PASL WINDTECH PVT. LTD., Ahmedabad V. THE ACIT.,(OSD),Circle-5, Ahmedabad

ITA 289/AHD/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9664 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Opportunity of being heard; Notional interest; Revenue expenditure
• Section: 143(3); 244A; 234B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. AY APPELLANT RESPONDENT 2639/AHD/2013 2005-06 PASL WINDTECH PVT LTD, (FORMERLY KNOWN AS AHMEDABAD FINVEST CO PVT LTD) 37-B, PHASE-1, GIDC ESTATE, VATVA, AHMEDABAD PAN : AABCA 3022 G ACIT, CIRCLE-5, AHMEDABAD 2773/AHD/2013 2005-06 REVENUE ASSESSEE 1184/AHD/2011 2007-08 ASSESSEE REVENUE 289/AHD/2012 2008-09 ASSESSEE REVENUE 661/AHD/2013 2009-10 ASSESSEE REVENUE ASSESSEE(S) BY : SHRI S.N. SOPARKAR, AR REVENUE BY : SHRI DINESH SINGH, SR. DR / // / DATE OF HEARING : 15/04/2015 !'# / // / DATE OF PRONOUNCEMENT: 17/04/2015 $% $% $% $%/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: ITA NOS. 2639/AHD/2013 AND 2773/AHD/2013 ARE THE CR OSS APPEALS FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD DATED 11.09.2013 FOR ASSESSMENT YEAR 2005-06. ITA NOS. 1184/AHD/2011, 2 89/AHD/2012 AND 661/AHD/2013 ARE THE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 RESPECTIVELY, AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD DATED 09.03.2011 (AY 2007-08), 30.12.2011 (AY 2008-09) AND 31.01.201 3 (AY 2009-10). SINCE ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 2 THESE APPEALS INVOLVE COMMON ISSUES, THESE WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. ITA NO.2773/AHD/2013 REVENUES APPEAL : AY 2005-0 6 2. IN THIS APPEAL, FOLLOWING GROUNDS ARE RAISED BY THE REVENUE:- I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RED UCING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF ESTIMATION OF ALV AN D REWORKING OF THE ALV AT RS. 17,04,420/- AS AGAINST THAT OF RS.34,58, 969/- BEING THE ALV WORKED OUT BY THE A.O. II. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACT S IN ADOPTING THE RATE OF INTEREST AT 8.5% ON THE FIXED DEPOSITS WITHOUT A NY LOGICAL BASIS AND IN REPLACING THE RATE OF 17.25% ADOPTED BY THE A.O. BE ING THE RATE OF INTEREST ON BORROWINGS FROM THE BANK AT THE RELEVAN T TIME FORMING THE BASIS FOR DETERMINING OF ALV OF THE RENTED PROPERTI ES. III. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. IV. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO.2639/AHD/2013 ASSESSEES APPEAL : AY 2005- 06 3. IN THIS APPEAL BY THE ASSESSEE, FOLLOWING GROUND S ARE RAISED:- I. LD. CIT(A) GRAVELY ERRED IN LAW AND ON FACTS IN ADO PTING RATE @ 8.5% AS RETURN OF INVESTMENT CONFIRMING ADDITION OF RS.11,9 3,094/- FROM TOTAL ADDITION OF RS.24,21,279/- MADE BY AO TOWARDS HOUSE PROPERTY INCOME. LD. CIT(A) ERRED IN IGNORING THE SUBMISSIONS THAT R EASONABLE RATE OF RETURN WOULD BE 5.5 TO 7.5% ON LONG TERM FIXED DEPO SIT AS CONFIRMED BY THE BANKERS OF THE APPELLANT. LD. CIT(A) OUGHT TO H AVE ACCEPTED RATE OF INTEREST AS CONFIRMED BY THE BANKERS. IT BE SO HELD NOW. II. LD. CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN CON FIRMING ACTION OF AO IN MAKING ERRONEOUS CALCULATION OF NOTIONAL INCOME IN RESPECT OF PROPERTY B FOR THE WHOLE YEAR WHEN THE SAID PROPERTY WAS OCC UPIED ONLY FOR A PERIOD OF 6 MONTHS AND 21 DAYS OF THE YEAR. BOTH T HE LOWER AUTHORITIES ERRED IN COMPUTING NOTIONAL INCOME @ REASONABLE RAT E OF INTEREST ON ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 3 INVESTMENT ALSO FOR PERIOD DURING WHICH PROPERTY RE MAINED VACANT. LD. CIT(A) OUGHT TO HAVE DELETED EXCESS ADDITION MADE O N THIS ACCOUNT. IT BE SO HELD NOW. III. LEVY OF INTEREST U/S 234B & 234C OF THE ACT IS NOT JUSTIFIED. IV. INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS N OT JUSTIFIED. V. WITHDRAWAL OF INTEREST U/S 244A IS NOT JUSTIFIED. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS GIVEN THE IMMOVABLE PROPERTY WHICH WAS THE INDUSTRIAL SHED TO THE SISTE R CONCERN WITHOUT CHARGING ANY RENT. THE ASSESSING OFFICER, IN HIS O RDER U/S 143(3) DATED 31.12.2007, ESTIMATED THE ANNUAL LETTING VALUE (ALV FOR SHORT) OF THE PROPERTY AND ASSESSED THE SAME AS INCOME FROM HOUSE PROPERTY. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSES SING OFFICER. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE ITAT WHICH BY ORDER DATED 31.03.2011 IN ITA NO.1165/AHD/2009 SET ASIDE THE MA TTER BACK TO THE FILE OF THE ASSESSING OFFICER, WITH THE FOLLOWING FINDINGS: - 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. IN THE CASE OF SAKARLAL BALABHAI (SUPRA), THE H ONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- IN THE ABSENCE OF BETTER WAY OF ESTIMATING RENT, THE RATE OF INTEREST ON COST OF BUILDING AND LAND MAY PROVIDE A REASONAB LE BASIS FOR DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY MO RE PARTICULARLY WHEN THE PROPERTY IS OCCUPIED BY THE OWNER. THE CAP ITAL VALUE OF THE PROPERTY HAS RELEVANCE IN DETERMINING ITS ANNUAL LE TTING VALUE. IN THIS CASE, THE AO ESTIMATED THE ALV ON THE BAS IS OF SOME INFORMATION SAID TO HAVE BEEN COLLECTED BY HIM BEHIND BACK OF T HE ASSESSEE. ADMITTEDLY, THOSE DETAILS WERE NOT CONFRONTED TO THE ASSESSEE. NEITHER THE SAME IS PRODUCED BEFORE US. THEREFORE, THE SAME CANNOT BE R ELIED ON FOR ESTIMATING THE ALV. IN THE ABOVE CIRCUMSTANCES, WE DEEM IT PROPE R TO SET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. WE DIRECT HIM TO DETERMINE THE ALV AS PER THE OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT I.E. BY APPLYING THE REASONABLE RATE OF ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 4 INTEREST ON THE COST OF IMMOVABLE PROPERTY. NEEDLES S TO MENTION, HE WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE WHILE ADJUDICATING THE MATTER. 5. THE ASSESSING OFFICER GAVE EFFECT TO THE ORDER O F ITAT VIDE HIS ORDER DATED 03.12.2012 PASSED U/S 143(3) R.W.S. 254 OF TH E ACT, WHEREIN THE ASSESSING OFFICER ESTIMATED INCOME AT THE RATE OF 1 7.25% OF THE INVESTMENT IN THE PROPERTY BY THE ASSESSEE. ON APPEAL, THE CIT (A) VIDE HIS ORDER DATED 11.09.2013 COMPUTED THE INCOME AT 8.5% OF THE COST OF THE PROPERTY AND ALLOWED PART RELIEF TO THE ASSESSEE. THE RELEVANT P ORTION IN THE ORDER OF THE CIT(A) READS AS UNDER:- 2.