Dy.Comm. of Income-tax, Pune V. Shri Avinash Bhosale, Pune

ITA 1604/PUN/2011

• Counselvise Citation: 160424514 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.1604/PN/2011 (ASSTT. YEAR : 2008-09) DCIT, CIRCLE-3, PUNE. .. APPELLANT VS. SHRI AVINASH BHOSALE, 1, BHOSALE HEIGHTS, FERGUSSON COLLEGE ROAD, SHIVAJI NAGAR, PUNE 411005. PAN: ABTPB8151F .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : MS.ANN KAPTHUAMA DATE OF HEARING : 18.04.2013 DATE OF PRONOUNCEMENT : 29.04.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANC ES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN ALLOWING THE ASSESSEE'S APPEAL INSTEAD OF CONFIRMING THE ASSESSING OFFICER'S ORDER. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' WITHOUT APPRECIATING THAT THE INFORMATION COLLECTED BY THE ASSESSING OFFICER REGARDING THE MARKET RENT PREVAILING IN THE WALKESHWAR AREA IN MUMBAI CLEARLY ESTABLISHED THAT THE RENT SHOWN BY THE ASSESSEE WAS FAR LESS THAN THE REASONA BLE RENT WHICH A SIMILAR PROPERTY WOULD FETCH AND, THEREFORE , THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED IN ADOPTI NG ANNUAL VALUE OF THE PROPERTY AS PER THE MARKET RENT. 2 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THAT THE ANNUAL RATEABLE VALUE ADO PTED BY THE MUNICIPAL AUTHORITIES SHOULD BE THE DETERMINING FAC TOR FOR APPLYING THE PROVISION OF SEC. 23(1)(A) OF THE INCO ME-TAX ACT, 1961; AND THAT WHEN THE RENT RECEIVED BY THE ASSESS EE IS MORE THAN THE ANNUAL RATEABLE VALUE, THE ACTUAL RENT REC EIVED SHOULD BE TAKEN AS THE ANNUAL VALUE U/S. 23(1)(B). 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT THERE IS NOTHIN G IN SECTION 23(1)(A) WHICH INDICATES THAT ANNUAL VALUE THEREUND ER SHOULD BE THE MUNICIPAL RATEABLE VALUE; AND, ON THE CONTRA RY, THIS PROVISION CLEARLY SHOWS THAT ANNUAL VALUE IS NOT DISTINGUISHABLE FROM MARKET VALUE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN RESTRICTING THE DISALLOWANCE MADE BY THE A SSESSING OFFICER ON ACCOUNT OF THE ASSESSEE'S CLAIM TOWARDS EXPENSES IN RESPECT OF HELICOPTER ONLY TO 1/7 TH OF SUCH CLAIM, AS HAD BEEN PLEADED BY THE ASSESSEE, WITHOUT IN ANY MANNER APPR ECIATING THAT FROM THE PERUSAL OF THE LOG BOOK, USE OF HELIC OPTER COULD NOT BE SPECIFICALLY DETERMINED IN RESPECT OF BUSINE SS PURPOSES ONLY, AND THE ASSESSEE BY CONSENTING TO A DISALLOWA NCE, EVEN IF TO 1/7 TH OF HIS CLAIM, HAD ADMITTED THIS FACT. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT THE ASSESSEE HA D PLEADED FOR RESTRICTING THE DISALLOWANCE OF HIS CLAIM TO 1/7 TH OF THE TOTAL CLAIM ONLY BY MAKING REFERENCE TO PAST ASSESSMENT O RDERS AND NOT ON THE BASIS OF ANY FACTS OR EVIDENCES PERTAINI NG TO THE USER OF THE HELICOPTER DURING THE RELEVANT PREVIOUS YEAR. 2. THE FIRST ISSUE IS WITH REGARD TO THE ADDITION M ADE BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY ESTIMATING THE ANNUAL VALUE OF THE PROPERTY AT WALK ESHWAR, MUMBAI AT RS.30,00,000/- AS AGAINST THE ACTUAL RENT RECEIVED BY THE ASSESSEE AT RS.1,15,000/-. AT THE OUTSET OF HE ARING IT WAS POINTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.823/PN/2011 FOR A.Y. 2007-08 WHEREIN THE TRIBUNA L HAS UPHELD THE ORDER OF THE CIT(A) WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE, ON SIMILAR ISSUE BY OBSERVING AS UNDER: 2. GROUND NOS. 1 & 2 ARE GENERAL IN NATURE. GROUN D NOS. 3 TO 6 ARE IN RESPECT OF ISSUE OF DETERMINING THE ANNUAL LETTING VALUE (ALV) OF THE ASSESSEES FLAT I N THE WALKESHWAR, MUMBAI. 3 3. THE FACTS AS NOTED BY THE AUTHORITIES BELOW ARE AS UNDER. THE ASSESSEE IS AN INDIVIDUAL HAVING FLAT AT WALKESHWAR IN MUMBAI. THE AREA OF FLAT IS 1169 SQ. FT. WHICH IS LET OUT ON RENT TO ASSESSEES ASSOCIATE CO NCERN M/S. AVINASH CONSTRUCTION. THE ASSESSEE CLAIMED T HAT THE ACTUAL RENT RECEIVED IN RESPECT OF THE SAID FL AT IS 1,15,000/-. THE ASSESSEE ALSO CLAIMED DEDUCTION A T 30% TOWARDS REPAIRS AND COLLECTION CHARGES AND DECLARED THE NET RENTAL INCOME AT RS. 80,500/-. IN THE OPINION OF THE A.O, THE ANNUAL VALUE OF THE PROPERTY WAS REQUIRED TO BE DETERMINED U/S. 23(1)(A) OF THE ACT. FOR GETTING T HE INFORMATION ON RENT, THE A.O USED ONE WEB SITE TO FIND OUT RENT FOR THE DIFFERENT SIZES OF THE FLAT IN SAI D AREA.. AFTER CONSIDERING THE OBJECTION OF THE ASSESSEE AN D RELYING ON THE WEB SITE RESULTS, ADOPTED THE ANNUAL VALUE (ALV) OF THE FLAT AT RS. 30,00,000/- I.E. TAKING TH E RENT AT RS. 2,50,000/- PER MONTH OF THE SAID FLAT AS A MARK ET RENT. THE ASSESSEE RESISTED THE ACTION OF THE A.O BY CHALLENGING THE ANNUAL VALUE DETERMINED BY THE A.O U/S. 23(1)(A) OF THE ACT. THE LD CIT(A) CONSIDERING THE DECISION OF THE ITAT, PUNE BENCH IN THE ASSESSEES OWN CASE ON THE ISSUE OF THE DETERMINATION OF THE ALV O F THE ASSESSEES FLAT FOR THE A.Y. 2005-06, ALLOWED THE G ROUND TAKEN BY THE ASSESSEE. NOW BEING AGGRIEVED, THE RE VENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. WE FIND THAT IDENTIC AL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSE SSEES OWN CASE FOR THE A.Y. 2005-06 IN THE APPEAL FILED BY THE REVENUE BEING ITA NO. 1524/PN/2008, ORDER DATED 24 TH SEPTEMBER 2010. THE OPERATIVE PART OF THE ORDER OF THE TRIBUNAL READS AS UNDER : 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS PAPER BOOK FILED BEFORE US AND COPIES OF TH E DECISIONS FILED BEFORE US. UNDISPUTEDLY, THIS IS T HE CASE, WHERE THE PROPERTY IS LET TO THE SISTER CONCE RN FOR RENT AND THEREFORE, CLAUSE (B) OF SECTION 23(1) APPLY TO THE CASE. AO HAS NOT MADE OUT A CASE THAT THE CASE FALL IN THE EXEMPTED CASES OF MAHARASHTRA RENT CONTROL ACT, 1999. THE PROVISIONS OF CLAUSE ( B) OF SECTION 23 ARE AS UNDER : 23(1) ANNUAL VALUE HOW DETERMINED SUBSECTION (1) FOR THE PURPOSE OF SECTION 22, THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE , (A)THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B)WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE 4 OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE. CLAUSE (B) REFERS TO A PROPERTY, WHICH ARE LET, ANN UAL VALUE OF A PROPERTY DETERMINED UNDER SECTION 23 SHALL BE ADOPTED FOR COMPUTING THE INCOME FROM PROPERTY IN TERMS OF SECTION 22. THE ANNUAL VALUE DETERMINATION SHALL BE STRICTLY IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 23 AS UPHELD BY THE CO-ORDINATE BENCH IN THE CASE OF DELITE ENTERPRISES (P) LTD V. ITO [2008] 22 SOT 245(MUM). ACCORDINGLY, WHERE THE RENT CONTROL ACT IS APPLICAB LE ONLY THE STANDARD RENT IS TO BE TAKEN AS THE ANNUA L LETTING VALUE. IN THE ABSENCE OF STANDARD RENT THE MUNICIPAL RATABLE VALUE IS TO BE TAKEN. WHERE THE MUNICIPAL RATABLE VALUE OF RENT IS LESS THAN ACTUAL RENT, THE ACTUAL RENT SHALL BE FAIR RENTAL VALUE FO R COMPUTING INCOME FROM HOUSE PROPERTY. HOWEVER, IT IS THE DECISION OF THE CO-ORDINATE BENCH IN THE CAS E OF MAKRUPA CHEMICALS (P) LTD [2007] 108 ITD 95/12 SOT 68(MUM) THAT THE STANDARD RENT IS THE UPPER LIMIT FOR DETERMINING THE ANNUAL VALUE. THE ABOVE SYNOPSIS GOES WELL WITH THE DECISIONS OF THE APEX COURT IN THE CASE OF DEWAN DAULAT RAJ KAPOOR (SUPRA) AND ALSO APEX COURT JUDGMENT IN THE CASE OF DR BALBIR SINGH AND OTHERS (SUPRA) FOR THE PROPOSITION THAT THE RATABLE VALUE DETERMINED BY TH E MUNICIPAL AUTHORITY IS BINDING UNLESS THE STANDARD RENT IS HIGHER. II. IN THE LIGHT OF THE ABOVE LEGAL POSITION WE HAV E EXAMINED THE FACTS OF THE INSTANT CASE. THE ASSESSE E HAS LET OUT SPACE TO THE SISTER CONCERN, WHICH IS UNDISPUTED FACT AND IS RECEIVING RS. 10,000/- PER MONTH FROM EACH SISTER CONCERN. THEREFORE, THE ASSESSEES PROPERTY IS COVERED BY PROVISIONS OF CLAUSE (B) OF SECTION 23(1). THIS IS A FACT THAT ASSESSEES ACTUALLY RENT RECEIVED OR RECEIVABLE IN RESPECT OF THE SAID PROPERTY IS NOT IN EXCESS OF TH E ALV COMPUTED UNDER CLAUSE (A) OF SECTION 23(1). I N THE LIGHT OF THESE FACTS, AOS DECISION TO INVOKE A COMPARABLE CASE TO THE PROPERTY COVERED UNDER CLAUSE (B) IS NOT IN TUNE WITH THE ABOVE REFERRED LEGAL POSITION. FURTHER, IT IS NOT ALSO THE CASE OF THE AO THAT ASSESSEE IS COVERED BY THE EXEMPTIONS PROVIDED IN THE MAHARASHTRA RENT CONTROL ACT AND, THEREFORE, ALV OF THE PROPERTY SHALL BE DETERMINED ON THE BASI S OF THE COMPARABLE CASES. IN ANY CASE, THE STANDARD RENT IS UPPER LIMIT FOR DETERMINATION THE ALV HAS HELD IN THE CASE OF MAKRUPA CHEMICALS PVT LTD (SUPRA). THEREFORE, WE ARE OF THE OPINION THAT THE 5 ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERE NCE. 22. THUS, IT IS NOT THE CASE OF THE REVENUE THAT THE ALV DETERMINED BY THE ASSESSEE IS LESS THAN THE STANDARD RENT. CONSIDERING THE ABOVE FACTUAL AND LEGAL POSITION IS FORCE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERE NCE FOR THE ABOVE REASONS. ACCORDINGLY, GROUND 1 OF TH E REVENUE IS DISMISSED. 5. AS THE FACTS ARE IDENTICAL IN THIS YEAR, WE HAV E NO REASON TO TAKE DIFFERENT VIEW ON THE ISSUE ON THE A LV TO BE DETERMINED U/S. 23(1)(A) OF THE ACT. WE FIND NO IN FIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY , THE SAME IS CONFIRMED. IN THE RESULT, GROUND NOS. 3 TO 6 ARE DISMISSED. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FAC TS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE UPHOLD THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BECAUSE ALV TO BE DETERMINED U/S.23(1)(A) OF THE ACT. 3. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF 1/5 TH OF TOTAL EXPENDITURE ON HELICOPTER INSTEAD OF 1/7 TH AS DONE IN EARLIER YEAR I.E., A.Y. 2005-06. THIS ISSUE IS COVERED IN FAVOU R OF ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1425/PN/08 FOR A.Y. 2005-06 WHEREIN THE TRIBUNAL HELD THAT THE OFFER OF THE ASSESSEE TO RESTRICT THE DISALLOWANCE TO 1/7 TH OF THE CLAIM IN RESPECT OF HELICOPTER IS FAIR AND REASONABLE, BY OBSERVING AS UNDER: 14. IN VIEW OF THE EXISTENCE OF THE PUNE BENCH D ECISION, WHICH IS BINDING, WE ARE OF THE OPINION, THAT THE OFFER OF THE ASSESSEE TO RESTRICT THE DISALLOWANCE TO 1/7 TH OF THE CLAIMS IN RESPECT OF BOTH BELL HELICOPTOR AND THE CESSNA AIRC RAFT, IS REASONABLE AND FAIR. ACCORDINGLY, THE AO IS DIRECTE D. THUS, THE ORIGINAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED . 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 1/7 TH OF THE CLAIM IN RESPECT OF HELICOPTER. 6 5. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF APRIL, 2013. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 29 TH APRIL, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CIRCLE-1(2), PUNE. 3. THE CIT(A)-I, PUNE. 4. THE CIT-I, PUNE. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.