ASHA M SAYANI, MUMBAI V. ITO RG 20(1)(1), MUMBAI

ITA 1405/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9916 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CIRCUMSTANCES OF CASE; OUGHT TO HAVE HELD THAT
• Assessee Lawyers: SONAKSHI JHUN JHUNWALA
• Keywords: Deemed owner of house property
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 1405 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 2011 - 1 2 ) ASHA M SAYANI 2/A RIZVI PARK, ALTAMOUNT ROAD, MUMBAI PIN:400026 / VS. ITO RG 20(1)(1) PIRAMAL CHAMBERS, MUMBAI PIN: ./ ./ PAN/GIR NO. : AAEPS 8313 A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 25 .0 4 .2017 / DATE OF PRONOUNCEMENT : 14 .0 7 .2017 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILE D THE PRESENT APPEAL AGAINST THE ORDER DATED 07.12 .2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 36 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 12 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACT S AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLD ING THE ACTION OF THE AO IN DISALLOWING A TOTAL OF THE EXPENSES OF RS.1,94,640/ - FOR EACH OF THE ALLEGED TWO RESIDENTIAL UNITS ON THE GROUND THAT THE SAME ARE INCURRED TOWARDS PURPOS ES NOT ALLOWABLE TO BE CLAIMED AS DEDUCTIBLE EXPENSES WHILE COMPUTING UNDER THE HEADINCOME FROM HOUSE PROPERTY . 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT: ASSESSEE BY : SHRI RONAK DOSHI & MS. SONAKSHI JHUN JHUNWALA REVENUE BY: SHRI RAJESH KUMAR YADAV ASHA M SAYANI 2 (I) THE AFORESAID EXPENSES WERE INCURRED TOWARDS ELECTRIC METER, WATER METER PAID TO T HE SOCIETY AT THE TIME OF PURCHASE OF FLATS AS ALSO TOWARDS UNDERTAKING PLASTERING, FLOORING, ETC. WORK ON THE RESIDENTIAL FLAT PURCHASED BY THE APPELLANT; (II) THESE EXPENSES WERE CAPITALIZED TO THE COST OF THE FLATS AND THE APPELLANT HAS NOT CLAIMED ANY DEDUCTION IN RESPECT OF THE SAID EXPENSES SO INCURRED BY HER; (III) SINCE THE EXPENSES ARE NOT CLAIMED BY THE APPELLANT AT ALL, THE SAME CANNOT TO BE DISALLOWED. 3. THE APPELLANT THEREFORE, PRAYS THAT THE AO BY DIRECTED TO DELETE THE ADDITION OF RS.3,89,28 0/ - MADE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME ON 28 .0 8 .2011 DECLARING TOTAL INCOME TO THE TUNE OF RS. 3,59,500/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME T AX ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S 143(2) WAS ISSUED ON 03.08.2012 AND WAS SERVED UPON THE ASSESSEE. THEREAFTER, THE NOTICE U/S 142(1) WAS ALSO ISSUED AND WAS SERVED UPON THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL . O N VERIFICATION , IT WAS FOUND THAT THE ASSESSEE PURCHASED THE TWO PROPERTIES AT FLAT NO. 1401 & 1402. THE ASSESSEE DID NOT SHOW THE RENTAL INCOME IN CONNECTION WITH THE FLAT NO. 1402. THEREFORE, THE NOTIONAL RENTAL INCOME TO THE TUNE OF RS. 3,24,151/ - BEING TH E VALUE OF THE FLAT NO. OF THE AMOUNT OF RS.54,02,510/ - WAS ASSESSED AND ADDED TO THE INCOME OF THE ASSESSEE . T HE EXPENDITURE TO THE TUNE OF RS. 3,89,280/ - WAS ALSO DISALLOWED AND THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 10,72,930/ - . FEELI NG AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BUT DECLINE THE CLAIM OF THE ASSESSEE ON THE ISSUES MENTIONED ABOVE THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 : - ASHA M SAYANI 3 4 . U NDER THIS ISSUE THE ASSESSEE HAS CLAIMED THAT THE FLAT NO. 1401 AND 1402 ARE SINGLE RESIDENTIAL UNIT USED BY THE ASSESSEE THEREFORE, NO NOTIONAL RENT WAS REQUIRED TO BE ASSESSED WITH REGARD TO THE PROPERTY NO. 1402. THEREFORE , THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE . THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSING OFFICER HAS ADMITTED THIS FACT THAT THE ENTRANCE AND THE K ITCHEN WERE ONE IN BOTH THE UNIT AND WAS BEING USED BY THE ASSESSEE F OR HIS OWN FACILITIES , T HEREFORE , IN THE SAID CIRCUMSTANCES IT WAS QUITE CLEAR THAT THE FLAT NO. 1401 AND 1402 WERE BEING USED FOR AS A SINGLE UNIT HENCE, NO NOTIONAL RENT WAS LIABLE TO BE ASSESSED WITH REGARD TO THE FLAT NO. 1402 AND ACCORDINGLY, THE A SSESSMENT IS WRONG AND IS NOT LIABLE TO BE SUSTAINABLE. IN SUPPORT OF HIS CONTENTION THE LD. REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE UPON THE LAW SETTLED IN: - 1. MEHAR BANAJI KRUL VS. ADD. CIT(ITA NO. 4048/MUM/2010) 2. SURESH C. SADARANGANI VS. ACIT (33 SOT 428) (TMUM) 3. SMT. DAMYANTI C. VORA VS. ITO (ITA NO. 5590/MUM/2010 (TMUM.) 5. IT IS ALSO ARGUED THAT WHERE TWO PROPERTY WERE BEING USED AS A SINGLE UNIT THEN IN THE SAID CIRCUMSTANCES ALSO THE INCOME TAX EXEMPTION U/S 54/54F OF THE ACT HAS ALSO B EEN ALLOWED AS A SINGLE UNIT IN VIEW OF THE LAW SETTLED IN: - ASHA M SAYANI 4 4. CIT VS. RAMAN KUMAR SURI (255CTR 257) (BOM HC) 5. CIT VS. DEVDAS NAIK (366 ITR 12) (BOM HC) 6. CIT VS. D. ANANADA BASAPPA (309 ITR 329) (KAR HC) 7. SLP DISMISSED (320 (ITR (S T ) 19) 8. CIT VS. GITA DUGGAL (357 ITR 153) (DEL HC) 9. CIT VS. SYED ALI ADIL (352 ITR 418) (AP HC) 10. SLP DISMISSED (228 TAXMAN 62) (SC) \ 11. CIT VS. SMT. V.R. KARPAGAM (373 ITR 127) (MAD HC) 6. ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUT ED THAT THE SAID CONTENTION. 7. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. ON APPRAISAL OF THE FINDING OF THE AO , IT CAME INTO NOTICE THAT THE ASSESSING OFFICER CONSIDER ED THE AGREEMENT OF SALE OF THE FLAT NO. 1401 AND 1402 IN WHICH TWO SEPARATE UNIT S HAVE BEEN MENTIONED. UNDOUBTEDLY, THE SAID FINDING WAS CONFIRMED BY THE CIT(A) . IT IS ONLY TO BE SEEN THAT THE ASSESSEE PUR CHASED TWO UNITS AND THEREAFTER THE ASSESSEE WAS USING THE SAID UNITS AS SIN GLE ONE AFTER THE NECESSARY MODIFICATION OR NOT . TH E ASSESSING OFFICER IN ASSESSMENT ORDER ADMITTED THIS FACT THAT THE ENTRANCE OF THE BOTH THE UNITS WAS SINGLE ONE AND THE KITCHEN OF BOTH THE UNITS WAS ALSO BE SINGLE ONE. HOWEVER, THE ASSESSEE DID THE MOD IFICATION IN ACCORDANCE WITH HER CONVENIENCE. THE ASSESSEE ALSO PRODUCED SOME OTHER EVID ENCES TO PROVE THIS FACT THAT BOTH THE UNITS WERE BEING USED AS A SINGLE UNIT THEREFORE, NO ASHA M SAYANI 5 NOTIONAL RENTAL VA LUE OF THE OTHER UNIT WAS LIABLE TO BE ASS ESSED. THE ASS ESSEE HAS SOLD BOTH THE UNITS BY VIRTUE OF AGREEMENT DATED 24.06.2010 IN WHICH THE FLAT NO. 1401/02 HAVE BEEN SHOWN AS SINGLE UNIT . T HE PHOTOGRAPH OF THE ENTRANCE OF THE FLAT HAS ALREADY BEEN PLACED ON RECORD WHICH LIES AT PAGE NO. 156 TO 157 OF THE PAPER BOOK. THE PHOTOGRAPH OF THE KITCHEN HAS ALSO PLACED ON RECORD IN WHICH THE SINGLE UNIT WAS BEING SEEN AND THE PHOTOGRAPHS ARE ALSO LIES AT PAGE NO. 159 OF THE