MULTIPLEX COLLAPSIBLE TUBES LTD, MUMBAI V. ACIT 6(3), MUMBAI

ITA 3049/MUM/2010

• Counselvise Citation: 304919914 RSA 2010
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: VASANNTI B PATEL
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI PRAMOD KUMAR (A.M) ITA NO.3049/MUM/2010(A.Y. 2006-07) MULTIPLEX COLLAPSIBLE TUBES LTD., ZODIAC CLOTHING CO. LTD., 10/76 OFF. HAINES ROAD, WORLI, MUMBAI 400 018. PAN:AAACM2818C (APPELLANT) VS. THE ACIT 6(9), AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (RESPONDENT) APPELLANT BY : MS. VASANNTI B. PATEL RESPONDENT BY : SMT. ASHIMA GUPTA ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 30/12/2009 OF CIT(A)-12, MUMBAI RELATING TO ASSESSMENT YEAR 20 06-07. THE GROUNDS OF APPEAL RAISED BY THE ASSSESSEE READ AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN TAXING THE NOTIONAL INCOME IN RESPECT OF VACANT PORTION OF THE PROPERTY DURING THE PREVIOUS YEAR UNDER THE HEAD INCOME FRO M HOUSE PROPERTY. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING, IN CORRECT PERSPECTIVE THE SUBMISSIONS MADE BEFORE THE APPELLA NT THAT NO INCOME COULD BE LIABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF PROPERTY WHICH WAS VACANT DU RING THE RELEVANT PREVIOUS YEAR. ITA NO.3049/MUM/2010(A.Y. 2006-07) ) 2 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THAT THE PROPERTY WAS A SINGLE PROPERTY AND ITS ANNUAL VALUE OUGHT TO HAVE BEEN DETERMINED AS A SINGLE PRO PERTY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 23. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ANNUAL VALUE OF THE VACANT PORTION OF THE PROPERTY OUGHT TO HAVE BE EN ARRIVED AT ON THE BASIS MUNICIPAL RATEABLE VALUE. 5. THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) E RRED IN REJECTING THE APPELLANTS CONTENTIONS BY WRONGLY RE LYING ON THE DECISIONS OF THE SUPREME COURT IN THE CASE OF GOETZ E INDIA LTD. (284 ITR 323). 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN TH E BUSINESS OF DEALING IN SHARES AND SECURITIES. DURING THE PREVIOUS YEAR T HE ASSESSEE ACQUIRED PROPERTY MEASURING 31483.64 SQ.FT. SITUATE AT NYLOC HOUSE, 254D, DR. ANNIE BESANT ROAD, WORLI, MUMBAI-25, CONSISTING OF 3 FL OORS ( GROUND + 2+4 TH FLOOR AND PART OF FIRST FLOOR). A PORTION OF THE A BOVE PROPERTY MEASURING 16,042 WAS GIVEN ON LICENCE BASIS FROM 1/7/2005 TO M/S. ZODIAC CLOTHING CO. LTD. DURING THE PREVIOUS YEAR THE ASSESSEE DER IVED A RENT OF RS. 1,30,00,000 BY LETTING THE PORTION OF THE PROPERTY TO ZODIAC CLOTHING LTD. THE REMAINING PORTION OF THE PROPERTY WHICH THE ASS ESSEE HAD PURCHASED REMAINED VACANT DURING THE PREVIOUS YEAR. 3. WHILE FILING THE RETURN OF INCOME IN THE COMPUTA TION OF TOTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY THE ASSES SEE ADDED TO THE ACTUAL RENT RECEIVED FROM ZODIAC CLOTHING CO. LTD. A NOTIO NAL RENTAL INCOME OF RS.27,92,770/-IN RESPECT OF THE PORTION OF THE PROP ERTY WHICH REMAINED VACANT. IN A NOTE ATTACHED TO THE COMPUTATION OF I NCOME THE ASSESSE MADE IT CLEAR THAT THE COMPUTATION OF NOTIONAL INCOME FOR T HE PORTION OF THE PROPERTY WHICH REMAINED VACANT WAS DONE BY WAY OF ABANDONED CAUTION AND THAT UNDER SECTION 23 OF THE INCOME TAX ACT, 1961(THE AC T) THE ANNUAL VALUE HAS TO BE DETERMINED BY TAKING THE MUNICIPAL VALUATION OR THE ACTUAL RENT RECEIVED WHICHEVER IS HIGHER. THE AO HOWEVER, DID NOT ACCEPT THE PLEA OF THE ITA NO.3049/MUM/2010(A.Y. 2006-07) ) 3 ASSESSEE. THE AO ALSO TREATED THE INCOME AS DECLAR ED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. ON APPEAL BY THE ASSESSEE THE CIT(A) HELD THAT THE INCOME FROM LETTING OF THE PROPERTY HAS TO BE ASSESSED UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. WITH REGARD TO EXCLUDING THE NOTIONAL IN COME DECLARED BY THE ASSESSEE IN RESPECT OF THE VACANT PORTION OF THE PR OPERTY, THE CIT(A) HELD AS FOLLOWS: 3.3 I HAVE CONSIDERED THE SUBMISSIONS. IN SHORT, THE CLAIM OF THE APPELLANT IS THAT ALTHOUGH BY ABUNDANT CAUTION, TH E ANNUAL LETTING VALUE WAS DECLARED AT A HIGHER FIGURE BASED ON THE ACTUAL RENT RECEIVED FOR THE OTHER PORTION, THE ANNUAL LET OUT VALUE SHOULD BE DETERMINED ON THE BASIS OF MUNICIPAL RATEABLE VALUE , AS PER LAW. THE APPELLANT HAS RELIED ON VARIOUS DECISIONS TO CONTEN D THAT IT IS THE DUTY OF THE AO TO COMPUTE THE INCOME AS PER THE LAW IRRE SPECTIVE OF WHAT HAS BEEN DECLARED BY THE APPELLANT. THE APPELLANT HAD DECLARED THE ANNUAL LETTING VALUE AT A CERTAIN FIGURE BASED ON C ERTAIN PRESUMPTIONS. IF IT WANTED TO MAKE ANY CHANGE IN THE CLAIM OR THE AMOUNT OF INCOME DECLARED, IT WAS REQUIRED TO FILE A REVISED RETURN DURING THE TIME PERMITTED FOR THE SAME. IN THE CASE OF GOETZE INDI A LTD. ( 284 ITR 323), THE SUPREME COURT HELD THAT A CLAIM CAN BE MA DE AFTER RETURN HAS BEEN FILED ONLY BY WAY OF A REVISED RETURN. TH E AO DOES NOT HAVE JURISDICTION TO ENTERTAIN THE CLAIM MADE OTHERWISE. THE APPELLANT WAS MAKING A CLAIM WHICH WOULD HAVE REDUCED ITS TAXABLE INCOME DECLARED IN THE ORIGINAL RETURN. ACCORDING TO THE ABOVE DEC ISION, THE AO WILL NOT HAVE JURISDICTION TO ENTERTAIN SUCH A CLAIM UNL ESS IT IS MADE BY WAY OF A REVISED RETURN. 3.4 FURTHER, IN CASE OF A VACANT PROPERTY, THE ANN UAL LETTING VALUE CAN BE DETERMINED BY VARIOUS FACTORS NAMELY STANDARD RE NT WHERE THE RENT CONTROL ACT IS APPLICABLE, MUNICIPAL RATEABLE VALUE , RENT OF SURROUNDING SIMILAR PROPERTIES ETC. IN THE ABOVE C ASE, THE ACTUAL RENT RECEIVED FOR A PART OF THE PROPERTY HAS BEEN TAKEN AS THE BASIS. THIS IS A BETTER INDICATOR OF THE ANNUAL LETTING VALUE OF T HE VACANT PORTION. IT CANNOT, THEREFORE, BE SAID THAT THE INCOME DECLARED BY WAY OF ANNUAL LETTING VALUE OF THE VACANT PORTION IS NOT ACCORDIN G TO THE PROVISIONS OF THE ACT. THE AO IN ACCEPTING THE DECLARATION MADE BY THE APPELLANT WAS ALSO FOLLOWING THE PROVISIONS OF THE ACT. IN V IEW OF THE ABOVE, THE CLAIM OF THE APPELLANT IS NOT ACCEPTABLE AND, THERE FORE, DISMISSED. ITA NO.3049/MUM/2010(A.Y. 2006-07) ) 4 5. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E HAS FIELD THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE APPROACH ADOPTED BY THE CIT(A) IS NOT CORRECT. ADM ITTEDLY THE ASSESSEE BY WAY OF A NOTE APPENDED TO THE RETURN OF INCOME HAD CLEARLY MENTIONED THE FACT THAT BY WAY OF ABUNDANT CAUTION IT HAD DECLARE D THE NOTIONAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY EVEN IN R ESPECT OF THE VACANT PORTION OF THE PROPERTY. THE PROPERTY HAS TO BE C ONSIDERED AS ONE PROPERTY. THE ANNUAL VALUE HAS TO BE DETERMINED IN ACCORDANCE WITH SECTION 23 OF THE ACT. ADMITTEDLY THE MUNICIPAL VALUATION FOR THE EN TIRE PROPERTY WAS LESS THAN A SUM OF RS. 1.30 CRORES WHICH THE ASSESSEE HA D RECEIVED BY LETTING OUT THE PROPERTY TO M/S. ZODIAC CLOTHING CO. LTD. THE HIGHER OF THE TWO NAMELY ACTUAL RENT RECEIVED OR MUNICIPAL VALUATION HAD TO BE ADOPTED FOR DETERMINING THE ANNUAL VALUE. IT IS NOT POSSIBLE FOR THE AO TO MAKE BIFURCATION OF THE LET OUT PROPERTY AND PROPERTY RE MAINED VACANT WHEN ENTIRE PROPERTY IS ONE AND THE SAME PROPERTY. THE ANNUAL VALUE (ALSO REFERRED TO AS MUNICIPAL VALUATION/ RATEABLE VALUE) ADOPTED BY THE MUNICIPAL AUTHORITIES IN RESPECT OF THE PROPERTY OR THE ACTUAL RENT RECEIVE D, WHICHEVER IS HIGHER SHOULD BE THE DETERMINING FACTOR FOR APPLYING THE P ROVISIONS OF SEC.23(1)(A) OF THE ACT. SINCE THE RENT RECEIVED BY THE ASSESSEE W AS MORE THAN THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR, THE ACTUAL RENT RECEIVED SHOULD BE THE ANNUAL VALUE OF THE PROPERTY U/S.23(1)(B) OF THE ACT. THE ABOVE VIEW HAS BEEN TAKEN BY THE MUMBAI BENCH OF THE ITAT IN THE CASE OF DCIT VS. RECLAMATION REALITY IN DIA IN ITA NO.1411/M/07, A.Y. 2004-05. WE DIRECT THE AO TO ACCEPT THE ACTUA L RENT RECEIVED WHICH IS MUCH MORE THAN THE MUNICIPAL VALUATION AS CRITERIA FOR DETERMINING THE ANNUAL VALUE OF THE PROPERTY. WITH REGARD TO THE O RDER OF THE CIT(A) HOLDING ITA NO.3049/MUM/2010(A.Y. 2006-07) ) 5 THAT THE ASSESSEE CANNOT MAKE A CLAIM CONTRARY TO T HE RETURN OF INCOME WITHOUT FILING REVISED RETURN BY PLACING RELIANCE O N THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE GOETZ INDIA LTD.( SUPRA) WE ARE OF THE VIEW THAT THE TRIBUNAL CAN CONSIDER SUCH A CLAIM EVEN IN THE ABSENCE OF REVISED RETURN. T HE HONBLE DELHI HIGH COURT IN THE CASE OF JAI PAR OBOLIC SPRINGS LTD. VS. CIT 306 ITR 42(DEL.) HAS HELD THAT THE POWER OF THE TRIBUNAL TO ENTERTAIN THE ADDITIONAL GROUND IS NOT IN ANY WAY RESTRICTED IN V IEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. FURTHER WE FIND THAT THE CLAIM HAD BEEN MADE BY THE ASSESSEE BEFORE THE AO IN THE FORM OF A NOTE APPENDED TO THE RETURN OF INCOME. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) OUGHT TO HAVE EXAMINED THE CLAIM OF THE ASSE SSEE ON ITS MERITS. NOW THAT, WE HAVE EXAMINED THE MERITS OF THE CASE OF TH E ASSESSEE THE REVENUE CANNOT HAVE ANY GRIEVANCE IN THIS REGARD. THE TAX LIABILITY HAS TO BE DETERMINED IN ACCORDANCE WITH LAW AND THE TECHNICAL ITIES RAISED BY THE CIT(A) WILL NOT APPLY IN ANY CASE TO THE POWERS OF THE TRIBUNAL. FOR THE REASONS STATED ABOVE WE DIRECT THE AO TO ACCEPT THE PLEA OF THE ASSESSEE. THE APPEAL IS ACCORDINGLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 8 TH DAY OF APRIL, 2011. SD/- SD/- (PRAMOD KUMAR ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 8 TH APRIL.2011 ITA NO.3049/MUM/2010(A.Y. 2006-07) ) 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RF BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.3049/MUM/2010(A.Y. 2006-07) ) 7 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 1/4/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 5/4/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROV ED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER