AVTAR SINGH NAGPAL, MUMBAI V. ACIT 21(1), MUMBAI

ITA 3020/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4233 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K R LAKSHMI NARAYANAN
• Keywords: Business income

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI .. , , , BEFORE, SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.3020/MUM/2013 ASSESSMENT YEAR: 2009-10 MR. AVTAR SINGH NAGPAL, A-6, JEWEL, MODEL TOWN SOCIETY, GULMARG SOCIETY, JVPD SCHEME, VILE PARLE, (WEST), MUMBAI-400049 / VS. ACIT-21, PIRAMAL CHAMBER, MUMBAI-400012 ( !'# /ASSESSEE) ( % / REVENUE) PAN. NO. AABPN7790F !'# / ASSESSEE BY SHRI K.R. LAKSHMINARAYANAN % / REVENUE BY SHRI AARSI PRASAD & %'() / DATE OF HEARING : 10/02/2016 () / DATE OF ORDER: 16/02/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER D ATED 17/01/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. ITA NO.3020/MUM/2013 SHRI AVTAR SINGH NAGPAL 2 DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI K.R. LAKSHMINARAYANAN, DID NOT PRESS GROUNDS NO. 5,6 & 8 TO WHICH THE LD. DR, SHRI YOGES H KAMAT HAD NO OBJECTION, THEREFORE, THESE GROUNDS ARE DISM ISSED AS NOT PRESSED. 2. THE ONLY GROUND AGITATED BY THE LD. COUNSEL FOR THE ASSESSEE, IS GROUND NO.7, AS GROUND NO 2 TO 4 ARE I N SUPPORT OF GROUND NO.7 ONLY, TO THE EFFECT THAT INCOME FROM SELF OCCUPIED PROPERTIES OF THE ASSESSEE MAY BE TAKEN ON THE BASIS OF MUNICIPAL VALUATION. THE LD. COUNSEL PLACE D RELIANCE UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUN AL IN THE CASE OF PARK PAPER INDUSTRIES VS ITO 25 SOT 406 AND ANOTHER DECISION FROM HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT. RADHA DEVI DALMIA VS CIT (1980) 125 IT R 134 (ALL.). ON THE OTHER HAND, THE LD. DR, SHRI YOGESH KAMAT THOUGH RELIED UPON THE IMPUGNED ORDER BUT DID NOT CONTROVERT THE CONCLUSION ARRIVED AT IN THE AFORESA ID DECISIONS. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVED INC OME FROM SALARY, HOUSE PROPERTY, BUSINESS INCOME AND INCOME FROM OTHER SOURCES. DURING THE YEAR, THE ASSESSEE OFFERE D RENTAL INCOME FROM HOUSE PROPERTY AMOUNTING TO RS.33,41,45 6/- FROM DENA BANK. IT WAS NOTICED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAD SEVERAL PROPERTIES (NINE IN N UMBERS). ITA NO.3020/MUM/2013 SHRI AVTAR SINGH NAGPAL 3 THE LD. ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE DEEMED ALV IN RESPECT OF PROPERTIES OTHER THAN SELF OCCUPIED PROPERTY SHOULD NOT BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WAS EXPLAINED BY THE ASSESSEE TH AT BUNGALOW NO. A-6 WAS SELF OCCUPIED PROPERTY, WHEREA S, FOR REMAINING FIVE PROPERTIES, THE ASSESSEE OFFERED NOT IONAL INCOME (ALV) TO THE TUNE OF RS.37,376/-. THE PROPER TIES WERE LOCATED IN THE PRIME AREAS OF MUMBAI, THEREFORE, OF FERING INCOME ON NOTIONAL BASIS WAS VERY LESS. THE LD. ASS ESSING OFFICER FOLLOWING THE DECISION IN THE CASE OF RADHA DEVI DALMIA VS CIT 125 ITR 134 (ALL.), ADOPTED 8% OF THE INVESTMENT IN PROPERTIES AS DEEMED ALV, WHICH WERE WORKED OUT TO RS.3,00,074/- AND AFTER ALLOWING THE REBATE OF MUNICIPAL TAXES AND DEDUCTION AT THE RATE OF 30%, T HE LD. ASSESSING OFFICER COMPUTED THE INCOME UNDER THE HEA D HOUSE PROPERTY AT RS.1,98,831/-. THE STAND OF TH E ASSESSEE IS THAT OFFERING OF DEEMED ALV AT RS.37,376/- IS BA SED UPON RATEABLE VALUE AND PLACED RELIANCE UPON THE DECISIO N IN PARK PAPER INDUSTRIES 25 SOT 406 (BOM.), WHEREIN, IT HAS BEEN HELD THAT THE ANNUAL VALUE OF PROPERTY, NOT LET OUT , THE MUNICIPAL VALUATION WOULD BE A PROPER YARDSTICK. IT IS NOTED THAT THE ASSESSEE HAS NOT SHOWN ANY INCOME FROM THE SE FIVE PROPERTIES OTHER THAN THE PROPERTY WHICH WAS LET OU T TO DENA BANK. EVEN ON THE INSISTENCE OF THE LD. ASSESSING O FFICER, THE ASSESSEE CAME FORWARD TO OFFER THE DEEMED ALV IN RE SPECT OF FIVE PROPERTIES. THE DEPARTMENT HAS NOT DISPUTED TH AT THESE FIVE PROPERTIES WERE NOT LET OUT BY THE ASSESSEE. I N SUCH A ITA NO.3020/MUM/2013 SHRI AVTAR SINGH NAGPAL 4 SITUATION, WE ARE IN AGREEMENT THAT SINCE NO RENTAL INCOME WAS RECEIVED BY THE ASSESSEE OUT OF THESE FIVE PROP ERTIES, THEREFORE, VALUATION AT MUNICIPAL VALUE WOULD BE A PROPER YARDSTICK FOR CALCULATING THE ALV OF THE PROPERTY. SO FAR AS, THE CONTENTION OF THE LD. ASSESSING OFFICER AS WELL AS OF THE LD. DR THAT THESE PROPERTIES ARE SITUATED IN THE POSH A REAS, MAKES NO DIFFERENCE BECAUSE THE PROPERTIES WERE NOT RENTED OUT AND ACTUALLY NO RENT WAS RECEIVED, THEREFORE, T HE MUNICIPAL VALUATION IS THE PROPER VALUATION. EVEN O THERWISE, THE MUNICIPAL AUTHORITIES, WHILE VALUING THE PROPER TY ARE AWARE ABOUT THE LOCATION OR THE LOCALITY, WHERE SUC H PROPERTIES ARE EXISTING. 2.2. OUR VIEW FIND SUPPORT FROM THE DECISION FROM THE MUMBAI BENCH OF THE TRIBUNAL IN PARK PAPER INDUSTRI ES PVT. LTD. VS ITO (2008) 25 SOT 406 (MUM.), WHEREIN, IT W AS HELD THAT IN A CASE, WHERE THE PROPERTY IS NOT LET OUT, MUNICIPAL VALUE WOULD BE A PROPER YARDSTICK FOR DETERMINING A NNUAL VALUE. THE CBDT CIRCULAR NO. 204 DATED 24/07/1976 H AS CLARIFIED THE FACTUAL MATRIX. SO FAR AS, THE CASES RELIED UPON BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CONCERNED, WE FIND THAT IN THESE CASES, THE FACTS P ERTAINS TO RENTED PROPERTY, WHEREAS, THE ASSESSEE HAS NOT RENT ED OUT THE PROPERTIES IN QUESTION, THEREFORE, MAY NOT BE APPLI CABLE TO THE FACTS OF THE PRESENT APPEAL. THE RATIO LAID DOWN IN TIVOLI INVESTMENT 130 ITD 521 (MUM.) SUPPORTS OUR VIEW, WH EREIN, THE TRIBUNAL HAS INTERPRETED THE PROVISIONS OF SECT ION 23(1) OF ITA NO.3020/MUM/2013 SHRI AVTAR SINGH NAGPAL 5 THE ACT, HOLDING THAT MUNICIPAL VALUE WOULD BE THE SAFEST GUIDE FOR COMPUTING THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET OUT FROM YEAR TO YEAR . 2.3. SO FAR AS, THE RELIANCE BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS) IN THE CASE OF J. K. SYNTHETIC S (245 ITR 723) (BOM.) IS CONCERNED, THE FACTS WAS THAT IN CAS E OF A LET OUT PROPERTY, THE ASSESSING OFFICER ON THE BASIS OF MATERIAL BEFORE HIM HAS REASON TO CONCLUDE THAT DECLARED REN T IS LESS THAN THE MARKET RENT, HE CAN SUBSTITUTE, THE FAIR R ENT OR SUM FOR WHICH THE PROPERTY IN QUESTION MIGHT REASONABLY BE EXPECTED TO LET OUT FROM YEAR TO YEAR. IT CAN BE CO NCLUDED THAT THE FACTS ARE ALTOGETHER DIFFERENT BECAUSE THE ASSE SSEE WAS NOT ACTUALLY GETTING RENT FROM THESE PROPERTIES, TH EREFORE, THERE IS NO QUESTION OF SAYING THAT THE LESS RENT T HAN THE MARKET RENT WAS RECEIVED BY THE ASSESSEE, THUS, THI S DECISION MAY NOT BE APPLICABLE TO THE FACTS OF THE PRESENT A PPEAL. IN VIEW OF THE FACTS AVAILABLE ON RECORD, WE DIRECT TH E LD. ASSESSING OFFICER TO ADOPT THE MUNICIPAL VALUATION TO DETERMINE THE ALV. THE RATIO LAID DOWN IN GAGAN TR ADING COMPANY 54 SOT 608, DIRECTING THE ASSESSING OFFICER TO ACCEPT THE INCOME FROM HOUSE PROPERTY, DECLARED BY THE ASSESSEE, ADOPTING THE MUNICIPAL VALUATION AS ANNUA L VALUE, SUPPORTS OUR VIEW. EVEN OTHERWISE, SO FAR AS, SELF OCCUPIED PROPERTIES ARE CONCERNED, IT HAS TO BE ON THE BASIS OF MUNICIPAL VALUATION. THE RATIO LAID DOWN IN DCIT VS LAXMI SATYAPAL JAIN (ITA NO.4726 & 4831/MUM/2014) ORDER D ATED ITA NO.3020/MUM/2013 SHRI AVTAR SINGH NAGPAL 6 04/02/2016 SUPPORTS OUR VIEW, WHEREIN, IT WAS HELD THAT THE MUNICIPAL VALUE WOULD BE THE RATEABLE VALUE AND HAS TO BE TAXED ACCORDINGLY. THUS, THIS GROUND OF THE ASSESS EE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 10/02/2016. SD/- SD/- ( G.S. PANNU ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; + DATED : 16/02/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. , -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 11 & 2 ( , ) / THE CIT, MUMBAI. 4. 11 & 2 / CIT(A)- , MUMBAI 5. 4%5/! , 1, ),!6 , & ' / DR, ITAT, MUMBAI 6. 7'8' / GUARD FILE. / BY ORDER, 04/ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI