AJAY MARWAH, MUMBAI V. ACIT RG 19(3), MUMBAI

ITA 2907/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3492 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-03-2015
• Assessment Year: misc
• Appeal Filed On: 13-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S M AGARWAL

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI !, ' #$ %%, & #$ ' BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.2907/M/2010 ( &* + &* + &* + &* + / ASSESSMENT YEAR: 2006-07) SHRI AJAY MARWAH, MARWAH BHAVAN, 114A, TURNER ROAD, BANDRA WEST, MUMBAI 400 050 PAN: AADPM5934E * * * * / VS. AC CIT 19(3), MUMBAI-400 012 ( ,- / APPELLANT) ( ./,- /RESPONDENT) ./ ITA NO.738/M/2013 ( &* + &* + &* + &* + / ASSESSMENT YEAR: 2006-07) SHRI AJAY MARWAH, MARWAH BHAVAN, 114A, TURNER ROAD, BANDRA WEST, MUMBAI 400 050 PAN: AADPM5934E * * * * / VS. AC CIT 19(3), MUMBAI-400 012 ( ,- / APPELLANT) ( ./,- /RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI S.M. AGARWAL, A.R. REVENUE BY : MADANAPPA RAGHUVEER, D.R. * 0 1' / DATE OF HEARING : 19.02.2016 23+ 0 1' / DATE OF PRONOUNCEMENT : 29.02.2016 # 4 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST TWO SEPARATE ORDERS DATED 05.01.2010 & 04.10.2012 OF TH E COMMISSIONER OF ITA NO.2907/M/2010 & ITA NO.738/M/2013 SHRI AJAY MARWAH 2 INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2006-07. NO.2907/M/2010: 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOW ING GROUNDS : THE LEARNED CIT(APPEAL) HAS ERRED IN CONSIDERING T HE SUM OF RS.132000/- (50% SHARE OF APPELLANT) AS ANNUAL VALUE OF PROPERTY ON THE GROUND OF RENT RECE IVED OVERLOOKING THAT THE WHOLE AMOUNT RECEIVED FROM THE TENANT IS NOT THE RENT BUT THE SAME INCLUDES REIMBURSEMENT OF (A) WATER CHARGES (B ) MAINTENANCE CHARGES (C) NON OCCUPANCY CHARGES (D) CABLE CHARGES (E) CAR PARKING CHARGES AND THEREFORE WHILE ARRIVING AT ANNUAL VALUE THE ACTUAL RENT RECEIVED S HOULD BE CONSIDERED AS PER SECTION 23(1) (B) AND THEREFORE THE AMOUNT OF RENT RECEIVED FROM TENANT SHOULD BE REDUCED BY THE AMOUNTS FOR EXTRA FACILITIES INCLUDE D IN THE AMOUNT OF RENT. 2. THE LEARNED CIT(APPEAL) AS ERRED IN CONSIDERING RENT OF RS.132000/- AS ANNUAL VALUE OF THE PROPERTY AGAINST THE MUNICIPAL RATABLE VALUE OF RS. 2500/- P.A. OVERLOOKING THE SUM OF RS.132000/- RECEIVED FROM TE NANT AS ON ACCOUNT OF REIMBURSEMENT OF FOLLOWING AMOUNTS CHARGED BY SOCIE TY WHICH ARE ALLOWABLE AS DEDUCTION TO ARRIVE AT ACTUAL RENT RECEIVABLE BY TH E APPELLANT. A) WATER CHARGES RS.12420 B) SOCIETY MAINTENANCE CHARGES RS. 17460/- C) NON OCCUPANCY CHARGES RS. 52380/- D) CABLE CHARGES RS.5796/- E) CAR PARKING CHARGES RS. 4550/- TOTAL RS.92606/- 50% OF APPELLANT SHARE COMES TO RS.46303/- 3. THE LEARNED A.O. AS WELL AS LEARNED CIT(A) HAVE ERRED IN CONSIDERING 50% SHARE OF APPELLANT IN CASE AKASH TALKIES AT RS.1347 23/- AS AGAINST RENT OF RS.24000/- RECEIVED BY THE APPELLANT OVERLOOKING TH AT THE PROPERTY WAS GIVEN ON RENT IN THE YEAR 1969-70. AND AS PER RENT CONTROL A CT THE APPELLANT COULD NOT INCREASE THE RENT BUT THE INCREASE OF MUNICIPAL TAX ES HAVE BEEN PAID BY THE TENANT ON ACCOUNT OF INCREASE IN MUNICIPAL RATABLE VALUE A ND THEREFORE THE ANNUAL RATABLE VALUE SHOULD BE CONSIDERED AS ONLY THE AMOUNT OF RE NT RECEIVED BY THE APPELLANT AMOUNT TO RS.24000/PER ANNUM. 4. ALTERNATIVELY WITHOUT PREJUDICE THE LEARNED A.O. AS WELL AS THE LEARNED CIT(A) HAVE ERRED ON NOT CONSIDERING THAT WHEN THE RATABLE VALUE WAS INCREASED BY BMC, THE TENANT DID NOT INCREASE THE RENT BUT AG REED TO PAY THE INCREASE PORTION OF MUNICIPAL TAXES AND THEREFORE THE ANNUAL VALUE SHOULD BE REDUCED TO THE EXTENT THE INCREASING MUNICIPAL TAXES BORNE BY THE TENANT INSTEAD OF INCREASING THE AMOUNT OF RENT AND THEREFORE IF THE NOTIONAL AMOUNT IS CONSIDER AS ANNUAL VALUE THEN THE MUNICIPAL TAXES PAYED BY TENA NT DIRECTLY SHOULD BE REDUCED FROM ANNUAL VALUE OF THE PROPERTY. ITA NO.2907/M/2010 & ITA NO.738/M/2013 SHRI AJAY MARWAH 3 5. APPELLANT CRAVES LEAVE TO ADD AND OR ALTER THE ABOVE GROUNDS OF APPEAL. GROUND NOS.1 & 2 3. THE ISSUE RAISED VIDE GROUND NOS.1 & 2 IS RELATI NG TO THE ADOPTION OF ANNUAL RENTAL VALUE OF THE PROPERTY. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) NOTED THAT THE ASSESSEE IN R ESPECT OF HIS HOUSE PROPERTY INCOME AT PLEASANT PARK, PEDDAR ROAD, MUMBAI HAD D EDUCTED SOCIETY CHARGES FROM THE RENTAL INCOME OF THE SAID PROPERTY. THE A O, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HELD THAT AGAINST THE PROPERTY INCOME ONLY MUNICIPAL TAXES ARE TO BE ALLOWED AND NOT THE SOCIE TY CHARGES. HE ACCORDINGLY ALLOWED THE MUNICIPAL TAXES AT RS.1,917/- AND DISAL LOWED RS.48,484/- ON ACCOUNT OF SOCIETY CHARGES. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 4. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ANNUAL LETTING VALUE ON ACCOUNT OF 50% SHARE OF THE ASSESS EE IN THE PROPERTY IN QUESTION AT RS.1,32,000/- WAS THE GROSS RENT RECEIP T AND THAT THE SAID AMOUNT INCLUDED REIMBURSEMENT OF VARIOUS SOCIETY CHARGES A ND FURTHER THAT THE RATEABLE VALUE FIXED BY THE BMC OF THE SAID PROPERTY WAS AT RS.2500/- APPROXIMATELY. THE LD. CIT(A), HOWEVER, OBSERVED THAT THE AO HAD T AKEN THE ACTUAL FIGURE OF RENT RECEIVED BY THE ASSESSEE AND THAT NO DEDUCTION OF SOCIETY CHARGES WAS AVAILABLE. HE ACCORDINGLY UPHELD THE ANNUAL RENTAL VALUE TAKEN BY THE AO QUA THE SHARE OF THE ASSESSEE AT RS.132000/-. BEING AG GRIEVED THE ASSESSEE HAS COME IN APPEAL BEFORE US. 5. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE SAID RECEIPT OF RS.132000/- BEING THE 50% SHARE OF THE ASSESSEE TOW ARDS THE RENT OF THE PROPERTY INCLUDED THE REIMBURSEMENT OF WATER CHARGE S OF RS.12,420/-, SOCIETY MAINTENANCE CHARGES OF RS.17,460/-, NON OCCUPANCY C HARGES OF RS.52,380/-, CABLE CHARGES OF RS.5796/- AND CAR PARKING CHARGES OF RS.4,550/- TOTALING RS.92,606/- OUT OF WHICH THE 50% OF THE SAME CAME T O RS.46,303/- WHICH WERE ITA NO.2907/M/2010 & ITA NO.738/M/2013 SHRI AJAY MARWAH 4 REQUIRED TO BE DEDUCTED FROM THE ANNUAL RENT RECEIV ED BY THE ASSESSEE. 6. WE ARE OF THE VIEW THAT THE ABOVE DESCRIPTION OF CHARGES SUCH AS WATER CHARGES, SOCIETY MAINTENANCE CHARGES, CABLE CHARGES AND CAR PARKING CHARGES IS THE LIABILITY OF THE TENANT. FURTHER, THE NON OCCU PANCY CHARGES PAID BY THE LANDLORD ARE THE LIABILITY OF THE OWNER/LANDLORD. SINCE A STANDARD DEDUCTION IS CLAIMED IN RELATION TO EXPENDITURE INCURRED TOWARDS MAINTENANCE ETC. OF THE HOUSE PROPERTY AND HENCE NO SEPARATE DEDUCTION IN R ESPECT OF NON-OCCUPANCY CHARGES IS ADMISSIBLE OUT OF THE RENT RECEIVED. IN VIEW OF THE ABOVE, WE DIRECT THE AO TO VERIFY THE CLAIM OF THE ASSESSEE REGARDIN G THE WATER CHARGES, SOCIETY MAINTENANCE CHARGES, CABLE CHARGES AND CAR PARKING CHARGES AND REDUCE THE SAME FROM THE RENT RECEIVED BY THE ASSESSEE. HOWEV ER, NO DEDUCTION WILL BE MADE IN RESPECT OF NON OCCUPANCY CHARGES FROM THE A NNUAL RENT RECEIPT. THE ABOVE GROUNDS THEREFORE PARTLY ALLOWED. GROUND NO.3 7. VIDE GROUND NO.3, THE ASSESSEE HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN ADOPTING THE FAIR RENTAL VALUE OF TH E PROPERTY AKASH TALKIES AT RS.1,34,723/- AS AGAINST ACTUAL RENT OF RS.24,000/- . THE AO NOTED THAT THE RATEABLE VALUE OF THE AKASH TALKIES WAS AT RS.1,34, 723/- AND THE MUNICIPAL TAX PAID WAS AT RS.3553/-, WHEREAS, THE ACTUAL RENT REC EIVED BY THE ASSESSEE IN RELATION TO SAID PROPERTY WAS RS.24,660/-. THE AO OBSERVED THAT THE HIGHER OF THE MUNICIPAL RATEABLE VALUE AND ACTUAL RENT RECEIV ED SHOULD BE TREATED AS GROSS ANNUAL VALUE. HE, THEREFORE, COMPUTED THE INCOME F ROM HOUSE PROPERTY AT MUNICIPAL RATEABLE VALUE AT RS.1,34,723/- AND AFTER GIVING REBATE OF MUNICIPAL TAXES AND STANDARD DEDUCTION OF 30%; HE COMPUTED TH E RENTAL INCOME QUA THE 50% SHARE OF THE ASSESSEE IN THE THE PROPERTY AT RS .91,819/-. 8. THE LD. CIT(A) CONFIRMED THE ABOVE FINDING OF TH E AO. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. ITA NO.2907/M/2010 & ITA NO.738/M/2013 SHRI AJAY MARWAH 5 9. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE PROPERTY WAS GIVEN ON RENT FOR THE YEAR 1969-70 AND AS PER THE PROVISI ONS OF RENT CONTROL ACT, THE ASSESSEE COULD NOT INCREASE THE RENT BUT THE INCREA SE OF MUNICIPAL TAXES HAVE BEEN PAID BY THE TENANT ON ACCOUNT OF INCREASE IN M UNICIPAL RATEABLE VALUE AND THEREFORE THE ANNUAL RATEABLE VALUE SHOULD BE CONSI DERED AS ONLY THE ACTUAL AMOUNT OF RENT RECEIVED BY THE ASSESSEE AMOUNTING T O RS.24,000/- PER ANNUM. 10. WE FIND FORCE IN THE CONTENTION OF THE LD. A.R. OF THE ASSESSEE. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE IS RECEIVING A NY AMOUNT MORE THAN THE ACTUAL RENT SHOWN TO HAVE BEEN RECEIVED BY THE ASSE SSEE. IT IS THE CASE OF THE ASSESSEE THAT THE PROPERTY WAS RENTED IN THE YEAR 1 969 AND THE TENANT HAS BEEN PROTECTED BY THE PROVISIONS OF THE RENT CONTROL ACT . THE ASSESSEE, THUS, COULD NOT CLAIM MORE RENT THAN THAT WAS AGREED WITH THE T ENANT EXCEPT WITH THE INTERVENTION OF THE COURT OR IN THE EVENT IF THE TE NANT AGREES OR CONSENTS TO ENHANCE THE SAME. THE ASSESSEE CANNOT BURDENED WIT H THE TAXES ON THE INCOME WHICH HE HAS NOT RECEIVED AND IS ALSO NOT SUPPOSED TO HAVE RECEIVED AND THE SAME OTHERWISE HAS NOT ACCRUED TO HIM DURING THE YE AR. EVEN, IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE CAN REALIZE ANY AMOUNT MORE THAN THE ACTUAL RENT OF RS.24,660/- RECEIVED BY THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION FOR THE PROPERTY IN QUESTION. WE, THEREFORE, DO NOT FI ND ANY JUSTIFICATION ON THE PART OF LOWER AUTHORITIES IN ADOPTING THE ANNUAL RE NTAL PROPERTY OF THE AKASH TALKIES AT RS.1,34,723/- INSTEAD OF RS.24,660/-. H OWEVER, IT IS MADE CLEAR THAT THE ASSESSEE WILL NOT BE ENTITLED TO ANY DEDUCTIONS IN RELATION TO MUNICIPAL TAXES NOT ACTUALLY PAID BY THE ASSESSEE BUT PAID BY THE T ENANT. WITH THE ABOVE OBSERVATIONS, THIS GROUND OF THE ASSESSEES APPEAL IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ITA NO.738/M/2013 12. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGIT ATING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RELAT ION TO THE ADDITION MADE BY ITA NO.2907/M/2010 & ITA NO.738/M/2013 SHRI AJAY MARWAH 6 THE AO WHILE ASSESSING THE ANNUAL RENTAL VALUE OF T HE PROPERTY IN QUESTION. AS DISCUSSED ABOVE, WE HAVE ALREADY ACCEPTED MOST OF T HE CLAIM OF THE ASSESSEE IN RELATION TO DEDUCTION OF CERTAIN AMOUNTS RECEIVED B Y THE ASSESSEE FROM THE TENANTS WHICH COULD NOT BE CONSIDERED AS PART OF TH E ANNUAL RENTAL VALUE EXCEPT THE AMOUNT OF RS.52380/- IN RELATION TO NON OCCUPAN CY CHARGES. HOWEVER, WE FIND THAT IT IS NEITHER A CASE OF FURNISHING OF INA CCURATE PARTICULARS OF INCOME NOR CONCEALMENT OF INCOME. WE, THEREFORE, DO NOT F IND ANY JUSTIFICATION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THIS CASE. THE PENALTY LEVIED UNDER SECTION 271(1)(C) IS THEREFORE ORDERED TO BE DELETED IN THIS CASE. THIS APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED. 13. IN THE RESULT, THE ITA NO.2907/M/2010 IS PARTLY ALLOWED AND ITA NO.738/M/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.2016. # 4 0 23+ ' 5 6#*7 29.02.2016 3 0 % SD/- SD/- ( ! / RAJENDRA) ( %% / SANJAY GARG) ' #$ / ACCOUNTANT MEMBER & #$ / JUDICIAL MEMBER /MUMBAI ; 6#* / DATED 29.02.2016 * KISHORE # 4 0 .&1HI J I+1 # 4 0 .&1HI J I+1 # 4 0 .&1HI J I+1 # 4 0 .&1HI J I+1/COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED TO TOTO TO : :: : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. \1 () / THE CIT(A)- 4. \1 / CIT 5. IC% .&1&* , , / THE DR CONCERNED BENCH, 6. %F G / GUARD FILE. # 4* # 4* # 4* # 4* / // / BY ORDER, /I1 .&1 //TRUE COPY// K KK K/ // /L L L L ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI