PASL WINDTECH PVT. LTD., Ahmedabad V. THE ADDL. CIT., RANGE-I, Ahmedabad

ITA 1165/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1679 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: J P SHAH
• Keywords: Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.1165/AHD/2009 [ASSTT. YEAR : 2005-2006] PASL WINDTECH PVT. LTD. (FORMERLY AHMEDABAD FINVEST COMPANY P. LTD. 37-B, PHASE-I, GIDC VAVA, AHMEDABAD. PAN : AABCA 3022 G VS. ACIT, RANGE-1 AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.P. SHAH REVENUE BY : SHRI R.K. DHANESTA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD DATED 05.01.2009 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) THE INCOME TAX ACT, 1961. 2. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL BY THE ASSESSEE READS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN ADDING RS.48,26,251/ - BEING RENT ON PROPERTY INCOME THOUGH FULLY EXPLAINED. THE ADD ITION MADE BE DELETED. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT DURING THE ACCOUNTING YEAR RELEVANT TO THE ASS ESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS GIVEN THE IMMOVABLE PROPERTY WHICH WAS INDUSTRIAL SHED TO SISTER CONCERN. THE ASSESSEE DI D NOT CHARGE ANY RENT BECAUSE IT HAD RECEIVED INTEREST FREE DEPOSIT FROM THE SISTER CONCERN. THE AO ESTIMATED THE ANNUAL LETTING VALUE (ALV FOR SH ORT) OF THE ITA NO.1165/AHD/2009 -2- PROPERTY WITHOUT ANY BASIS; THAT IN THE ASSESSMENT ORDER, THE AO HAS MENTIONED THAT HE COLLECTED THE INFORMATION UNDER S ECTION 133(6) AS WELL AS INQUIRY WERE GOT CONDUCTED THROUGH INSPECTOR OF THE INCOME-TAX DEPARTMENT. HOWEVER, NEITHER COPY OF THE ANY INFOR MATION COLLECTED UNDER SECTION 133(6) NOR INSPECTORS REPORT WAS EVE R COMMUNICATED TO THE ASSESSEE. HE THEREFORE SUBMITTED THAT THE ESTI MATE OF ALV OF THE PROPERTY OF THE ASSESSEE IS WITHOUT ANY BASIS AND C ANNOT BE SUSTAINED. HE FURTHER SUBMITTED THAT MORE RATIONAL BASIS FOR ESTI MATING THE FAIR RATE IS RENTAL VALUATION OF THE SAID PROPERTY BY THE MUNICI PAL AUTHORITIES OR THE ESTIMATED RATE OF INTEREST ON THE COST OF THE ABOVE IMMOVABLE PROPERTY. HE HAS STATED THAT HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF SAKARLAL BALABHAI VS. ITO, 100 ITR 97 HELD THAT THE RATE OF INTEREST ON THE COST OF BUILDING AND THE LAND MAY PROVIDE A REASONA BLE BASIS FOR DETERMINING THE ALV OF THE PROPERTY. HE THEREFOR E STATED THAT THE ALV ESTIMATED BY THE AO WITHOUT ANY BASIS MAY BE SET ASIDE AND HE SHOULD BE DIRECTED TO ESTIMATE THE VALUE AS PER THE OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA KARLAL BALABHAI (SUPRA) 4. THE LEARNED DR WAS FAIR TO ACCEPT THAT THE DECIS ION OF THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON ALL THE AUT HORITIES WORKING WITHIN THE TERRITORIAL JURISDICTION OF THEIR LORDSHIPS AND THEREFORE HE HAD NO OBJECTION IF THE MATTER IS SET ASIDE TO THE FILE OF THE AO FOR RE-ADJUDICATION AS PER THE DECISION OF THE HONBLE JURISDICTIONAL H IGH COURT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. IN THE CASE OF SAKARLAL BALABHAI (SUPRA ), THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER: ... IN THE ABSENCE OF A BETTER WAY OF ESTIMATING RENT, THE RATE OF INTEREST ON COST OF BUILDING AND LAND MAY PROVIDE A REASONABLE ITA NO.1165/AHD/2009 -3- BASIS FOR DETERMINING THE ANNUAL LETTING VALUE OF P ROPERTY MORE PARTICULARLY WHEN THE PROPERTY IS OCCUPIED BY THE O WNER. THE CAPITAL VALUE OF THE PROPERTY HAS RELEVANCE IN DETE RMINING ITS ANNUAL LETTING VALUE. IN THIS CASE, THE AO ESTIMATED THE ALV ON THE BAS IS OF SOME INFORMATION SAID TO HAVE BEEN COLLECTED BY HIM BEHI ND BACK OF THE ASSESSEE. ADMITTEDLY, THOSE DETAILS WERE NOT CONFR ONTED TO THE ASSESSEE. NEITHER THE SAME IS PRODUCED BEFORE US. THEREFORE, THE SAME CANNOT BE RELIED ON FOR ESTIMATING THE ALV. IN THE ABOVE C IRCUMSTANCES, WE DEEM IT PROPER TO SET ASIDE THE ORDER OF THE AUTHOR ITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. WE DIRECT HIM TO DETERMINE THE ALV AS PER THE OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT I.E. BY APPLYING THE REASONABLE RATE OF INTEREST ON THE COST OF IMMOVABLE PROPERTY. NEEDLESS TO MENTION, HE WILL A LLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE AD JUDICATING THE MATTER. 6. IN RESULT, ASSESSEES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 31 ST MARCH, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 31-03-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD