SANJAY GUPTA, MUMBAI V. ASST CIT CEN CIR 47, MUMBAI

ITA 1002/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1888 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMPRIYA RAGHAVAN
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Deemed owner of house property; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND ASHWANI TANEJA , AM ITA NO . 1002 /MUM/20 1 5 (A.Y: 20 1 0 - 1 1 ) MR. SANJAY GUPTA BUNGLAOW NO.31 - 101, MHADA SVP NAGAR, H.BUNLOW, ANDHERI (W), MUMBAI - 400053 VS. THE ASST. COMMIS SIONER OF INCOME TAX - CENTRAL CIRCLE - 47 ROOM NO.658, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI - 400020 PAN NO.AABPG8751F APPELLANT .. RESPONDENT ASSESSEE BY .. SHRI. SANJIV M. SHAH, AR REVENUE BY .. MISS. RAMPRIYA RAGHAVAN, DR DATE OF HEARING . . 23 - 11 - 2016 DATE OF PRONOUNCEMENT .. 23 - 11 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF CIT (A) - 38 , MUMBAI IN APPEAL NO.CIT ( A) - 38/IT - 495/2013 - 14 DATED 24 - 10 - 2014 . THE ASSESSMENT WAS FRAMED BY ACIT CENTRAL CIRCLE - 47 , MUMBAI FOR THE A . Y . 201 0 - 1 1 VIDE ORDER DATED 28 - 03 - 2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF THE AO IN DISALLOWING ELECTRICITY EXPENSE AT 50 % AMOUNTING TO RS.1,12,090/ - AND BUSINESS PROMOTION EXPENSES AT 50% AMOUNTING TO RS.67,391/ - . 3. AT THE OUTSET , THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT A REASONABLE DISALLOWANCE SHOULD BE MADE AND 50% IS ON H IGHER SI D E. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE SI D ES AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) CONFIRMED THE DISALLOWANCE ON ACCOUNT OF BUSINESS PROMOTION EXPENSES AND ELECTRICITY EXPENSES AT 50% OF THE EXP ENSES. THE ASSESSEE HAS INCURRED BUSINESS PROMOTION EXPENSES AT RS.1,34,781/ - AND ELECTRICITY EXPENSES AT RS.2,24,180/ - . THE AO DISALLOWED 50% OF EXPENSES BY HOLDING THAT THERE IS PERSONAL ELEMENT IN THE SAME. THE REASON CITED BY THE AO WAS THAT THERE BEIN G THAT NO SPECIFIC DETAILS FILED BY ASSESSEE IN RESPECT OF BUSINESS PROMOTION EXPENSES AND AS REGARDS TO ELECTRICITY EXPENSES , ASSESSEE HAS INCLUDED THE ELECTRICITY EXPENSES OF HIS HOUSE S TO WOODSTOCK AND PUNE ITA NO. 1 002 / MUM/2015 2 BUNGALOW, WHICH ARE HIS OWN RESIDENCE. THE A O DISALLOWED THE EXPENSES BEING PERSONAL IN NATURE AND CIT(A) ON THE SAME REASONING CONFIRMED THE SAME. WE FIND NO INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES AND HENCE DISALLOWANCE AT THE RATE OF 50% IS CONFIRMED. 4. THE NEXT ISSUE IN THIS APPEAL OF AS SESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE VALUE OF FOUR PROPERTIES BUNGLOW AT GOA, PUNE BUNGLOW, BUNGLOW NO.91(MHADA) AND LONAWALA BUNGLOW TREATING THE SAME AS DEEMED LET OUT PROPERTIES AND ALSO CONFIRMING THE ALV OF PROPERTY BE TAKEN AT 8.5% OF THE BOOK VALUE. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 2 & 3: - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THAT ASSESSEE HAS 4 PROPERTIES (BUNGLOW AT GOA, PUNE BUNGLOW, BUNGLOW NO.91 (MHADA) & LONAWALA BUNGLOW OF WHICH BOOK VALUE IS AT RS.2,40,00,000/ - TREATED AS DEEMED LET OUT PROPERTY. 3. WITHOUT PREJUDICE THE ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE ALV OF PROPERTY B E TAKEN @8.5% OF BOOK VALUE OF 4 PROPERTIES. 5. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE FILED A COPY OF TRIBUNAL ORDER FOR A.Y. 2009 - 10 IN ASSESSEES OWN CASE IN ITA NO. 1027/MUM/2014 DATED 06 - 10 - 2016, WHEREIN EXACTLY IDENTICAL ISSUE WAS RAISED AN D TRIBUNAL HAS SET ASIDE THE MATTER BACK TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATIONS AS UNDER: - WITH RESPECT TO THE ADDITION ON ACCOUNT OF INCOME FROM HOUSE PROPERTY, WE HAVE OBSERVED THAT THE ASSESSEE OWNS FIVE PROPERTIES SPREAD OVER MUMBAI, P UNE & GOA. THERE WAS NO RECEIPT OF RENT VIS - - VIS PRECEDING ASSESSMENT YEAR WHEREIN THERE WAS ARRANGEMENT WITH WFFL WHICH STOOD CHANGED W.E.F. 01 - 04 - 2008 AND IT IS THE CONTENTION OF THE ASSESSEE THAT NOW RENTAL INCOME IS EMBEDDED IN THE PROFESSIONAL RECEI PT OF WHICH NO EVIDENCE TO SUBSTANTIATE THE CONTENTION IS BROUGHT ON RECORD BY THE ASSESSEE EXCEPT MAKING AN BALD STATEMENT NOR ANY EVIDENCE TO SUBSTANTIATE BUSINESS USAGE OF FOUR PREMISES AS CONTENDED BY THE ASSESSEE HAS BEEN BROUGHT ON RECORD. THE ASSESS EE CLAIMED THAT ONE PROPERTY AT WOODSTOCK VILLA, ANDHERI, MUMBAI WAS A SELF - OCCUPIED RESIDENTIAL PROPERTY WHILE THE REST OF FOUR PROPERTIES WERE USED FOR BUSINESS PURPOSES. WE FIND THAT THE AO HAS BROUGHT TO TAX INCOME FROM HOUSE PROPERTY @ 12% OF THE COST OF THE PROPERTY OF ALL THE FIVE PROPERTIES , WHICH WAS SUSTAINED BY THE LEARNED CIT(A) TO THE TUNE OF 8.5% OF THE VALUE OF THE PROPERTY WITH RESPECT TO FOUR PROPERTIES AND THE LEARNED CIT(A) ALLOWED RELIEF FOR ONE PROPERTY WHICH IS BEING USED BY THE ASSES SEE AS SELF - OCCUPIED RESIDENTIAL PROPERTY FOR WHICH RELEVANT DIRECTIONS WERE GIVEN TO THE AO TO ITA NO. 1 002 / MUM/2015 3 IDENTIFY AND DEEM ALV AS NIL FOR THE SAID RESIDENTIAL PROPERTY . THE AO DID NOT MAKE ANY ENQUIRY TO IDENTIFY AND ESTIMATE PREVAILING MARKET RENTAL OF THE PROPER TIES IN THE RELEVANT PERIOD AND THE ASSESSEE ON HIS PART HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THE BUSINESS USAGE OF FOUR PROPERTIES CONTENDED TO BE USED FOR BUSINESS PURPOSES EXCEPT MAKING BALD STATEMENT. IN OUR CONSIDERED VIEW, THE ADDITIO NS CANNOT BE MADE BASED UPON THE NOTIONAL RENT BASED ON THE VALUE OF THE PROPERTIES HOWEVER ALV OF THE PROPERTIES IS TO BE BROUGHT TO TAX AS PER THE SCHEME OF THE ACT. THE A.O. HAS NOT CONDUCTED ANY ENQUIRY WITH RESPECT TO THESE PROPERTIES TO COMPUTE INCOM E FROM HOUSE PROPERTIES BEING ALV IN ACCORDANCE WITH SECTION 22 & 23 OF THE ACT AND THE PRINCIPLES LAID DOWN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY(SUPRA ). THE ASSESSEE ON HIS PART HAS ALSO NOT BROUGHT ON RECORD ANY COGENT MATERIAL / EVIDENCES TO SUBSTANTIATE ITS SUBMISSIONS ABOUT USAGE OF THE PROPERTIES FOR BUSINESS PURPOSES EXCEPT FOR MAKING A STATEMENT IN THIS REGARD. THE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF VISHWANATH ACHARAYA V. ACIT IN ITA NO 7976/MUM/2011 VIDE ORDERS DATED 16 - 12 - 2015 WHICH WAS AUTHORED BY ONE OF US ( ACCOUNTANT MEMBER). KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO SET ASIDE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO DECIDE THE ISSU E DE NOVO IN ACCORDANCE WITH THE PROVISIONS OF SECTION 22 AND 23 OF THE ACT AND THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY (SUPRA). NEEDLESS TO SAY THAT THE A.O. SHALL AFFORD PROPER AND SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. THE ASSESSEE WILL BE ALLOWED TO SUBMIT RELEVANT EVIDENCES AND EXPLANATIONS IN HIS DEFENSE WHICH WILL BE ADMITTED BY THE AO BEFORE ADJUDICATING THE ISSUE. THE ASSESSEE IS DIRECTED TO CO - OPERATE WITH THE REVENUE IN SET ASIDE PROCEEDINGS. WE ORDER ACCORDINGLY. 6. THE LEARNED SENIOR DR ALSO AGREE D WITH THE ISSUE , WHICH IS EXACTLY IDENTICAL AND FACTS ARE SIMILAR. IN VIEW OF THE ABOVE DECISIONS OF TRIBUNAL IN ASSESSEES OWN CASE FOR IMMEDIATE PRECEDING YEAR FOR THE A.Y. 2009 - 10 , RESPECTFULLY FOLLOWING THE SAME, WE RESTORE THE MATTER BACK TO THE FILE OF AO TO FOLLOW THE DIRECTION OF TRIBUNAL OF EARLIER YEAR AND DECIDE THE ISSUE ACCORDINGLY . THIS ISSUE OF THE ASSESSEES IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 - 11 - 2016 . SD/ SD/ ( ASHWANI TANEJA ) (MAHAVIR SINGH) ACCOUNTANT MEMEBR JUDICIAL MEMBER MUMBAI, DATED: 2 3 - 11 - 2016 SUDIP SARKAR /SR.PS ITA NO. 1 002 / MUM/2015 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//