ZODIAC FINSEC AND HOLDINGS LTD, MUMBAI V. ASST CIT 6(3), MUMBAI

ITA 1091/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7987 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMBIT MISHRA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI D.KARUNAKARA RAO (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 1091/MUM/2014 ASSESSMENT YEAR: 2010-11 ZODIAC FINSEC AND HOLDINGS LTD, 254 D-2 NYLOC HOUSE, DR. A.B. ROAD, WORLI, MUMBAI- 400 018 PAN: AAACM2918C VS. THE ASST. CIT, CIRCLE 6(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. VASANTI PATEL RESPONDENT BY : SHRI. SAMBIT MISHRA DATE OF HEARING: 1 7/02/2017 DATE OF PRONOUNCEMENT: 28/02/20 17 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 09/12/2013 PASSED BY THE LD. CIT(APPEALS)-12 MUMBAI , FOR THE ASST. YEAR 2010-11, WHEREBY THE LD. CIT(A) DISMISSED THE APPEA L FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 04/01/2013 PASSED U/ S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN ON INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING TO THE INCOM E OF RS. 2,85,62,410/-. THE RETURN WAS PROCESSED AND AFTER SCRUTINY ASSESSMENT ORDER U/S 143 (3) OF THE ACT WAS PASSED DETERMINING THE TOTAL INCOME OF RS. 5,24,54,870/-. THE A.O. NOTICED THAT THE ASSESSEE HAD EARNED RENTAL INCOME OF RS. 4,70,91,450/- IN 2 ITA NO. 1091/MUM/2014 ASSESSMENT YEAR: 2010-11 RESPECT OF ITS PROPERTY MEASURING 40,561 SQ.FT. ALO NG WITH 11 CAR PARKING LET OUT TO ITS HOLDING COMPANY ZODIAC CLOTHING COMPANY LTD. (ZCCL). THE ASSESSEE HAD ALSO RECEIVED RENTAL INCOME OF RS. 2,77,31,795/ - IN RESPECT OF ITS ANOTHER PROPERTY MEASURING 13817.53 SQ.FT. ALONG WITH 4 CAR PARKINGS TO AN UN-RELATED PARTY HINDALCO INDUSTRIES LTD. THE ASSESSEE HAD CHA RGED THE RENT @ RS. 90 AND RS. 99 FROM ITS RELATED COMPANY AND RS. 150 AND RS. 137 PER SQ.FT. FROM UNRELATED PARTY. ACCORDINGLY, THE ASSESSEE WAS ASK ED TO JUSTIFY THE DIFFERENCE. IN RESPONSE THEREOF THE ASSESSEE INTER ALIA CONTEND ED THAT THE HOUSE PROPERTY WAS RENTED OUT TO ZCCL @ RS. 90/99 PER SQ.FT. CONSI DERING THE FAIR MARKET RATE AND THE ASSESSEE DID NOT INCUR ANY EXTRA COST ON RE NOVATION, INSTALLATION OF AIR CONDITIONERS OR FURNITURE ETC. THE ZCCL WAS LIABLE TO INCUR PROPERTY TAX AND OTHER MAINTENANCE COST IN RESPECT OF THE PREMISES L ET OUT TO IT. MOREOVER, THE RENT PAID BY ZCCL IS COMMERCIAL FAIR RENT. THE A.O . REJECTING THE CONTENTION OF THE ASSESSEE ASSESSED THE RENTAL VALUE OF THE PREMI SES RENTED OUT TO ZCCL AT RS. 8,12,23,414/- AGAINST THE AMOUNT OF RS. 4,70,91 ,450/- DISCLOSED BY THE ASSESSEE. 3. FEELING AGGRIEVED BY THE ASSESSMENT ORDER THE AS SESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A). THE ASSESSEE CONTEND ED BEFORE THE LD. CIT (A) THAT THE A.O. HAS WRONGLY ASSESSED THE VALUE OF THE PROPERTY RENTED OUT TO ZCCL WITHOUT FOLLOWING THE LAW LAID DOWN BY THE COU RTS AND TRIBUNALS. HOWEVER, THE LD. CIT (A) UPHELD THE ACTION OF THE A O AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLL OWING EFFECTIVE GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN UPHOLDING THE ANNUAL VALUE DETERMINED BY THE ASSESS ING OFFICER FOR PART OF THE FIRST FLOOR, SECOND FLOOR, THIRD F LOOR, AND FOURTH 3 ITA NO. 1091/MUM/2014 ASSESSMENT YEAR: 2010-11 FLOOR LET OUT TO ZODIAC CLOTHING CO. LTD. FOR THE P ERIOD FROM 01/04/2009 TO 31/03/2010 AT RS. 8,12,23,532/- INSTE AD OF RS. 4,70,91,450/- (BEING THE RENT RECEIVED) AS OFFERED BY THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE SUBMISSION, EVIDENCE ON RECO RD AND NOT DEALING WITH THE DIRECT DECISION ON THE ABOVE ISSUE WHICH WAS CITED BEFORE THE LEARNED CIT(A) ALONG WITH SUBMISSI ON. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE DIFFERENCE IN THE CHARACTERIST ICS OF THE PROPERTIES. 4. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN GIVING DIRECTIONS IN RESPECT OF A.Y. 2008-09 AND A. Y. 2009-10 ALTHOUGH NO APPEAL WAS PENDING BEFORE HIM FOR THOS E ASSESSMENT YEARS. 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ANNUAL VALUE DETERMINED BY THE ASSESSING OFFICER FOR PART OF THE FIRST FLOOR, SECOND FLOOR, THIRD F LOOR, AND FOURTH FLOOR LET OUT TO ZODIAC CLOTHING CO. LTD. FOR THE PERIOD FROM 01/04/ 2009 TO 31/03/2010 AT RS. 8,12,23,532/- INSTEAD OF RS. 4,70,91,450/- (BEING T HE RENT RECEIVED) AS OFFERED BY THE APPELLANT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE IMPUGNED ORDER IS NOT IN ACCORDANCE WITH THE LAW LA ID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT BOMBAY IN VIMAL R. AMBANI VS. DY. COMMISSIONER OF INCOME TAX- 375 ITR 66 (BOM) , THE SAME IS LIABLE TO BE SET ASIDE. 4 ITA NO. 1091/MUM/2014 ASSESSMENT YEAR: 2010-11 6. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRES ENTATIVE RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMIT TED THAT THERE IS NO SCOPE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL PLACED ON RECORD. THE LD. CIT (A) HAS DISMISSED THE APPEAL OF THE ASSESSEE HOLDING AS UNDER: I HAVE CAREFULLY CONSIDERED THE FATS OF THE CASE A VERRED IN THE IMPUGNED ORDER AS WELL AS ORAL AND WRITTEN ARGUMENT S OF THE LEARNED REPRESENTATIVE OF THE APPELLANT. DURING THE APPELLATE PROCEEDINGS, THE LEARNED REPRESENTATIVE OF THE APPE LLANT FAIRLY BROUGHT ON RECORD A COPY OF APPELLATE ORDER DATED 25.10.2010 PASSED BY MY LEARNED PREDECESSOR IN THE APPELLANTS CASE FOR A.Y. 2007-08 WHEREFROM IT IS NOTICED THAT THE THEN CIT(A ) HAD UPHELD THE ACTION OF THE A.O ON THIS COUNT. HAVING REGARD TO A LL THE RELEVANT FACTS OF THE CASE, IT IS FOUND THAT THE FACTS AND C IRCUMSTANCES OF THE INSTANT YEAR ARE IDENTICAL TO THOSE OF THE A.Y. 200 7-08 WHEREIN THE ERSTWHILE CIT(A), IN HER APPELLATE ORDER, HAD DISMI SSED THE APPELLANTS GROUND OF APPEAL. HENCE, I DO NOT FIND ANY REASON TO DIFFER FROM THE VIEW TAKEN BY MY LEARNED PREDECESSO R IN OFFICE. THEREFORE, THE ACTION THE A.O OF ARRIVING AT A RENT AL IN RESPECT OF THE PREMISES LET OUT TO ZCCL AT RS. 8,12,23,532/- AS AG AINST THE SUM OF RS. 4,70,91,450/- DISCLOSED BY THE APPELLANT, DESER VES TO BE UPHELD AND IT REQUIRES NO INTERFERENCE. 8. WE NOTICE THAT THE AO HAS FOLLOWED THE VIEW TAKEN BY THE AO IN THE ASSESSMENT YEAR 2007-08, WHEREIN THE RENT CHARGED B Y THE ASSESSEE FROM M/S HINDALCO INDUSTRIES LTD. WAS ADOPTED TO WORK OU T THE RENTAL VALUE OF THE PROPERTY LET OUT BY THE ASSESSEE TO THAT ZCCL A ND THE ACTION TAKEN BY 5 ITA NO. 1091/MUM/2014 ASSESSMENT YEAR: 2010-11 THE AO WAS FURTHER CONFIRMED BY THE CIT (A). SIMILA RLY, THE LD. CIT(A) HAS AFFIRMED THE FINDINGS OF THE AO WITHOUT TAKING INTO CONSIDERATION THE RENT CONTROL LEGISLATION, FAIR MARKET LETTING VALUE AND STANDARD RENT WHILE DECIDING THE ISSUE INVOLVED IN THIS CASE. 9. IN VIMAL R. AMBANI VS. DY. COMMISSIONER OF INCOME TAX- 375 ITR 66 (BOM), IT HAS BEEN HELD BY THE HONBLE JURISDICTIONAL HIG H COURT THAT WHILE DETERMINING THE ANNUAL LETTING VALUE IN RESPECT OF PROPERTIES WHICH ARE SUBJECT TO RENT CONTROL AND WHERE THE STANDARD RENT HAS NOT BEEN FIXED, THE ASSESSING OFFICER SHALL DETERMINING THE ANNUAL LETT ING VALUE IN ACCORDANCE WITH THE RELEVANT RENT CONTROL LEGISLATION, IF THE FAIR RENT IS LESS THAN THE STANDARD RENT THEN IT IS THE FAIR RENT WHICH SHALL BE TAKEN AS ANNUAL LETTING VALUE AND NOT THE STANDARD RENT. IN THE SAID CASE, THE ASSESSING OFFICER HAD FOLLOWED THE VIEW TAKEN IN THE EARLIER YEARS IN RES PECT OF THE ASSESSEE TO THE EFFECT THAT THE ANNUAL VALUE SHOULD BE DETERMINED O N THE BASIS OF STANDARD RATE AND NOT ON THE BASIS OF THE RELATABLE VALUE AS DETERMINE BY THE MUNICIPAL CORPORATION. 10. WE FURTHER NOTICE THAT IN THE PRESENT CASE THE AO HAS DETERMINED THE RENTAL INCOME IN QUESTION JUST FOLLOWING THE VIEW T AKEN BY THE AO IN THE ASSESSMENT YEAR 2007-08, WITHOUT TAKING INTO CONSID ERATION THE OTHER FACTORS RELEVANT TO DETERMINE THE ANNUAL LETTING VA LUE OF THE PROPERTY IN QUESTION. THE LD. CIT(A) HAS ALSO AFFIRMED THE SAME . WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT IN THE PRESENT CASE, THE R ENT SHOULD BE DETERMINED IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN VIMAL R. AMBANI VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) AND OTHER JUDGMENT/DECISION IF ANY. HENCE, THE IMPUGNED ORDE R IS SET ASIDE AND THE CASE IS SENT BACK TO AO WITH THE DIRECTION TO ADJUD ICATE THE ISSUE AFRESH IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE BO MBAY HIGH COURT IN 6 ITA NO. 1091/MUM/2014 ASSESSMENT YEAR: 2010-11 THE AFORESAID CASE, AFTER AFFORDING REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE FOR ASST. YEAR 2010-11 IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 28 TH FEBRUARY, 2017. SD/- SD/- ( D.KARUNAKARA RAO ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 28/02/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA