Arava Subba Rao, CHENNAI V. ACIT, CHENNAI

ITA 2064/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9766 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-02-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 19-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: BABU PERAM
• Keywords: Deemed owner of house property
• Section: 27; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO. 2064/MDS/2015 / ASSESSMENT YEAR : 2011-12. SHRI. ARAVA SUBBA RAO, FLAT NO.6A, YAMINI BUILDINGS, 153, VELACHERY MAIN ROAD, VELACHERY, CHENNAI 600 042. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, SALARY CIRCLE IV CHENNAI. [PAN ANAPS 9313D] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. BABU PERAM, C.A. $% ! ' # /RESPONDENT BY : SHRI. A.V.SREEKANTH, IRS, JCIT. & ' ' ( /DATE OF HEARING : 01-02-2016 ) ' ' ( /DATE OF PRONOUNCEMENT : 01-04-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, CHENNAI IN ITA NO.1144/13-14, DT 27.07.2015 FOR THE ASSESSMENT YE AR 2011-2012 ITA NO.2064/MDS/2015 :- 2 -: PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) 2. THE SUBSTANTIVE GROUND RAISED BY THE ASSESSEE THA T THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE FINDINGS OF THE ASSESSING OFFICER ON SELF OCCUPIED HOUSE PROPERTY ASSESSED U/S.23(1) OF THE ACT TREATED AS DEEMED LET OUT ON ESTIMATED ANNUAL VALUE. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS A N INDIVIDUAL AND EMPLOYEE OF M/S. BLUE DART AVIATION LTD, AND F ILED RETURN OF INCOME ADMITTING TOTAL INCOME OF <64,64,739/- ON 30 .07.2011 AND WAS PROCESSED U/S.143(1)(A) OF THE ACT ON 29.08.201 2 UNDER SCRUTINY NORMS THE CASE WAS SELECTED AND NOTICE U/S.143(2) O F THE ACT WAS ISSUED AND FURTHER NOTICE U/S.142(1) AND SUMMONS U/ S.131 OF THE ACT DATED 26.12.2013 WAS SERVED ON THE ASSESSEE. IN CO MPLIANCE, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED DOCUMENTARY EVIDENCES AND FURNISHED DE TAILS. THE ASSESSING OFFICER FOUND ASSESSEE OWNS TWO RESIDENTI AL PROPERTIES A FLAT IN EAST ANDHERI, MUMBAI AND FLAT AT VELACHERRY, C HENNAI. THE CHENNAI PROPERTY IS SELF OCCUPIED AND CLAIMED NIL ANNUAL VALUE, WEREAS FOR THE MUMBAI FLAT THE ASSESSEE HAS NOT OFF ERED ANNUAL VALUE ITA NO.2064/MDS/2015 :- 3 -: AND CLAIMED UNDER SELF OCCUPATION DUE TO EMPLOYMEN T DURING THE RELEVANT ASSESSMENT YEAR. THE LD. ASSESSING OFFICE R CONSIDERING THE PROVISIONS OF SEC. 24 OF THE ACT, THE ASSESSEE IS A OWNER OF MORE THAN ONE PROPERTY UNDER HIS OCCUPATION AND VALUE OF OTH ER HOUSE HAS TO BE DETERMINED U/S.23(1) OF THE ACT AND ESTIMATED ANNUA L VALUE OF FLAT AT MUMBAI <3,00,000/- PER ANNUM AND ALLOWED DEDUCTIO N U/S.24(A) OF THE ACT; AND ASSESSED TOTAL INCOME INCLUDING OTHER DISALLOWANCES <67,47,676/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE EXPLAINED THE PROPE RTY SITUATED IN MUMBAI CANNOT BE TREATED AS DEEMED LET OUT AND ESTI MATING RENT IS BAD IN LAW. THE ASSESSEE RESIDES AT VELACHERRY FLA T IN CHENNAI WITH FAMILY MEMBERS AND VISITS FREQUENTLY TO OFFICE HEAD QUARTERS I.E. M/S. BLUE DART AVIATION LTD, MUMBAI AND OCCUPY THE FLAT FOR OFFICIAL RESIDENTIAL PURPOSE. THE LD. COUNSEL FURTHER ARGUE D THAT THE ADOPTION OF NIL ANNUAL VALUE U/S.23(2) OF THE ACT IS ALL OWED FOR OWN RESIDENCE AND RELIED ON THE VARIOUS JUDICIAL DECISIONS WERE T HE STAY OF FAMILY MEMBERS IN A HOUSE IS CONSIDERED AS STAY OF THE ASS ESSEE HIMSELF AND ASSESSEE DUE TO OFFICE WORKS OCCUPY THE BOMBAY FL AT AS OFFICIAL ITA NO.2064/MDS/2015 :- 4 -: RESIDENCE. THE LD. COMMISSIONER OF INCOME TAX (APP EALS) CONSIDERED THE SUBMISSIONS AND FINDINGS OF THE ASSESSING OFFI CER AND HAS DEALT THE PROVISIONS OF SEC.22 TO 27 OF THE INCOME TAX AC T AND FIND THE LEGISLATIVE INTENT PROVIDES THE COMPUTATION OF AN NUAL VALUE AT NIL FOR ONE SELF OCCUPIED HOUSE PROPERTY AND WERE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE THE ASSESSEE IS ALLOWED CONC ESSIONAL TAX TREATMENT U/S.23(2) OF THE ACT AND OTHER SELF OCCU PIED HOUSE PROPERTY ASSESSED U/S.23(1) FOR THE PURPOSE OF NORM AL ANNUAL LETTING VALUE AND CONCURRED WITH FINDINGS OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE ASSAILED AN APPE AL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITER ATED THE SUBMISSIONS OF ASSESSMENT AND APPELLATE PROCEEDINGS AND SUPPORTED THE CASE WITH JUDICIAL DECISIONS AND TRIBUNAL DECIS IONS. THE ASSESSEE IS HAVING MORE THAN ONE RESIDENTIAL HOUSE AND USED THE FLAT AT MUMBAI AS OFFICIAL RESIDENCE PURPOSE. THE COURTS HAVE CONS IDERED THE STAY OF FAMILY MEMBERS IS TO BE TREATED AS ASSESSEE HIMSELF . THE FLAT IS SITUATED AT EAST ANDHERI (OUTSKIRTS OF ANDHERI) MUM BAI WERE THE ASSESSEE STAYS FREQUENTLY BECAUSE OF HIS HEADQUARTE RS WORK AND ALSO SUBMITTED WRITTEN SUBMISSIONS TO CONSIDER UNDER SEL F OCCUPATION. BUT ITA NO.2064/MDS/2015 :- 5 -: THE LD. ASSESSING OFFICER TREATED THE FLAT AS DEEME D LET OUT AND ESTIMATED ANNUAL VALUE OF <3,00,000/- PER ANNUM, W HICH IS VERY MUCH ON HIGHER SIDE AS ACTUAL LET OUT VALUE WILL NOT YIE LD RENT MORE THAN <5,000/- PER MONTH AND SUPPORTED THE ARGUMENTS WITH APEX COURT AND HIGH COURT DECISIONS AND CBDT CIRCULAR AND PLE ADED TO TEAT ANNUAL VALUE OF BOTH AS NIL AND DELETE THE ADDITI ON. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND OPPOSED TO THE GROUNDS OF THE ASSESSEE. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE CONTENTIONS OF THE LD. AUTHORISED REPR ESENTATIVE THAT THE ASSESSEE DUE TO EMPLOYMENT HAS TO SHUTTLE TO MUMBAI WHICH IS THE HEADQUARTERS OF M/S. BLUE DART AVIATION LTD WEREAS VELACHERRY FLAT AT CHENNAI IS OCCUPIED BY FAMILY MEMBERS AND CLAIMED AS SELF OCCUPIED AND THE FLAT AT EAT ANDHERI MUMBAI OCCUPIED ONLY DURING HIS OFFICIAL VISIT. THE QUESTION ARISES THE ASSESSEE HAS NOT FI LED NUMBER OF DAYS STAY DETAILS AND CIRCUMSTANCES OF TRAVEL TO MUMBAI IN PREVIOUS YEAR. THE PROVISIONS OF LAW SPECIFIES IN CASE A PERSON HAVING MORE THAN ONE SELF OCCUPIED PROPERTY, ONE HOUSE IS TREATED AS SELF OCCUPIED AND ANNUAL VALUE CONSIDERED NIL AND OTHER SELF OCCUP IED HOUSE PROPERTY IS ITA NO.2064/MDS/2015 :- 6 -: ASSESSED U/S.23(1) OF THE ACT ON DEEMING ANNUAL LET OUT VALUE. THE LD. AUTHORISED REPRESENTATIVE CONTESTED THE ISSUE RELYI NG ON THE JUDICIAL DECISIONS BUT THE PREAMBLE OF LEGISLATIVE INTENT IS TO ALLOW ANNUAL VALUE NIL FOR SELF OCCUPIED PROPERTY AND THE PROVISION S OF SEC. 23(2) OF THE ACT PROVIDES AS UNDER:- (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PAR T OF A HOUSE WHICH (A) IS IN THE OCCUPATION OF THE OWNER FOR THE PURPO SES OF HIS OWN RESIDENCE; OR (B) CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY REA SON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSION CARRIED ON AT ANY OTHER PLACE, HE HA S TO RESIDE AT THAT OTHER PLACE IN A BUILDING NOT B ELONGING TO HIM, THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APP LY IF (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE O WNER. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN ONE HOUSE (A) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ONLY IN RESPECT OF ONE OF SUCH HOUSES, WHICH THE ASSESSEE MAY, AT H IS OPTION, SPECIFY IN THIS BEHALF; (B) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, OTHER THAN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISE D AN OPTION UNDER CLAUSE (A), SHALL BE DETERMINED UNDER SUB-SECTION (1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET.] ON PERUSAL OF THE ASSESSMENT ORDER, THE ASSESSING O FFICER HAS ESTIMATED THE ANNUAL LET OUT VALUE AT <3,00,000/- PER ANNUM WITHOUT ANY EVIDENCE OR ANY COMPARABLES OF THE SAME AREA A ND THE FLAT IS SITUATED AT EAST ANDHERI IN OUTSKIRTS OF ANDHERI AND AS PER THE ASSESSEE SUBMISSIONS THE RENTAL INCOME SHALL NOT E XCEED <5,000/- PER ITA NO.2064/MDS/2015 :- 7 -: MONTH AND USING THE PROPERTY FOR HIS OFFICIAL RESI DENCE AT MUMBAI. THE ASSESSING OFFICER HAS ESTIMATED THE ANNUAL VALU E OF <3,00,000/- WITHOUT CONSIDERING THE ACTUAL RENT RECEIVABLE, FAI R MARKET VALUE OF THE PROPERTY AND MUNICIPAL VALUATION AS PER THE PROVISI ONS IN RESPECT OF RESIDENTIAL FLAT AT EAST ANDHERI AND COMPLETED THE ASSESSMENT. CONSIDERING THE APPARENT FACTS AND PROVISIONS OF LA W, WE SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND R EMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CAL CULATION OF ANNUAL VALUE OF THE FLAT AS PER LAW AND ASSESSEE SHOULD BE PROVI DED WITH ADEQUATE OPPORTUNITY OF HEARING BEFORE PASSING THE ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 1ST DAY OF APRIL, 2016 AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) # $% / ACCOUNTANT MEMBER ( & . ' ( ) (G. PAVAN KUMAR) ) $% / JUDICIAL MEMBER *& / CHENNAI + / DATED: 1ST APRIL, 2016. KV , ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 2. $% ! / RESPONDENT 3. 1' () / CIT(A) 4. 1' / CIT 5. /4 5 $'6 / DR 6. 5 7 8 & / GF