SUNIL PANDURANG MANTRI, MUMBAI V. ACIT , Mumbai

ITA 1799/MUM/2023

AI Insights

The case involves Sunil Pandurang Mantri, who appealed against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2016-17. The primary issues revolved around the classification of the Ambey Valley property as self-occupied, the determination of annual value of properties, disallowance of interest expenditure under section 24(b), and an addition under section 68 related to the sale of a property. The Tribunal found merit in revisiting the classification of the Ambey Valley property and the addition under section 68, while upholding other decisions made by the CIT(A).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299474 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 02-08-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 18-05-2023
• Other Referred Cases: Radha Devi Dalamia vs. 125 ITR 124
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL SAWANT
• Keywords: Sale consideration of property below Jantri Value; Gift; Deemed to accrue or arise in india; Revised return; Set aside
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI NARENDER KUMAR CHOUDHRY, JM ITA No. 1799/Mum/2023 (Assessment Year 2016-17) Sunil Pandu ran g M antri 3&4, Kam al Co-op. Societ y, W alkeshwa r Road, W alkeshwa r, Mum bai-400006 Vs. ACIT Aaykar Bhawan, M.K. Road, Mumbai-400020 (Appellant) (Respondent) PAN No. ABNPM4825D Assessee by : Shri. Abhishek Jhunjhunwala Revenue by : Shri. Swapnil Sawant Date of hearing: 03.08.2023 Date of pronouncement : 13.10.2023 O R D E R PER PRASHANT MAHARISHI, AM: 01. ITA No. 1799/Mum/2023 is filed by Shri Sunil Pandurang Mantri (the Assessee/Appellant) against the appellate order passed by the Learned Commissioner of Income Tax (Appeals)-3, National Faceless Appeal Center, Delhi [herein after referred as “the CIT(A)”] dated 21.04.2023 for A.Y. 2016-17 wherein the appeal filed by the assessee against the assessment order passed u/s 143(3) of the Income Tax Act, 1961 [herein after referred as “the Act”] Page | 2 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri dated 28.12.2018 passed by the Assistant Commissioner of Income Tax, Circle-1(3)(1), Mumbai [herein after referred as “the AO”] was partly allowed. The assessee is aggrieved and has preferred appeal before us. 02. Facts culled out from records shows that assessee is an individual, filed his return of income [ ROI] on 05.08.2016 at loss of ₹23,68,320/-. This ROI was selected for scrutiny. The AO noted that the assessee is holding the position of director of companies engaged in the real estate business. The assessee has shown loss from income from house property and income from other sources. The Ld. AO noted that as per the balance sheet as at 31.03.2015 the assessee was having four properties, one of the properties is at Ambey Valley. The assessee has shown annual value for deemed late out property at 5% of actual cost of acquisition. From the above sum, the assessee has deducted interest on loan of ₹37,27,616/- and accordingly the claimed loss of ₹26,12,517/-. The AO questioned the assessee and Page | 3 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri as mentioned by the AO that assessee’s representative as per the letter dated 15.12.2018 filed revised computation of income in which the assessee intended to withdraw claim of self- occupied property at Ambey Valley, Lonavala. The AO held that the assessee has not shown deemed rent as per the law of that property and as well as the assessee is having one more flat in Mantri park Bloom 1604 for which the assessee has not declared any annual value. Accordingly, the AO as per the provision of section 23 following the decision of Allahabad High Court in the case of Radha Devi Dalamia 125 ITR 124 determined annual value at the rate of 7% of investment in property. The investment in the Ambey Valley house is ₹ 9,10,52,000/-. Further for flat in Mantri Park Bloom 1604 the cost was Rs. 54,40,231/- and accordingly on the total cost of house property of ₹9,64,92,231/- annual value was determined at the rate of 7% amounting to ₹ 67,54,456/-. The deduction at the rate of 30% for repairs was allowed and income from house property was assessed at ₹47,28,119/-. The Page | 4 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri assessee has also claimed deduction u/s 24(b) of the Act of ₹37,26,616/- against the deemed rental income of Ambey Valley property as originally the assessee treated the same premises as self occupied and therefore the annual would be nil. The assessee was asked to provide proof regarding interest on loan from property, in response to that the assessee submitted that originally the interest paid of ₹ 37,27,616/- was claimed as deduction against the income from house property of Ambey Valley but now as assessee withdrawing the income offered and claiming that property as self occupied property, thus requested considering the deduction of house loan to the extent to ₹ 2 lacs only The AO stated that for A.Y. 2015-16 identical issue was considered wherein the loan was stated to be of two different types, one is home loan and another is loan against the property and therefore the proportionate interest was allowed, on the similar basis The AO allowed the interest proportionately and disallowed the balance interest paid of ₹ 22,58,936/- Page | 5 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri 03. The AO further noted that the assessee has gifted flat at Kamal Housing Society of Rs 29.46 Crore to his son and daughter. The gift was registered on 04.05.2015. The assessee was asked to show from the books of account of son and daughter , whether deemed income from house property has been offered for tax by them. The assessee submitted that property is jointly owned by assessee with his wife and deemed rental income of ₹ 1,20,000/- is offered in the return of income of his daughter. The Ld. AO held that gift deed was registered in the month of May 2015 and therefore for 2 months the assessee is required to offer income from housing property, he determined value of property by applying 7% rate and determined income for 2 months at ₹ 34,37,642/-. He granted the deduction at the rate 30% for repairs and taxed income of ₹ 24,06,349/- under income from house property. 04. The AO further found that the assessee has sold property being flat at Mantri Park Bloom 1601 for ₹ 78 lacs, but in ROI sales consideration was shown at Page | 6 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri Rs. 11540800/- , the market value of that is ₹ 94,43,000/- and therefore the difference of ₹20,97,800/- according to the AO should be taxed u/s 68 of the Act. The assessee submitted that there is error in filling of return of income originally where ₹1,15,40,800/- was taken as sale consideration. However, the property was sold for ₹78 lacs as per the agreement to sale dated 28.04.2015. Reason was stated by assessee that assessee has sold the property below the market price, as the market condition of real estate section was not good. The Ld. AO rejected the contention of the assessee and said that it does not satisfy the condition laid down u/s 50C of the Act, as the assessee did not furnish any valuation report or proof of the fair market value of the property. Therefore, he made an addition of difference between actual sale value of ₹1,15,40,800/- and market value of the property of ₹ 94,43,000/- u/s 68 of the Act amounting to ₹ 20,97,800/-. Page | 7 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri 05. The total income of the assessee was computed at ₹83,22,370/- as per Assessment order dated 28.12.2018 passed u/s 143(3) of the Act against the loss of ₹ 24,68,320/-. 06. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) a. Upheld the determination of the annual value of properties at 7% of the cost of property following the decision of co-ordinate bench in assessee’s own case for A.Y. 2009-10 and 2010-11. b. With respect to the claim of the assessee to consider the Ambey Valley property as self-occupied property with effect from 13.05.2015 the same was allowed. c. With respect to the deemed annual value of flat no. 1604, he deleted the addition of annual value holding that occupancy certificate is not available and same issue is decided in favour of the assessee for assessment year 2015-16. d. On the issue of disallowance of interest expenditure u/s 24(b) of the Act against the claim of the Page | 8 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri assessee of ₹ 37,27,616 allowed as deduction by the AO to the extent of ₹ 14,68,680/- the same was dismissed. e. With respect to the addition u/s 68 of the Act, he held that the claimed of the lower sale value of property at ₹ 78 lacs against consideration was stated in the original return of ₹ 1,15,40,800/-. He held that as the claim was made in the assessment proceedings and not by filling by a revised return it was not admissible. 07. Accordingly, the appellate order was passed on 21.04.2023 against which the assessee is aggrieved. 08. Though the assessee has raised three grounds of appeal but during the course of hearing, the assessee did not press the ground no. 2 against the interest disallowance. Therefore, ground 2 is dismissed. 09. The first ground of appeal is to consider the Ambey Valley property as self-occupied property. We find that the Ld. AO did not consider the claim of the Page | 9 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri assessee as it was not made in the original return of income and Ld. CIT(A) denied the claim as the claim was made during the assessment proceedings and not part of the return of income. After hearing the parties, we find that during the course of assessment proceedings the assessee has revised computation of income where by the claim of the assessee was changed by withdrawing the amount offered under the income of house property and claiming Ambey Valley property as self-occupied property. The Ld. AO held that as there was no claim by filling revised income, it was not entertained. On appeal before ld. CIT (A) the issue arose about allowbility of same claim but in Para 7.2, the Ld. CIT(A) has held that the ground no. 1 of the appeal of the assessee is partly allowed. Ground no. 1.1 and 1.2 are with respect to considering Ambey Valley property as self occupied property and ground no. 1.3 is determining deemed annual value of the house property at the rate of 7%. The Ld. CIT(A) has upheld that the 7% of cost of property as annual value taxable u/s 23 , against the assessee and therefore only others Page | 10 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri ground are 1.1 and 1.2 which are allowed by him. However, there is no reason given by him. Therefore, we restore ground no. 1 of the appeal back to the file of Ld. CIT(A) to give clear cut reason and finding that whether the claim of the assessee of considering Ambey Valley property as self-occupied property u/s 23(2) of the Act is allowable or not. While deciding so the ld. CIT(A) may also give opportunity of hearing to the assessee as well as the AO on the issue. Accordingly, the ground no.1 is allowed with above direction. 010. Ground no.3 is with respect to addition u/s 68 of the Act of ₹20,97,500/-, claim of the assessee is that in the original return of income sale consideration was wrongly shown of ₹150,40,800/- whereas it is claimed by the assessee that property is sold at ₹ 78 lacs only , the market value of the property was stated to be ₹ 94,43,000/-. Before us, the assessee has also not submitted any evidence that how the sale consideration of Rs.1.15 crore was mentioned originally. However, the sale agreement produced Page | 11 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri before us along with the revised computation shows that the sale consideration of the flat as Rs. 78 lacs whereas market value of flat is Rs. 94,43,000/-. In view of this, we set aside this issue to the file of the Ld. CIT(A) also where the assessee is directed to substantiate that actual sale consideration received in his books of account is only ₹ 78 lacs and there is no credit of ₹ 1,15,00,000/- as mentioned in the computation of total income filed with original return of income and thus there cannot be any addition u/s 68 of the Act as above sum was not mentioned in books of account. Accordingly, the ground no.3 of the appeal is allowed with above direction. 011. In the result the appeal filed by the assessee is partly allowed for statistical purposes Order pronounced in the open court on 13.10.2023. Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated:13.10.2023 Aniket Singh Rajput/Stenographer Copy of the Order forwarded to : BY ORDER, Page | 12 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai Page | 13 ITA No.1799/Mum/2023 A.Y.2016-17 Sunil Pandurang Mantri Sr. No. Particulars Date Initials Person concern ed 1 Draft dictated Sr.PS 2 Draft placed before author Sr.PS 3 Draft proposed & placed before the second Member AM 4 Draft discussed/approved by Second Member AM 5 Approved Draft comes to the Sr.PS/PS Sr.PS 6 Kept for pronouncement on Sr.PS 7 File sent to the Bench Clerk Sr.PS 8 Date on which file goes to the Head Clerk 9 Date of dispatch of Order 10 Dictation Sheet is attached herewith