PASL Windtech Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-5(2), Ahmedabad

ITA 3212/AHD/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7667 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Tax effect; Set aside
• Section: 143(3); 234B; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.3212/AHD/2014 (ASSESSMENT YEAR : 2011-12) PASL WINDTECH PVT. LTD., 37-B, PHASE 1, GIDC ESTATE, VATVA, AHMEDABAD 382 445. VS. INCOME TAX OFFICER, WARD 5(2), AHMEDABAD. I.T.A. NO.3460/AHD/2014 (ASSESSMENT YEAR : 2011-12) INCOME TAX OFFICER, WARD 5(2), AHMEDABAD VS. PASL WINDTECH PVT. LTD., 37-B, PHASE 1, GIDC ESTATE, VATVA, AHMEDABAD 382 445. [PAN NO. AABCA 3022 G] ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI BANDISH S. SOPARKAR, A.R. R EVENUE BY : SHRI S. K. DEV, SR. D.R. DATE OF HEARING 17.01.2019 DATE OF PRONOUNCEMENT 04.04.2019 O R D E R PER MS. MADHUMITA ROY - JM: THESE TWO CROSS APPEALS FILED BY THE ASSESSEE AND R EVENUE ARE AGAINST THE SAME ORDER DATED 10.09.2014 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-XI, AHMEDABAD UNDER SECTION 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED AS TO THE ACT) ARISING OUT OF THE ORDER DATED 20.02.201 4 PASSED BY THE ITO, WARD 5(2), AHMEDABAD FOR THE ASSESSMENT YEAR 2011-12. - 2 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 ITA NO. 3212/AHD/2014 FOR A.Y. 2011-12: 2. THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACT URING OF DIFFERENT TYPES OF CASTINGS FILED ITS RETURN OF INCOME ON 30.09.2011 F OR A.Y. 2011-12 DECLARING TOTAL INCOME OF RS.14,34,270/- WHICH WAS PROCESSED U/S 143(1) ON 10.01.2012. UPON SCRUTINY NOTICE U/S 143(2) DATED 27.09.2012 FOLLOWED BY A DETAILED QUESTIONNAIRE DATED 10.09.2013 WAS SERVED UPON THE ASSESSEE. IT APPEARS FROM THE BOOKS OF ACCOUNT, RETURN OF INCOME AND OTHER DETAILS THAT THE ASSESSEE IS OWNING IMMOVABLE PROPERTIES A AND B FOR COMMERCIAL UTILIZATION BY AND UNDER AN AGREEMENT TO M/S. PATEL ALLOY STEEL PVT. LTD., A SISTER CONCERN OF THE ASSESSEE COMPANY. SUCH PROPER TIES CONSIST OF INDUSTRIAL SHED, OFFICE AND OPEN LAND WHICH WERE GIVEN TO ITS SISTER CONCER N BY AND UNDER THE AGREEMENT DATED 26.12.2003 AND 09.09.2004 RESPECTIVELY. DURING THE YEAR THE ASSESSEE HAS SHOWN RENTAL INCOME OF RS.14,03,700/-. IT WAS THE CASE OF THE AS SESSEE THAT HE DIDNT CHARGE ANY RENT BECAUSE IT HAD RECEIVED INTEREST FREE DEPOSIT FROM SAID SISTER CONCERN AND THEREFORE NO AMOUNT OF ANY NOTIONAL INCOME CAN BE TAXED AS THE T RUE EFFECT OF THE AGREEMENT. NEITHER ANY INCOME WAS BOOKED IN RESPECT THEREOF TILL A.Y. 2010-11. HOWEVER, IN A.Y. 2011-12 AND THEREAFTER THE ASSESSEE HAS, BY WAY OF ABUNDANT CAUTION, STARTED BOOKING RENTAL INCOME PROVISIONALLY SEQUEL TO THE DECISION OF THE HONBLE TRIBUNAL DATED 31.03.2011 FOR A.Y. 2005-06 IN ASSESSEES OWN CASE ON THE ISSUE OF THE DETERMINATION OF THE ALV. FOR A.Y. 2011-12, THE PROVISIONAL RENTAL INCOME BOOKED IS RS.14,03,700/- ON WHICH THE PAYER HAD DEDUCTED AND DEPOSITED TAX AT SOURCE. IN FACT, IN THIS PARTICULAR CASE, THE LEARNED AO CALCULATED THE ALV @ RS.36/- PER SQ.MTS. PER MONTH. IN APPEAL, THE ALV HAS BEEN RECOMPUTED TAKING AT RS.20.90/- SQ.MTS. HENCE, THE INSTANT APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ALV DETER MINED BY THE AO FOR A.Y. 2011-12 WAS ULTIMATELY TRAVELLED TO THE HONBLE TRIBUNAL WH EREIN THE ISSUE WAS SET ASIDE TO THE FILE OF THE LEARNED AO WITH A DIRECTION TO DETERMIN E THE ALV IN TERMS OF THE OBSERVATION - 3 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 MADE IN THE CASE OF SAKARLAL BALABHAI-VS-ITO REPORT ED IN 100 ITR 97 I.E. BY APPLYING REASONABLE RATE OF INTEREST ON THE COST OF IMMOVABL E PROPERTIES. ULTIMATELY, THE HONBLE TRIBUNAL IN ITA NO.2639/AHD/2013 FOR A.Y. 2005-06 U PHELD IN ADOPTING 8.5% TO BE THE RATE OF INTEREST AS DIRECTED BY THE LEARNED CIT(A). IN FACT, SUBSEQUENTLY IN A.Y. 2010-11 THE CO-ORDINATE BENCH RELYING UPON THE SAID ORDER D ATED 17.04.2015 PASSED BY THE HONBLE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO PASS ORDERS ADOPTING 8.5% AS THE RATE OF RETURN QUA THE TWO PROPERTIES IN QUESTION. HE, T HEREFORE, ON THE IDENTICAL ISSUE PRAYS FOR SAME RELIEF BEFORE US. ON THE CONTRARY, THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED TH E RELEVANT MATERIALS AVAILABLE ON RECORDS. WE FIND FROM RECORDS THAT THE LEARNED AO W HILE DETERMINING THE ALV OBSERVED THAT THE ALV FOR A.Y. 2005-06 DETERMINED IN TERMS O F THE SPECIFIC DIRECTION OF THE HONBLE ITAT IS NOT BINDING UPON HIM AND THE DEPART MENT HAS ALSO FILED AN APPEAL BEFORE THE LEARNED TRIBUNAL AGAINST THE ORDER PASSED BY TH E LEARNED CIT(A) FOR A.Y. 2010-11. HE, THEREFORE, CALCULATED THE ALV @ RS.36/- SQR.MTS PER MONTH. IN APPEAL, THE LEARNED CIT(A) OBSERVED AS FOLLOWS WHILE ADOPTING THE RATE @ 20.90/- SQR.MTS IN DETERMINING ALV: I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. I AM OF THE OPINION THAT THE STAND OF A.O. THIS YEAR IN ADOPTING THE ALV IS REAS ONABLE. THE DIRECTIONS GIVEN BY HON'BLE ITAT WERE IN CONTEXT OF PARTICULAR YEAR I.E . A.Y. 05-06. IN SUCH A SCENARIO THE REASONABLE RATE OF ALV IS AGAIN TO BE SEEN IN T HE LIGHT OF MY PREDECESSOR IN A.Y.08-09. IN MY OPINION THE RATE OF ALV @RS.35/- P ER MTR WAS TO BE ADOPTED IN A.Y. 2005-06, WHEREAS IN A.Y.2011-12 THE RATE OF AL V TAKEN @ 36 PER SQ.MTR CANNOT BE BRUSHED ASIDE TREATING IT AS VERY HIGH AS THERE IS A SUFFICIENT TIME GAP AFTER A.Y.2005-0. HOWEVER, IN THE INTEREST OF JUST ICE I HOLD THAT RATE OF @ RS. 29.90 AS ADOPTED BY MY PREDECESSOR IN A.Y. 2008-09 IS REASONABLE TO ADOPT THE RATE OF ALV AS HELD BY HIM. 'A.O. GOT INQUIRIES CON DUCTED FROM THE MARKET AND REACHED TO A CONCLUSION THAT MARKET RENT OF THESE P ROPERTIES WAS AROUND RS.35/- PER SQ.YD. PER MONTH. THE A.O. HAS FURTHER TAKEN IN TO CONSIDERATION MANDATE OF SECTION 23(1) AND REACHED TO A REASONABLE RENT OF R S.25/-PER SQ.YD. THIS WAY, A.O. HAS GIVEN SUFFICIENT BENEFITS TO THE APPELLANT FOR ANY OTHER ESTIMATION OF RENTAL - 4 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 INCOME. IF MONTHLY RENT OF RS.257-PER SQ.YD. PER MO NTH IS CONVERTED PER SQ.MTR. IT WILL BE RS.29.90 PER SQ.MTR. PER MONTH.' I HAVE ALSO OBSERVED THAT THE A.O. GRANTED SUFFICIE NT OPPORTUNITY BEFORE MAKING THE ADDITION ADOPTING THE ALV @RS. 36 PER SQ. MTR. HENCE THERE IS NO FORCE IN THE ARGUMENT OF APPELLANT THAT REASONABLE OPPORTUNITY W AS NOT GRANTED TO HIM. IN VIEW OF ABOVE FACTS THE ALV IS TO BE RECOMPUTED WRT TO T HE PROPERTIES TAKING @ 20.90 PER SQ.MTR. PROPERTY DETAIL (AS PER SUBMISSION DT.14.03.2012) TOTAL AREA OF P ROPERTY GIVEN FOR USE UNDER AGREEMENT ORIGINALLY AREA OF POSSESSION DURING FY 2010-11 H AS CLAIMED BY THE ASSESSEE ALV AREA29.9012 (IN RS.) PROPERTY 'A' 7947 SQ MTS AGREEMENT DATED 26/12/2003 2387 SQ MTS 794729.9012=28,51,383/- PROPERTY 'B' 20123 SQ. MTS. AGREEMENT DATED 9/9/2004 13000 SQ. .MTS. 2012329.9012=72201327 RS.1,00,71,515 ALV AS CALCULATED ABOVE : RS. 1,00,71,515 LESS: 30% STANDARD DEDUCTION U/S 24 : RS. 30,21,454 INCOME FROM HOUSE PROPERTY : RS. 70,50,0 61/- ACCORDINGLY THE INCOME FROM HOUSE PROPERTY IS WORKE D OUT AT RS.70,50,061/- THE APPELLANT WILL GET A RELIEF OF RS. 14,38,307/-. 3. THE 4 TH , 5 TH AND 7 TH GROUNDS OF APPEAL ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE ADJUDICATION. FOR STATISTICAL PURPOSE THE S AME ARE TREATED AS DISMISSED. 4. VIDE SIXTH GROUND OF APPEAL, THE APPELLANT HAS CONTESTED CHARGING OF INTEREST U/S. 234A, 234B & 234C_'OF THE ACT. CHARGI NG OF INTEREST U/S. 234A, 234B & 234C OF THE ACT IS MANDATORY IN NATURE. ACCORDING LY, NO INTERFERENCE IS CALLED FOR IN THE CHARGING OF INTEREST. THIS GROUND OF APP EAL IS DISMISSED. - 5 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 HOWEVER, IT IS ON RECORD THAT THE APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) FOR A.Y. 2010-11 HAS B EEN DISMISSED BY THE CO-ORDINATE BENCH. WHILE DOING SO, THE CO-ORDINATE BENCH WAS PL EASED TO DIRECT THE LEARNED AO TO ADOPT 8.5% AS THE RATE OF RETURN IN VIEW OF THE JUD GMENTS AND ORDERS PASSED BY THE CO- ORDINATE BENCH ON IDENTICAL ISSUE FOR A.Y. 2005-06 TO 2007-08 & 2009-10. THE RELEVANT PORTION WHEREOF IS AS FOLLOWS: 5. WE HAVE HEARD RIVAL SUBMISSIONS IN TUNE WITH ABO VE NARRATED PLEADINGS. WE SOUGHT TO KNOW ABOUT STATUS OF IDENTICAL PROCEED INGS IN PRECEDING ASSESSMENT YEARS QUA THE INSTANT ISSUE. CASE FILE INDICATES T HAT THIS TRIBUNAL IN A BATCH OF CASES ITA NOS. 2639/AHD/2013 AND FOUR OTHER APPEALS IN ASSESSMENT YEARS 2005- 06 , 2007-08 TO 2009-10 DECIDED ON 17.04.2015 HAS A LREADY DEALT WITH ALL THESE ARGUMENTS IN ARRIVING AT INTEREST RATE OF 8.5% TO F ORM REASONABLE BASIS AS UNDER: 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HA S GIVEN THE IMMOVABLE PROPERTY WHICH WAS THE INDUSTRIAL SHED TO THE SISTE R CONCERN WITHOUT CHARGING ANY RENT. THE ASSESSING OFFICER, IN HIS OR DER 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 HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- '... IN THE ABSENCE OF BETTER WAY OF ESTIMATING REN T, THE RATE OF INTEREST ON COST OF BUILDING AND LAND MAY PROVIDE A REASONABLE BASIS FOR DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY MORE PARTICULARLY WHEN THE PROPERTY IS OCC UPIED BY THE OWNER. THE CAPITAL VALUE OF THE PROPERTY HAS RE LEVANCE IN DETERMINING ITS ANNUAL LETTING VALUE.' IN THIS CASE, THE AO ESTIMATED THE 'ALV' ON THE BAS IS OF SOME INFORMATION SAID TO HAVE BEEN COLLECTED BY HIM BEHI ND BACK OF THE ASSESSEE. ADMITTEDLY, THOSE DETAILS WERE NOT CONFRO NTED TO THE ASSESSEE. NEITHER THE SAME IS PRODUCED BEFORE US. T HEREFORE, THE - 6 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 SAME CANNOT BE RELIED ON FOR ESTIMATING THE 'ALV'. IN THE ABOVE CIRCUMSTANCES, WE DEEM IT PROPER TO SET ASIDE THE O RDER OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MAT TER BACK TO THE FILE OF THE AO. WE DIRECT HIM TO DETERMINE THE 'ALV' AS PER THE OBSERVATIONS OF THE HON'BLE JURISDICTIONAL HIGH COU RT I.E. BY APPLYING THE REASONABLE RATE OF INTEREST ON THE COS T OF IMMOVABLE PROPERTY. NEEDLESS TO MENTION, HE WILL ALLOW ADEQUA TE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE ADJUDICATING THE MATTER. 5. THE ASSESSING OFFICER GAVE EFFECT TO THE ORDER OF 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 CONTENT IONS. I AM OF THE OPINION THAT THE STAND OF A.O. IN ADOPTING THE INTE REST AS IF THE APPELLANT IS BORROWING FUNDS EQUIVALENT TO THE INVE STMENT IS NOT REASONABLE. THE APPELLANT HAD ALREADY INVESTED IN T HE PROPERTY AND WHAT IS TO BE WORKED OUT IS A REASONABLE RATE OF RE TURN FROM SUCH INVESTMENT, IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY HON'BLE ITAT. IN SUCH A SCENARIO THE REASONABLE RATE OF RET URN CAN BE EQUATED WITH THE PREVAILING INTEREST RATE ON THE LO NG TERM FIXED DEPOSIT KEPT WITH THE BANKS/NBFCS. THE APPELLANT HA S CONTENDED THAT THE RATE OF INTEREST WHICH COULD HAVE BEEN EAR NED IN RESPECT OF THE BANK DEPOSIT WOULD BE 5.5 TO 7.75%. IN THIS REG ARD THE DECISION OF HON'BLE BOMBAY ITAT IN THE CASE OF SMT. INDIRA S . JAIN REPORTED IN 52 SOT 270 IS RELEVANT WHEREIN THE HON'BLE BENCH HAS ADOPTED AND CONFIRMED THE RATE OF RETURN AT 8.5% ON THE COS T 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 PREVAILING INTEREST RATE ON THE LONG TERM FIXED DEP OSIT DURING THE RELEVANT PERIOD. THE ALV OF THE PROPERTY IS WORKED OUT AS UNDER:- PROPERTY DETAIL (AS PER SUBMISSION DT. COST OF PROPERTY (IN RS.) ALV CALCULATED ASSUMING RATE OF INTEREST AT 8.5% (IN - 7 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 14.03.2012 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/- 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 T HE LD. CIT(A), ARE IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL PLACED BEFORE US. AT THE TIME OF HEARING BEFORE US, THE LD . COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSING OFFICER HAS ESTIMATED THE INTEREST WHICH THE ASSESSEE WOULD HAVE BEEN REQUIRED TO PAY HAD HE BOR ROWED THE MONEY FOR THE PURPOSE OF INVESTMENT IN THE PROPERTY. HE SUBMI TTED THAT IN THE CASE OF THE ASSESSEE, INCOME FROM THE PROPERTY IS TO BE EST IMATED AND NOT INTEREST EXPENDITURE ON ACQUISITION OF SUCH PROPERTY HAD BOR ROWED MONEY BEEN UTILIZED. THEREFORE, PROPER YARDSTICK IS TO ESTIMAT E 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 F ROM 5.5% TO 7.5%. HE, THEREFORE, SUBMITTED THAT THE AVERAGE RATE OF INTER EST ON THE FDRS WAS AROUND 6.5% AND THEREFORE, INCOME SHOULD BE ESTIMAT ED AT THE RATE OF 6.5% ON THE COST OF THE PROPERTY LET OUT BY ASSESSEE TO SISTER CONCERN. 8. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER 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 PAID BY THE ASSESSEE HAD BORROWED MONEY BEING UTILIZED. HE ALTERNATIVELY SUBMITTED THAT IF THE ASSESSEE'S CONTENTION WITH REGARD TO RATE OF RETURN ON INVESTMENT IS ACCEPTED, THEN THE EXAMPLES IN THE INVESTMENT IN FD RS BY THE ASSESSEE 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 - 8 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 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 B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF SAKARLAL BALABHAI VS INCOME-TAX OFFICER, RE PORTED 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 T HE ALV AS PER THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT. IN T HE ABOVE MENTIONED CASE, THEIR LORDSHIPS OF THE HON'BLE JURISDICTIONAL HIGH COURT HAVE CONSIDERED VARIOUS DECISIONS FROM OTHER COURTS AND ALSO FROM BOOK RYDE ON RATING AND THEREAFTER, CONCLUDED AS UNDER AT PAGE N O.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, THE RATE OF INTEREST ON COST OF BUILDING AND LAND MAY PROVIDE A REASONABLE BASIS FOR DETERMINING THE ANNUAL LETTING VALUE OF PROPERT Y, AND MORE PARTICULARLY, AS OBSERVED IN RYDE ON RATING, WHEN T HE PROPERTY IS OCCUPIED BY THE OWNER. IN OUR OPINION, THEREFORE, T HE CONTENTION OF THE LEARNED ADVOCATE-GENERAL THAT CAPITAL VALUE OF PROPERTY MAY NOT HAVE A BEARING OR RELEVANCE ON THE QUESTION OF ANNU AL LETTING VALUE, SHOULD BE REJECTED, AND MORE PARTICULARLY, WHEN, AS IN THE INSTANT CASE, THE ANNUAL LETTING VALUE OF A SELF-OCCUPIED P ROPERTY IS TO BE ASCERTAINED....' FROM THE ABOVE, IT IS EVIDENT THAT THEIR LORDSHIPS OF HON'BLE JURISDICTIONAL HIGH COURT HAVE COME TO THE CONCLUSION THAT RATE OF INTEREST ON COST OF THE BUILDING AND LAND WOULD PROVIDE A REASONABLE BASIS FOR DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY. THEREFORE, THE CO NTENTION OF THE LD. DR THAT INSTEAD OF COST, MARKET VALUE OF THE PROPERTY IN EACH YEAR SHOULD BE ADOPTED CANNOT BE ACCEPTED. 10. NOW, WE COME TO THE QUESTION WHETHER RATE OF I NTEREST 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 - 9 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 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 AR E PLACED AT PAGE NO. 29 ONWARDS OF THE ASSESSEE'S 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 ANOT HER CASE, WHERE THE RATE OF INTEREST WAS 6%, IT WAS FOR 91 DAYS AND IN ANOTH ER 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 I NVESTMENT IS CONSIDERED, THEN IT SHOULD BE A LONG TERM INVESTMENT BECAUSE IN ANY PROPERTY 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 CIT(A), THE SAME IS SUSTAINED; AND ON THIS POINT, T HE GROUND APPEAL OF REVENUE AS WELL AS ASSESSEE ARE REJECTED. BOTH PARTIES FAIL TO INDICATE ANY DISTINCTION IN T HE TWO SETS OF FACTS INVOLVED IN SAID EARLIER AND IN THE IMPUGNED ASSESSMENT YEAR . WE THEREFORE UPHOLD CIT(A)S FINDINGS EXCEPT TO THE EXTENT THAT HE HAS ARRIVED AT INTEREST RATE @10% THAN THAT @8.5% IN EARLIER ASSESSMENT YEARS. WE TH EREFORE DIRECT THE ASSESSING OFFICER TO PASS CONSEQUENTIAL ORDER ACCORDINGLY ADO PTING 8.5% AS THE RATE OF RETURN IN VIEW OF LEARNED CO-ORDINATE BENCH DETAILE D DISCUSSION EXTRACTED HEREINABOVE. REST ALL OTHER SUBSTANTIVE GROUNDS ST AND REJECTED IN BOTH THESE CROSS APPEALS. 6. THE ASSESSEES APPEAL ITA NO.2942/AHD/2013 IS PA RTLY ALLOWED WHEREAS REVENUES APPEAL ITA NO.248/AHD/2014 IS DISMISSED. RESPECTFULLY FOLLOWING THE SAME, WE FIND IT FIT AND PROPER TO SET ASIDE THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER TO PASS A PPROPRIATE ORDERS ADOPTING 8.5% AT THE RATE OF RETURN IN THE LIGHT OF THE JUDGMENT PASSED BY THE CO-ORDINATE BENCH FOR A.Y. 2010-11 AS DISCUSSED ABOVE. HENCE, ASSESSEES APPEA L IS ALLOWED FOR STATISTICAL PURPOSES. - 10 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 ITA NO.3460/AHD/2014 FOR A.Y. 2011-12: 5. AT THE TIME OF THE HEARING, WE OBSERVE THAT THE TAX EFFECT IN THE APPEAL FILED BY THE REVENUE IS LESS THAN RS. 20 LACS. AS PER THE CIRCUL AR NO. 3 OF 2018 DATED 11/07/2018 ISSUED BY CBDT RECENTLY ALL PENDING APPEALS FILED B Y REVENUE ARE LIABLE TO BE DISMISSED/ WITHDRAWN/ NOT PRESSED TO REDUCE THE LITIGATION WHE RE THE TAX EFFECT DOES NOT EXCEED THE PRESCRIBED MONETARY LIMIT, I.E., RS.20 LACS. THE R ELEVANT EXTRACT OF THE CIRCULAR IS REPRODUCED BELOW: 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BEEN DECIDED BY THE B OARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BE FORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLPS/ APPEAL S BEFORE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDI TIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER : S. NO. APPEALS/ SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS.) 1. BEFORE APPELLATE TRIBUNAL 20,00,000 2. BEFORE HIGH COURT 50,00,000 3. BEFORE SUPREME COURT 1,00,00,000 THE MONETARY LIMIT FOR FILING THE APPEALS BY THE RE VENUE BEFORE THE TRIBUNAL HAS BEEN INCREASED TO RS. 20 LACS. IT IS ALSO CLARIFIED IN THE SAID CIRCULAR THAT THE SAID MONETARY LIMIT IS APPLICABLE RETROSPECTIVELY EVEN T O THE APPEALS PENDING BEFORE THE TRIBUNAL. THE CBDT HAS ALSO INSTRUCTED THAT SUCH PE NDING APPEALS BELOW THIS SPECIFIED TAX LIMIT OF RS.20 LACS MAY BE WITHDRAWN / NOT PRESSED. IN THE CASE ON HAND, IT WAS NOTICED THAT THE TAX EF FECT ON THE DISPUTED ISSUE RAISED BY THE REVENUE IS CLAIMED TO BE LESS RS.20 LACS. THEREFORE APPEAL OF THE REVENUE IS REQUIRED TO BE DISMISSED IN LIMINE IN TERMS OF THE ABOVE CIRCULAR. - 11 - ITA NOS.3212 & 3460/AHD/2014 PASL WINDTECH PVT. LTD. VS ITO ASST.YEAR 2011-12 6. THE LD. DR FOR THE REVENUE FAIRLY AGREED ON THE APPLICABILITY OF THE CBDT CIRCULAR NO. 3 OF 2018. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. HOWEVER, THE REVENUE IS ON THE LIBER TY TO MOVE THE MISCELLANEOUS APPLICATION TO RECALL THE ORDER IF THE TAX EFFECT E XCEEDS THE THRESHOLD LIMIT OR THE CASE OF THE REVENUE FALLS IN ANY OF THE EXCEPTION PROVIDED IN THE AFORESAID CBDT CIRCULAR IN ANY MANNER. THE MA SHALL BE FILED WITHIN THE PRESCRIBED TIME. HENCE THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES AND FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 04/04/2019 SD/- SD/- ( PRAMOD KUMAR ) ( MS. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 04/04/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-XI, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD