ACIT, Range-3, Pune V. Shri Avinash Nivrutti Bhosale, Pune

ITA 2582/PUN/2012

• Counselvise Citation: 258224514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2582/PN/2012 (A.Y: 2009-10) ADDL. CIT, RANGE-3, PUNE APPELLANT VS. SHRI AVINASH NIVRUTTI BHOSALE 759/34, BHOSALE PAVILION, BHANDARKAR ROAD, DECCAN GYMKHANA, PUNE 411004 PAN: ABTPB8151F RESPONDENT APPELLANT BY : SHRI P.L.PA THADE RESPONDENT BY : SHRI NIK HIL PATHAK DATE OF HEARING: 06.05.2014 DATE OF ORDER : 21.05.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [IN SHOR T CIT(A)] PUNE, DATED 29.08.2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS. 1. THE L'D COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF RS 77,78,214/- COMPUTE D (U/R 8D OF THE INCOME TAX RULES OUT OF INTEREST PAID HOLDIN G THAT SUCH EXPENDITURE WAS NOT DIRECTLY RELATABLE TO EXEMPT IN COME. 2. THE L'D COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN IGNORING THAT THERE WAS A NEXUS BETWEEN THE INTERES T PERIOD ON LOAN INVESTED IN WIND MILLS AND INCOME FROM INVESTM ENTS IN PARTNERSHIP FIRMS, SHARES AND MUTUAL FUNDS CLAIMED EXEMPT. 3. THE L'D COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN RESTRICTING THE DISALLOWANCE ON HELICOPTER EXPENSES TO 1/7 TH INSTEAD OF 1/5 TH AS DISALLOWED BY THE AO. 2 4. THE L'D CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E ON ACCOUNT OF DEPRECIATION ON HELICOPTER TO 1/7 TH INSTEAD OF 1/5 TH OF THE DEPRECIATION CLAIMED 5. THE L'D CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E ON ACCOUNT OF DEPRECIATION ON HELIPAD BUILDING TO 1/7 TH INSTEAD OF 1/5 TH OF THE DEPRECIATION CLAIMED. 6. THE L'D COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' WITHOUT APPRECIA TING THAT THE RENT SHOWN BY THE ASSESSEE WAS FAR LESS THAN TH E REASONABLE RENT WHICH A SIMILAR PROPERTY IN THE SAM E AREA WOULD FETCH. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL, HAVING TWO PROPRI ETARY CONCERNS (I) AMIT CONSTRUCTIONS AND (II) SWAPNALI C ONSTRUCTIONS & AVINASH BHOSALE-WINDMILL AND IS ALSO PARTNER IN A VINASH CONSTRUCTION, AVI CONSTRUCTION AND SAHASTRAJIT PROP ERTIES. AS AN INDIVIDUAL, HE IS ENGAGED IN THE BUSINESS ACTIVITY UNDERTAKING CIVIL CONTRACTS, CONSTRUCTION AND POWER GENERATIONS . THE FIRST ISSUE IS WITH REGARD TO DISALLOWANCE OF 77,78,214/- COMPUTED U/R 8D OF INCOME TAX RULES OUT OF INTEREST PAID. T HE ASSESSING OFFICER MADE DISALLOWANCE OF 1,30,30,180/- U/S.14A R.W. RULE 8D. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME, ALLOWED AN AMOUNT OF 77,78,214/- MADE BY THE ASSESSING OFFICER U/S.14A R.W. RULE 8D(2) OF I.T. RULES. THE SAME HAS BEEN OPPOSED BEF ORE US ON BEHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE C IT(A) ERRED IN DELETING THE DISALLOWANCE OF 77,78,214/- COMPUTED U/R 8D OF THE INCOME TAX RULES OUT OF INTEREST PAID. THE CIT (A) ERRED IN IGNORING THAT THERE WAS A NEXUS BETWEEN THE INTERES T PERIOD ON LOAN INVESTED IN WIND MILLS AND INCOME FROM INVESTM ENTS IN PARTNERSHIP FIRMS, SHARES AND MUTUAL FUNDS CLAIMED EXEMPT. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATI VE HAS 3 SUPPORTED THE ORDER OF CIT(A) AND DREW OUR ATTENTIO N TO THE VARIOUS DETAILS IN THIS REGARD TO JUSTIFY THE ORDER OF CIT(A) ON THE ISSUE. 2.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD CLAIMED EXEMP T INCOME OF 2,59,35,319/- WHICH COMPRISED OF DIVIDEND INCOME, P PF INTEREST, LIC RECEIPT AND SHARE OF PROFIT FROM FIRMS WHERE TH E ASSESSEE WAS A PARTNER. THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS SUBMITTED THE WORKING OF DISALLOWANCE AS PER SECTIO N 14A. THE ASSESSING OFFICER NOTICED THAT AS PER RULE 8D(2)(II ), THE INTEREST EXPENDITURE INCURRED DIRECTLY RELATING TO INCOME WH ICH DID NOT FORM PART OF TOTAL INCOME, WAS SHOWN AS NIL AND THE ASSESSEE FURTHER CLAIMED THAT DURING THE YEAR, INTEREST EXPE NDITURE HAS BEEN INCURRED TOWARDS BUSINESS OF WINDMILL, THEREFO RE, NOT CONSIDERED AS PER RULE 8D(2)(II) AS THE PROFIT FROM WINDMILL HAS BEEN OFFERED TO TAX AND NOT CLAIMED EXEMPT. THE AS SESSING OFFICER NOTICED THAT AS PER RULE 8D(2)(II), DISALLO WANCE CALCULATED BY THE ASSESSEE WORKED OUT TO 49,42,676/-. THE CONTENTION RAISED BY THE ASSESSEE OF NON-INCURRENCE OF ANY INT EREST EXPENDITURE DIRECTLY IN EARNING THE EXEMPT INCOME U NDER RULE 8D(2)(I) WAS ACCEPTED. HOWEVER, THE ASSESSING OFFI CER DID NOT AGREE TO THE WORKING OF THE NIL DISALLOWANCE UNDER RULE 8D(2)(II) BY THE ASSESSEE ON THE PLEA THAT THE LOAN WAS UTILI ZED FOR SPECIFIC PURPOSE I.E. FOR WINDMILL. THE ASSESSING OFFICER O BSERVED THAT THE ASSESSEE HAD INVESTED TO THE TUNE OF 1,24,24,69,335/- IN SHARES, 1,76,18,000/- IN MUTUAL FUNDS AND NEGATIVE BALANCE OF 12,37,16,314/- IN THE PARTNERSHIP FIRM. THE ASSES SING OFFICER, THUS HELD THAT HAD THE AFORESAID SUM OF MONEY UTILI ZED FOR INVESTMENT IN THE WIND MILL BUSINESS, THE INTEREST LIABILITY WOULD HAVE BEEN DECREASED ACCORDINGLY. THE ASSESSING OFF ICER NOTED THAT THE ASSESSEE HAD CASH AVAILABLE WITH IT, WHICH HAD BEEN INVESTED IN PARTNERSHIP FIRM, SHARES AND MUTUAL FUN DS WHOSE 4 INCOME WAS NOT TAXABLE AND ON THE OTHER HAND, THE A SSESSEE HAD TAKEN INTEREST BEARING FUNDS FOR INVESTMENT IN WIND MILL. THE ASSESSING OFFICER NOTED THAT THERE WAS NO DIFFERENC E BETWEEN FUNDS OF ASSESSEE OR PROPRIETARY BUSINESS AS PER BO OKS OF ACCOUNT MAINTAINED. THE ASSESSING OFFICER, HENCE R EJECTED THE CLAIM OF ASSESSEE THAT THE INTEREST EXPENDITURE INC URRED BY WIND MILL HAD NO BEARING ON EARNING OF EXEMPT INCOME AND HENCE NOT BEEN CONSIDERED FOR RULE 8D(2)(II) OF I.T. RULES. THE ASSESSING OFFICER FURTHER NOTICED WHILE COMPUTING AVERAGE VAL UE OF INVESTMENT, THE ASSESSEE IN ITS WORKING OF DISALLOW ANCE U/S.14A HAD CONSIDERED THE NEGATIVE BALANCE OF 12,37,16,314/- AS CAPITAL IN PARTNERSHIP. THE ASSESSING OFFICER HELD THAT SECTION 14A AND RULE 8D INCLUDES INVESTMENT MADE BY THE ASS ESSEE AND IN A SITUATION OF NEGATIVE CAPITAL BALANCE IN THE H ANDS OF FIRM, IT WAS CLEAR THAT THE FIRM HAD TENDERED FUNDS TO THE A SSESSEE AND SUCH TRANSACTION COULD NOT TAKE COLOUR OF INVESTMEN T. THUS, THE ASSESSING OFFICER TOOK AVERAGE VALUE OF INVESTMENT WITHOUT CONSIDERING NEGATIVE BALANCE OF CAPITAL AND THUS AV ERAGE INVESTMENT WAS WORKED OUT AT 1,05,03,93,276/- AS AGAIN 98,85,35,119/- COMPUTED BY THE ASSESSEE. THUS, THE ASSESSING OFFICER WORKED OUT DISALLOWANCE U/S.14A R.W. RULE 8 D AS UNDER: (I) NIL (II) 2,90,95,369 (A) X 1,05,03,93,276 (B) 3,92,91,25,509 (C) A X B = RS.77,78,214/- C (I) 0.5 X 1,05,03,93,276/100 = RS.52,51,966/- 2.2 THUS, THE TOTAL DISALLOWANCE OF EXPENDITURE ATT RIBUTABLE TO EARNING OF INCOME DETERMINED AT 1,30,30,180/- (77,78,214 + 52,51,966) AND THE SAME WAS DISALLOWED AND ADDED TO THE TOTAL INCOME. 5 2.3 IN APPEAL, THE CIT(A) HAVING CONSIDERED, HELD T HAT THE ASSESSEE IN THE CAPACITY OF INDIVIDUAL CARRIES ON D IFFERENT BUSINESSES BOTH AS PARTNER OF FIRM AND ALSO AS A PR OPRIETOR OF SEVERAL CONCERNS BEING M/S. SNEHPURTI CONSTRUCTION AND M/S. AVINASH BHOSALE WIND FARM, WHOSE BOOKS OF ACCOUNT A ND FINANCIAL STATEMENTS WERE MAINTAINED AND DRAWN UP S EPARATELY. THE ASSESSING OFFICER CONSIDERED THEM TO BE ALL ONE INDIVIDUAL BUSINESS ACTIVITIES AND THUS HAS LINKED THE NEXUS O F THE INTEREST EXPENDITURE TO THE EARNING OF EXEMPT INCOME. THE C IT(A) FROM THE MATERIAL BROUGHT ON RECORD, OBSERVED THAT THE A SSESSEE HAS MAINTAINED ACCOUNTS SEPARATELY FOR ALL ITS PROPRIET ARY BUSINESSES WHICH ALSO INCLUDES THAT WIND FARM BUSINESS. THE P ROFIT & LOSS ACCOUNT AND BALANCE SHEETS OF AFORESAID PROPRIETARY CONCERNS INDICATED THE PAYMENT OF INTEREST AMOUNTING TO 2,90,95,369/- TO BANK OF INDIA ON ACCOUNT OF LOAN TAKEN OF 30 CRORES BY THE ASSESSEE DURING EARLIER YEARS, WHICH WAS EVIDENT FR OM THE SANCTIONED LETTER OF BANK OF INDIA DATED 18.05.2006 ADDRESSED TO THE ASSESSEE OF THE CREDIT FACILITIES AND TERMS & C ONDITIONS MENTIONED THEREIN IN THE ANNEXURE ATTACHED TO THE S AME. THUS, THE AFORESAID AMOUNT OF LOAN OF 30 CRORES HAD EXCLUSIVELY BEEN ASSIGNED WITH RESPECT TO PURCHASE OF WIND MILL FROM M/S. ENERCON WAS FOUND UNDISPUTED. THE ASSESSEE HAS ALS O CREDITED AN AMOUNT OF 7,56,61,095/- ON ACCOUNT OF SALE OF POWER AND HAS ALSO SHOWN PROFIT OF 4,77,10,734/- IN PROFIT & LOSS ACCOUNT FROM WIND MILL BUSINESS. IN THIS BACKGROUND, HE OB SERVED THAT THE AFORESAID INTEREST COULD NOT BE HELD TO BE IN A NY WAY TO BE RELATED TO THE EARNING OF EXEMPT INCOME EITHER DIRE CTLY OR INDIRECTLY. THEREFORE, DISALLOWANCE MADE BY THE AS SESSING OFFICER U/S.14A R.W. RULE 8D(2)(II) OF 77,78,214/- WAS ALLOWED OUT OF 1,30,30,180/-. THIS REASONED FINDING OF CIT(A) NEE DS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF 1/5 TH OF TOTAL EXPENDITURE ON HELICOPTER INSTEAD OF 1/7 TH . IN APPEAL, THE 6 CIT(A) FOLLOWING THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR A.Y. 2005-06, HAS RESTRICTED THE DISALLOWANCE ON HE LICOPTER EXPENDITURE TO 1/7 TH . THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDER: FROM THE ABOVE, IT IS CLEAR THAT SPECIAL BENCH DEC ISION IN THE CASE OF GULATHI SAREE CENTRE (SUPRA) OR THE DEC ISION IN THE CASE OF MAYUR KOTHARI (SUPRA) ARE IN THE CONTEX T OF THE PERSONAL CARS; WHEREAS THE PUNE BENCH DECISION IN T HE CASE OF M/S. KIRLOSKAR OIL ENGINES LTD (SUPRA) RELATES T O THE AVIATION VEHICLES, WHICH IS ALSO THE CASE OF THE AS SESSEE AS WHETHER IT IS THE CASE OF A HELICOPTER OR AIRCRAFT SHOULD NOT MAKE ANY DIFFERENCE. THUS, THE DECISION IN THE CAS E OF GULATHI SAREE CENTRE (SUPRA) OR THE DECISION IN THE CASE OF MAYUR KOTHARI (SUPRA) ARE DISTINGUISHABLE AS THE SU BJECT MATTER OF THESE APPEALS ARE THE DISALLOWANCE OUT OF THE CLAIMS INVOLVING THE PERSONAL CARS. FURTHER, WE MAY MENTIONED THAT THE REVENUE IS NO FAIR IN ADOPTING 2 0% (1/5 TH OF THE CLAIM) IN RESPECT OF THE BELL HELICOPTER AND IN ADOPTING 30% (NEARLY L/3 TH OF THE CLAIM) IN RESPECT OF THE CESSNA AIRCRAFT AND IN OUR OPINION, IT CONSTITUTES AN ARTIFICIAL DIFFERENCE. IT IS ALSO RELEVANT TO MENTI ON THAT THE SECTION 38(2) REFERS TO THE EXPRESSION 'FAIR' AND NEITHER OF THE IT AUTHORITIES I.E. AO OR CIT(A) HAVE UNDERTAKEN AN Y EXERCISE TO ESTABLISH THE SAID FAIRNESS IN ADOPTING THE SAID PERCENTAGES. IT IS TRUE THAT THE ONUS IS ON THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF THE ASSESSES. CONSIDERI NG THE PECULIAR CIRCUMSTANCES BETTER KNOWN TO THE ASSESSEE, THERE IS SURRENDER OF CLAIM TO THE EXTENT OF 1/7 TH OF THE TOTAL CLAIMS RS.93,96,771/- (I.E. RS.66,04,980/- ON ACCOUNT OF DEPRECIATION OF VEHICL ES AND RS.27,91,791/- ON ACCOUNT OF AVIATION EXPENSES) . AT THIS POINT OF TIME, IN OUR OPINION, THE ONUS HAS SHIFTED TO THE REVENUE TO DEMONSTRATE THAT THE SAID SURRENDER IS INCORRECT AND ESTIMATIONS MADE BY THE AO ARE FAIR WITHIN THE MEANING OF SECTION 38(2) OF THE ACT. FAIRNESS IS AN IMPORTANT FACTOR IN MATTERS OF QUANTIFICATION OF THE DISALLOWANCES, WHEN SECTION 3 8(2) OF THE ACT INVOKED. THE REVENUE HAS NOT DONE ANY PROBE INDEPENDENTLY TO DEMONSTRATE THAT ASSESSEES OFFER IS UNFAIR AND HIS ESTIMATIONS ARE FAIR. HENC E, WE ARE OF THE OPINION THAT THE ESTIMATIONS MADE BY THE AO, WHICH ARE CONFIRMED IN CASE OF THE CESSNA AIRCR AFT AND ALTERED IN CASE OF BELL HELICOPTER ARE HEREBY S ET ASIDE. 7 14. IN VIEW OF THE EXISTENCE OF THE PUNE BENCH DECI SION, WHICH IS BINDING, WE ARE OF THE OPINION, THAT THE O FFER OF THE ASSESSEE TO RESTRICT THE DISALLOWANCE TO 1/7 TH OF THE CLAIMS IN RESPECT OF BOTH BELL HELICOPTER AND THE CESSNA A IRCRAFT, IS REASONABLE AND FAIR. ACCORDINGLY, THE AO IS DIRECTE D. THUS, THE ORIGINAL GROUNDS RAISED BY THE ASSESSEE ARE ALL OWED. 3.1 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWI NG THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDING OF CIT(A), WHO HAS RESTRICTED THE DISALLOWANCE ON HELI COPTER EXPENDITURE TO 1/7 TH . WE UPHOLD THE SAME. 4. THE NEXT ISSUE IS WITH REGARD TO ESTIMATION OF A NNUAL VALUE OF LET OUT PROPERTY AT MUMBAI AT 30,00,000/-. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN RENT RECE IVED FROM A HOUSE PROPERTY AT WALKESHWAR, MUMBAI AT 80,500/-, AFTER DEDUCTION OF 34,500/- FOR REPAIRS AND COLLECTION CHARGES FROM THE TOTAL RENT RECEIPT OF 1,15,000/-. THE FLAT WAS 1169 SQ. FT. IN AREA AND IT WAS LET OUT ON RENT TO THE ASSOCIATE CO NCERN M/S. AVINASH CONSTRUCTION. THE ASSESSING OFFICER OBSERV ED THAT THE PROPERTY WAS PURCHASED ON 30.08.1999 AND THE TOTAL PURCHASE PRICE WAS AT 2,44,70,031/-. CONSIDERING THE LOCALITY OF THE PROPERTY, VERY LOW RENTAL INCOME WAS SHOWN FROM THI S RELATED CONCERN, AND THEREFORE, THE ANNUAL VALUE OF THE PRO PERTY WAS REQUIRED TO BE DETERMINED U/S.23(1)(A) OF THE ACT. THE ASSESSING OFFICER CITED INFORMATION REGARDING RENT AVAILABLE ON THE WEBSITE WWW.REALESTATEMUMBAI.COM., ACCORDING TO WHICH RENT IN WALKESHWARNAGAR AREA, MUMBAI PER MONTH APPROXIMATEL Y WAS 2,50,000/- TO 3,00,000/-. 4.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) ON PERUSAL OF THE ORDER PASSED BY IT AT, PUNE BENCH IN THE ASSESSEES OWN CASE IN ITA NO.1425/PN/ 2008 DATED 8 24.09.2010, WHEREIN, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE AS UNDER: 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS PAPER BOOK FILED BEFORE US AND COPIES OF THE DECISIONS FILED BEFORE US. UNDISPUTEDLY, THIS IS THE CASE, WHERE THE PROPERTY IS LET TO THE SISTER CONCERN FOR RENT AND THEREFORE, CLAUSE ( B) OF SECTION 23(1) APPLY TO THE CASE. AO HAS NOT MADE OU T A CASE THAT THE CASE FALL IN THE EXEMPTED CASES OF MAHARAS HTRA RENT CONTROL ACT, 1999. THE PROVISIONS OF CLAUSE (B ) OF SECTION 23 ARE AS UNDER:- 23(1) ANNUAL VALUE HOW DETERMINED SUBSECTION (1) FOR THE PURPOSE OF SECTION 22, THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE, (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS L ET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED O R RECEIVABLE CLAUSE (B) REFERS TO A PROPERTY, WHICH ARE LET. AN NUAL VALUE OF A PROPERTY DETERMINED UNDER SECTION 23 SHALL BE ADOPTED FOR COMPUTING THE INCOME FROM PROPERTY IN TERMS OF SECTION 22. THE ANNUAL VALUE DETERMINATION SHALL BE STRICT LY IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 23 AS UPHELD BY THE CO-ORDINATE BENCH IN THE CASE OF DELI TE ENTERPRISES (P) LTD. V. ITO (2008) 22 SOT 245 (MUM) . ACCORDINGLY, WHERE THE RENT CONTROL ACT IS APPLICAB LE ONLY THE STANDARD RENT IS TO BE TAKEN AS THE ANNUAL LETT ING VALUE. IN THE ABSENCE OF STANDARD RENT THE MUNICIPAL RATAB LE VALUE IS TO BE TAKEN. WHERE THE MUNICIPAL RATABLE VALUE OF RENT IS LESS THAN ACTUAL RENT, THE ACTUAL RENT SHALL BE FAI R RENTAL VALUE FOR COMPUTING INCOME FROM HOUSE PROPERTY. HO WEVER, IT IS THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF MAKRUPA CHEMICALS (P) LTD. (2007) 108 ITD 95/12 SOT 68 (MUM) THAT THE STANDARD RENT IS THE UPPER LIMIT FOR DETERMINING THE ANNUAL VALUE. THE ABOVE SYNOPSIS G OES WELL WITH THE DECISIONS OF THE APEX COURT IN THE CASE OF DEWAN DAULAT RAI KAPOOR (SUPRA) AND ALSO APEX COURT JUDGM ENT IN THE CASE OF DR. BALBIR SINGH AND OTHERS (SUPRA) FOR THE PROPOSITION THAT THE RATABLE VALUE DETERMINED BY TH E MUNICIPAL AUTHORITY IS BINDING UNLESS THE STANDARD RENT IS HIGHER. 9 11. IN THE LIGHT OF THE ABOVE LEGAL POSITION WE HAV E EXAMINED THE FACTS OF THE INSTANT CASE. THE ASSESSE E HAS LET OUT SPACE TO THE SISTER CONCERN, WHICH IS UNDISPUTED FACT AND IS RECEIVING RS 10,000/- PER MONTH FROM EACH SISTER CONCERN. THEREFORE, THE ASSESSEE'S PROPERTY IS COVERED BY PROVISIONS OF CLA USE (B) OF SECTION 23(1). THIS IS A FACT THAT ASSESSEE' S ACTUALLY RENT RECEIVED OR RECEIVABLE IN RESPECT OF THE SAID PROPERTY IS NOT IN EXCESS OF THE ALV COMPUTED UNDER CLAUSE (A) OF SECTION 23(1). IN THE LIGHT OF THESE FACTS, AO'S DECISION TO INVOKE A COMPARABLE CASE TO THE PROPERTY COVERED UNDER CLAUSE (B) IS NOT IN TUNE WI TH THE ABOVE REFERRED LEGAL POSITION. FURTHER, IT IS N OT ALSO THE CASE OF THE AO THAT ASSESSEE IS COVERED BY THE EXEMPTIONS PROVIDED IN THE MAHARASHTRA RENT CONTROL ACT AND, THEREFORE, ALV OF THE PROPERTY SHALL BE DETERMINED ON THE BASIS OF THE COMPARABLE CASES. IN ANY CASE, THE STANDARD RENT IS UPPER LIMIT FOR DETERMINATION THE ALV AS HELD IN THE CASE OF MAKRUP A CHEMICALS PVT LTD (SUPRA). THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. 22, THUS, IT IS NOT THE CASE OF THE REVENUE THAT TH E ALV DETERMINED BY THE ASSESSEE IS LESS THAN THE STANDAR D RENT. CONSIDERING THE ABOVE FACTUAL AND LEGAL POSITION IN FORCE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) DOE S NOT CALL FOR ANY INTERFERENCE FOR THE ABOVE REASONS. ACCORDI NGLY, GROUND 1 OF THE REVENUE IS DISMISSED. IN THIS BACKGROUND, THE CIT(A) GRANTED RELIEF TO T HE ASSESSEE. THIS REASONED FINDING OF CIT(A), WHICH IS BASED ON DECISION OF ITAT IN ASSESSEES OWN CASE, NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 21 ST OF MAY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 21 ST MAY, 2014 GCVSR 10 COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE