ANAND SAGAR, MUMBAI V. ITO 11(1)(1), MUMBAI

ITA 1188/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56168 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: AARTI SATHE
• Keywords: Salary income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K.AGARWAL (J M) ITA NO.1188/MUM/2010 (ASSESSMENT YEAR: 2006-07) MR.ANAND SAGAR SAGAR VILLA, ROAD NO.12A, JVPD SCHEME, VILLE PARLE (W), MUMBAI-400049 PAN: ABDPS8161J INCOME TAX OFFICER 11(1)(1), MUMBAI. APPELLANT V/S RESPONDENT DATE OF HEARING : 20.12.2011 DATE OF PRONOUNCEMENT : 23.12.2011 APPELLANT BY : MS.AARTI SATHE RESPONDENT BY : SHRI V.V.SHASTRI O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4.12.2009 PASSED BY THE LD . CIT(A) FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL DERIVES INCOME FROM SALARY, HOUSE PROPERTY AND OTHER SOURCES. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE AO INTERALIA OBSERVE D THAT THE ASSESSEE HAS SHOWN A RENTAL INCOME FROM FLAT AT DELHI RS.20,000/-. ON INQUIRY IT HAS BEEN ITA NO.1188/MUM/2010 (ASSESSMENT YEAR: 2006-07) 2 REPRESENTED THAT IT IS A FIVE BEDROOM FLAT SITUATE D AT B-7, 105/A SAFADARJUNG ENCLAVE EXTENSION, NEW DELHI . THE AO, THEREFORE, TAKEN RS.25,000/- PER MONTH AS REASONABLE RENT AND COMPUTED THE NET INCOME FROM HOUSE PROPERTY OF DELHI FLAT AT RS.1,94,524/-. TH E AO AFTER MAKING SOME OTHER ADDITIONS COMPLETED THE ASSESSMENT AT AN INCOME OF RS.5,20,760/- VIDE ASSESSMENT ORDER DATED 15.12.2008, PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. ON APPEAL, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE AND A RELATED PERSON SHRI SUBHASH SAGAR, BOTH HAVE BEEN ASSESSED TO TAX FOR THE SAME ASSESSMENT YEAR IN RESPECT OF SHARE OF THESE PROPERTIES BY HOLDING DIFFERENT AMOUNT OF INCOME FR OM THE PROPERTY AS REASONABLE RENT. IN THE CASE OF SH RI SUBHASH SAGAR THE AO COMPUTED THE ANNUAL VALUE OF THE PROPERTY ON THE BASIS OF THE RETURN OF 8% ON T HE INVESTMENT OF RS.18,93,966/- WHICH CAME TO RS.1,51,517/- AND AFTER ALLOWING MUNICIPAL TAXES AN D 30% FOR REPAIRS THE NET ANNUAL LETTING VALUE WAS ARRIVED AT RS.90,586/-. HE FURTHER OBSERVED THAT ITA NO.1188/MUM/2010 (ASSESSMENT YEAR: 2006-07) 3 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE MUNICIPAL AUTHORITIES HAVE FOUND PART OF THE CONSTRUCTION TO BE ILLEGAL A ND HAVE DEMOLISHED THREE BEDROOMS OUT OF FIVE BEDROOMS AND THE PROPERTY IS NOT IN HABITABLE CONDITION AND THUS A TOKEN RENT OF RS.1,00,000/- WAS CHARGED. THE LD. CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS HELD THAT IT WOULD BE REASONABLE TO ESTIMATE ANNUA L LETTING VALUE AT 5% OF THE COST OF FLAT I.E.18,93, 966/- AS IN THE CASE OF SHRI SUBHASH SAGAR WHICH HE WORK ED OUT TO RS.94,698/- AND AFTER ALLOWING 30% DEDUCT ION FOR REPAIRS RS.28,490/-, HE SUSTAINED THE ADDITION OF RS.46,208/-. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWI NG GROUND OF APPEAL : 1. THE LD. CIT(A) ERRED IN COMPUTING THE ANNUAL LETTING VALUE (ALV) OF THE PROPERTY AT DELHI AT RS.94698/- AND COMPUTING THE INCOME FROM HOUSE PROPERTY FOR THE SAID PROPERTY ACCORDINGLY. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE STANDS COVERED I N FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNA L IN ITA NO.1188/MUM/2010 (ASSESSMENT YEAR: 2006-07) 4 THE CASE OF SHRI SUBHASH SAGAR (THROUGH LEGAL HEIR MR.JYOTI SAGAR) V/S ITO AND VICE-VERSA IN ITA NO.11 89 AND 1984/MUM/2010 (AY-2006-07) ORDER DATED 29.7.2011, THEREFORE, THE ISSUE MAY BE DECIDED ACCORDINGLY. SHE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL. 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER OF THE AO AND LD. CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND MERITS IN THE PLEA OF THE LD. COUN SEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE DECISION OF THE TRIBUNAL IN THE CASE OF CO-OWNER O F THE PROPERTY SHRI SUBHASH SAGAR (SUPRA), WHEREIN THE ASSESSEE HAS SHOWN RENTAL INCOME OF DELHI FLAT AT RS.20,000/-. THE AO ON THE BASIS OF THE INVESTMEN TS IN THE PROPERTIES HAS COMPUTED ALV OF THE PROPERTY AT 8% OF THE INVESTMENT WHICH HE WORKED OUT AT RS.1,51,517/- AND AFTER ALLOWING DEDUCTION AT THE RATE OF 30%, HE COMPUTED THE NET INCOME FROM THE ITA NO.1188/MUM/2010 (ASSESSMENT YEAR: 2006-07) 5 PROPERTY AT RS.90,586/-. ON APPEAL, THE LD. CIT(A ) ESTIMATED THE ALV AT 5% OF THE INVESTMENT WHICH COMES TO RS.94,698/-. SINCE MUNICIPAL TAXES AND OTH ER TAXES WERE FOUND TO BE PAYABLE BY THE TENANT, THE L D. CIT(A) DID NOT ALLOW THE SAME. ON SECOND APPEAL TO THE TRIBUNAL, THE TRIBUNAL DIRECTED THE AO TO AS SESS THE PROPERTY INCOME ON THE BASIS OF ALV DECLARED BY THE ASSESSEE VIDE FINDINGS RECORDED IN PARAGRAPH 2. 3 OF ITS ORDER, WHICH ARE AS UNDER: 2.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING COMPUTATION OF ANNUAL VALUE OF THE PROPERTY. THE ANNUAL VALUE HAS BEEN DEFINED AS THE SUM FOR WHICH THE PROPERTY CAN BE LET OUT FROM YEAR TO YEAR AND IN CASE PROPERTY IS LET OUT AND RENT RECEIVED IS MORE, THEN THE ACTUAL RENT RECEIVED. IN THIS CASE THE RENT CHARGED FOR THE PROPERTY WAS RS.1.00 LACS. THE PROPERTY WAS ALREADY TENANTED. THE MUNICIPAL RATABLE VALUE IS RS.77,000/-. THE PROPERTY HAD BEEN FOUND TO BE ILLEGALLY CONSTRUCTED BY THE MUNICIPAL AUTHORITIES WHO HAVE ALREADY DEMOLISHED PART OF THE PROPERTY. THERE IS NO MATERIAL PLACED ON RECORD BY THE REVENUE TO SHOW THAT FAIR RENT OF THE PROPERTY IN THE AREA WILL BE MORE THAN THE RENT CHARGED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE ORDER OF THE CIT(A), SUSTAINING THE ALV AT A HIGHER RATE CANNOT BE UPHELD. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ASSESS THE PROPERTY INCOME ON THE BASIS OF ALV DECLARED BY THE ASSESSEE. ITA NO.1188/MUM/2010 (ASSESSMENT YEAR: 2006-07) 6 IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE LD. DR, WE RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL (SUP RA) DIRECT THE AO TO ASSESS THE PROPERTY INCOME ON THE BASIS OF ALV DECLARED BY THE ASSESSEE. ACCORDINGL Y, THE ADDITION SUSTAINED BY THE LD. CIT(A) IS DELETED . THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, ALLOWED. 8. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DEC.,2011. SD SD ( R.S. SYAL) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, 23RD DECEMBER, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI