DCIT 1(2), MUMBAI V. SUDHEER OMPRAKASH BAHL, MUMBAI

ITA 1839/MUM/2013

• Counselvise Citation: 183919914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 17-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: M SUBRAMANIYAM
• Keywords: Notional interest

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 18 39 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 9 - 10 ) DCIT - 1(2) , MUMBAI VS. SHRI SUDHEER OMPRAKASH BAHL, 41 - B, JOLLY MAKER APARTMENT - 1, CUFFE PARADE, MUMBAI - 400005 ./ ./ PAN/GIR NO. : A A MPB 8549 F ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI B.YADAGIRI /ASSESSEE BY : SHRI M.SUBRAMANIYAM / DATE OF HEARING : 1 7 /0 6 / 2015 / DATE OF PRONOUNCEMENT 17 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 2 , MUMBAI , DATED 3 - 12 - 2012 FOR THE ASSESSMENT YEAR 200 9 - 10 IN THE MATTER ORDER PASSED U/S. 250 (6) OF THE I.T.ACT , WHEREIN THE ASSESSEE TAKEN FOLLOWING GROUNDS : - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CI T (A) ERRED IN HOLDING THAT FAIR RENT DETERMINED BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH SECTION 23(1 )(A) OF THE ACT, WHEN THE FACTS AND CIRCUMSTANCES INDICATE OTHERWISE ON THE BASIS OF SUBSTANTIAL EVIDENCE BROUGHT ON RECORD?' 2. ' WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE 'AN . IN LAW, THE LD CIT(A) WAS RIGHT IN APPLYING THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBH A 333 ITR (DEL) EVEN THOUGH THE FACTS BROUGHT OUT ON RECORD SUGGESTS EXTRANEOUS REASONS FOR DEFLATED RENT IS IN CONFORMITY WITH THE OBSERVATION OF HON'BLE ITA NO. 18 39 /1 3 2 SUPREME COURT IN THE CASE OF CORPORATION OF CALCUTTA VS SMT. PADMA DEBI AIR 1962 SUPREME COURT 151?'. 3. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE AND APPLY THE LAW LAID DOWN BY(P & H) HIGH COURT REPORTED IN 244 CTR 647 (2011) IN THE CASE OF CIT VS K.STREETLITE ELECTRIC CORPORATION WHICH HA S UPHELD THE DETERMINATION OF ANNUAL VALUE ON THE BASIS OF INTEREST FREE DEPOSITS?'. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT T HE ASSESSEE IS THE OWNER OF 'FLAT NO. 91 - B, MAKER TOWERS - A&B, CO - OP. HSG. SOCIETY LTD., CUFFE PARADE, COLABA, MUMBAI - 5. THE AREA OF THE FLAT IS 3000 SQ. FT. THE ASSESSEE VIDE LEAVE AND LICENSE AGREEMENT DATED 11.03.2006 LET OUT THE FLAT TO ABN AMRO BANK ON A MONTHLY RENT OF RS.15,250/ - AND INTEREST FREE DEPOSIT OF RS.3.15 CRORES. THE ASSESSEE HAD DISCLOSED ANNUAL RENTAL VALUE OF THE SAID FLAT U/ S 23 OF THE I.T. ACT AT RS.1,83,000/ - . THE AO DETERMINED THE ANNUAL VALUE OF THE FLAT OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 23(1)(A) OF THE I.T.ACT. THE AO OBSERVED THAT THE REASONABLE RENT A S MENTIONED IN SECTION 23(1)(A) WAS RENT WHICH A PROPERTY CAN FETCH IN AN OPEN MARKET AND THE RENT WAS FIXED BETWEEN THE LANDLORD AND THE TENANT WHEREIN NO EXTRANEOUS CONSIDERATION WAS PRESENT. I T WAS HELD BY THE A O THAT ANNUAL VALUE OF RS.1,83, 000/ - DISCL OSED BY THE ASSESSEE FROM LETTING OF HIS FLAT 91 - B IN MAKERS TOWER A&B, DOES NOT REPRESENT THE REASONABLY EXPECTED RENT AS PROVIDED UNDER THE PROVISIONS OF SECTION 23(1)(A) OF THE INCOME - TAX ACT. AFTER TAKING INTO CONSIDERATION, THE RENTS FETCHED BY IDENTI CAL FLATS IN THE SAME BUILDING AND THE FACT THAT SOME OF THE INSTANCES DO NOT PERTAIN TO THE YEAR RELEVANT TO THE A. YR.2009 - 10, THE ANNUAL VALUE OF THE SAID FLAT WAS ITA NO. 18 39 /1 3 3 DETERMINED BY THE A O BASED UPON THE RENT @ RS.152.38 PER SQ. FT. PER MONTH I. E. RS.54,85, 680 / - . 