ITO, Ward-3(1)(2), Ahmedabad V. M/s. PASL Windtech Pvt. Ltd., Ahmedabad

ITA 1960/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5780 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 1960/AHD/2016 (ASSESSMENT YEAR : 2012-13) INCOME TAX OFFICER, WARD 3(1)(2), AHMEDABAD A PPELLANT VS. M/S. PASL WINDTECH PVT. LTD., PLOT NO.37B, PHASE 1, GIDC, VATVA, AHMEDABAD-382445 RESPONDENT PAN: AABCA3022G / BY REVENUE : SHRI PRASOON KABRA, SR. D.R. / BY ASSESSEE : SHRI BANDISH SOPARKAR, A.R. /DATE OF HEARING : 22.03.2018 /DATE OF PRONOUNCEMENT : 28.03.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 AR ISES FROM THE CIT(A)-9, AHMEDABADS ORDER DATED 20.05.2016, IN CAS E NO. CIT(A)- 9/39/ITO.WD.3(1)(2)/15-16, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 1960/AHD/16 [ITO VS. M/S. PASL WINDTECH PV T. LTD. ] A.Y. 2012-13 - 2 - 2. THE REVENUES FIRST SUBSTANTIVE GROUND PLEADS THA T THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DIRECTING TO CALCULAT E ALV @ 8.5% ON THE COST OF BUILDING LET OUT AND TREAT THE SAME AS THE ANNUAL L ETTING VALUE INSTEAD OF ASSESSING OFFICERS ACTION CALCULATING THE SAME ON THE BASIS OF FAIR MARKET VALUE. WE FIND THAT CIT(A)S DETAILS DISCUSSION ON THE ISS UE READS AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED RIVAL CONTENTIONS AND OBSERVATIONS MADE BY THE A,O. IN THE ASSESSMENT ORDER. IT IS OBSERVED THAT A .O. HAS MADE AN ADDITION OF RS.70,84,668/- UNDER THE HEAD INCOME FROM HOUSE PRO PERTY. APPELLANT HAD GIVEN ITS INDUSTRIAL SHED PROPERTY TO ITS SISTER CONCERN WITHOUT CHARGING ANY RENT. THE A.O. HAS ESTIMATED THE ANNUAL LETTING VALUE (ALV) O F THE PROPERTY AND HAS ASSESSED THE SAME AS INCOME FROM HOUSE PROPERTY. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT FOR A.Y. 2007-08 TO A.Y. 2011 -12 THE A.O. HAS TAKEN THE FAIR MARKET VALUE FOR CALCULATING THE ALV@ RS.36/- PER S Q.METER. THE A.O. HAS ALSO MENTIONED AT PAGE 7 OF THE ASSESSMENT ORDER THAT AL L THE APPEALS OF THE ASSESSEE FOR A.Y. 2007-08 ONWARDS ARE PENDING BEFORE HON'BLE ITA T. DURING THE APPELLATE PROCEEDINGS, APPELLANT HAS SUBMITTED THE ORDER OF H ON'BLE TRIBUNAL, AHMEDABAD FOR A.Y. 2005-06, A.Y. 2007-08, A.Y. 2008-09 AND A. Y. 2009-10 PRONOUNCED ON 17/04/2015 I.E. AFTER PASSING OF THE ASSESSMENT ORD ER. WITH RESPECT TO CALCULATION OF ALV, HON'BLE TRIBUNAL HAS GIVEN FOLLOWING FINDING A T PARA 10 PAGE 7 OF THE ORDER, WHICH IS REPRODUCED HEREUNDER: '10. NOW, WE COME TO THE QUESTION WHETHER RATE OF I NTEREST TO BE ADOPTED FOR DETERMINING THE ALV SHOULD BE INTEREST WHICH WOULD HAVE BEEN PAYABLE BY THE ASSESSEE HAD THE ASSESSEE BORROWED THE MONEY FO R INVESTMENT IN THE PROPERTY OR IT SHOULD BE INTEREST RECEIVABLE BY THE ASSESSEE HAD THE SIMILAR MONEY IS INVESTED SOMEWHERE ELSE. IN OUR OPINION, F OR DETERMINING THE INCOME FROM THE PROPERTY, IT SHOULD BE RATE OF RETU RN ON THE INVESTMENT OF SIMILAR AMOUNT IN ANOTHER ASSET. THEREFORE, IN OUR OPINION, THE CIT(A) WAS FULLY JUSTIFIED IN ESTIMATING THE ALV ON THE BASIS OF INTEREST WHICH ASSESSEE WOULD HAVE EARNED ON THE INVESTMENT OF THE SIMILAR AMOUNT. THE LD. COUNSEL FOR THE ASSESSEE HAD ARGUED THAT THE RATE OF INTERE ST APPLIED BY THE CIT(A) AT 8.5% IS EXCESSIVE. IN SUPPORT OF WHICH, HE GAVE VAR IOUS EXAMPLES OF INVESTMENT IN FDRS WHICH FACED THE INTEREST RANGING FROM 5.52% TO 7.5%. COPIES OF THOSE CERTIFICATES FROM THE BANK ARE PLAC ED AS PAGE NO.29 ONWARDS OF THE ASSESSES'S PAPER BOOK-HOWEVER, WE FI ND THAT THOSE INVESTMENTS WERE FOR A VERY SHORT PERIOD. IN FIRST CASE WHERE INTEREST RATE WAS 5.5%, THE INVESTMENT WAS ONLY FOR 46 DAYS. IN A NOTHER CASE WHERE THE INTEREST WAS 5.6%, IT WAS ONLY FOR 31 DAYS. IN ANOT HER CASE, WHERE THE RATE OF INTEREST WAS 6%, IT WAS FOR 91 DAYS AND IN ANOTH ER CASE WHERE THE PERIOD OF DEPOSIT WAS 366 DAYS, THE RATE OF INTEREST WAS 7 .75%. THE LD.DR WAS FULLY JUSTIFIED THAT IF THE RATE OF RETURN ON THE INVESTM ENT IS CONSIDERED THEN IT SHOULD BE A LONG TERM INVESTMENT BECAUSE IN ANY PRO PERTY NOBODY WOULD MAKE INVESTMENT JUST FOR FEW DAYS. CONSIDERING ALL THESE FACTS, IN OUR OPINION, THE CIT(A) HAS RIGHTLY APPLIED THE RATE OF INTEREST OF 8.5%. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDER OF THE ITA NO. 1960/AHD/16 [ITO VS. M/S. PASL WINDTECH PV T. LTD. ] A.Y. 2012-13 - 3 - CIT(A), THE SAME IS SUSTAINED; AND ON THIS POINT, T HE GROUND OF APPEAL OF REVENUE AS WELL AS ASSESSEE ARE REJECTED.' THIS FINDING RELATES TO A.Y. 2005-06. IN THE SAME O RDER, HON'BLE TRIBUNAL HAS ALSO GIVEN ITS FINDING FOR A.Y. 2007-08, A.Y. 2008-09 AN D A.Y. 2009-10. THE RESPECTIVE ITA NOS. ARE AS FOLLOWS: ITA NO. A.Y. 2639/AHD/2013(A) 2005-06 2773/AHD/2013(D) 2005-06 1184/AHD/2011(A) 2007-08 289/AHD/2012 (A) 2008-09 661/AHD/2013 (A) 2009-10 FOR ALL THE A.Y. HON'BLE TRIBUNAL HAS DIRECTED THE A.O. TO CALCULATE ALV @ 8.5% ON THE COST OF THE BUILDING LET OUT BY THE APPELLAN T AND TREAT THE SAME AS ALV AND ACCORDINGLY DETERMINE THE INCOME FROM HOUSE PROPERT Y. DURING THE YEAR UNDER CONSIDERATION I.E. A.Y. 2012-13 BY FOLLOWING THE DI RECTION OF HON'BLE TRIBUNAL IN THE ABOVE REFERRED ORDER, I HEREBY DIRECT THE A.O. TO CALCULATE ALV @ 8.5% ON THE COST OF BUILDING LET OUT BY THE APPELLANT AND TREAT THE SAME AS ALV INSTEAD OF CALCULATING ALV ON THE FAIR MARKET VALUE AS HAS BEE N DONE BY THE A.O. SUBJECT TO THIS REMARK, THESE GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE ALLOWED. 3. MR. KABRA VEHEMENTLY ARGUES DURING THE COURSE OF HEARING THAT THE ASSESSING OFFICER HAD RIGHTLY COMPUTED THE IMPUGNED ALV ON THE BASIS OF FAIR MARKET VALUE. HE FAILS TO DISPUTE THE FACT THAT TH E CIT(A) HAS FOLLOWED PRECEDING ASSESSMENT YEARS TRIBUNALS ORDER (SUPRA) IN DECID ING THE ISSUE IN ASSESSEES FAVOUR. NO CHANGE ON FACTS OR LAW IS POINTED OUT A T THE REVENUES BEHEST. WE THEREFORE ADOPT JUDICIAL CONSISTENCY TO AFFIRM THE CIT(A)S ABOVESTATED DIRECTIONS. THE REVENUES INSTANT SUBSTANTIVE GROU ND IS ACCORDINGLY DECLINED. 4. THE REVENUES NEXT TWO SUBSTANTIVE GROUNDS AVER T HAT THE CIT(A) HAS COMMITTED BOTH LEGAL AS WELL AS FACTUAL ERROR IN DI RECTING THE ASSESSING OFFICER TO WORK OUT THE ABOVE ALV WITHOUT TAKING INTO CONSIDERA TION THE APPROPRIATE TOTAL AREA AND ALSO IN ALLOWING DEDUCTION OF INTEREST AMO UNTING TO RS.19,73,165/- INCURRED ON BORROWED CAPITAL FOR PURCHASING THE PLO T IN QUESTION. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO REBUT THE FACT THAT THE CIT(A)S DIRECTIONS UNDER CHALLENGE ON THESE TWO REMAINING ISSUES HAVE MERELY RESTORED THE ISSUE BACK ITA NO. 1960/AHD/16 [ITO VS. M/S. PASL WINDTECH PV T. LTD. ] A.Y. 2012-13 - 4 - TO THE ASSESSING OFFICER FOR FACTUAL VERIFICATION O N BOTH COUNTS. WE THUS OBSERVE THAT THERE IS NO PREJUDICE CAUSED TO THE REVENUES INTEREST AT THIS STAGE. THESE TWO LATTER SUBSTANTIVE GROUNDS ARE ALSO REJECTED AC CORDINGLY. 5. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF MARCH, 2018.] SD/- SD/- ( N. K. BILLAIYA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD: DATED 28/03/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0