PAPER BOOK. THE ASSESSEE ALSO ADDUCED THE TELEPHONE BILL IN RESPECT OF FLAT NO. 1401 AND 1402 WHI CH LIES AT PAGE NO. 160 TO 162 . T HESE TELEP HONE BILLS SPEAK S THAT THE TELEPHONE BILL S WERE BEING ISSUED WITH THE NAME OF THE ASSESSEE AT THE FLAT NO. 1401/02. THE BUILDER ALSO ISSUED THE RECEIPT AND PAYMENT OF THE LEGAL COST, SOCIETY SHARE MONEY AND PART PA YMENT OF FLAT NO. 1401/02 WITH THE NAME OF THE ASSESSEE WHICH LIES AT PAGE NO. 164 OF THE PAPER BOOK. IN VIEW OF THE SAID DOCUMENT AND OBSERVATION RECORDED BY THE AO. IT IS QUITE CLEAR THAT THE ASSESSEE WAS USING THE FLAT NO. 1401/02 AS A SINGLE UNIT . IN T HE SAID CIRCUMSTANCES, THE NOTIONAL INCOME OF THE SECOND FLAT 1402 IS NOT LIABLE TO BE ASSESSED SEPARATELY . THIS QUESTION HAS ALSO BEEN ANSWERED BY THE ITAT BENCH MUMBAI IN THE CASE TITLE AS: - 1. MEHAR BANAJI KRUL VS. ADD. CIT (ITA NO. 4048/MUM/2010) 2. SURESH C. SADARANGANI VS. ACIT(33 SOT 428) (TMUM) 3. SMT. DAMYANTI C. VORA VS. ITO (ITA NO. 5590/MUM/2010 (TMUM.) 8. NO DOUBT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE , WE HO LD THAT THE ANNUAL RENTAL VALUE OF THE FLAT NO. 1402 BE TREATED AS N IL BEING NO ASHA M SAYANI 6 NOTIONAL RENTAL INCOME IS REQUIRED TO BE ASSESSED IN RESPECT OF A SINGLE UNIT. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) ON THIS ISSUE IS WRONG AGAINST THE LAW AND FACT AND IS NOT LIABLE TO BE SUSTAINA BLE AND THE EYE OF LAW. THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.2 : - 9 . AT THE TIME OF THE ARGUMENT THE LD. REPRESENTATIVE OF THE ASSESSEE DID NOT PRESS T HIS GROUND. THEREFORE, THIS GROUND IS BEING DECIDED AGAINST THE ASSESSEE BEING NOT PRESSED. ISSUE NO. 3: - 10 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ADDITION OF EXPENSES OF RS. 3,89,280/ - . THE CONTENTION OF THE ASSESSEE IS THAT H E NEVER CLAIM ED AN Y EXPENSES IN ITS COMPUTATION OF THE INCOME THEREFORE THERE IS NO GROUND TO DISALLOW THE SAME . IN FACT, THE SAID AM OUNT WAS EXPENDED WITH REGARD TO THE RESIDENTIAL FLAT WHICH WAS REFLECTED IN THE BALANCE - SHEET OF THE APPELLANT AND IN THIS REGARD TH E LD. RE PRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER PASSED BY THE ITAT DELHI I N THE CASE OF MODERN INFO TECHNOLOGY P. LTD. VS. ITO (ITA. NO. 4294/DEL/2012). THE CIT(A) WAS OF THE VIEW THAT THE DISALLOWANCE W AS IN THE PROCESS OF CALCULATING RENT AL INCOME ON DEEMED LET OUT PROPERTY AND DISALLOWANCE WAS COMPUTED ON THE ASHA M SAYANI 7 BASIS OF ANNUAL RENT OF BOTH THE PROPERTIES. WHILE DECIDING THE I SSUE NO. 1 , WE HAVE ARRIVED AT THIS CONCLUSION THAT THE FLAT NO. 1401/02 WERE BEING USED AS A SINGLE UNIT THEREFORE, DISALLOWANCE ON THE BASIS OF NOTIONAL INCOME DOESN T SEE MS JUSTIFIABLE. MOREOVER, THE ASSESSEE DID NOT CLAIM ANY EXPENSES AGAINST THE SAID PROPERTY. THEREFORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) ON THIS ISSUE IS NO T JUSTIFIABLE THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOWED THE EXPENSES. ACCORDINGLY, THIS ISSUE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 11 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14. 0 7 . 2017 SD/ - SD/ - ( RAJENDRA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 14 .07 . 2017 V.P.SINGH / 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