ACIT CIR 6(1), MUMBAI V. BDA P. LTD, MUMBAI

ITA 2609/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7464 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VANDANA SAGAR
• Keywords: Notional interest; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKO TAIAH ,(AM) ITA NO.2609/MUM/2009 ASSESSMENT YEAR : 2005-06 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 6(1), ROOM NO.506, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. BDA PVT. LTD. 12, EVERGREEN INDUSTRIAL ESTATE SHAKTI MILLS LANE MAHALAXMI MUMBAI-400 011. ..( RESPONDENT ) P.A. NO. (AAACB 0502 B) APPELLANT BY : MS. VANDANA SAGAR RESPONDENT BY : SHR I K.P. DEWANI O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 18.1.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF IND IAN MADE FOREIGN LIQUOR. DURING THE COURSE OF ASSESSMENT PROCEEDIN G IT WAS INTERALIA OBSERVED BY THE AO THAT THE ASSESSEE HAS SHOWN I NCOME ITA NO.2609/M/09 A.Y:05-06 2 UNDER THE HEAD INCOME FROM HOUSE PROPERTY AT RS.2.10 LACS OF ITS FLAT IN NCPA BUILDING AT NARIMAN POINT, A VERY PROMINENT AND KNOWN PLACE IN MUMBAI. THE AO FOR THE REASONS AS DISCUSSED IN THE ASSESSM ENT ORDER FOR THE PRECEDING ASSESSMENT YEAR HAS DETERMINED TH E INCOME FROM HOUSE PROPERTY AT RS.23,10,000/- BY CONSIDERING TH E ANNUAL LETTING VALUE AS NOTIONAL INTEREST ON THE INTEREST FRE E DEPOSIT OF RS.2.50 CRORES RECEIVED BY THE ASSESSEE FROM TENANT IN ADDITION TO ACTUAL RENT RECEIVED BY THE ASSESSEE AS UNDER :- ANNUAL VALUE 2,75,000 X 12 MONTHS RS.33,00, 000/- LESS: 30% REPAIRS OF RS.33,00,000/- RS. 9,90,0 00/- INCOME FROM HOUSE PROPERTY RS.23,10 ,000/- THE ASSESSING OFFICER AFTER MAKING CERTAIN OTHER DISALLOWA NCES COMPLETED THE ASSESSMENT AT A LOSS OF RS.2,13,99,705/- VID E ORDER DATED 31.12.2007 PASSED U/S.143(3) OF THE INCOME TAX AC T, 1961(THE ACT). ON APPEAL THE LD. CIT(A) FOLLOWING THE TRIBUN AL ORDER IN ASSESSEES OWN CASE IN ITA NO.1278/MUM/05 FOR ASSESSMENT YEAR 2001-02 DATED 10.3.2008 DELETED THE ADDITION MADE B Y THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE A NNUAL LETTING VALUE AS DECLARED BY THE ASSESSEE INSTEAD O F RS.33,00,000/- DETERMINED BY THE ASSESSING OFFICER IGNORING THE RETURN OF DEPOSIT AND PREVAILING MARKE T RATE ON RENT ON THE FLAT. ITA NO.2609/M/09 A.Y:05-06 3 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSE SSING OFFICER BE RESTORED. 4. AT THE TIME OF HEARING IT HAS BEEN AGREED BY BOTH THE PARTIES THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CA SE FOR THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2004-05. THE LD. COUNSEL FOR THE ASSESSEE ALSO PLACED ON RECORD THE COPY OF THE ORD ERS OF THE TRIBUNAL. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. WE FURTHER FIND THAT THE TRIBUN AL IN ASSESSEES OWN CASE IN BDA LIMITED VS. DCIT AND VICE VERSA IN ITA NO.9 19/MUM/05 FOR THE ASSESSMENT YEAR 2001-02, ITA NO.159/MUM/07 FOR THE ASSESSMENT YEAR 2002-03 AND ITA NO.1278/MUM/05 FOR THE ASSESSMENT YEAR 2001-02 HAS HELD VIDE PARA 8 OF ITS ORDER DATED 10.3.2008 AS UNDER : 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. WITH THE HELP O F CERTIFICATE GIVEN BY APSARA CO-OPERATIVE HOUSING S OCIETY ASSESSEE HAS DEMONSTRATED THE RATABLE VALUE AT RS. 1,23,302/- IN THE VICINITY. THE ASSESSEE HAS SHOW N THE ACTUAL RENT MORE THAN THIS AMOUNT AND FURNISHED A .L.V AT RS. 6.00 LACS. THE A.O HAS NOT EXAMINED ANY IS SUE, HE SIMPLY TAKEN INTO CONSIDERATION THE INTEREST COM PONENT ON THE INTEREST FREE DEPOSIT RECEIVED BY THE ASSESS EE. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V S. MAHAVIR PRASAD, 279 ITR 522 HELD THAT NOTIONAL INTE REST ON INTEREST FREE LOAN BY LESSEE IS NOT ASSESSABLE AS ITA NO.2609/M/09 A.Y:05-06 4 INCOME FROM HOUSE PROPERTY. IF ASSESSEE HAS ANY IN TEREST INCOME ON SUCH DEPOSIT THEN THAT WILL BE ASSESSED U NDER SOME OTHER HEAD. THE LD. CIT(A) BEFORE ACCEPTING T HE ANNUAL LETTING VALUE DISCLOSED BY THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF J.K. INVESTORS AS WELL AS MADE A REF ERENCE OF SERIES OF DECISIONS OF ITAT ON THIS POINT. THER EFORE, IN VIEW OF THE REASONED FINDING OF LD. CIT(A) EXTRACTE D SUPRA, WE DO NOT FIND ANY MERIT IN THIS GROUND OF A PPEAL, IT IS REJECTED. WE FURTHER FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE I N ACIT VS. BDA PVT. LTD. IN ITA NO.5350/MUM/2007 FOR ASSESSMENT YE AR 2004-05 DATED 30.7.2008 FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL (SUPRA), HAS CONFIRMED THE ORDER OF THE LD. CIT(A) IN DELETING TH E ADDITION MADE BY THE AO. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE B ROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE CON SISTENT VIEW OF THE TRIBUNAL DECLINE TO INTERFERE WITH THE ORDER PASSE D BY THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE AO. TH E GROUNDS TAKEN BY THE REVENUE ARE THEREFORE, REJECTED. 6. IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.3.2010. SD/- SD/- ( B. RAMAKOTAIAH ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 4.3.2010. JV. ITA NO.2609/M/09 A.Y:05-06 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 15.2.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17.2.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 4.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 5.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER