PRITI SHREEPAL DALAL, MUMBAI V. ITO 12(3)(2), MUMBAI

ITA 2700/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7396 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 28-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: REEPAL TRALSHAWALA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE SHRI R V EASWAR, SENIOR VICE PRESIDENT AND SHRI P M JAGTAP, ACCOUNTANT MEMBER I T A NO: 2700/MUM/2009 (ASSESSMENT YEAR: 2004-05) MRS PRITI SHREEPAL DALAL, MUMBAI APPELLANT (PAN: AABPD6620N) VS INCOME TAX OFFICER 12(3)(2), MUMBAI RESPONDENT APPELLANT BY: SHRI REEPAL TRALSHAWALA RESPONDENT BY: SHRI NAVEEN GUPTA O R D E R R V EASWAR, SENIOR VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSM ENT YEAR 2004-05. THE ASSESSEE BROUGHT A PROPERTY, BEING RE SIDENTIAL FLAT, ON THE 14 TH FLOOR OF PUSHPAK APARTMENTS, ALTAMOUNT ROAD, MUMBA I, ON 31.03.2003 FOR A PRICE OF RS.1,69,00,000/-. IT WOU LD APPEAR THAT SHE COULD NOT LET OUT THE PROPERTY AS SHE WAS NOT IN A POSITION TO OBTAIN A GOOD LICENSEE THOUGH SHE INTENDED TO LET OUT THE F LAT. THE FLAT WAS THUS VACANT FOR THE ENTIRE PERIOD FROM 01.04.2003 T O 31.03.2004. IN THE RETURN OF INCOME SHE ESTIMATED THE ANNUAL LETTING V ALUE OF THE PROPERTY AT RS.50,000/-. THE ASSESSING OFFICER, HO WEVER, INVOKED SECTION 23(1)(A) OF THE INCOME TAX ACT, 1961, AND P ROPOSED TO TAKE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPE CTED TO LET FROM YEAR TO YEAR AS THE ALV. HE FOUND THAT IN THE IMME DIATELY FOLLOWING YEAR, I.E. THE ASSESSMENT YEAR 2005-06, THE ASSESSE E HAD LET OUT THE FLAT FOR RS.90,000/- PER MONTH. HE, THEREFORE, CON SIDERED THE FAIR RENT FOR THE YEAR UNDER APPEAL TO BE RS.75,000/- PER MON TH AND PROCEEDED TO COMPUTE THE ALV ON THAT BASIS. THIS RESULTED IN THE ALV BEING 2 TAKEN AT RS.9,00,000/- AND AFTER THE STATUTORY DEDU CTIONS THE NET INCOME FROM THE FLAT WAS TAKEN AT RS.3,26,924/-. 2. THE ASSESSEE APPEALED AND CONTENDED THAT SINCE T HE PROPERTY WAS VACANT THROUGHOUT THE PREVIOUS YEAR, SECTION 23 (1)(A) WAS NOT APPLICABLE AND THE ALV MUST BE COMPUTED UNDER SECTI ON 23(1)(C). THE CIT(A) REJECTED THE CONTENTION ON THE GROUND THAT T HE ASSESSEE WAS UNABLE TO SHOW THAT THE RENT CONTROL ACT WAS APPLIC ABLE IN RESPECT OF THE FLAT. HENCE, THE PRESENT APPEAL. 3. THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESS EE BY THE ORDER OF THE TRIBUNAL, MUMBAI BENCH, IN THE CASE OF PREMS UDHA EXPORTS (P) LTD. VS. ACIT (2007) 17 SOT 293 (MUM). IN THIS ORD ER, THE TRIBUNAL HAS OPINED THAT THE WORDS PROPERTY IS LET APPEARI NG IN SECTION 23(1)(C) DOES NOT MEAN ACTUAL LETTING OUT OF THE PROPERTY AN D THAT IT WOULD APPLY IF THE ASSESSEE IS ABLE TO SHOW THAT THE PROPERTY W AS HELD WITH AN INTENTION TO LET OUT COUPLED WITH EFFORTS MADE FOR LETTING IT OUT. IN THE PRESENT CASE THE ASSESSEE HAS WRITTEN TO THE ASSESS ING OFFICER ON 20.11.2006 THAT SINCE SHE COULD NOT FETCH A PROPER LICENSEE FOR THE FLAT, SHE COULD NOT LET IT OUT DURING THE RELEVANT PREVIO US YEAR. THIS CLAIM HAS NOT BEEN DOUBTED. THE MUMBAI BENCH HAS HELD IN THE ORDER CITED ABOVE THAT IT IS NOT NECESSARY FOR THE APPLICATION OF SECTION 23(1)(C) THAT THE PROPERTY SHOULD FIRST BE LET OUT AND THEREAFTER SHOULD FALL VACANT. IT HAS BEEN HELD THAT IT IS ENOUGH IF THERE WAS AN INT ENTION TO LET OUT THE PROPERTY WHICH DID NOT FRUCTIFY AND IF THAT IS SUCC ESSFULLY SHOWN, THEN EVEN THOUGH THE PROPERTY WAS VACANT THROUGHOUT THE PREVIOUS YEAR, ITS ANNUAL LETTING VALUE SHOULD BE COMPUTED UNDER SECTI ON 23(1)(C). 3 RESPECTFULLY FOLLOWING THE ORDER CITED ABOVE, WE AC CEPT IN PRINCIPLE THE ASSESSEES CLAIM. HOWEVER, SINCE THE ASSESSEE HERSELF HAS SHOWN THE ANNUAL LETTING VALUE AT RS.50,000/- IN RESPECT OF THE PROPERTY, THE SAME HAS TO BE ASSESSED. WE, THEREFORE, REDUCE THE ALV TO RS.50,000/- AND DIRECT THE ASSESSING OFFICER TO COM PUTE THE INCOME FROM THE FLAT ON THAT BASIS. 4. IN THE RESULT, THE APPEAL IS ALLOWED IN THE ABOV E TERMS WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED ON 12 TH MARCH 2010. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESI DENT MUMBAI, DATED 12 TH MARCH 2010 SALDANHA COPY TO: 1. MRS PRITI SHREEPAL DALAL 151, PUSHPAK APTS., 31, ALTAMOUNT ROAD MUMBAI 400 026 2. ITO 12(3)(2) 3.CIT-XII 4.CIT(A)-XII 5.DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI