DCIT CC 39, MUMBAI V. SATYAPAL JAIN, MUMBAI

ITA 2119/MUM/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3330 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .TA NOS.2119 & 2120/MUM/2012 ( / ASSESSMENT YEARS: 2008-09 & 2009-10 THE ACIT, CC - 39, AAYAKAR BHAVAN, MUMBAI-400 020 / VS. SHRI SATYAPAL JAIN, 807, EMBASSY CENTRE, NARIMAN POINT, MUMBAI-400 021 ./ ./ PAN/GIR NO. AABPJ 1888Q ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY: SHRI MANJUNATHA SWAMY / ASSESEE BY: SHRI ANUJ KISNADWALA / DATE OF HEARING :20.01.2016 !' / DATE OF PRONOUNCEMENT :20.01.2016 / O R D E R PER C.N. PRASAD, JM: THESE TWO APPEALS BY THE REVENUE ARE PREFERRED AGA INST THE VERY SAME ORDER OF THE LD. CIT(A)-41, MUMBAI DATED 09.1.2012 PERTAINING TO ASSESSMENT YEARS 2008-09 & 2009-10. AS COMMON ISSUE IS INVOLVED IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 2. IN BOTH THESE APPEALS, THE REVENUE HAS CHALLENGE D THE ORDER OF THE LD. CIT(A) IN DETERMINING THE ALV OF THE PROPER TY AS FIXED BY THE MUNICIPAL AUTHORITIES. ITA. 2119 & 2120M/2012 2 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITS THAT THE ISSUE IN BOTH THESE APPEALS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE FOR ASSESSMENT YEARS 2006-07 AND 2007-08 BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE IN ITA NOS. 2719 & 2718/M/2013 DATED 26.11.2015. 4. HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE, RE FERRING TO PARA-8 OF THE TRIBUNALS ORDER SUBMITS THAT THE FIN DINGS OF THE TRIBUNAL THAT IN THE ASSESSMENT ORDER THE AO HAS N OT REFERRED TO ANY MATERIAL THAT ANNUAL RENTAL VALUE SHOWN BY THE ASSE SSEE IS NOT CORRECT ARE NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL. ACCORDING TO THE LD. DR, SINCE THE ASSESSING OFFICE R POINTED OUT CERTAIN MATERIALS IN THE ASSESSMENT ORDER I.E. THE SUMMONS ISSUED U/S. 131 OF THE I.T. ACT TO THE SOCIETY AND THE INS PECTORS ENQUIRY REPORT DT. 23.12.2010, WHICH GOES TO SHOW THAT THE ALV IS MUCH MORE THAN THE VALUE FIXED BY MUNICIPAL AUTHORITIES, THE TRIBUNAL ORDER FOR THE EARLIER YEARS CANNOT BE RELIED UPON. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT TH E INSPECTORS REPORT, WHICH THE DR IS REFERRING TO HAS BEEN CONSI DERED BY THIS TRIBUNAL IN THE CASE OF ASSESSEES WIFE SMT. LAXMI JAIN, IN ITA NO. 2118/M/2012 DATED 26.11.2014 FOR ASSESSMENT YEAR 20 09-10, WHERE THE PROPERTIES ARE SITUATED IN THE SAME COMPLEX AND HELD THAT THE ALV AS DETERMINED BY THE MUNICIPAL AUTHORITIES SHOU LD BE CONSIDERED. HE SUBMITS THAT THE ASSESSING OFFICER IS RELYING ON THE VERY SAME INSPECTORS REPORT DATED 23.12.2010 IN TH E ASSESSEES CASE ALSO AND DETERMINED THE ALV. ITA. 2119 & 2120M/2012 3 6. WE HAVE PERUSED THE ORDERS FURNISHED BEFORE US I N THE CASE OF THE ASSESSEE AND HIS WIFE AND FIND THAT THERE IS NO MATERIAL DIFFERENCE IN THE ORDERS PASSED IN EARLIER YEARS AND THIS YEAR . NO NEW MATERIAL HAS COME ON RECORD TO SUGGEST THAT THE ALV OF THE V ACANT FLATS SHOULD NOT BE FIXED AT SOME OTHER VALUE OTHER THAN THE MUN ICIPAL VALUE. THERE IS NO CHANGE IN FACT THEREFORE, THE CONTENTI ON OF THE LD. DR THAT DURING THIS YEAR THERE ARE MATERIALS TO SHOW THAT T HE ALV IS MORE THAN THE MUNICIPAL VALUATION MAY NOT BE CORRECT. W E FIND FROM THE CO-ORDINATE BENCH ORDER DATED 26.11.2015 IN ITA NOS . 2719/M/2013 AND 2718/M/13 IN ASSESEES OWN CASE THAT THIS ISSUE HAS BEEN DECIDED IN ASSESSEES FAVOUR HOLDING AS UNDER: APART FROM THE AFORESAID CONTENTION, HE SUBMITTED THAT ON MERITS ALSO, THE ISSUE OF ALV OF VACANT FLATS U/S 2 3(1)(A) IN THE SAME VERY COMPLEX STANDS COVERED IN FAVOUR OF THE A SSESSEE BY SERIES OF DECISIONS OF THE TRIBUNAL IN THE GROUP/FA MILY CONCERNS OF THE ASSESSEE, WHEREIN THE HONBLE TRIBUNAL UPHELD T HAT THE ALV ON THE VACANT FLAT CAN BE DETERMINED AT A MUNICIPAL RA TABLE VALUE. NOT ONLY THAT, NOW THE DETERMINATION OF ALV AS PER THE MUNICIPAL RATABLE VALUE HAS BEEN PRINCIPALLY UPHELD BY THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TIP TOP TY POGRAPHY, REPORTED IN [2014] 368 ITR 330. ON THE OTHER HAND, LD. DR ON BOTH THE ISSUES I.E. LEGAL AS WELL AS ON MERITS, STRONGLY RELIED UPON THE ORDER O F THE CIT(A). WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING IN THE ORDER AND ALSO THE VARIOUS TRIBUNAL ORDERS AS REFERRED AND RELIED UPON BY THE LD. COUNSEL. THE ASSESSEE HAD SHOWN FLAT NOS. B-4/64, D-4/65, D- 4/66 & B- 4/67 AT GREEN FIELD COMPLEX, HEAVEN VIEW, 4TH FLOOR , JOGESHWARI- SATYPAL JAIN ITA NO. 2719/MUM/2013 ITA NO.2718/MUM/2013 4 VIKROLI LINK ROAD, ANDHERI (EAST ), MUMBAI - 400 093 AS VACANT AND HAS OFFERED THE ANNUAL RENT AL VALUE OF THE FLATS AS PER THE MUNICIPAL RATABLE VALUE. THE AO RE JECTED THE ASSESSEES CONTENTION WITHOUT ASSIGNING ANY REASON AND SOUGHT FOR INFORMATION FROM THE SOCIETY OF GREEN FIELD COMPLEX . IN RESPONSE, ITA. 2119 & 2120M/2012 4 THE SOCIETY IN ITS REPLY, FURNISHED A COPY OF LEAVE AND LICENSE AGREEMENT OF A FLAT IN THE SAME COMPLEX SHOWING A M ONTHLY RENT OF RS. 17,000/- FOR THE FINANCIAL YEAR 2010-11. THE AO AFTER REDUCING/INDEXING THE AVERAGE ANNUAL RENT FEES OF 1 0% AND APPLYING THE SAME FOR AY 2006-07, HE WORKED OUT MON THLY RENT OF RS. 10,550/- FOR EACH FLAT AND DETERMINED THE DEEME D ALV AT RS. 5,06,400/- IN TERMS OF SECTION 23(1)(A). THIS ACTIO N OF THE AO HAS BEEN CONFIRMED BY THE LD. CIT(A). FROM THE PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT NOWHERE AO HAS REFERRED TO ANY MATERIAL THAT ANNUAL RENTAL VALUE SHOWN BY THE ASSESSEE IS NOT CORRECT. ALV AS PER MU NICIPAL RATABLE VALUE IS AN ACCEPTED METHOD OF VALUATION AT LEAST I N CASES OF VACANT PREMISES. AS POINTED OUT BY LD. COUNSEL TRIBUNAL IN SERIES OF DECISIONS IN GROUP CASES THE TRIBUNAL ON SIMILAR FA CTS AND FOR SIMILAR COMPLEX HAS HELD THAT, WHERE THE FLAT HAS B EEN LYING VACANT THEN THE ALV U/S 23(1)(A) CAN BE VALUED AT MUNICIPA L RATABLE VALUE. THE LISTS OF SUCH CASES ARE AS UNDER:- SR. NO. NAME OF ASSESSEE RELATION WITH ASSESSEE AY ITA NO ITAT MUMBAI DATE OF ORDER PARTICULARS OF PROPERTY WHETHER VACANT OR NOT REMARK 1 HARSH JAIN NEPHEW 2009-10 2710 OF 2013 17.7.15 CENTRAL GARDEN COMPLEX VACANT HONBLE ITAT HELD THAT AMOUNT TO BE TAXED U/S23(1)(A) OF THE ACT WOULD BE MUNICIPAL RATABLE VALUE 2 ANAND JAIN BROTHER 2009-10 2709/13 17.4.15 CENTRA L GARDEN COMPLEX VACANT HONBLE ITAT HELD THAT AMOUNT TO BE TAXED U/S23(1)(A) OF THE ACT WOULD BE MUNICIPAL RATABLE VALUE 3 LAXMI JAIN WIFE 2009-10 2118/12 26.11.1 4 CENTRAL GARDEN COMPLEX VACANT HONBLE ITAT HELD THAT AMOUNT TO BE TAXED U/S23(1)(A) OF THE ACT WOULD BE MUNICIPAL RATABLE VALUE 4 RAMETIDEVI JAIN MOTHER 2005-06 2006-07 3268/11 3269/11 25.4.12 VACANT HONBLE ITAT HELD THAT AMOUNT TO BE TAXED U/S23(1)(A) OF THE ACT WOULD BE MUNICIPAL RATABLE VALUE NOT ONLY IN THE AFORESAID CASES, BUT NOW HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TIP TOP TY POGRAPHY, REPORTED IN [2014] 368 ITR 330 HAS UPHELD THAT MUNI CIPAL RATABLE VALUE CAN BE ADOPTED FOR DETERMINING THE ALV U/S 23 (1)(A). THE HONBLE HIGH COURT HELD THAT FOR DISTURBING THE ALV OR RENT SHOWN BY THE ASSESSEE, THE AO MUST HAVE COGENT AND SATISF ACTORY MATERIAL ITA. 2119 & 2120M/2012 5 IN HIS POSSESSION INDICATING THAT THE PARTIES HAVE CONCEALED THE REAL POSITION. HE MUST NOT MAKE A GUESS WORK OR ACT ON CONJECTURES AND SURMISES. THERE MUST BE DEFINITE AND POSITIVE M ATERIAL TO INDICATE THAT THE PARTIES HAVE SUPPRESSED THE PREVA ILING RATE AND THEN ONLY THE ENQUIRIES CAN BE MADE, FOR ASCERTAINI NG THE MARKET RATE. THE HONBLE HIGH COURT HAS ALSO HELD THAT, IF THE STANDARD RENT IS FIXED BY THE RENT CONTROLLER OR MUNICIPAL R ATABLE VALUE IS AVAILABLE THEN SAME IS TO BE ACCEPTED AS AN ALV. HE RE, IT IS NOT A CASE THAT ASSESSEE HAS RENTED OUT THE PROPERTY AND THE RENT RECEIVED OR RECEIVABLE IS LESS BUT THE FLAT HAS BEEN LYING V ACANT, THUS, IT CANNOT BE HELD THAT MUNICIPAL RATABLE VALUE CANNOT BE THE BASIS FOR DETERMINATION OF DEEMED ALV. ACCORDINGLY, RESPECTFU LLY FOLLOWING THE DECISIONS OF THE TRIBUNAL AND ALSO THE PRINCIPL E LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, WE DECIDE TH IS ISSUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, GROUND NO. 2 & 3 ARE TREATED AS ALLOWED. SIMILARLY IN THE ASESEES WIFES CASE THIS TRIBUNAL BY ORDER DATED 26.11.2014 IN ITA NO. 2118/M/2012 FOR ASSESSM ENT YEAR 2009-10 HELD AS UNDER: BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THA T THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN SHOW ING THE HOUSE PROPERTY INCOME ON ACCOUNT OF COUPLE OF PROPERTIES IE., (I) GALA NO.311 AND (II) CENTRAL GARDEN COMPLEX. IN THE RETU RN OF INCOME, FOR THE PURPOSE OF COMPUTATION OF ALV OF THE PROPER TIES, ASSESSEE RELIED ON THE RATEABLE VALUES OF THESE PROPERTIES. AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE AND REJECTED THE COMPU TATION OF ALV OF THE SAID PROPERTIES AND HELD THAT A PERCENTAGE O F INVESTMENT IN THE PROPERTIES SHOULD REFLECT CORRECT ALV. ACCORDIN GLY, HE QUANTIFIED THE ALVS AND THE CUMULATIVE ALV OF THE P ROPERTIES WAS TAKEN AT RS. 1,65,51,632/- (GALAS ALV IS RS. 3,94,5 08/- AND RS.1,61,57,124/- IS THE ALV OF OTHER PROPERTIES). O THERWISE, ASSESSEES COMPUTATION IN THIS REGARD WORKED OUT AT RS.94,181/- IE., GALAS RATEABLE VALUE IS RS.5,880/- AND OTHER P ROPERTIES IS RS.88,301/-. AO RELIED ON THE INSPECTORS REPORT OF COMPARABLE CASES IN THIS REGARD. AGGRIEVED WITH THE SAME, ASSE SSEE IS IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) REJECTED THE AOS METHOD OF COMPUTATION OF ALV OF THE ITA. 2119 & 2120M/2012 6 SAID TWO PROPERTIES AND UPHELD THE ASSESSEES RATEA BLE VALUE. FOR THIS, CIT(A) RELIED ON VARIOUS DECISIONS INCLUDING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SMITAB EN N AMBANI VS. CWT, 323 ITR 104 WHEREIN IT WAS HELD THAT RATEABLE VALUE OF THE PROPERTIES DETERMINED BY THE MUNICIPAL AUTHORITIES SHALL BE THE YARD STICK. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON VARIOUS DECISIONS TO STATE THAT THE ALV AS DETERMINED BY TH E MUNICIPAL AUTHORITIES IS ONLY ONE OF THE FACTORS AND SAME CAN BE IGNORED IF IT DOES NOT REFLECT THE TRUE ALV. LD DR RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, LD COUNSEL FOR THE ASSSESSEE HE AVILY RELIED ON THE ORDER OF THE CIT(A) AND REITERATED TH E SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORD ERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MAT ERIAL PLACED BEFORE US. ON HEARING BOTH THE 3 PARTIES AND ON PER USAL OF THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THAT THE CIT (A) HAS RIGHTLY RELIED ON THE BINDING JUDGMENT OF THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF SMITABEN N AMBANI (SUPRA) . THERE ARE MANY OTHER DECISIONS FROM THE JURISDICTIONAL HIGH C OURT IN THE SIMILAR LINES, THE COPIES OF WHICH ARE PLACED IN TH E PAPER BOOK OF THE ASSSESSEE. THE REVENUE HAS NOT DEMONSTRATED THA T THE FACTS OF THE ASSESSEES CASE ARE COVERED BY THE DECISIONS CI TED IN GROUND NO.1 OF THE PRESENT APPEAL. CONSIDERING THE BINDING NATURE OF THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF S MITABEN N AMBANI (SUPRA), WE ARE OF THE OPINION THAT THE FIND ING OF THE CIT (A) IS AN ORDER AND IT DOES NOT CALL FOR ANY INTERF ERENCE ON THIS ISSUE. IN ANY CASE, THE PERCENTAGE OF INVESTMENT IN THE IMPUGNED PROPERTIES IS NO BASIS FOR ARRIVING AT THE ALV OF T HE PROPERTIES. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. RESPECTFULLY FOLLOWING THE SAID DECISIONS OF THE CO -ORDINATE BENCH, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESS EE AND REJECT THE GROUND OF THE REVENUE. ITA. 2119 & 2120M/2012 7 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 20 TH JANUARY, 2016. SD/- SD/- (RAJESH KUMAR) (C.N. PRASAD ) # / ACCOUNTANT MEMBER %&# /JUDICIAL MEMBER MUMBAI; )# DATED : 20 TH JANUARY, 2016 . & . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,-&&./ , ./' , / DR, ITAT, MUMBAI 6. -012 / GUARD FILE. / BY ORDER, +& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI