Sangappa K. Hanumasagar, Laxmeshwar 582116 V. ITO, Hubli

ITA 26/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89969 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 19-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Assessee Lawyers: R B KRISHNA
• Keywords: Additional evidence; Corroborative evidences; Onus to prove
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER IT(IT)A NO.26(BANG) 2014 (ASSESSMENT YEAR : 2009-10) SMT MITHRAVINDA BINDU, NO.43, 39 TH CROSS, 8 TH BLOCK, JAYANAGAR, BANGALORE A PPELLANT PAN NO.ATKPB1376P VS THE INCOME-TAX OFFICER, INTERNATIONAL TAXATION, BANGALORE RESPONDENT ASSESSEE BY : SHRI R.B.KRISHNA, ADVOCATE REVENUE BY : SHRI P. DHIVAHAR, JCIT DATE OF HEARING : 04-06-2015 DATE OF PRONOUNCEMENT : 2 2-06-2015 O R D E R PER SHRI VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26- 03-2014 OF CIT(A)-IV, BANGALORE FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS; 1. THE ORDER IS OPPOSED TO LAW AND TO FACTS IN AS MUCH AS THE AO HAS ESTIMATED THE FAIR RENTAL VALUE OF THE PROPE RTY AT K.K.NAGAR, CHENNAI AD THE DISPOSED OFF PROPERTY AT JUBILEE HILLS, HYDERABAD WITHOUT ANY BASIS. IT(IT)A NO.26(BANG)2014 2 2. THE DISALLOWANCE OF VACANCY ALLOWANCE IS OPPOSED TO LAW AND TO FACTS. 3. THE DISALLOWANCE OF 50% OF COST OF IMPROVEMENT IS OPPOSED TO LAW AND TO FACTS SPECIALLY WHEREIN AN AFFIDAVIT IN THIS REGARD HAS BEEN PRODUCED. 4. FOR THESE AND OTHER REASONS THAT MAY BE ADDUCED AT THE TIME OF HEARING THIS APPEAL MAY BE ALLOWED. 2. GROUND NO.1 & 2 ARE REGARDING COMPUTATION OF ANN UAL LETTING VALUE AND VACANCY ALLOWANCE. THE ASSESSEE IS A NON -RESIDENT INDIA AND EARNED INCOME FROM HOUSE PROPERTY AS WELL AS CAPITA L GAIN FROM THE SALE OF PROPERTY. DURING THE YEAR UNDER CONSIDERATION, THE TWO PROPERTIES ONE AT CHENNAI AND THE OTHER AT HYDERABAD WERE VACANT. AS SESSEE DECLARED THE ANNUAL LET OUT VALUE OF PROPERTIES AT BANGALORE AT RS.30,000/-, WHEREAS THE ANNUAL LETTING VALUE OF PROPERTY AT JUBILEE HILLS, HYDERABAD WAS DECLARED NIL. THE AO ACCEPTED THE ANNUAL LET OUT VALUE D ECLARED BY THE ASSESSEE IN RESPECT OF THE PROPERTY AT BANGALORE, BUT DID NOT A CCEPT THE ANNUAL LET OUT VALUE ADOPTED BY THE ASSESSEE AS NIL IN RESPECT O F THE PROPERTY AT JUBILEE HILLS, HYDERABAD AND COMPUTED THE SAME AT THE RATE OF 10,000/- PER MONTH. THUS, THE ANNUAL LETTING VALUE ESTIMATED BY THE AO AT RS.90,000/- FOR A PERIOD OF NINE MONTHS, BECAUSE THE ASSESSEE H AD SOLD THE PROPERTY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A)AND ALSO CLAIM VACATION ALL OWANCE IN RESPECT OF IT(IT)A NO.26(BANG)2014 3 PROPERTY AT JUBILEE HILLS, HYDERABAD. THE CIT(A) HAS CONFIRMED THE ACTION OF THE AO, WHILE PASSING THE IMPUGNED ORDER. 3. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AO HAS ACCEPTED THE MUNICIPAL VALUE IN RESPECT OF O THER PROPERTIES BUT ESTIMATED THE ANNUAL LETTING VALUE IN RESPECT OF TH E PROPERTY AT JUBILEE HILLS, HYDERABAD ON THE GROUND THAT THE ASSESSEE DI D NOT PRODUCE THE PROPERTY TAX RECEIPT IN SUPPORT OF THE MUNICIPAL VA LUE OF THE PROPERTY. THE LEARNED COUNSEL HAS POINTED OUT BEFORE THE CIT(A) T HE ASSESSEE HAS PRODUCED THE PROPERTY TAX RECEIPT IN RESPECT OF THE PROPERTY SITUATED AT JUBILEE HILLS, HYDERABAD. HOWEVER, THE CIT(A) HAS NOT CONSIDERED THE SAID EVIDENCE PRODUCED BY THE ASSESSEE IN RESPECT OF MUN ICIPAL VALUE OF THE PROPERTY. THUS, LEARNED AR HAS SUBMITTED THAT THE ANNUAL LETTING VALUE IF AT ALL ADOPTED IN CASE OF HYDERABAD PROPERTY OF THE ASSESSEE, THE SAME SHOULD BE BY CONSIDERING THE MUNICIPAL VALUE OF THE PROPERTY. HE HAS FURTHER SUBMITTED THAT SINCE THE PROPERTY REMAINS V ACANT DURING THE YEAR, THE ASSESSEE IS ALSO ENTITLED FOR VACATION ALLOWANC E. 4. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE OF PAYMENT OF PROPERT Y TAX TO SHOW THE MUNICIPAL VALUE OF THE PROPERTY BEFORE THE AO. FU RTHER, THE CIT(A) HAS ALSO NOT DISCUSSED ANY ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. IT(IT)A NO.26(BANG)2014 4 5. AS REGARDS THE VACATION ALLOWANCE, LEARNED DR SU BMITTED THAT WHEN THE PROPERTY WAS NEVER LET OUT BY THE ASSESSEE , THEN THE VACATION ALLOWANCE IS NOT AVAILABLE TO THE ASSESSEE IN RESPE CT OF THAT PROPERTY. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THE AO HAS GIVEN THE DETAILS OF THE PROPERTY AND THE ANNUAL LETTING VALUE ESTIMATED BY THE ASSESSEE IN P ARA-3 OF THE ORDER AS UNDER; 3. IT WAS SEEN FROM THE RETURN OF INCOME THAT THE A SSESSEE IS THE OWNER OF THE FOLLOWING PROPERTY AND HAS ESTIMAT ED THE ANNUAL LET OUT VALUE OF THE IMMOVABLE PROPERTY AS U NDER; PROPERTY ADDRESSES ALV (A) PROPERTY AT B - 3, II FLOOR, KRISHN A GARDEN APARTMENT, KAVAL BYRASANDRA, BANGALORE (CO- OWNERSHIP WITH SRI ARAVAPALLI BINDU) 24,000 ( B) PROPERTY AT 1933, 5 TH CROSS, SARAKKI, BANGALORE (C0- OWNERSHIP WITH SRI ARAVAPALLI BINDU) 30,000 (C) PROPERTY AT NO.43,39 TH CROSS, 9 TH BLOCK, CLAIMED AS SELF OCCUPIED IT(IT)A NO.26(BANG)2014 5 JAYANAGAR, BANGALORE (D) PROPERTY AT 8 - 2 - 293/82/BE/131 ROAD NO.71, JUBILEE HILLS, HYDERABAD (SOLD ON DECEMBER, 2008) (252 S.FT) NIL 7. AS IT IS CLEAR FROM THE ABOVE TABLE, THE ASSESSE E HAS ESTIMATED THE ANNUAL LETTING VALUE IN RESPECT OF PROPERTY AT JUBI LEE HILLS, HYDERABAD AS NIL. THE AO, WHILE CONSIDERING THE ISSUE OF ANN UAL LETTING VALUE IN RESPECT OF THE PROPERTY AT SL.NO. A & B OF THE TABLE SITUAT ED AT BANGALORE HAS ACCEPTED THE CLAIM OF THE ASSESSEE BEING MUNICIPAL VALUE AS UNDER; THE ASSESSEE WAS ASKED TO FURNISH COPIES OF THE RE TURNS OF ASSESSMENT OF THE PROPERTY SUBMITTED TO THE MUNICIPAL/CORPORATION AUTHORITIES. THE ASSESEE HAS FURNISHED THE COPIES OF THE RETURN ONLY IN RESPECT OF THE PROPERTY AT J.P.NAGAR AND KAVAL BYRASANDRA, BANGALO RE. HENCE THE ASSESSEES CLAIM RELATING TO THESE TWO PR OPERTIES IS ACCEPTABLE KEEPING IN VIEW THE JUDGMENTS RELIED ON BY THE ASSESSEE. HOWEVER, SIMILAR VIEW CANNOT BE TAKEN IN RESPECT OF THE OTHER PROPERTY AT JUBILEE HILLS, HYDERABAD A S THE ASSESEE HAS NOT PRODUCED THE PROOF OF MUNICIPAL VAL UATION IN RESPECT OF THE PROPERTIES AT JUBILEE HILLS, HYDERAB AD. IN THE IT(IT)A NO.26(BANG)2014 6 ABSENCE OF PRODUCTION OF MUNICIPAL VALUATION THE AN NUAL VALUE OF THE PROPERTIES IS COMPUTED AS UNDER U/S 23(1)(A) . 8. THUS, IT IS CLEAR THAT THE AO ACCEPTED THE ESTI MATION OF ANNUAL LET TING VALUE GIVEN BY THE ASSESSEE BASED ON MUNICIPAL VALUE OF THE PROPERTY SITUATED AT BANGALORE, BECAUSE THE ASSESSEE HAS FUR NISHED THE RETURN OF THE ASSESSMENT OF THE PROPERTY. THE CLAIM OF THE ASSESSEE IN RESPECT OF THE PROPERTY AT JUBILEE HILLS, HYDERABAD WAS REJECTED B Y THE AO ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED THE PROOF OF MUN ICIPAL VALUATION IN RESPECT OF THE SAID PROPERTY. THE ASSESSEE PRODUC ED THE RECEIPT OF THE PROPERTY TAX AS WELL AS THE SUMMARY OF THE PROPERTY TAX DUE DEMAND IN RESPECT OF THE PROPERTY AT JUBILEE HILLS, HYDERABAD BEFORE THE CIT(A), BUT THE CIT(A) HAS NOT CONSIDERED THE MUNICIPAL VALUATI ON OF THE SAID PROPERTY WHILE DECIDING THE ISSUE. AS IT IS MANIFEST FROM T HE ASSESSMENT ORDER, THE AO ACCEPTED THE ANNUAL LETTING VALUE BASED ON THE M UNICIPAL VALUE IN RESPECT OF THE PROPERTIES SITUATED AT BANGALORE. T HEREFORE, THE MUNICIPAL VALUE IN RESPECT OF THE PROPERTY AT JUBILEE HILLS, HYDERABAD IS ALSO REQUIRED TO BE CONSIDERED WHILE DETERMINING THE ANNUAL LET O UT VALUE U/S 23(1)(A) OF THE ACT. THEREFORE, IN THE FACTS AND CIRCUMSTANCE S OF THE CASE, AS WELL AS THE IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS I SSUE OF DETERMINATION OF ANNUAL LETTING VALUE IN RESPECT OF THE PROPERTY AT JUBILEE HILLS, HYDERABAD TO THE RECORD OF THE AO TO RE-DO THE EXERCISE OF CO MPUTATION OF ANNUAL LET IT(IT)A NO.26(BANG)2014 7 OUT VALUE, AFTER CONSIDERING THE PROPERTY TAX PAYME NT RECORD FILED BY THE ASSESSEE. 9. AS REGARDS THE VACANCY ALLOWANCE CLAIMED BY THE ASSESSEE, WE NOTE THAT THE ASSESSEE NEVER LET OUT THE PROPERTY A T JUBILEE HILLS, HYDERABAD. THEREFORE, THE QUESTION OF REMAINING T HE PROPERTY VACANT DURING THE YEAR FOR THE PURPOSE OF VACANCY ALLOWANC E DOES NOT ARISE. ACCORDINGLY, THE CLAIM OF THE ASSESSEE IS DEVOID OF ANY MERIT, WHEN THE ASSESSEE NEVER LET OUT THE PROPERTY IN QUESTION. H ENCE, THE CLAIM OF VACANCY ALLOWANCE IS REJECTED. 10. GROUND NO.3, REGARDING DISALLOWANCE OF COST OF IMPROVEMENT, WHILE COMPUTING THE CAPITAL GAIN. THE ASSESSEE IS A JOINT OWNER WITH HER HUSBAND SHRI ARAVAPALLI BINDU OF PROPERTY NO.71, JU BILEE HILLS, HYDERABAD. DURING THE YEAR ASSESSEE SOLD THE SAID IMMOVABLE PR OPERTY FOR A CONSIDERATION OF RS.1.20 CRORES AND CLAIMED COST OF IMPROVEMENT OF RS.1,50,000/-LACS FOR FY: 2003-04 AND RS.2.00 LAC S FOR FY: 2004-05. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE CLAIM, AS THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SU PPORT OF SUCH EXPENDITURE ON ACCOUNT OF COST OF IMPROVEMENT. TH E CIT(A) HAD CONCURRED WITH THE FINDINGS OF THE AO. 11. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE PROPERTY IN QUESTION VIDE SALE DEED DATED 19-10-1995 WITHOUT ANY CONSTRUCTION. HE HAS REFERR ED THE SCHEDULE OF THE IT(IT)A NO.26(BANG)2014 8 PROPERTY AS PART OF THE SALE DEED DATED 19-10-1995 AND SUBMITTED THAT AS PER THE SCHEDULE OF THE PROPERTY, THERE IS NO MENTI ON OF ANY HOUSE ON THE SAID PLOT OF LAND. LEARNED COUNSEL FOR THE ASSESSEE THEN REFERRED THE SCHEDULE OF THE PROPERTY AS PER SALE DEED DATED 2 ND DECEMBER, 2008, WHEREBY THE ASSESSEE HAD SOLD THE PROPERTY IN QUEST ION AS A HOUSE. THUS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ACCEPTED THE COST OF CONSTRUCTION AND CLAIMED THE S AME AS COST OF IMPROVEMENT. THE LEARNED COUNSEL HAS FURTHER SUBMI TTED THAT THE ASSESSEE HAS EXPLAINED THE AUTHORITIES BELOW AND SU BMITTED THAT THIS EXPENDITURE WAS INCURRED BY THE ASSESSEE THROUGH ON E MR.PRABHANJAN RAO, WHOSE AFFIDAVIT HAS BEEN FILED BY THE ASSESSEE IN C ONFIRMATION OF THE SAID EXPENDITURE. THE AO ISSUED SUMMONS U/S 131 TO SHRI PRABHANJAN RAO, AND IN RESPONSE TO THE NOTICE MR. PRABHANJAN RAO, F ILED AN AFFIDAVIT AND STATED THAT HE HAD NOT MAINTAINED ANY BILL OR DOCUM ENTARY EVIDENCE AS HE WAS NOT AWARE THAT IT WAS NECESSARY TO KEEP THIS EV IDENCE TO CLAIM THE BENEFIT. THUS, THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT WHEN THERE IS CONSTRUCTION ON THE PROPERTY IN QUESTION, SUBSEQUENT TO THE ACQUISITION, THEN THE CLAIM OF THE ASSESSEE CANNOT BE DENIED BY TREATING THE SAME AS NOT GENUINE. 12. ON THE OTHER HAND, LEARNED DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS NOT FILED ANY DOCUMENTARY EVIDENCE TO SHOW THAT ANY EXPENDITURE I NCURRED ON THE IT(IT)A NO.26(BANG)2014 9 IMPROVEMENT OF THE PROPERTY IN QUESTION. THEREFOR E, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE THE CLAIM OF THE ASSESSEE CANN OT BE ACCEPTED. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND T HE MATERIAL AVAILABLE ON RECORD. THOUGH, ASSESSEE HAS NOT PROD UCED ANY SUPPORTING EVIDENCE REGARDING THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF IMPROVEMENT OF THE PROPERTY IN QUESTION, HOWEVER, A S POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE PROPERTY IN Q UESTION WAS PURCHASED BY ASSESSEE VIDE SALE DEED DATED 19-10-1995 AND AS PER THE SCHEDULE OF THE PROPERTY, THERE IS NO MENTION OF ANY CONSTRUCTI ON OR ANY STRUCTURE ON THE SAID PROPERTY PURCHASED BY THE ASSESSEE. WE NO TE THAT THE ASSESSEE HAD SOLD THE PROPERTY VIDE SALE DEED DATED 2 ND DECEMBER, 2008 AND AS PER THE SCHEDULE OF THE PROPERTY, BEING PART OF THE SAL E DEED DATED 2 ND DECEMBER, 2008 THE PROPERTY IS DESCRIBED AS HOUSE NO.. THEREFORE, PRIMA FACIE IT APPEARS THAT WHAT IS SOLD BY THE ASSESSEE IS A CONSTRUCTED PROPERTY. HOWEVER, IT IS A MATTER OF VERIFICATION AND EXAMINA TION. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE RECORD OF THE AO TO EXAMI NE THE FACTS OF ANY CONSTRUCTION PHYSICALLY EXISTING ON THE PROPERTY IN QUESTION AT THE TIME OF SALE, IN COMPARISON TO THE STATE OF PROPERTY AT THE TIME OF PURCHASE VIDE SALE DEED DATED 19-10-1995. IN CASE, IT IS FOUND T HAT THE ASSESSEE HAS CARRIED OUT ANY CONSTRUCTION OR IMPROVEMENT WORK IN THE PROPERTY AND ALSO PRODUCED THE RECORD OF PAYMENT OF MONEY THEN THE CL AIM OF THE ASSESSEE CANNOT BE BRUSHED ASIDE, MERELY BECAUSE THE ASSESSE E HAS NOT PRODUCED IT(IT)A NO.26(BANG)2014 10 THE BILLS OF THE EXPENDITURE. THIS GROUND OF THE A SSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2015. SD/- (ABRAHAM P GEORGE) SD/- (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 22-06-2015 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE