SALE MOHAMMMED PADAMSEE & CO, MUMBAI V. ITO 20(3)(2), MUMBAI

ITA 1863/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0446 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Keywords: Business income

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.1863/MUM/2017 : ASST.YEAR 2011-2012 M/S. SALE MOHAMMED PADAMSEE &CO. 13 NEW INDIA INDUSTRIAL ESTATE MAHAKALI CAVES ROAD ANDHERI (EAST), MUMBAI 400 093. PAN : ABVFS7235F. / VS. THE INCOME TAX OFFICER WARD 20(3)(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : --- NONE --- /RESPONDENT BY : SHRI SUMIT KUMAR / DATE OF HEARING : 01.06.2017 / DATE OF PRONOUNCEMENT : 07.08.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 10.11.2016 AND PERTAINS TO ASSESSMENT YEAR 2011-2012. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.3,08,904/- SAID TO HAVE BEEN CLAIMED AS WATER CHARGES AGAINST PROPERTY INCOME UNDER S.24 OF THE ACT. THE ADDITION OF RS.3,08,904/- BEING WITHOUT JURISDICTION BE DELETED. 2. THE APPELLANT CRAVES / LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. IN THIS CASE THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DISCLOSED INCOME OF RS.39,984 AND CLAIMED THE WATER CHARGES OF ITA NO.1863/MUM/2017. M/S.SALE MOHAMMED PADAMSEE & CO. 2 RS.3,08,904 AND PROPERTY TAX OF RS.50,488. A.O. OBSERVED THAT AS THE WATER TAX IS NOT AN ALLOWABLE AS DEDUCTION THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. FURTHER THE ASSESSING OFFICER MADE ADDITION OF INCOME FROM HOUSE PROPERTY BY HOLDING AS UNDER:- FOR AY. 2007-08 AND AY. 2009-10 THE ASSESSEES RENTAL INCOME HAS BEEN TREATED AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME AS CLAIMED BY THE ASSESSEE. THE ASSESSEES APPEAL AGAINST THE SAME HAS SINCE BEEN DISMISSED BY LD.CIT(A) IN BOTH THE ASST.YEARS. BUT THE ASSESSEE HAS CONTESTED APPEAL BEFORE THE ITAT. KEEPING IN VIEW THE CONSISTENT STAND TAKEN BY THE DEPT., INCOME IS TREATED AS HOUSE PROPERTY INCOME. ACCORDINGLY, THE SAME HAS BEEN ADJUSTED INCOME FROM THE HOUSE PROPERTY IN THE HANDS OF THE ASSESSEE AS COMPUTED AS UNDER ON THE BASIS OF THE DISCUSSIONS ON THE FOREGOING PARAGRAPHS. ANNUAL RENT RECEIVED / RECEIVABLE RS.37,65,120 ADD : WATER CHARGES RS. 3,08,904 ------------------- RS.40,74,024 LESS: 30% FOR REPAIRS U/S 24 RS.12,22,207 ------------------ INCOME FROM HOUSE PROPERTY RS.28,51,817 ========== 4. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) NOTED THAT ITAT IN ASSESSEES OWN CASE FOR EARLIER YEARS HAS DELETED THE ADDITION. HENCE LEARNED CIT(A) DELETED THE ADDITION ON ACCOUNT OF ESTIMATED HOUSE RENT. HOWEVER, HE UPHELD THE ADDITION ON ACCOUNT OF DISALLOWANCE OF WATER CHARGES HOLDING THAT THE SAME WERE NOT ALLOWABLE. 5. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE THE ITAT. ITA NO.1863/MUM/2017. M/S.SALE MOHAMMED PADAMSEE & CO. 3 6. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE, HOWEVER, A WRITTEN SUBMISSION HAS BEEN PRODUCED. 7. UPON CAREFUL CONSIDERATION, I NOTE THAT IDENTICAL ADDITION WAS CONSIDERED BY THIS TRIBUNAL IN ITA NO.739/MUM/2013 & 2671/MUM/2013 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-2009 AND 2009-2010.THE ADDITION UNDER CONSIDERATION BY THE TRIBUNAL WAS AS UNDER:- ANNUAL RENT RECEIVED / RECEIVABLE RS.28,23,840 ADD : WATER CHARGES RS. 4,92,982 ------------------- TOTAL RS.33,16,822 LESS : 30% FOR REPAIRS U/S 24 RS. 9,95,047 ------------------- INCOME FROM HOUSE PROPERTY RS.23,21,775 ========== 8. THE TRIBUNAL HAD ADJUDICATED THE ISSUE AND DELETED THE ADDITION AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD AVAILABLE BEFORE US. WE FIND THAT THE RENT FROM THE RENTAL PROPERTIES LOCATED IN KHAR AREA HAVE BEEN SHOWN AT RS.15,808/- AND WATER CHARGES RS.4,94,282/- AND PROPERTY TAX RS.54,532/- WERE CLAIMED IN RESPECT OF THE SAID PROPERTY. THE AO FURTHER OBSERVED THAT THE FIVE FLATS WERE OCCUPIED BY THE PARTNER AND THEIR FAMILY MEMBERS. THE AO ESTIMATED THE RENT IN RESPECT OF RENTED PROPERTY AT RS.30 TO 50 SQ. FT. AND THUS ARRIVED AT NOTIONAL INCOME OF RS. 28,23,840/- WHICH WAS INCREASED BY WATER CHARGES OF RS.4,94,982/- AND FROM THE TOTAL RENTAL CHARGES ALLOWED STANDARD DEDUCTION OF 30% U/S 24 OF THE ACT AND WORKED OUT THE TOTAL INCOME FROM HOUSE PROPERTY AT RS.23.,21,775/- ITA NO.1863/MUM/2017. M/S.SALE MOHAMMED PADAMSEE & CO. 4 WHICH WAS CONFIRMED BY THE ID.CIT(A) ON THE GROUND THAT LOW RENT WAS CHARGED BY THE ASSESSEE FROM THE PARTNERS AND HIS FAMILY MEMBERS. AS IT IS CLEAR FROM THE ABOVE THE AO HAS FAILED TO PROVE/BRING ON RECORD BY ANY COGENT EVIDENCE THAT THE RENT OF COMPARABLE PROPERTIES IN THE VICINITY WHERE THE ASSESSEE'S PROPERTY WAS LOCATED AND WE FIND THAT THE ESTIMATION OF RENT BY AO IS A PURELY GUESS WORK AND BASED ON ESTIMATION, CONJECTURE AND SURMISES, WHICH IN OUR OPINION, CANNOT BE SUSTAINED. WE, THEREFORE, DELETE THE ADDITION BY ALLOWING THE APPEAL OF THE ASSESSEE AND THE AO IS DIRECTED ACCORDINGLY. 9. FROM THE ABOVE, I NOTE THAT THE ADDITION ON ACCOUNT OF WATER CHARGES WAS ALSO DELETED BY THE ITAT. THE LEARNED CIT(A), THEREFORE, HAS ERRED IN PARTLY ACCEPTING THE ITAT ORDER AND PARTLY NOT ACCEPTING THE SAME. IN MY CONSIDERED OPINION, THE TRIBUNAL ORDER ON THE SAME FACTS IN ASSESSEES OWN CASE HAS TO BE FOLLOWED, UNLESS THE SAME HAS BEEN REVERSED BY THE HONBLE JURISDICTIONAL HIGH COURT. IT IS NOT THE CASE OF THE REVENUE THAT THE SAID DECISION OF THE ITAT IN ASSESSEES OWN CASE HAS BEEN REVERSED. SINCE SIMILAR ADDITION HAS BEEN DELETED BY THE ITAT, THERE IS NO REASON WHY SUCH ADDITION SHOULD BE SUSTAINED HERE. ACCORDINGLY, RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, I SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DELETE THE ADDITION. 10. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON THIS 07 TH DAY OF AUGUST, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 07 TH AUGUST, 2017. DEVDAS* ITA NO.1863/MUM/2017. M/S.SALE MOHAMMED PADAMSEE & CO. 5 / COPY OF THE ORDER FORWARDED TO : TRUE COPY / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.