ASHISH THEATERS, MUMBAI V. ITO 11(1)(1), MUMBAI

CO 41/MUM/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8966 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: M SUBRAMANIAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 1001/MUM/2011 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD-11(1)(1) ROOM NO.436A AAYAKAR BHAVAN M.K. MARG MUMBAI-400 020. VS. M/S. ASHISH THEATRE RAMKRISHNA CHEMBURKAR MARG OPP. F.C.I. CHEMBUR MUMBAI-400 074. PAN NO:AABFA 2890 F (APPELLANT) (RESPONDENT) C.O. NO.41/MUM/2013 ARISING OUT OF ITA NO. 1001/MUM/2011 ASSESSMENT YEAR : 2005-06 M/S. ASHISH THEATRE RAMKRISHNA CHEMBURKAR MARG OPP. F.C.I. CHEMBUR MUMBAI-400 074. PAN NO:AABFA 2890 F VS. INCOME TAX OFFICER WARD-11(1)(1) ROOM NO.436A AAYAKAR BHAVAN M.K. MARG MUMBAI-400 020. ( CROSS OB JECTOR ) (RESPONDENT) ASSESSEE BY : SHRI M. SUBRAMANIAN REVENUE BY : SHRI O.P. SINGH DATE OF HEARING : 05/08/2013 DATE OF PRONOUNCEMENT : 14 / 0 8 /2013 ITA NO.1001/11 & CO-41/113 A.Y.05-06 ASHISH THEATRE 2 O R D E R PER B. RAMAKOTAIAH, AM: THE APPEAL IS BY REVENUE AGAINST THE ORDERS OF CIT (A)-3, MUMBAI DATED 22.11.2010. THE ASSESSEE HAS RAISED CROSS OBJ ECTION ON THE ISSUE OF JURISDICTION FOR RE-OPENING THE ASSESSMENT UNDER SECTION 147. 2. THE ISSUE IN THE APPEAL OF REVENUE IS WITH REFE RENCE TO ADOPTION OF ALV OF THE PROPERTY. THE ASSESSEE LET OUT THE PROPE RTY TO ANOTHER FIRM AT RS.6,11,550/- WHICH WAS LET OUT TO MTNL BY M/S. RAK ESH BUILDERS, SUB- LESSEE AT RS.22,62,744/-. THE AO WAS OF THE OPINION THAT ALV OF THE PROPERTY WAS TO BE TAKEN AT RS.22,62,744/- I.E. REN T RECEIVED FROM MTNL BY M/S RAKESH BUILDERS. FOLLOWING THE ORDERS IN ASS ESSMENT YEAR 2002- 03 TO 2004-05, THE AO ADOPTED THE ALV AT HIGHER AMO UNT. THE LD. CIT(A) DELETED THE SAME BY STATING AS UNDER :- 2.2.1 GROUNDS NO.2, 3, 4 AND 5 PERTAIN TO ASSESSI NG OFFICER TREATING THE ALV OF RS.22,62,744/- I.E. RENT RECEIV ED FROM SUB-LESSEE MTNL TO LESSEE RAKESH BUILDERS WHO PAID A RENT OF R S.6,11,550/- TO THE APPELLANT. DETAILED SUBMISSIONS HAVE BEEN MADE BY APPELLANT INTERALIA RELYING UPON ORDERS U/S. 143(3) R.W.S. 14 7 IN ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 IN ITS OWN CASE , WHEREIN THE APPELLANT HAS BEEN ASSESSED ON THE BASIS OF RENT RE CEIVED FROM M/S. RAKESH BUILDERS AND NOT ON ALV BASED ON THE RENT RE CEIVED BY RAKESH BUILDERS FROM SUB LEASE MTNL. APPELLANT HAS ALSO RELIED UPON HONBLE ITAT, MUMBAI DECISION IN ITA NO.2102/M UM/2008 IN ASSESSMENT YEAR 2004-05 IN THE CASE OF RAKESH BUILD ERS, WHEREIN HONBLE TRIBUNAL WAS PLEASED TO SET ASIDE THE ISSUE TO AO TO BRING TO TAX INCOME EARNED FROM MTNL UNDER THE HEAD INCOME F ROM HOUSE PROPERTY IN THAT CASE. APPELLANT HAS ALSO PLACED ON RECORD A COPY OF AOS ORDER FOR ASSESSMENT YEAR 2004-05 IN THE CASE OF RAKESH BUILDERS WHEREIN, RENT FROM MTNL HAS BEEN ASSESSED IN THE HANDS OF RAKESH BUILDERS. CONSEQUENT TO THE ORDERS OF HO NBLE ITAT, APPELLANT PLEADS, THAT IN THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE ALV ADOPTED BY ASSESSING OFFICER IS NOT SUSTAIN ABLE AND THE ADDITION SHOULD BE DELETED. ITA NO.1001/11 & CO-41/113 A.Y.05-06 ASHISH THEATRE 3 2.1 LD.CIT(A) FOLLOWED THE ORDERS OF ITAT ON THE IS SUE AND FURTHER WE WERE INFORMED THAT THE AO ACCEPTED THE RENT RECEIVE D BY ASSESSEE FOR THE EARLIER YEARS ON THE SAME BASIS IN CONSEQUENTIAL OR DERS AFTER THE ITAT ORDERS. FURTHER, THIS ISSUE WAS ALSO CRYSTALLIZED B Y THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. AKSHAY TEXTILE TRADING AGENCIES PVT. LTD 304 ITR 401(BOM), WHEREIN IT WAS HELD AS UNDER :- SECTION 23(1)(A) OF THE INCOME-TAX ACT, 1961, USES THE EXPRESSION THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR. THIS HAS TO BE CONSIDERED I N THE CONTEXT OF THE APPLICABLE RENT LAWS. THE COURTS HAVE CONSTRUED THE RENT RECEIVABLE IN SUCH CIRCUMSTANCES TO BE EITHER THE STANDARD REN T OR THE RATEABLE VALUE AS FIXED BY THE LOCAL AUTHORITY. BEFORE THE A MENDMENT BROUGHT ABOUT TO SECTION 23 BY THE FINANCE ACT, 2001, WITH EFFECT FROM APRIL 1, 2002, EVEN AN ASSESSEE HAD RECEIVED HIGHER RENT THAN THE STANDARD RENT, THE ADDITIONAL AMOUNT WOULD NOT BE T HE SUBJECT OF TAX. TO OVERCOME THIS OMISSION THE SECTION WAS SUBS TITUTED TO COVER ALSO THOSE CASES WHERE RENT RECEIVED WAS HIGHER THA N THE STANDARD RENT OR RENT BASED ON MUNICIPAL RATEABLE VALUE. IT IS NOT POSSIBLE TO GIVE A WIDER MEANING THAN IS CONTAINED IN SECTION 2 3(L)(A). THE LEGISLATURE HAS SUBSTITUTED THE PROVISION AND BROUG HT IN SECTION 23W(B) TO COVER THE PART OF THE ANNUAL VALUE WHICH OTHERWISE WOULD NOT FALL WITHIN THE TAX AMBIT BEFORE ITS AMENDMENT. IN THAT CONTEXT, THE EXPRESSION RECEIVABLE WOULD MEAN THAT THOUGH THE ANNUAL VALUE IS FIXED IN TERMS OF THE AGREEMENT EVEN THOUG H IT IS NOT RECEIVED IN THE RELEVANT YEAR, YET THE SAME WOULD B E ASSESSABLE TO TAX. THE ASSESSEE LET OUT THREE PROPERTIES TO E, S AND B . THOSE TENANTS SUB-LET THE PROPERTIES TO R. THE ASSESSING OFFICER HELD THAT FOR PURPOSES OF SECTION 23 OF THE ACT THE ANNUAL VALUE OF THE PROPERTY SHOULD NOT BE ONE ENTERED INTO BY THE ASSESSEE WITH ITS TENANTS, BUT THE AMOUNT RECEIVED BY THE TENANTS FROM R. THE COMM ISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM ITS TENANTS WAS ASSESSABLE IN ITS HANDS. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT IT WAS NOT THE CO NTENTION OF THE REVENUE THAT THE CONTRACT BETWEEN THE ASSESSEE AND THE TENANT WAS SHAM. THE ANNUAL VALUE WOULD BE THE VALUE IN TERMS OF THAT CONTRACT. ITA NO.1001/11 & CO-41/113 A.Y.05-06 ASHISH THEATRE 4 2.2 RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). ACCORDINGLY, GROUND OF THE REVENUE ON THIS ISSUE IS DISMISSED. 3. THE CROSS OBJECTION BY THE ASSESSEE IS WITH REFE RENCE TO INITIATION OF PROCEEDINGS UNDER SECTION 147 FOR RE-VALUING THE AN NUAL LETTING VALUE (ALV), WHICH THE CIT(A) CONSIDERED AND DISMISSED TH E ASSESSEES GROUND. SINCE WE UPHELD THE ORDER OF CIT(A) ON MERITS, THE ISSUE OF RE-OPENING BECOMES ACADEMIC IN NATURE. ACCORDINGLY ASSESSEES CROSS OBJECTION IS ALSO TREATED AS DISMISSED. 4. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2013. SD/- SD/- (AMIT SHUKLA ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 14/08/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.