3. BY THE IMPUGNED ORDER, THE CIT(A) DIRECTED THE AO TO DETERMINE THE ALV BY TAKING THE FAIR RENT AT RS. 33,600/ - PER MON TH (20% INCREASE OF RS.28,000/ - TAKEN FOR ASSESSMENT YEAR 2005 - 06 ) . THE PRECISE OBSERVATION OF THE CIT(A) ARE AS UNDER : - 2.29. I HAVE GONE THROUGH THE ISSUE. THE HON'BLE ITAT IN THEIR ORDER DATED 18.11.2011 IN THE APPELLANT'S CASE FOR A. YR. 1999 - 2000 TO 2002 - 03 AND 2005 - 06 HAVE STATED IN PARAS 4 & 5 OF THE ORDER AS FOLLOWS: '4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND A LSO PERUSED THE RELEVANT MATTER ON RECORD. THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE CITED VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE INVOLVED IN THESE APPEALS IN SUPPORT OF THEIR RESPECTIVE STAND. IT IS, HOWEVER, OBSERVED THAT IN THE DECISION R ECENTLY DELIVERED IN THE CASE OF THE CIT VS. MONI KUMAR SUBBA 333 ITR 38 [DEL.], THE FULL BENCH OF HON'BLE DELHI HIG H COU RT HAS CONSIDERED AND DECIDED A SIMILAR ISSUE AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT ASPECTS OF THE MATTER INCLUDING THE VARI OUS JUDICIAL PRONOUNCEMENTS RELEVANT THERETO. AS HELD BY THE FULL BENCH OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA), THE NOTIONAL INTEREST ON THE INTEREST FREE SECURITY DEPOSIT CANNOT BE TAKEN AS DETERMINATIVE FACTOR TO ARRIVE A T THE FAIR RENT AND SECTION 23(1)(A) DOES NOT MANDATE THIS. IT WAS HELD THAT SECTION 23(1)(A) REQUIRES DETERMINATION OF THE 'FAIR RENT' BEING 'THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLE BE EXPECTED TO LET FROM YEAR TO YEAR' AND THE AO HAS TO MAKE ENQU IRY AS TO WHAT WOULD BE THE POSSIBLE RENT THAT THE PROPERTY MIGHT FETCH. IT WAS HELD THAT THE A O CAN IGNORE THE MUNICIPAL VALUATION FOR DETERMINING THE ALV IF HE FINDS THAT THE SAME IS NOT BASED ON RELEVANT MATERIAL FOR DETERMINING THE 'FAIR RENT' IN THE M ARKET AND THERE IS SUFFICIENT MATERIAL ON RECORD FOR TAKING A DIFFERENT VALUATION. IN THE PRESENT CASE, ALTHOUGH SUCH RELEVANT MATERIAL IN. THE FORM OF COMPARABLE INSTANCES OF RENT IN THE SIMILAR LOCALITY WAS COLLECTED BY THE AO BY MAKING THE ENQUIRIES, HE PROCEEDED TO ADOPT THE FAIR RENT OF ASSESSEE'S PROPERTY AT RS.2, 50, 000/ - PER MONTH BY TAKING INTO CONSIDERATION MAINLY THE NOTIONAL INTEREST ON THE INTEREST FREE DEPOSIT WHICH, IN OUR OPINION, WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 23(1)(A ) AS HELD BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA). THE LEARNED CIT(APPEALS), ON THE OTHER HAND, EXAMINED THE MATERIAL GATHERED BY THE A O IN ITA NO. 18 39 /1 3 4 THE FORM OF COMPARABLE INSTANCES AND FOUND ON SUCH EXAMINATION THAT ONE OF SUCH COMP ARABLE CASES, NAMELY, POONAM K ROHIRA AND GAURI KAPOO WAS THE CLOSEST TO THE CASE OF THE ASSESSEE. IN THE SAID CASE, DEPOSIT TAKEN WAS RS.2.S CRORES AND RENT RECEIVED WAS RS.27,902/ - PER MONTH AS AGAINST DEPOSIT OF RS.2.24 CRORES TAKEN BY THE ASSESSEE AND RENT OF RS.23, 000 /- PER MONTH. O N THE BASIS OF THE SAID COMPARABLE CASE, THE FAIR RENT OF THE ASSESSEE'S PROPERTY WAS DETERMINED BY THE LEARNED CIT(APPEALS) AT RS.28, 000 / - PER MONTH FOR ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03 WHICH, IN OUR OPINION, IS IN CON SONANCE WITH THE RATIO LAID DOWN BY THE FULL BENCH OF HON'BLE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA). WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE LEARNED CIT(APPEALS) RELYING ON THE ORDER OF HIS PREDECESSOR DATED 30 - 04 - 2007 TO DIRECT THE AO TO ADOPT THE ALV OF THE ASSESSEE'S PROPERTY FOR ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03 ON THE BASIS OF FAIR RENT OF RS.28,000/ - PER MONTH AS AGAINST RS.23, 000/ - SHOWN BY THE ASSESSEE AND RS.2, 50,000/ - TAKEN BY THE A O . THE APPEALS OF T HE REVENUE FOR ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03 ARE ACCORDINGLY DISMISSED. 5. IN SO FAR AS ASSESSMENT YEAR 2005 - 06 IS CONCERNED, IT IS OBSERVED THAT THE LEARNED CIT (APPEALS), HOWEVER, HAS TAKEN A DIFFERENT STAND BY DIRECTING THE A O TO DETERMINE THE ALV OF THE ASSESSEE'S PROPERTY ON THE BASIS OF RENT OF RS. 15 , 000/ - PER MONTH ACTUALLY RECEIVED. AS ALREADY HELD BY US WHILE DISPOSING OF THE REVENUE'S APPEALS FOR ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03, THE ALV OF THE ASESSEE'S PROPERTY WAS CORRECTLY DETERM INED BY THE LEARNED CIT(APPEALS) BY TAKING FAIR RENT OF RS.28,000 / - PER MONTH ON THE BASI S OF MATERIAL GATHERED BY THE AO IN THE FORM OF COMPARABLE INSTANCES OF RENT RECEIVED FOR THE SIMILAR PROPERTY IN THE SAME LOCALITY. FOLLOWING OUR DECISION RENDERED IN ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03, WE MODIFY THE IMPUGNED ORDER OF THE LEARNED CL T(APPEAIS) FOR ASSESSMENT YEAR 2005 - 06 AND DIRECT THE AO TO DETERMINE THE AL V OF THE ASSESSEE'S PROPERTY BY TAKING THE FAIR RENT AT RS.28, 000 / - PER MONTH. THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005 - 06 IS THUS PARTLY ALLOWED. 2.30. THE FACTS ARE ALMOST IDENTICAL AS IN EARLIER ASSESSMENT YEARS, WHICH ARE CONSIDERED BY THE HON'BIE ITAT. THE HON'BLE ITAT DIRECTED THE A O TO DETERMINE THE ALV BY TAKING THE FAIR RENT A T RS.28, 000/ - PER MONTH FOR A.YR. 2005 - 06. NOW FOUR YEARS HAVE PASSED. IN VIEW OF THIS, I DIRECT THE A O TO DETERMINE THE ALV BY TAKING THE FAIR RENT AT RS.33,600/ - PER MONTH (2 0% INCREASE OF RS.28,000/ - ) FOR THIS A. YR. 2009 - 10. ITA NO. 18 39 /1 3 5 4. WE HAVE CONSIDERED RIVA L CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1999 - 2000 TO 2002 - 03 AND THE ASSESSMENT YEAR 2005 - 06 VIDE ORDER DATED 18 - 11 - 2011. AS THE FACTS AND CIRCUMSTANCES OF THE CASE ARE SAME , THE CIT(A) HAD TAKEN THE MONTHLY RENT OF RS. 28,000/ - AS TAKEN BY THE TRIBUNAL IN THE A.Y.2005 - 06 AND THEREAFTER INCREASED IT BY 20% AND THUS COMPUTED ALV AT RS. 33,6000/ - PER MONTH. R ESPECTFUL LY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 5 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 17 /06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 17 /06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWAR DED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//