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS. I AM OF THE OPINION THAT THE STAND OF A.O. IN ADOPTING THE INTEREST AS IF THE APPELLANT IS BORROWING FUNDS EQUIVALENT TO THE INVESTMENT IS NOT REASONABLE. THE APPELLANT HAD ALREADY INVESTED IN THE PROPERTY AND WHAT IS TO BE WORKED OUT IS A REASONABLE RATE OF RETURN FROM SUCH INVESTMENT , IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY HONBLE ITAT. IN SUCH A SCENARI O THE REASONABLE RATE OF RETURN CAN BE EQUATED WITH THE PREVAILING INTEREST RATE ON THE LONG TERM FIXED DEPOSIT KEPT WITH THE BANKS/NBFCS. THE APPELLANT HA S CONTENDED THAT THE RATE OF INTEREST WHICH COULD HAVE BEEN EARNED IN RE SPECT OF THE BANK DEPOSIT WOULD BE 5.5 TO 7.75%. IN THIS REGARD THE DECISION OF HONBLE BOMBAY ITAT IN THE CASE OF SMT. INDIRA S. JAIN REPORTED IN 52 S OT 270 IS RELEVANT WHEREIN THE HONBLE BENCH HAS ADOPTED AND CONFIRMED THE RAT E OF RETURN AT 8.5% ON THE COST OF THE PROPERTY. I THEREFORE DEEM IT FIT TO ADOPT THE RATE OF RETURN ON INVESTMENT IN THE PROPERTY AT 8.5% WHICH IS AT PAR WITH THE PREVAILIN G INTEREST RATE ON THE LONG TERM FIXED DEPOSIT DURING THE RELEVANT PERIOD. THE ALV OF THE PROPERTY IS WORKED OUT AS UNDER:- PROPERTY DETAIL (AS PER SUBMISSION DT. 14.03.2012 COST OF PROPERTY (IN RS.) ALV CALCULATED ASSUMING RATE OF INTEREST AT 8.5% (IN RS.) PROPERTY A 74,22,612/- 6,30,922/- PROPERTY B 1,26,29,388/- 10,73,498/- TOTAL 17,04,420/- ALV AS CALCULATED ABOVE : RS. 17,04,420/- ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 5 LESS : 30% STANDARD DEDUCTION U/S 24 : RS. 5,11,326/- INCOME FROM HOUSE PROPERTY : RS.11,93,094/- ACCORDINGLY THE INCOME FROM HOUSE PROPERTY IS WORKE D OUT AT RS.11,93,094/- THE APPELLANT WILL GET A RELIEF OF RS.12,28,185/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6. BOTH THE PARTIES, AGGRIEVED WITH THE ORDER OF TH E LD. CIT(A), ARE IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL PLACED BEFORE US. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESSEE STATED THAT THE ASSESSING OFFICER HAS ESTIMATED THE INTERE ST WHICH THE ASSESSEE WOULD HAVE BEEN REQUIRED TO PAY HAD HE BORROWED THE MONEY FOR THE PURPOSE OF INVESTMENT IN THE PROPERTY. HE SUBMITTE D THAT IN THE CASE OF THE ASSESSEE, INCOME FROM THE PROPERTY IS TO BE ESTIMAT ED AND NOT INTEREST EXPENDITURE ON ACQUISITION OF SUCH PROPERTY HAD BOR ROWED MONEY BEEN UTILIZED. THEREFORE, PROPER YARDSTICK IS TO ESTIMA TE THE PROPER RATE OF RETURN ON THE INVESTMENT OF SIMILAR AMOUNT IN ANY OTHER SE CURED INVESTMENT. HE GAVE BEFORE US VARIOUS BANK CERTIFICATES FOR INVEST MENT IN FDRS AND POINTED OUT THAT INTEREST ON THE FDRS WAS VARYING FROM 5.5% TO 7.5%. HE, THEREFORE, SUBMITTED THAT THE AVERAGE RATE OF INTEREST ON THE FDRS WAS AROUND 6.5% AND THEREFORE, INCOME SHOULD BE ESTIMATED AT THE RA TE OF 6.5% ON THE COST OF THE PROPERTY LET OUT BY ASSESSEE TO SISTER CONCERN. 8. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND HE STATED TH AT THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN ESTIMATING THE INTEREST AT T HE RATE OF 17.25% ON THE BASIS OF INTEREST WHICH WOULD HAVE BEEN REQUIRED TO BE PA ID BY THE ASSESSEE HAD BORROWED MONEY BEING UTILIZED. HE ALTERNATIVELY SUB MITTED THAT IF THE ASSESSEES CONTENTION WITH REGARD TO RATE OF RETURN ON INVESTMENT IS ACCEPTED, THEN THE EXAMPLES IN THE INVESTMENT IN FD RS BY THE ASSESSEE ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 6 SHOULD NOT BE ACCEPTED BECAUSE THOSE INVESTMENTS AR E FOR A SHORT PERIOD; WHILE THE INVESTMENT IN THE PROPERTY IS FOR THE LON G PERIOD. HE ALSO SUBMITTED THAT THE RATE OF RETURN SHOULD BE CONSIDE RED ON THE BASIS OF MARKET VALUE OF THE PROPERTY IN EACH YEAR AND NOT S IMPLY ON THE BASIS OF COST OF THE PROPERTY. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF SAKARLAL BALABHAI VS INCOME-TAX OFFICER, REPORTE D IN 100 ITR 97. IN THE FIRST ROUND OF APPEAL ALSO, THE ITAT HAS SET ASIDE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DETERMINING THE ALV AS PER THE ABOVE DECISION OF HONBLE JURISDICTIONAL HIGH COURT. IN THE ABOVE MENTIONED CASE, THEIR LORDSHIPS OF THE HONBLE JURISDICTIONAL HIGH COURT HAVE CONSIDERED VARIOUS DECISIONS FROM OTHER COURTS AND ALSO FROM BOOK RYDE ON RATING AND THEREAFTER, CONCLUDED AS UNDER AT PAGE NO.107:- 17. THOUGH THE ABOVE PASSAGES ARE MORE OR LESS IN THE CONTEXT OF ASCERTAINING RATEABLE VALUE OF PROPERTY, THEY NONE- THE-LESS ASSURE US THAT IN THE ABSENCE OF ANY BETTER WAY OF ESTIMATING RENT, T HE RATE OF INTEREST ON COST OF BUILDING AND LAND MAY PROVIDE A REASONABLE BASIS FO R DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY, AND MORE PARTICULARLY, A S OBSERVED IN RYDE ON RATING, WHEN THE PROPERTY IS OCCUPIED BY THE OWNER. IN OUR OPINION, THEREFORE, THE CONTENTION OF THE LEARNED ADVOCATE-G ENERAL THAT CAPITAL VALUE OF PROPERTY MAY NOT HAVE A BEARING OR RELEVANCE ON THE QUESTION OF ANNUAL LETTING VALUE, SHOULD BE REJECTED, AND MORE PARTICU LARLY, WHEN, AS IN THE INSTANT CASE, THE ANNUAL LETTING VALUE OF A SELF-OC CUPIED PROPERTY IS TO BE ASCERTAINED. FROM THE ABOVE, IT IS EVIDENT THAT THEIR LORDSHIPS OF HONBLE JURISDICTIONAL HIGH COURT HAVE COME TO THE CONCLUSI ON THAT RATE OF INTEREST ON COST OF THE BUILDING AND LAND WOULD PROVIDE A RE ASONABLE BASIS FOR DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY. T HEREFORE, THE ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 7 CONTENTION OF THE LD. DR THAT INSTEAD OF COST, MARK ET VALUE OF THE PROPERTY IN EACH YEAR SHOULD BE ADOPTED CANNOT BE ACCEPTED. 10. NOW, WE COME TO THE QUESTION WHETHER RATE OF IN TEREST TO BE ADOPTED FOR DETERMINING THE ALV SHOULD BE INTEREST WHICH WO ULD HAVE BEEN PAYABLE BY THE ASSESSEE HAD THE ASSESSEE BORROWED THE MONEY FOR INVESTMENT IN THE PROPERTY OR IT SHOULD BE INTEREST RECEIVABLE BY THE ASSESSEE HAD THE SIMILAR MONEY IS INVESTED SOMEWHERE ELSE. IN OUR OPINION, F OR DETERMINING THE INCOME FROM THE PROPERTY, IT SHOULD BE RATE OF RETU RN ON THE INVESTMENT OF SIMILAR AMOUNT IN ANOTHER ASSET. THEREFORE, IN OUR OPINION, THE CIT(A) WAS FULLY JUSTIFIED IN ESTIMATING THE ALV ON THE BASIS OF INTEREST WHICH ASSESSEE WOULD HAVE EARNED ON THE INVESTMENT OF THE SIMILAR AMOUNT. THE LD. COUNSEL FOR THE ASSESSEE HAD ARGUED THAT THE RATE O F INTEREST APPLIED BY THE CIT(A) AT 8.5% IS EXCESSIVE. IN SUPPORT OF WHICH, H E GAVE VARIOUS EXAMPLES OF INVESTMENT IN FDRS WHICH FACED THE INTEREST RANG ING FROM 5.52% TO 7.5%. COPIES OF THOSE CERTIFICATES FROM THE BANK ARE PLAC ED AT PAGE NO. 29 ONWARDS OF THE ASSESSEES PAPER-BOOK. HOWEVER, WE F IND THAT THOSE INVESTMENTS WERE FOR A VERY SHORT PERIOD. IN FIRST CASE WHERE INTEREST RATE WAS 5.5%, THE INVESTMENT WAS ONLY FOR 46 DAYS. IN A NOTHER CASE WHERE THE INTEREST WAS 5.6%, IT WAS ONLY FOR 31 DAYS. IN ANO THER CASE, WHERE THE RATE OF INTEREST WAS 6%, IT WAS FOR 91 DAYS AND IN ANOTHER CASE WHERE THE PERIOD OF DEPOSIT WAS 366 DAYS, THE RATE OF INTEREST WAS 7.75 %. THE LD. DR WAS FULLY JUSTIFIED THAT IF THE RATE OF RETURN ON THE INVESTM ENT IS CONSIDERED, THEN IT SHOULD BE A LONG TERM INVESTMENT BECAUSE IN ANY PRO PERTY NOBODY WOULD MAKE INVESTMENT JUST FOR FEW DAYS. CONSIDERING ALL THESE FACTS, IN OUR OPINION, THE CIT(A) HAS RIGHTLY APPLIED THE RATE OF INTEREST OF 8.5%. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDER OF THE ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 8 CIT(A), THE SAME IS SUSTAINED; AND ON THIS POINT, T HE GROUND APPEAL OF REVENUE AS WELL AS ASSESSEE ARE REJECTED. 11. GROUND NO.2 OF THE ASSESSEES APPEAL IS WITH RE GARD TO CALCULATION OF ALV IN RESPECT OF ONE PROPERTY FOR WHOLE YEAR WHILE THE PROPERTY HAS LET OUT ONLY FOR THE PERIOD OF 6 MONTHS AND 21 DAYS. 12. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL PLACED BEFORE US. SECTION 23(1)(C) OF THE INCOME-TAX ACT READS A S UNDER:- 23. (1) (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR A ND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE : FROM THE ABOVE, IT IS EVIDENT THAT IF THE PROPERT Y IS LET OUT FOR THE PART PERIOD, THE RENT RECEIVED OR RECEIVABLE BY THE OWNE R IS TO BE CONSIDERED. THEREFORE, IT IS EVIDENT THAT IF THE PROPERTY IS LE T OUT FOR THE PART PERIOD, THE ALV IS TO BE COMPUTED FOR THE PART PERIOD AND NOT F OR THE WHOLE YEAR. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO ASSESS T HE ALV OF THE PROPERTY FOR 6 MONTHS AND 21 DAYS I.E. ACTUAL PERIOD FOR WHICH T HE PROPERTY LET OUT. 13. GROUND NO.3 IS WITH RESPECT TO CHARGING OF INTE REST U/S 234B & 234C WHICH IS ADMITTED TO BE CONSEQUENTIAL. WE, THEREFO RE, DIRECT THE ASSESSING OFFICER TO RECALCULATE THE INTEREST IN ACCORDANCE W ITH LAW, IF ANY, AFTER RE- DETERMINING THE INCOME AS PER OUR ORDER. 14. NO ARGUMENTS WERE ADVANCED WITH REGARD TO GROUN D NOS. 4 & 5; THEREFORE, THEY ARE TREATED AS NOT PRESSED AND REJE CTED AS SUCH. ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 9 ITA NO.1184/AHD/2011 ASSESSEES APPEAL : AY 2007- 08 15. IN THIS APPEAL BY THE ASSESSEE, FOLLOWING GROUN DS WERE RAISED:- I) LD. CIT(A) HAS GRAVELY ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.48,26,251/- MADE BY AO AS NOTIONAL RENTAL INC OME IN ABSENCE OF ANY STIPULATION OF RENT OR TENANCY FAILING TO APPRE CIATE TERMS OF AGREEMENT FOR SECURITY DEPOSITS WITH THE OCCUPANT O F THE INDUSTRIAL SHEDS. BOTH THE LOWER AUTHORITIES SIMPLY FOLLOWED A DJUDICATION OF THE PREVIOUS YEAR WHEREIN ADDITION WAS CONFIRMED ON HYP OTHETICAL BASIS AS AGAINST THE THEORY OF REAL INCOME BY IGNORING PROVI SIONS OF LAW. LD. CIT(A) OUGHT TO HAVE APPRECIATED SUBMISSIONS OF THE APPELLANT INDEPENDENTLY AND DELETED THE ADDITION MADE OF NOTI ONAL RENTAL INCOME. II) LD. CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN NOT ENTERTAINING THE ALTERNATE PLEA TAKEN BY THE APPELLANT IN RESPECT OF IMPROPER COMPUTATION OF THE SO CALLED NOTIONAL RENTAL INCOME BY AO. LD. CIT(A) DESPITE HAVING NOTED THE SUBMISSIONS OF THE APPELLANT INSTEAD OF A DJUDICATING UPON THE SAME CONFIRMED THE ADDITION ON THE BASIS OF ORDER O F THE PREVIOUS YEAR. LD. CIT(A) ALTERNATIVELY OUGHT TO HAVE DIRECTED AO TO COMPUTE THE INCOME ON THE BASIS OF DOCUMENTARY EVIDENCE AND SUB MISSIONS OF THE APPELLANT. III) LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING DISALLOWANCE OF RS.9,11,602/- MADE BY AO TREATING REVENUE EXPENDITU RE INCURRED AS CAPITAL IN NATURE. BOTH THE LOWER AUTHORITIES ERRED IN NOT APPRECIATING THE FACT THAT THE EXPENSES WERE INCURRED FOR CONDUC T OF THE BUSINESS MORE PROFITABLY AND NO NEW ASSET WAS ACQUIRED BY THE APP ELLANT. LD. CIT(A) OUGHT TO HAVE ALLOWED THE EXPENSES INCURRED AND QUA SHED THE ORDER OF AO. IV) LEVY OF INTEREST U/S 234B/234C AND 234D OF THE ACT IS NOT JUSTIFIED. V) INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS N OT JUSTIFIED. VI) WITHDRAWAL OF INTEREST U/S 244A IS NOT JUSTIFIED. 15. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NOS. 1 & 2 IS SIMILAR TO THE ISSUE RAISED BY THE ASSESSEE AS WELL AS REVENUE IN THEIR RESPECTIVE APPEAL FOR ASSESSMENT YEAR 2005-06. FOR THE DETAILED DISCUSSI ON IN PARAGRAPH 10 ABOVE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE T HE INCOME AT THE RATE OF ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 10 8.5% ON THE COST OF THE BUILDING LET OUT BY THE ASS ESSEE AND TREAT THE SAME AS ALV AND ACCORDINGLY DETERMINE THE INCOME FROM HOUSE PROPERTY. 16. GROUND NO.3 OF THE ASSESSEES APPEAL WAS NOT PR ESSED AT THE TIME OF HEARING; ACCORDINGLY THE SAME IS REJECTED. 17. GROUND NO. 4 IS WITH RESPECT TO CHARGING OF INT EREST U/S 234B, 234C AND 234D OF THE ACT, WHICH IS ADMITTED TO BE CONSEQ UENTIAL. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO WORK OUT INTER EST, IF ANY, IN ACCORDANCE WITH LAW, AFTER RE-DETERMINING THE INCOME AS PER OU R ORDER. 18. NO ARGUMENTS WERE ADVANCED WITH REGARD TO GROUN D NOS. 5 & 6; ACCORDINGLY, THEY ARE TREATED AS NOT PRESSED AND RE JECTED AS SUCH. ITA NO.289/AHD/2012 ASSESSEES APPEAL : AY 2008-0 9 19. IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWI NG GROUNDS:- I) LD. CIT(A) HAS GRAVELY ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.70,65,131/- AS NOTIONAL RENTAL INCOME IN RESP ECT OF PROPERTY A AND PROPERTY B IN ABSENCE OF ANY STIPULATION OF RENT OR TENANCY IN TERMS OF AGREEMENT FOR SECURITY DEPOSITS WITH THE OCCUPANT O F THE INDUSTRIAL SHEDS. LD. CIT(A) ERRED IN CONFIRMING ADDITION ON H YPOTHETICAL BASIS AS AGAINST THE THEORY OF REAL INCOME IGNORING PROVISIO NS OF LAW. LD. CIT(A) OUGHT TO HAVE APPRECIATED SUBMISSIONS OF THE APPELL ANT AND OUGHT TO HAVE DELETED THE ADDITION MADE OF NOTIONAL RENTAL I NCOME. II) LD. CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN NOT APPRECIATING CONTENTION OF THE APPELLANT THAT IF ANY ALV WAS TO BE ADDED THAN IT OUGHT O HAVE BEEN COMPUTED AS NOTIONAL INTEREST ON THE COST OF THE PROPERTIES REFLECTED IN THE BOOKS OF ACCOUNTS. III) LEARNED CIT(A) FURTHER ERRED IN NOT FOLLOWING DIREC TIONS OF THE HONBLE ITAT IN APPEAL FOR AY 2005-06 FOR ESTIMATING ALV OF THE PROPERTY BY APPLYING REASONABLE RATE OF INTEREST ON THE COST OF IMMOVABLE PROPERTY AS PER RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COUR T. ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 11 IV) LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTI NG AO TO GRANT DEDUCTION CLAIMED IN RESPECT OF RATES AND TAXES DES PITE NOTING THAT COMPLETE DETAILS WERE BEFORE BOTH THE AUTHORITIES. LD. CIT(A) OUGHT TO HAVE GRANTED THE DEDUCTION INSTEAD OF DIRECTING AO TO VERIFY THE SAME. V) LEVY OF INTEREST U/S 234B IS NOT JUSTIFIED. VI) INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS N OT JUSTIFIED. 20. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NOS. 1, 2 & 3 IS SIMILAR TO THE ISSUE RAISED BY THE ASSESSEE AS WELL AS REVENUE IN THEIR RESPECTIVE APPEAL FOR ASSESSMENT YEAR 2005-06. FOR THE DETAILED DISC USSION IN PARAGRAPH 10 ABOVE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE T HE INCOME AT THE RATE OF 8.5% ON THE COST OF THE BUILDING LET OUT BY THE ASS ESSEE AND TREAT THE SAME AS ALV AND ACCORDINGLY DETERMINE THE INCOME FROM HOUSE PROPERTY. 21. GROUND NO.4 OF THE ASSESSEES APPEAL WAS NOT PR ESSED AT THE TIME OF HEARING; ACCORDINGLY THE SAME IS REJECTED. 22. GROUND NO. 5 IS WITH RESPECT TO CHARGING OF INT EREST U/S 234B OF THE ACT, WHICH IS ADMITTED TO BE CONSEQUENTIAL. ACCORD INGLY, THE ASSESSING OFFICER IS DIRECTED TO WORK OUT INTEREST, IF ANY, I N ACCORDANCE WITH LAW, AFTER RE-DETERMINING THE INCOME AS PER OUR ORDER. 23. NO ARGUMENTS WERE ADVANCED WITH REGARD TO GROUN D NO.6; ACCORDINGLY, THE SAME IS TREATED AS NOT PRESSED AND REJECTED AS SUCH. ITA NO.661/AHD/2013 ASSESSEES APPEAL : AY 2009-1 0 24. IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWI NG GROUNDS:- I) LD CIT (A) ERRED IN LAW AND ON FACTS IN ENHANCING A SSESSABLE INCOME FROM HOUSE PROPERTY IN RESPECT OF PROPERTY A & B TO RS.7 0,65,131/- IN PLACE OF RS.35,51,691/- ASSESSED BY AO FOLLOWING DIRECTION G IVEN BY THE HON'BLE ITAT IN ORDER DATED 31/03/2011. LD. CIT (A) ERRED I N COMPUTING NOTIONAL RENTAL INCOME ON TOTALLY NEW GROUND IGNORING COMPUT ATION BY AO AS PER ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 12 JUDGMENT OF JURISDICTIONAL HIGH COURT. LD. CIT (A) OUGHT TO HAVE RESTRICTED ADDITION MADE BY AO OF NOTIONAL RENTAL INCOME ADOPT ING REASONABLE RATE OF INTEREST AS PRAYED BY THE APPELLANT. II) LD. CIT (A) ERRED IN LAW AND ON FACTS IN ENHANCING ASSESSABLE INCOME BY PLACING RELIANCE ON THE APPELLATE ORDER FOR A.Y. 20 08/09 IGNORING THE FACT THAT AO IN A. Y. 2008/09 ADOPTED THE METHOD FOR DET ERMINING ALV AS PER ORDER OF A.Y. 2005/06 THAT NOW BECAME REDUNDANT WIT H THE PASSING OF ORDER FOR A.Y. 2005/06 BY THE HON'BLE ITAT. LD. CIT (A) OUGHT TO HAVE FOLLOWED DIRECTIONS OF THE HON'BLE ITAT IN DETERMINING ALP A S PER THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT. III) LD. CIT (A) FURTHER ERRED IN LAW AND ON FACTS IN CO NFIRMING ACTION OF AO IN COMPUTING THE NOTIONAL RENT OF TOTAL AREA OF THE PR OPERTY MARKED AS A & B IGNORING SUBMISSION OF THE APPELLANT THAT ONLY THE ACTUAL AREA IN POSSESSION OF PATEL ALLOYS & STEEL PVT. LTD. OUGHT TO BE CONSI DERED FOR COMPUTATION. IV) LD. CIT (A) ERRED IN LAW AND ON FACTS IN NOT APPREC IATING CONTENTION OF THE APPELLANT THAT IF ANY ALV WAS TO BE ADDED THAN IT O UGHT TO HAVE BEEN COMPUTED AS NOTIONAL REASONABLE INTEREST ON THE COS T OF THE PROPERTIES REFLECTED IN THE BOOKS OF ACCOUNTS. V) LD. CIT (A) FURTHER ERRED IN NOT FOLLOWING DIRECTIO NS OF THE HON'BLE ITAT IN APPEAL FOR A.Y. 2005/06 FOR ESTIMATING ALV OF THE P ROPERTY BY APPLYING REASONABLE RATE OF INTEREST ON THE COST OF IMMOVABL E PROPERTY AS PER RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT. VI) LD. CIT (A) ERRED IN LAW AND ON FACTS IN PARTLY CON FIRMING DISALLOWANCE MADE BY AO OF RS.4,01,473/- OF TAXES PAID IN RESPEC T OF CONSTRUCTION ON PLOT NO. 34/35 AS REVENUE EXPENDITURE. LD. CIT (A) OUGHT TO HAVE GRANTED THE DEDUCTION CLAIMED INSTEAD OF TREATING THE SAME AS C APITAL EXPENDITURE. VII) LEVY OF INTEREST U/S 234A/234B/234C & 234C IS NOT JUSTIFIED. VIII) INITIATION OF PENALTY U/S 271(1 )(C) OF THE A CT IS NOT JUSTIFIED. 25. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NOS. 1 TO 5 IS SIMILAR TO THE ISSUE RAISED BY BOTH THE PARTIES IN THEIR RESPECTIV E APPEAL FOR ASSESSMENT YEAR 2005-06. FOR THE DETAILED DISCUSSION IN PARAG RAPH 10 ABOVE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE INCOME AT THE RATE OF 8.5% ON THE COST OF THE BUILDING LET OUT BY THE ASSESSEE AND TREAT T HE SAME AS ALV AND ACCORDINGLY DETERMINE THE INCOME FROM HOUSE PROPERT Y. ITA NOS. 2773 & 2639/AHD/ 2013, 1184/AHDF 2011, 289/AHD/ 2012 & D 661/AHD/ 2013 PASL WINDTECH PVT LTD AYS: 2005-06, 07-08, 08-09 & 09-10 13 26. GROUND NO.6 OF THE ASSESSEES APPEAL WAS NOT PR ESSED AT THE TIME OF HEARING; ACCORDINGLY THE SAME IS REJECTED. 27. GROUND NO. 7 IS WITH RESPECT TO CHARGING OF INT EREST U/S 234A/234B/234C & 234C OF THE ACT, WHICH IS ADMITTED TO BE CONSEQUENTIAL. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO W ORK OUT INTEREST, IF ANY, IN ACCORDANCE WITH LAW, AFTER RE-DETERMINING THE INCOM E AS PER OUR ORDER. 23. NO ARGUMENTS WERE ADVANCED WITH REGARD TO GROUN D NO. 8; ACCORDINGLY, THE SAME IS TREATED AS NOT PRESSED AND REJECTED AS SUCH. 24. IN THE RESULT, THE REVENUES APPEAL FOR ASSESSM ENT YEAR 2005-06 IS DISMISSED, WHILE THE ASSESSEES APPEALS FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 17/04/2015 BIJU T., PS $% $% $% $% &' ($'# &' ($'# &' ($'# &' ($'#/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. &+)* / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. - ( ) / THE CIT(A) - X I , AHMEDABAD 5. '01 & , , / DR, ITAT, AHMEDABAD 6. 123 4 / GUARD FILE . $% $% $% $% / BY ORDER, TRUE COPY 5 55 5/ // / ,6 ,6 ,6 ,6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD