IN HER RETURN OF INCOME HAS SHOWN RENTAL INCOME OF RS.1,47,464/- TOWARDS 11% SHARE IN THE PROPERTY AT MISTRY CHAMBERS. IN THE F.Y. 2004-05, THE RENT INCOME OF RS.45,000/- SHOWN IS FOR 3 MONTHS ONLY. THE RENT RECEIVED BY T HE APPELLANT FROM CAMA MOTORS IS RS.15,000/- PER MONTH. THE ASSUMPTI ON OF THE AO THAT THERE IS AN INCREASE OF RENT @ 300% IN THE CAS E OF CAMA MOTORS IS THEREFORE FACTUALLY INCORRECT OBSERVATION OF THE AO. THEREFORE, THERE IS NO INCREASE IN RENT INCOME FROM THE TENANT S WHICH IS AS PER THE TERMS OF RENT AGREEMENT ENTERED INTO BY THE OWN ERS. FURTHER, IT IS NOTED THAT THE RENT INCOME SHOWN BY THE APPELLAN T HAS BEEN ACCEPTED BY THE DEPARTMENT IN PREVIOUS YEARS. IN T HE IMMEDIATE PRECEDING YEAR THE APPELLANT HAD SHOWN HER SHARE OF RENT INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AT RS.9 0,391/- WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. THEREFORE, I FIND THAT THE RENT INCOME SHOWN BY THE APPELLANT RS.1,47,464/- IN THE YEAR UNDER CONSIDERATION CANNOT BE TAKEN ON HIGHER SIDE WITHOU T ANY LOGICAL BASIS. THE AO WHILE COMPUTING THE ALV OF THE PROPE RTY HAS FAILED TO TAKE INTO CONSIDERATION THAT THE APPELLANTS SHARE IN THE RENT IS ONLY 11%. THE ADDITION MADE BY THE AO OF RS.11,79,871/- IS THEREFORE HELD TO BE NOT JUSTIFIED AND THE SAME IS HEREBY DIR ECTED TO BE DELETED. ITA NO. 1746/AHD/10 & C.O. NO. 216/AHD/10 A.Y. 07-08 PAGE 4 4. NOW THE REVENUE IS BEFORE US. LD. SR. DR ARGUED THAT THE APPELLANT HAD NOT GIVEN ANY EVIDENCE OF INCREASE OF RENT BEFORE T HE A.O. THE A.O. COMPARED THE RENT OF THE OTHER TENANTS OF MISTRY CH AMBERS AND MADE THE ADDITION. AT THE OUTSET, LD. COUNSEL FOR THE APPEL LANT RELIED UPON THE ORDER OF THE CIT(A) AND ALSO UPON THE PAPER BOOK FILED BY HI M. IT HAS BEEN SUBMITTED THAT THE APPELLANT IS AN OLD TENANT. THERE WERE 16 TENEMENTS WHICH WERE REDUCED TO 15 IN F.Y. 04-05. IN THE YEAR 06-07, TH ERE WERE 16 TENANTS. THE RENT OF RS.1,47,464/- IS THE ACTUAL RENT RECEIVED B Y THE ASSESSEE. HE FURTHER SUBMITTED THAT EVERY YEAR, THERE WAS AN INCREASE IN THE RENTS. AS PER, PAGE NO.18 OF THE PAPER BOOK, HE FILED BILLS OF THE RENT AL INCOME FOR PROPERTY KNOWN AS MISTRY CHAMBERS IN ALL THE 19 CASES AND IT WAS A RGUED THAT RENT IN CASE OF CAMA MOTORS WAS FOR THREE MONTHS ONLY, IN TOTAL I.E . RS. 45,000/- AND RS. 15,000/- PER MONTH. ON THIS BASIS, THE CAMA MOTORS RECEIVED RENT IN BOTH THE YEARS AT RS.1,80,000/-. AT PAGE NO.21, HE HAS CALC ULATED 11% SHARE IN RENT OF MISTRY CHAMBERS AT RS.99,925/- ON THE BASIS OF ACTU AL RENT RECEIVED FROM THE TENANTS. IN A.Y. 06-07, WHATEVER RENT INCOME DISCL OSED BY THE ASSESSEE, HAD BEEN ACCEPTED, AS SUCH. IN A.Y. 09-10, THE GROSS R ENTAL INCOME HAS SHOWN AT RS.1,68,986/-, WHICH HAS BEEN ACCEPTED BY THE A.O. U/S.143(3) OF THE IT ACT. THUS, HE HAS REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE A.O. HAD WRONGLY PRESUMED THE INCREASE IN THE RENTAL INCOME IN CASE OF CAMA MOTORS WHEREAS THE RENTS SHOWN BY CAMA MOTORS WAS FOR THE PERIOD OF 3 MONTHS I.E. IN TOTAL RS.45,000/-. IN O THER CASE ALSO, NO INCREASE HAS BEEN SHOWN. THE APPELLANT HAD 11% SHARE IN THE MISTRY CHAMBERS. THE ITA NO. 1746/AHD/10 & C.O. NO. 216/AHD/10 A.Y. 07-08 PAGE 5 LD. A.O. HAD NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE FAIR MARKET RENTAL VALUE IS MUCH MORE THAN RENT DISCLOSED BY TH E ASSESSEE. IN ABSENCE OF ANY EVIDENCE, NO ADDITION CAN BE SUSTAINED. ACCORD INGLY, WE UPHELD THE ORDER OF THE CIT(A). 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. C.O. NO. 216/AHD/2010 7. THE APPELLANT HAD NOT PRESSED THE C.O., THEREFOR E, THE SAME IS DISMISSED. 8. IN THE COMBINED RESULT, REVENUES APPEAL AND ASS ESSEES C.O. BOTH ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30.04.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * <