DCIT 7(2), MUMBAI V. SANGHI MOTORS ( BOMBAY), MUMBAI

ITA 2001/MUM/2010

• Counselvise Citation: 200119914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.2001/MUM /2010 (ASSESSMENT YEAR: 2006-07) ACIT 7(2), OFFICE OF THE ACIT, ROOM NO.624, 6TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 ....... APPELLANT VS M/S. SANGHI MOTORS (BOMBAY) PVT. LTD., 39A, N.S. PATKAR MARG, MUMBAI -400 007 ..... RESPONDENT PAN: AABCS 5977 Q APPELLANT BY: SHRI C.G.K. NAIR RESPONDENT BY: NONE O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-13 MUMBAI DATED 13.11.2009 FOR THE A.Y. 2006-07. THE REVENUE HAS TAKEN THE FOLLOWING EFFEC TIVE GROUNDS:- 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DETERMINING TH E ANNUAL LETTING VALUE OF THE PROPERTY AT ` 60 LAKHS AS AGAINST ` 2,16,00,000/- DETERMINED BY THE A.O. WITHOUT APPREC IATING THE FACT THAT THE A.O. HAS DETERMINED THE ALV U/S.2 3(1)(A) WHICH MANDATES THE DETERMINATION OF ALV ON RENT ON NOTIONAL BASIS WHICH THE PROPERTY IS REASONABLY EXPECTED TO FETCH FROM YEAR TO YEAR, WHEN SUCH VALUE WOULD BE MORE THAN TH E ACTUAL RENT FETCHED BY IT AS PER SECTION 23. ITA 2001/MUM/2010 M/S. SANGHI MOTORS (BOMBAY) PVT. LTD. 2 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN IGNORING THE V ALUE OF THE PROPERTY ACTUALLY FETCHED IN THE MARKET AND THUS RE STRICTING THE ANNUAL VALUE AT ` 60 LAKHS AS AGAINST ` 2,16,00,000/- DETERMINED BY THE AO ON THE BASIS OF INTEREST COMPO NENT ON THE INTEREST FREE SECURITY DEPOSIT PLACED AGAINST T HE SAID PROPERTY? 3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DIRECTING TO A DOPT THE ANNUAL LETTING VALUE OF THE HOUSE PROPERTY AT ` 60 LACS AS CLAIMED BY THE ASSESSEE INSTEAD OF ` 2,16,00,000/- IGNORING THE FACT THAT THE DECISION OF THE HONBLE ITAT IN T HE ASSESSEES OWN CASE FOR A.Y. 2001-02 AND 2002-03, H AS NOT BEEN ACCEPTED BY THE REVENUE AND FURTHER APPEAL HAS BEEN FILED BEFORE THE HONBLE HIGH COURT.? 2. WHEN THIS APPEAL WAS CALLED FOR HEARING, SR. A.R . MR. C.G.K. NAIR WAS PRESENT BUT NONE WAS PRESENT FOR THE ASSES SEE. MOREOVER, WE FIND THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING YEAR BY THE DECISION OF THE TRIBUNAL, HEN CE, WE DECIDED TO DISPOSE OFF THIS APPEAL ON MERIT. 3. BRIEFLY STATED, THE FACTS ARE AS UNDER. THE ASS ESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF INDUSTRIAL GAS PLANT AND GASES. THE ISSUE IN CONTROVERSY IS R ESTRICTED TO THE ASSESSMENT OF THE RENTAL INCOME. THE ASSESSEE HAS OFFERED THE RENTAL INCOME OF ` 60 LAKHS, WHICH IS RECEIVED FROM THE LESSEE AS WEL L AS THE SISTER CONCERN M/S. SANGHI UDYOG LTD. THE ASSESSEE HAS LET OUT ON LEASE ITS BUILDINGS SANGHI RESIDENCY TO M/S. SANG HI UDYOG LTD. BY LEAVE AND LICENSE AGREEMENT DATED 21.9.1997. AS PE R THE SAID AGREEMENT, THE ASSESSEE IS RECEIVING RENT OF ` 5 LAKHS PER MONTH. IN TURN, THE LESSEE M/S. SANGHI UDYOG LTD. HAS SUB-LET THE SAME ITA 2001/MUM/2010 M/S. SANGHI MOTORS (BOMBAY) PVT. LTD. 3 PREMISES TO THE FOLLOWING PARTIES PER MONTHLY RENT / LICENSE FEE SHOWN AS UNDER:- SR. NO. NAME OF THE PARTY MONTHLY RENT FOR THE F.Y. 2001-02 ( ` `` ` ) 1 VITESSEE LTD 1,50,000 2 FITCH RATING INDIA P. LTD. 1,35,000 3 BANK OF AMERICA N.A. 50,000 4 HINDUSTHAN THOMPSON ASS. LTD. 1,75,000 5 BIRLA MANAGEMENT CORPN. LTD.2 2,10,000 6 TRANSOCCEAN DRILLIGN OC 1,77,000 7 ASLITALIA LINEE AEREE ITALALIANE SPA 2,50,000 8 CONSULATE GENERAL OF NETHERLANDS 2,50,000 9 REAUTERS INDIA LTD. 25,000 4. THE A.O. FOLLOWING THE ORDER IN THE ASSESSEES O WN CASE IN THE PRECEDING YEAR FOR THE A.Y. 2001-02 DETERMINED THE ALV AT ` 2,16,00,000/- AND ACCORDINGLY ASSESSED THE INCOME U NDER THE HEAD INCOME FROM HOUSE PROPERTY. WHEN THE MATTER REAC HED BEFORE THE LD. CIT (A) FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN THE PRECEDING YEARS, THE LD. CIT (A) DIRECT ED THE A.O. TO ADOPT ALV AT ` 60 LAKHS. THE LD. COUNSEL HAS FILED THE COPIES OF THE TRIBUNAL ORDER IN THE ASSESESES OWN CASE AS UNDER: - WE FIND THAT FOLLOWING THE TRIBUNAL ORDER IN THE A. YS. 2001-02 AND 2002-03 AND IN THE A.YS. 2004-05 AND 2005-06 IT IS HELD AS UNDER:- 10. IN THE CASE BEFORE US IT IS NOT THE CASE OF TH E REVENUE THAT THE ACTUAL RENT RECEIVED OR RECEIVABLE IS IN EXCESS OF THE ALV I.E. MORE THAN RS.60.00 LACS AS DETERMINED BY THE TRIBUNAL IN ITS ORDERS FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03, THEREFORE , IN THE CASE OF THE ASSESSEE IT REMAINS SAME I.E. RS.60.00 LACS. IN THIS VIEW OF THE MATTER AND KEEPING IN VIEW THE RATIO OF DECISION IN SR. NO. ASSTT YEAR ITA NO. DATE OF ORDER 1 2001-02 9088/MUM/2004 17.01.2006 2 2002-03 2787/MUM/2006 12.01.2009 3 4 2004-05 2005-06 7292/MUM/2007 7293/MUM/2007 20.04.2010 ITA 2001/MUM/2010 M/S. SANGHI MOTORS (BOMBAY) PVT. LTD. 4 RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321(SC) W HEREIN IT HAS BEEN HELD THAT ... IN THE ABSENCE OF ANY MATER IAL CHANGE JUSTIFYING THE DEPARTMENT TO TAKE A DIFFERENT VIEW FROM THAT TAKEN IN THE EARLIER PROCEEDINGS... , WE ARE OF THE VIEW THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO ITA NO.729 2 & 93/M/07 A.Y:04-05 & 05-06 ADOPT RS.2,12,61,597/- AS ALV OF THE PROPERTY FOR THE YEAR UNDER CONSIDERATION AS AGAINS T THE ASSESSEES CLAIM THAT THE ALV OF THE PROPERTY SHOUL D BE TAKEN AT RS.60.00 LACS. ACCORDINGLY WE DIRECT THE AO TO ADOP T THE ALV OF THE PROPERTY AT RS.60.00 LACS ONLY. THE GROUNDS TAK EN BY THE ASSESSEE ARE THEREFORE ALLOWED. 5. AS THERE IS NO CHANGE IN THE FACTS THIS YEAR, NO DIFFERENT VIEW IS REQUIRED TO BE TAKEN. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LD. CIT (A). 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH JUNE 2011. SD/- SD/- ( R.S. SYAL ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 30TH JUNE 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)13, MUMBAI. 4) THE CIT-7, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 2001/MUM/2010 M/S. SANGHI MOTORS (BOMBAY) PVT. LTD. 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 30.06.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 30.06.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER