ACIT-16(1), MUMBAI V. SHREYAS ANIL TALPADE, MUMBAI

ITA 2263/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6825 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 11-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Assessee Lawyers: HITESH P SHAH
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Opportunity of being heard; Additional evidence; Revised return
• Section: 143(3); 50C; 143(1); 143(2); 13; 22

Judgement Text

ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO.2263/MUM/2018 (ASSESSMENT YEAR: 2014 - 15) SHREYAS ANIL TALPADE 6B, GODREJ WALDORF, SWAMI SAMARTHA, PRASANNA CHS, OPP. TO MILLAT NAGAR, OSHIWARA, ANDHERI, MUMBAI - 400 053 VS. ACIT 16(1 ), R. NO. 506 , 5 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE MARG, CHURCHGATE, MUMBAI 400 020 PAN NO. ABJPT6249E (ASSESSEE) (REVENUE) ASSESSEE BY : SHRI HITESH P. SHAH , A.R REVENUE BY : SHRI T.S. KHALSA, D.R DATE OF HEARING : 14 /07/2021 D ATE OF PRONOUNCEMENT : 22 /07/2021 ORDER PER RAVISH SOOD, J.M: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 4, MUMBAI, DATED 30.01.2018, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 31.12.2016 FOR A.Y. 2014 - 15. THE ASSE SSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING REVISED GROUNDS BEFORE US: 1. THE HONBLE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE APPELLANT COULD NOT REPRESENT THE MATTER DUE TO CIRCUMSTANCES BEYOND HIS CONTROL. 2. THE HONBLE CIT( A) AS WELL AS LD. A.O OUGHT TO HAVE ALLOWED THE TOTAL INTEREST OF RS.58,77,140/ - AS EXPENDITURE INCURRED FOR EARNING PROFESSIONAL INCOME. ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 2 3. THE HONBLE CIT(A) AS WELL AS LD. A.O ERRED IN CONSIDERING THE NOTIONAL INCOME OF RS.17,15,589/ - ON THE 3 HOUSE P ROPERTIES, OF WHICH ONE IS SOLD DURING THE YEAR AND OTHERS WERE USED BUSINESS AND PROFESSION. 4. THE HONBLE CIT(A) AND THE LD. A.O FAILED TO APPRECIATE THE FACT THAT THE MIDAS BANQUET HALL WAS A DEPRECIABLE ASSET FALLING WITHIN THE BLOCK OF ASSET AND HEN CE THE SALE OF THE SAID ASSET OUGHT TO HAVE BEEN CALCULATED UNDER SEC.50 OF THE I. T. ACT. 2. BRIEFLY STATED, THE ASSESSEE WHO IS A FILM ACTOR HAD E - FILED A REVISED RETURN OF INCOME FOR A.Y. 2014 - 15 ON 30.11.2014, DECLARING A TO T AL INCOME OF RS. N IL AFTE R CLAIMING CURRENT YEAR LOS S OF RS.46,12,269/ - . THE RETURN OF INCOME FIL ED BY THE ASSESSEE WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT U/S 143(2) OF THE ACT. 3. ASSESSMENT WAS FRAMED BY THE A.O VIDE HIS ORDER PASSED U/S 143(3) , DATED 31.12.2016 AT AN INCOME OF RS. 2,45,48,460/ - AFTER INTER ALIA MAKING THE FOLLOWING ADDITION S /DISALLOWANCE S : SR. NO. PARTICULARS AMOUNT 1. DISALLOWANCE OF INTEREST EXPENDITURE U/S 36(1)(III) RS. 58,77,140/ - 2. ADDITION TOWARDS THE NOTIONAL LETTABLE VALUE OF THREE HOUSE PROPERTIES OWNED BY THE ASSESSEE. RS. 17,15,589/ - 3. ADDITION U/S 50C QUA THE DIFFERENCE IN THE SEGMENT RATE OF PROPERTY SOLD AS AGAINST THE ACTUAL SALE CONSIDERATION RECEIVED B Y ASSESSEE. RS.2,15,68,000/ - 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). QUA THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.58,77,140/ - , THE CIT(A) FINDING NO INFIRMITY IN THE VIEW TAKEN BY THE A.O UPHELD THE SAME. ALSO, THE ADD I TION OF RS. 2,15,68,000/ - MADE BY THE A.O U/S 50C OF THE ACT WAS UPHELD BY THE CIT(A). INSOFAR, THE ADDITION TOWARDS THE NOTIONAL LETTABLE VA LUE U/S 23(1)(A) OF TH E ACT WAS CONCERNED, IT WAS INTER ALIA OBSERVED BY THE CIT(A) THAT IT WAS THE CLAIM OF THE ASSESSEE THAT AS THE FLAT OWNED BY HIM AT PUNE HAD BEEN SOLD IN F.Y. 2012 - 13, THEREFORE, NO DEEMED LET TABLE VALUE FOR THE YEAR UNDER CONSIDERATION QUA THE SAID PROPE RTY COULD HAVE BEEN BROUGHT TO TAX IN HIS HANDS. IN THE BACKDROP OF THE AFORESAID CLAIM OF THE ASSESSEE THE CIT(A) DIRECTED THE ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 3 A.O TO VERIFY THE VERACITY OF THE SAME AND A LLOW THE CONSEQUENTIAL RELIEF TO HIM AFTER CARRYING OUT NECESSARY VERIFICATION S . ACC ORDINGLY, THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. BEFORE PROCEEDING ANY FURTHER, WE MAY HEREIN OBSERVE THAT THE ASSESSEE HA S FILED AN AP PLICATION SEEKING ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963 . THE ASSESSEE HA S SOUGHT ADMISSION OF THE FOLLOWING DOCUMENTS AS AD DITIONAL EVIDENCE BEFORE US: SR. NO. PARTICULAR S PAGE NO. 1. THE COPY OF THE EMAIL LETTERS FROM 3 SCRIPT WRITERS, VIZ. MRS. PRATIMA KULKARNI, MRS. SHARVARI PATANKARAND MR. SANDESH NAYAK, STATING THAT THEY VISITED THE PREMISES 13B 14B FOR OFFICIAL WORK. 3 TO 5 2. THE COPIES OF PHOTOGRAPHS SHOWING PHOTO SHOOT OF MODELS, REHEARSHAL, AUDITION, LOOK TEST AND ETC. 6 TO 12 3. THE COPIES OF PURCHASE AGREEMENT AND SALE AGREEMENT OF THE MIDAS BANQUET HALL. 13 TO 66 ALSO, THE ASSESSEE HAS FILED AN AFFIDAVIT THEREIN NARRATING THE REASONS DUE TO WHICH THE AFORESAID DOCUMENTS COULD NOT BE FILED BEFORE THE LOWER AUTHORITI ES. IT IS THE CLAIM OF THE ASSESSEE THAT THE AFOREMENTIONED DOCUMENTARY EVIDENCE WHICH HAVE A STRONG BEARING ON THE ADJUDICATION OF THE ISSUE S BEFORE US HAD REMAINED OMITTED TO BE FILED BEFORE THE LOWER AUTHORITIES, FOR THE REASON , THAT THE RESPECTIVE COUNSELS ENGAGED BY HIM FOR APPEARING ON HIS BEHALF BEFORE THE LOWER AUTHORITIES , HAD EITHER FAILED TO COMMUNICATE TO HI M ABOUT THE REQUISITE DETAILS AND DOCUMENTS THAT WERE REQUIRED TO BE FILED IN THE COURSE OF THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES, AND/OR HAD ADOPTED A LACKADAI SICAL APPROACH RESULTING TO NON - FURNISHING OF THE SAID DOCUMENTS BEFORE THE SAID RESPECTI VE AUTHORITIES . IT IS FURTHER STATED BY THE ASSESSEE THAT AS HE IS A FILM ARTIST AND NOT TECHNICALLY QUALIFIED, THEREFORE, NOT BEING AWARE OF THE FACT THAT THE AFORESAID ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 4 DOCUMENTS WERE INDISPENSABLY REQUIRED TO BE FILED TO DISPEL ALL DOUBTS , AND SUBSTANTIA TE HIS RESPECTIVE CLAIMS THAT WERE RAISED IN THE RETURN OF INCOME, THE SAME, THUS , HAD RESULTED TO THE AFORESAID FAILURE IN NOT PLACING THE SAID DOCUMENTS ON THE RECORDS OF THE LOWER AUTHORITIES . 6. WE HAVE PERUSED THE AFORESAID APPLICATION FILED BY THE ASSESSEE UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963, WHICH IS SUPPORTED BY HIS AFFIDAVIT SUBSTANTIATING THE REASONS LEADING TO FAILURE ON HIS PART IN FILING THE AFOREMENTIONED DOCUMENTS BEFORE THE LOWER AUTHORITIES. AFTER GIVING A THOUGHTFUL CON SIDERATION, WE ARE OF THE CONSIDERED VIEW THAT THERE ARE BONAFIDE REASONS ON THE PART OF THE ASSESSEE IN NOT FILING THE AFOREMENTIONED DOCUMENTS BEFORE THE LOWER AUTHORITIES AND NO FAULT CAN BE ATTRIBUTED TO HIM. ALTHOUGH , AN ASSESSEE CANNOT BE ALLOWED TO WRIGGLE OUT OF THE FAILURES ON THE PART OF HIS DULY AUTHORIZED COUNSEL IN PROPERLY PROSECUTING THE MATTER BEFORE THE AUTHORITIES, BUT THEN, KEEPING IN VIEW THE FACTS INVOLVED IN THE PRESENT CASE WE HOLD A STRONG CONVICTION THAT THE ASSESSEE BEFORE US HAD A CTED IN A BONAFIDE MANNER AND NO FAULT CAN BE ATTRIBUTED TO HIM QUA THE NON - FILING OF THE AFOREMENTIONED DOCUMENTS WITH THE LOWER AUTHORITIES. WE, THUS, IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE US MERITS TO BE ADMITTED. 7. WE SHALL NOW ADVERT TO THE RESPECTIVE ISSUES WHICH HA VE BEEN RAISED BY THE ASSESSEE BEFORE US. THE ASSESSEE IS AGGRIEVED WITH THE DISALLOWANCE OF HIS CLAIM FOR DEDUCTION OF THE INTEREST EXPENDITU RE OF RS. 58,77,140/ - . AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD AVAILED BANK OD OF RS.2.04 CRORES, SECURED LOAN OF RS.3.99/ - CRORES AND UNSECURED LOANS OF RS.91 LACS. IT WAS OBSERVED BY HI M THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF INTEREST EXPENDITURE OF RS.58,77,140/ - , AS UNDER : ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 5 SR. NO. PARTICULARS AMOUNT 1. INTEREST ON OD(AXIS BANK) RS. 82,830/ - 2. INTEREST ON OD(DEUSTSCHE BANK) RS. 8,58,719/ - 3. INTEREST ON SECURED LOAN RS. 1,38,999/ - 4. INTEREST ON LAP RS.43,00,159/ - 5. INTEREST ON TERM LOAN RS. 4,96,433/ - TOTAL RS.58,77,140/ - APROPOS THE AFORESAID CLAIM F OR DEDUCTION OF INTEREST EXPENDIT URE, IT WAS OBSERVED BY THE A.O THAT THE ASSES S EE HAD GIVEN CERTAIN INTEREST FREE LOAN AND ADVANCE OF RS.62,91,560/ - TOWARDS CERTAIN POLICY , BESIDES MAKING INVESTMENTS IN CERTAIN FIXED ASSETS, VIZ. RESIDENTIAL PREMISES, BANQUET HALL AND OTHER PROPERTIES. OBSERVING, THAT ALL THE AFORESAID ASSETS WERE THE PERSONAL ASSETS OF THE ASSESSEE AND HAD NO NEXUS WITH HIS PROFESSION AS THAT OF AN ACTOR, THE A.O CALLED UPON HIM TO EXPLAIN AS TO WHY THE ENTIRE AMOUNT OF HIS CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE MAY NOT BE DISALLOWED. IN REPLY, THE ASSESSEE VIDE H IS LETTER DATED 09.12.2016 INTER ALIA SUBMITTED A VAGUE REPLY AND FAILED TO PLACE ON RECORD ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS AFORESAID CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE . OBSERVING, THAT THE REPLY FILED BY THE ASSESSEE WAS VAGUE AND NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE, THE A.O DISALLOWED THE CLAIM FOR DEDUCTION U/S 36(1)(III) OF RS.58,77,140/ - THAT WAS RAISED BY THE ASSESSEE . ALSO, THE A.O W H I LE CONCLUDING AS HEREINABOVE , OBSERVED , THAT THE ASSESSEE AS AGAINST HIS NORMAL PROFESSIONAL INCOME AND A PALTRY INTEREST INCOME HAD CLAIMED DEDUCTION OF THE AFORESAID EXORBITANT AMOUNT OF INTEREST EXPENDITURE. BACKED BY HIS AFORESAID OBSERVATION, THE A.O DISALLOWED THE ASSESSEE S CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE OF RS.58,77,140/ - . ON APPEAL, THE ASSESSEE TRIED TO IMPRESS UPON THE CIT(A) THAT THE INTEREST EXPENDITURE OF RS.58,77,140/ - ON THE LOANS WERE INCURRED BY HIM QUA HIS PROFESSION AS THAT OF A FILM ARTIST AND FURNISHED THE DETAILS AS REGARDS THE SAME, AS UNDER: SR. NO. PARTICULARS AMOUNT UTILISATION 1. INTEREST ON OD AXIS BANK 82,830 UTILIZATION FOR PRE - PRODUCTION OF MOVIE POSTER BOYS. 2. INTEREST ON OD (DEUSTSCHE 8,58,719 AMOUNT BEING USED TO PURCHASE OF ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 6 BANK) COMMERCIAL PROPERTY LOCATED AT SAMARTH AISHWARYA WHICH IS SUBSEQUENTLY LET OUT. 3. INTEREST ON SECURED LOANS 1,38,999 THEY ARE UTILIZED TO PAY THE OVERDRAFT OF AXIS BANK. 4. INTEREST ON LAP (DEUSTSCHE BANK) 43,00,156 AMOUNT BEING USED TO PURCHASE AT GODREJ WALDROF (13B/14B) OF WHICH 14B IS USED FOR RESIDENTIAL PURPOSE AND 13B USED AS BUSINESS PROPERTY. 5. INTEREST ON TERM LOAN (DEUSTSCHE BANK) 4,96,433 AMOUNT BEING USED TO PURCHASE AT GODREJ WALDROF (13B/14B) OF WHICH 14B IS USED FOR RESIDENTIAL PURPOSE AND 13B USED AS BUSINESS PROPERTY. IT WAS HOWEVER OBSERVED BY THE CIT(A) THAT NEITHER OF THE AFORESAID DETAILS WERE SUBMITTED BEFORE THE A.O. APART FROM THAT, IT WAS NOTICED BY THE CIT(A) THAT THE A SSES S EE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE HIS AFORESAID CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE ON THE BASIS OF ANY ADDITIONAL EVIDENCE FILED BEFORE HIM U/R ULE 46A OF THE INCOME TAX RULES, 1962. IT WAS OBSERVED BY THE CIT(A) THAT EXCEPT FOR THE INTEREST EXPENDITURE OF OD ACCOUNT PAID TO AXIS BANK WHICH WAS STATED TO HAVE BEEN UTILIZED FOR PRE - PRODUCTION OF A FILM , VIZ. POSTER BOYS ALL OTHER INTEREST EXPENDITURE WERE IN RESPECT OF PROPERTIES THAT WERE PURCHASED BY THE ASSESSE E. IT WAS FURTHER NOTICED BY HIM THAT THE ASSESSEE HAD FAILED TO FURNISH ANY MATERIAL WHICH WOULD SUBSTANTIATE HIS CLAIM THAT THE AFOREMENTIONED PROPERTIES WERE USED AS A BUSINESS PROPERTY. APROPOS THE PROPERTY AT 14B GODREJ W A LDROF, IT WAS OBSERVED BY THE CIT(A) THAT THE SAME WAS ADMITTED BY THE ASSESSEE TO HAVE BEEN USED FOR RESIDENTIAL PURPOSES. BACKED BY HIS AFORESAID OBSERVATIONS, THE CIT(A) WAS OF THE VIEW THAT THE INTEREST PAID ON BORROWED FUNDS THAT WERE UTILIZED FOR ACQUISITION OF PROPERTY I.E A RE SIDENTIAL OR COMMERCIAL PROPERTY COULD ONLY BE ALLOWED AS A DEDUCTI ON U/S 36(1)(III) OF THE ACT WHERE THE SAID PROPERTIES WERE USED FOR THE PURPOSE OF BUSINESS. IT WAS, THUS, OBSERVED BY THE CIT(A) THAT IN THE ABSENCE OF ANY SUPPORTING DOCUMENTS SUBMITTED EITHER DURING THE COURSE OF THE ASSESSMENT ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 7 PROCEEDINGS OR IN THE COURSE OF THE PROCEEDINGS BEFORE HIM, THE AFORESAID CLAIM FOR DEDUCTION OF THE INTEREST EXPENDITURE DID NOT MERIT ACCEPTANCE. 8. BEFORE US, IT WAS SUBMITTED BY THE LD. A.R THAT THE AFOREMENTIONED PROPERTIES WERE USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS, AND THUS, THE CORRELATING INTEREST EXPENDITURE WAS THEREIN ALLOWABLE AS A DEDUCTION U/S 36(1)(III) OF THE ACT. IN ORDER TO DRIVE HOME HIS AFORESAID CLAIM THE LD. A.R TOOK US THROUGH THE RELEVANT DOCUMENTS WHICH WERE FILED BEFORE US AS ADDITIONAL EVIDENCE , VIZ. LETTERS FROM 3 SCRIPT WRITERS I.E MS. PRATIMA KULKARNI, MS. SHARVARI PATANKAR AND MR. SANDESH NAYAK, WHEREIN THE Y HAD STATED THAT THEY HAD VISITED THE PREMISES OF THE ASSESSEE I.E GODREJ W A LDROF 13B AND 14B FOR OFFICIAL WORK. ALSO, THE LD. A.R IN ORDER TO BUTTRESS HIS AFORESAID CLAIM THAT THE PROPERTIES IN QUESTION WERE USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BU SINESS TOOK US THROUGH THE PHOTOGRAPHS SHOWING PHOTO SHOOT S OF MODELS, REHEARSAL S , AUDITIONS, LOOK TEST S ETC. ON THE BASIS OF THE AFORESAID DOCUMENTARY EVIDENCE, IT WAS THE CLAIM OF THE LD. A.R THAT THE AFOREMENTIONED PROPERTIES IN QUESTION WERE UNDENIABLY BEING USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS . 9. WE HAVE HEARD THE LD. AUTHORIZED R EPRESENTATIVES FOR BOTH THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES, AS WELL AS THE MATERIAL AVAILABLE ON RECORD TO WHICH OUR ATTENTION WAS D RAWN IN THE COURSE OF HEARING OF THE APPEAL. AS THE AFORESAID DOCUMENTS, VIZ. LETTERS OF THE SCRIPTS WRITERS ; PHOTOGRAPHS SHOWING PHOTO SHOOT S OF MODELS ; REHEARSAL S; AUDITION S; LOOK TESTS ETC. TO WHICH OUR ATTENTION WAS DRAWN BY THE LD. A.R IN ORDER TO FOR TIFY HIS CLAIM THAT THE AFOREMENTIONED PROPERTIES IN QUESTION WERE BEING USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS HAD THOUGH BEEN ADMITTED BY US AS ADDITIONAL EVIDENCE, HOWEVER, THE SAME WERE NOT THERE BEFORE THE A.O IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE MATTER IN ALL FAIRNESS QUA THE ASSESSEE S CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE OF RS.58,77,140/ - REQUIRE S TO BE REVISITED BY THE ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 8 A.O . WE, THUS, SET - ASIDE THE MATTER TO THE FILE OF THE A.O WITH A DIRECTION THAT HE SHALL RE - ADJUDICATE THE MATTER AFTER CONSIDERING THE AFOREMENTIONED DOCUMENTS THAT HA VE BEEN FILED BY THE ASSESSEE BEFORE US AS ADDITIONAL EVIDENC E PLACED AT PAGE NO. 3 TO 6 6 OF HIS P APER BOOK (FOR SHORT APB). NEEDLESS TO SAY, THE A.O WHILE RE - ADJUDICATING THE AFORESAID ISSUE SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHO SHALL REMAIN AT A LIBERTY TO SUBSTANTIATE HIS A FOREMENTIONED CLAIM. ACCORDINGLY, THE MATTER IS SET - ASIDE TO THE FILE OF THE A.O FOR RE - ADJUDICATION IN TERMS OF OUR AFORESAID OBSERVATION S . THE GROUND OF APPEAL NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 10. WE SHALL NOW TAKE UP THE GRIEVANCE OF THE ASSE SSEE THAT THE A.O HAD ERRED IN CONSIDERING THE NOTIONAL LETTABLE VALUE OF THE 3 HOUSE PROPERTIES OF WHICH ONE WAS SOLD DURING THE YEAR, WHILE FOR THE OTHER S WERE BEING USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS AND PROFESSION. AS IS DISCERNIBLE F ROM THE ASSESSMENT ORDER, IT WAS OBSERVED BY THE AO THAT THE ASSESSEE OWNED THE FOLLOWING IMMOVABLE PROPERTIES: SR. NO. NAME OF PROPERTY VALUE AS PER BALANCE SHEET 1. PROPERTY AT WALDROF (14B) OFFICE RS. 2,20,57,530/ - 2. PROPERTY AT WALDROF (13B) RESIDENTIAL RS. 2,20,57,530/ - 3. OFFICE PREMISES GODREJ WALDROF RS. 80,78,000/ - 4. RESIDENTIAL FLAT PUNE CITY RS. 5,00,000/ - IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAD NOT SHOWN ANY INCOME UNDER THE HEAD HOUSE PROPERTY QUA THE AFOREMENTIONED PROPERTIES. ACCORDINGLY, THE A.O TREATING ONE OF THE PROPERTY VIZ. PROPERTY AT GODREJ W A LDROF 13B AS A SELF - OCCUPIED RESIDENTIAL PROPERTY , THEREIN WORKED OUT THE ANNUAL LETTAB LE VALUE (AL V ) OF THE REMAINING PROPERTIES. ALTHOUGH, IT WAS THE CLAIM OF THE ASSESSEE THAT ONE OF THE RESI DENTIAL PROPERTY WAS BEING USED BY HIM AS HIS OFFICE, HOWEVER, IN THE ABSENCE OF ANY PROOF THE SAID CLAIM WAS REJECTED BY THE A.O. ACCORDINGLY, THE A .O BACKED BY HIS AFORESAID OBSERVATIONS WORKED OUT THE ALV OF THE AFOREMENTIONED 3 PROPERTIES AT RS.17,15,5 89/ - , AS UNDER: ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 9 SR. NO. NAME OF PROPERTY VALUE AS PER BALANCE SHEET 8% OF THE BOOK VALUE LESS 30% DEDUCTION U/S 24(A) NET VALUE AFTER 30% DEDUCTION U/S 24(A) 1. PROPERTY AT WALDROF (13B) - OFFICE 2,20,57,530 17,64,602 5,29,381 12,35,221 2. OFFICE PREMISES GODREJ WALDROF 80,78,000 6,46,240 1,93,872 4,52,368 3. RESIDENTIAL FLAT PUNE 5,00,000 40,000 12,000 28,000 TOTAL 24,50,842 7,35,253 17,15,589 ON APPEAL, IT WAS INTER ALIA SUBMITTED BY THE ASSESSEE THAT AS THE PROPERTY OWNED BY HIM AT PUNE WAS SOLD DURING THE YEAR, THEREFORE, THERE WAS NO QUESTION OF DETERMINING THE ALV OF THE SAME. INSOFAR THE AFORESAID CLAIM WAS CONCERNED, THE CIT( A) IN ALL FAIRNESS DIRECTED THE A.O TO VERIFY THE GENUINENESS AND VERACITY OF THE SAME AND ALLOW THE CONSEQUENTIAL RELIEF AFTER CARRYING OUT NECESSARY VERIFICATION S . 11. BEFORE US, IT IS SUBMITTED BY THE LD. A.R THAT THE AFOREMENTIONED PROPERT IES WERE BEI NG USED BY THE ASSESSEE FOR BUSINESS PURPOSE S . IN ORDER TO DRIVE HOME HIS AFORES A ID CLAIM , THE LD. A.R ONCE AGAIN TOOK US THROUGH THE RELEVANT DOCUMENTS WHICH WERE FILED BEFORE US AS ADDITIONAL EVIDENCE. I T WAS THE CLAIM OF THE LD. A.R THAT AS THE AFOREMENTIONED PROPERTIES IN QUEST I ON WERE BEING USED BY THE ASSESSEE FOR BUSINESS PURPOSES, THEREFORE, THERE WAS NO QUESTION OF SUBJECTING THEIR ALV TO TAX IN HIS HANDS UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERAT ION TO THE AFORESAID ISSUE IN QUESTION BEFORE US. SEC TION 22 OF THE ACT CARVES OUT AN INNATE EXCEPTION , AS PER WHICH THE ANNUAL LETTABLE VALUE OF SUCH PORTION OF A PROPERTY OWNED BY AN ASSESSEE, WHICH IS OCCUPIED BY HIM FOR THE PURPOSE OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME TAX , CANNOT BE BROUGHT TO TAX O N A NOTIONAL BASIS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AS OBSERVED BY US HEREINABOVE, IT IS THE CLAIM OF THE ASSESSEE THAT THE ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 10 AFOREMENTIONE D THREE PROPERTIES IN QUESTION WERE BEING USED BY HIM FOR BUSINESS PURPOSES. AS WE HAVE WHILE ADJUDICATING THE ASSESSEES CLAIM FOR DEDUCTION OF INTEREST EXPENDITURE QUA THE LOANS RAISED BY HIM FOR ACQU I RING THE AFOREMENTIO N ED PROPERTIES, THEREIN , RESTORE D THE MATTER TO THE FILE OF THE A.O FOR RE - A D JUDICATING THE ISSUE AFTER MAKING NECESSARY VERIFICATIONS AFTER CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE US, THEREFORE, AS A COROLLARY THERETO THE PRESENT ISSUE I.E SADDLING THE ASSSESSE E WITH TAX QUA THE ALV OF THE SAID PROPERTIES WHICH AS CLAIMED BY HIM HAD BEEN ACQUIRE D AND WERE BEING USED BY HIM DURING THE YEAR UNDER CONSIDERATION FOR HIS BUSINESS PURPOSES, IN ALL FAIRNESS , ALSO REQUIRES TO BE RESTORED TO THE FILE OF THE A.O. ACCORDIN GLY, THE A.O IS DIRECTED TO VERIFY AS TO WHETHER OR NOT THE AFOREMENTIONED PROPERTIES IN QUESTION WERE BEING USED BY THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION FOR THE PURPOSE OF HIS BUSINESS . I N CASE , IF THE AFORE SAID CLAIM OF THE ASSESSEE IS FOUND TO BE IN ORDER AND THE PROPERTIES IN QUESTION WERE USED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR THE PURPOSE OF HIS BUSINESS, THEN , THE ALV OF SUCH PROPERTIES WOULD NOT BE BROUGHT TO TAX BY THE A.O UNDER THE HEAD HOUSE PROPERTY. THE G ROUND OF APPEAL NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. 13. WE SHALL NOW TAKE UP THE GR I EVANCE OF THE ASSESSEE THAT THE LOWER AUTHORITIES HAD ERRED BY FAILING TO APPRECIATE THAT AS THE PROPERTY SOLD BY HIM DURING THE YEAR, VIZ. MIDAS BANQUET HALL WAS A DEPRECIABLE ASSET THAT FORMED PART OF THE BLOCK OF ASSETS, THEREFORE, THE SALE OF THE SAME OUGHT TO HAVE BEEN CONSIDERED UNDER SEC. 50 OF THE ACT. BRIEFLY STATED, THE ASSESSEE HAD SOLD A N IMMOVABLE PROPERTY VIZ. MIDAS BANQUET HALL FOR A CONSIDERATION OF RS.1,75,00,000/ - . ON A PERUSAL OF THE AGREEMENT/REGISTRATION DEED, IT WAS OBSERVED BY THE A.O THAT THE REGISTRAR HAD ADOPTED THE STAMP DUTY VALUATION OF THE AFORESAID PROPERTY AT AN AMOUNT OF RS.3,90,68,000/ - . IN THE BACKDROP OF THE AFORESAID FACTS, THE A.O CALLED UPON THE ASSESSEE TO PUT FORTH AN EXPLANATION AS ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 11 TO WHY THE VALUE ADOPTED BY THE REGISTRAR MAY NOT BE TAKEN AS THE DEEMED SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE LTCG BY APPLYING THE PROVISIONS OF SEC. 50C OF THE ACT. AS THE REPLY FILED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O, THEREFORE, HE ADOPTED THE SALE CONSIDERATION OF THE AFOREMENTIONED PROPERTY AT RS.3,90,68,000/ - AND MADE A CONSEQUENTIAL ADDITION OF RS. 2,15,68,000/ - [RS.3,90,68,000/ - ( - ) RS.1,75,00,000/ - ] TOWARDS LTCG IN THE HANDS OF THE ASSESSEE . ON APPEAL, IT WAS THE CLAIM OF THE ASSESSEE THAT AS THE PROPERTY IN QUESTION, VIZ. MIDAS BANQUET HALL WAS A DEPRECIABLE ASSET THAT FORM ED PART OF THE BLOCK OF ASSETS, THEREFORE, THE A.O LO O SING SIGHT OF THE MATERIAL FACT AS REGARDS THE EXI S TENCE OF THE BLOCK OF ASSETS POST REDUCTION OF THE VALUE OF PART OF THE ASSETS HAD WRONGLY MADE THE ADDITION IN THE HANDS OF THE ASSESSEE. THE WORKING OF THE DETAILS FURNI SHED BY THE ASSESSEE AS REGARDS THE EXISTENCE OF THE BLOCK OF ASSETS POST REDUCTION OF THE VALUE OF THE PROPERTY SOLD READ S AS UNDER : SR. NO. PARTICULARS AMOUNT 1. OPENING WDV 1,90,33,442 / - 2. ADDITION DURING THE YEAR 3,05,77,620/ - 3. SUBTOTAL 4,96,11,062 / - 4. LESS: AMOUNT CALCULATED BY ORDER AS PER SECTION 50C 3,90,63,000 / - 5. CLOSING WDV 1,05,48,062 / - 14. BEFORE US, THE LD. A.R REITERATED THE SUBMISSIONS WHICH WERE RAISED BEFORE THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE PROPERTY IN QUESTION VIZ. MIDAS BANQUET HALL FORM ED PART OF THE BLOCK OF ASSET S WHICH SUBSEQUENT TO THE AFORESAID SALE TRANSACTION DID NOT CEASE TO EXIST, THEREFORE, THE LOWER AUT HORITIES LO O SING SIGHT OF THE SAID MATERIAL FACT HAD WRON GLY MADE AN ADDITION TOWARDS LTCG RS.2,15,68,000/ - . 15. AFTER DELIBERATING AT LENGTH QUA THE ISSUE IN QUESTION, WE FIND, THAT IT IS THE CLAIM OF THE ASSESSE THAT AS THE PROPERTY UNDER CONSIDERATION, VIZ. MIDAS BANQUET HALL FORM ED PART OF THE BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 12 HAVE BEEN CLAIMED AND ALLOWED UNDER TH E ACT, THEREFORE , THE CAPITAL GAIN ARISING ON SALE OF THE SAID ASSET WAS LIABLE TO BE BROUGHT TO TAX AS PER THE MAN DATE OF THE SAID STATUTORY PROVISION. ON A PERUSAL OF THE SUBMISSIONS FILED BY THE ASSESSEE BEFORE US, WE FIND , THAT IN ORDER TO FORTIFY HIS AFORESAID CLAIM IT WAS SUBMITTED BY THE ASSESSEE THAT DEPRECIATION ON THE AFOREMENTIONED PROPERTY WHICH HAD BEEN USED FOR THE BUSINESS PURPOSES BY GIVING THE SAME ON HIRE WAS CLAIMED AND ALLOWED TILL THE YEAR 2009 AND FORM ED PART OF THE BLOCK OF ASSETS. AS SUCH, IT IS THE CLAIM OF THE ASSESSEE THAT THE PROFIT ARISING ON THE SALE OF THE AFORE SAID PROPERTY WAS LIABLE TO BE CO MPUTED AS PER THE PROVISIONS OF SEC. 50 OF THE ACT. 15. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID ISSUE AND ARE OF THE CONSIDERED VIEW THAT THE ADJU DICATION OF THE SAME WOULD REQUIRE VERIFICATION OF THE FACTUAL POSITION AS HAD BEEN CANVASS ED BY THE ASSESSEE BEFORE US. AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER , THE A.O HAD SUMMARILY MADE AN ADDITION OF AN AMOUNT OF RS. 2,15,68,000/ - (SUPRA) I.E THE DIFFERENCE IN THE VALUE ADOPTED BY THE REGISTRAR FOR STAMP DUTY VALUATION I.E RS. 3,90,68,00 0/ - AND THE SALE CONSIDERATION FOR WHICH THE SAID PROPERTY AS PER THE A.O HAD BEEN SOLD BY THE ASSESSEE I.E RS.1,75,00,000/ - , UNDER THE HEAD LONG TERM CAPITAL GAIN (LTCG) IN THE HANDS OF THE ASSESSEE . HOWEVER, CONTRARY TO THE AFORESAID OBSERVATION OF THE A .O THAT THE ASSESSEE HAD SOLD THE PROPERTY IN QUESTION, VIZ. MIDAS BANQUET HALL FOR A CONSIDERATION OF RS. 1,75,00,000/ - , WE FIND THAT THE ASSESSEES CHARTERED ACCOUNTANT HAD AT SR.NO.17 OF HIS AUDIT REPORT IN FORM 3CD REFLECTED THE SALE CONSIDERATION OF THE SAID PROPERTY AT AN AMOUNT OF RS. 4,25,00,000/ - (AS AGAINST THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AT RS. 3,90,63,000/ - ). ALSO, WE FIND , THAT THE ASSESSEES CLAIM OF HAVING EARNED STCG OF RS. 3,01,01,488/ - ON SALE OF THE AFORESAID PROPERTY UNDER CONSIDERATION, VIZ. MIDAS BANQUET HALL (AS PER THE ASSESSEES CAPITAL A/C) HAD ALSO NOT BEEN DISLODGED BY THE A.O WHILE TREATING THE DIFFERENTIAL AMOUNT OF RS. 2,15,68,000/ - (SUPRA) [I.E RS. ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 13 3,90,68,000/ - (VALUE AD OPTED BY THE REGISTRAR FOR STAMP DUTY VALUATION PURPOSE) ( MINUS ) RS. 1,75,00,000/ - (SALE CONSIDERATION RECEIVED BY THE ASSESSEE AS PER THE A.O)] AS LTCG IN THE HANDS OF THE ASSESSEE . BE THAT AS IT MAY , THE ASSESSEE HAD REBUTTED THE VERY BASIS F OR ASSESSING THE GAIN ON THE TRANSFER OF THE PROPERTY IN QUESTION AS LTCG IN HIS HANDS . IT IS THE CLAIM OF THE ASSESSEE THAT AS THE PROPERTY IN QUESTION FORMED PART OF THE BLOCK OF ASSETS, THEREFORE , THE PROFIT ARISING ON THE SALE OF THE SAME COULD ONLY BE BE CONSID ERED AS PER THE PROVISIONS OF SEC. 50 OF THE ACT. IN OUR CONSIDERED VIEW, THE AFORESAID CLAIM OF THE ASSESSEE , THOUGH, PRINCIPALLY CORRECT, CANNOT HOWEVER BE SUMMARILY ACCEPTED ON THE VERY FACE OF IT SPECIFICALLY IN THE BACKDROP OF THE AFORESAID INCONSISTE NCIES EMERGING THERE FROM, AND WOULD REQUIRE TO BE VERIFIED . ACCORDINGLY, TO FACILITATE SUCH VERIFICATION, WE HEREIN RESTORE THE MATTER TO THE FILE OF THE A.O WITH A DIRECTION TO RE - ADJUDICAT E THE ISSUE AFTER CONSIDERING THE DOCUMENTS FILED BY THE ASSESSEE BEFORE US AS ADDITIONAL EVIDENCE . NEEDLESS TO SAY, THE A.O SHALL IN THE COURSE OF THE SET - ASIDE PROCEEDINGS AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHO SHALL REMAIN AT A LIBERTY TO SUBSTANTIATE HIS AFORESAI D CLAIM . THE GROUND OF APPEAL NO. 4 IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. 16. THE GROUND OF APPEAL NO. 1 BEING GENERAL IS DISMISSED AS NOT PRESSED. 17. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN TER MS OF OUR AFORESAID OBSERVATIONS . ORDER PR ONOUNCED IN THE OPEN COURT ON 22 .07.2021 SD/ - SD/ - ( RAJESH KUMAR ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 22 .07 .2021 PS: ROHIT ITA NO. 2263/MUM/2018 A.Y. 2014 - 15 SHREYAS ANIL TALPADE VS. ACIT 16(1) 14 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI