BHIRYANI DADLANI SALES AGENCIES PVT. LTD., MUMBAI V. ITO 12(1)(3), MUMBAI

ITA 3305/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9380 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 234B; 22

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3305 / /201 9 ((. . 2009-10 ) ITA NO.3305/MUM/2019 (A.Y.2009-10) BHIRYANI DADLANI SALES AGENCIES PVT. LTD, SHOP NOS.10-11, KENWOOD APARTMENT CHS LTD., DR.AMBEDKAR ROAD, BANDRA (WEST), MUMBAI 400 050 PAN: AABCB- 7448-M ...... * / APPELLANT ( VS. ITO- WARD 12(1)(3) ROOM NO.145A, 1 ST FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020. ..... +,/ RESPONDENT *-/ APPELLANT BY : SHRI VIMAL PUNMIYA +,-/ RESPONDENT BY : MS. SMITA VERMA (., / DATE OF HEARING : 06/05/2021 /01 ., / DATE OF PRONOUNCEMENT : 16/07/2021 / ORDER THIS APPEAL BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) -20, MUMBAI [IN SHORT THE CIT(A)] FOR THE ASSESSMENT YEAR 2009-10. 2. SHRI VIMAL PUNMIYA APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED AT THE OUTSET THAT THE FACTS IN THE PRESENT APPEAL ARE IDE NTICAL TO THE FACTS RAISED BY THE ASSESSEE IN ITA NO.3303/MUM/2019 AND ITA NO.3304/MU M/2019 FOR ASSESSMENT YEARS 2007-08 AND 2008-09, RESPECTIVELY. THE AFORE SAID APPEALS HAVE BEEN RECENTLY 2 ITA NO.3305/MUM/2019 (A.Y.2009-10) DECIDED BY THE TRIBUNAL VIDE ORDER DATED 25/03/2021 . THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE ASSESSEE IN THE GROUNDS OF APPEAL HAS ASSAILED THE FINDINGS OF CIT(A) IN CO NFIRMING THE ADDITION MADE BY ASSESSING OFFICER IN RESPECT OF RENTAL INCOME FROM TWO SHOPS . THE ASSESSING OFFICER DETERMINED THE ANNUAL LETTING VALUE OF SHOPS WITHOU T CONSIDERING MUNICIPAL VALUATION OR THE PREVALENT RENT IN THE AREA. THE F ACTS IN THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO ASSESSMENT YEAR 2007-08 AND 2 008-09, THEREFORE, THE PRESENT APPEAL MAY ALSO BE DECIDED IN ACCORDANCE WITH THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN IMMEDIATE PRECEDING ASSESSMENT YEARS. 3. MS.SMITA VERMA REPRESENTING THE DEPARTMENT VEHEM ENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR UPHOLDING THE SAME. 4. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. I FIND THAT THE FACTS GERMANE TO THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS IN APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 AND 2008-09(SUPRA). WH ILE ADJUDICATING IDENTICAL ISSUE RAISED IN ASSESSMENT YEAR 2007-08 AND 2008-09 THE T RIBUNAL HELD AS UNDER:- 11. THE ASSESSEE HAS TWO SHOPS I.E. SHOP NO.10 AND SHOP NO.11 AT KENWOOD CO- OPERATIVE HOUSING SOCIETY LTD., DR. AMBEDKAR ROAD, BANDRA (W), MUMBAI. THE SAID SHOPS WERE GIVEN TO THE DAUGHTER OF THE DIRECTOR OF THE A SSESSEE COMPANY FOR HER BOUTIQUE. NO RENT WAS PURPORTEDLY CHARGED BY THE ASSESSE FOR USE OF THESE SHOPS. THE CONTENTION OF THE ASSESSEE IS THAT FOR THE PURPOSE OF DETERMINING ANNUAL LETTING VALUE UNDER SECTION 23(1)(A), MUNICIPAL VALUE SHOULD BE ADOPTED. THE AS SESSEE HAS FILED A REPORT FROM THE OFFICE OF ASST. COLLECTOR, MUNICIPAL CORPORATION GI VING THE AREA OF THE SHOPS AS WELL AS THE RENTAL VALUE (AT PAGE 17 OF THE PAPER BOOK). THE R ELEVANT EXTRACT OF THE SAME IS REPRODUCED HEREIN BELOW: DESCRIPTIO N RENT(RS.) GROUND FLOOR AT RS.80/-PER 10 M2 SHOP NO.10, AREA 25.60 M2 204.80 LOFT AREA 10.10 M2 AT RS.40/- PER 10 M2 40.40 SHOP NO.11, AREA 22.70 M2 181.60 MEZZANINE FLOOR AREA 20.06 M2 AT RS.80/- PER 10 M2 USED AS OFFICE 160.40 TOTAL RENT RS.11517.58; TOTAL RV RS. 110165 NPA RESIDENTIAL RV RS.79065 NPA; NON RESIDENTIAL RV R S.31100 - NPA 3 ITA NO.3305/MUM/2019 (A.Y.2009-10) A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER HAD DEPUTED INSPECTOR FOR CONDUCTING THE ENQUIRY. ON THE BASIS OF REPORT FURNISHED BY THE INSPECTOR, THE ASSESSING OFFICER DETERMINED NET ANNUAL VALUE O F THE SHOPS AS RS.6,72,000/- WITH AN YEARLY INCREASE OF 5% TO 10%. THE AREA OF EACH SHO P AS PER ASSESSMENT ORDER IS 800 SQ. FT. THE AREA OF SHOPS MENTIONED IN THE ASSESSMENT O RDER AND IN THE REPORT OF MUNICIPAL CORPORATION IS AT VARIANCE. DURING THE COURSE OF HE ARING THE LD. DEPARTMENTAL REPRESENTATIVE WAS ASKED TO PRODUCE SAID REPORT. TH E LD. DEPARTMENTAL REPRESENTATIVE EXPRESSED HIS INABILITY TO PLACE THE SAME ON RECORD . IN SO FAR AS THE RENTAL VALUE OF THE PROPERTY IS CO NCERNED, I FIND THAT IN THE CASE OF PARK PAPER INDUSTRIES PVT. LTD. VS. ITO REPORTED AS 25 S OT 406, THE TRIBUNAL HELD THAT WHERE THE PROPERTY HAS NOT BEEN LET OUT, MUNICIPAL VALUE WOULD BE PROPER YARDSTICK FOR DETERMINING ANNUAL VALUE. THE TRIBUNAL AFTER CONS IDERING THE DECISIONS RENDERED IN THE CASE OF M.V. SONAWALA VS. CIT (SUPRA), SHIELA KAUSH ISH VS. CIT (SUPRA) AND THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRABHABA TI BANSALI 141 ITR 419 CONCLUDED AS UNDER:- 12. LEARNED COUNSEL FOR THE ASSESSEE RELIED ON SEVERAL OTHER JUDICIAL PRONOUNCEMENTS IN SUPPORT OF HIS CONTENTION THAT TH E MUNICIPAL VALUE SHOULD BE THE BASIS OF DETERMINING THE ANNUAL VALUE. WE ARE N OT MAKING REFERENCE TO THOSE DECISIONS, SINCE, IN OUR OPINION THE AFORESAID PRON OUNCEMENT OF HON'BLE BOMBAY HIGH COURT CONSIDERS THE DECISIONS OF HON'BLE CALCU TTA HIGH COURT WHICH IN TURN HAS CONSIDERED THE LAW LAID DOWN BY THE HON'BLE APE X COURT ON THE ISSUE. IT IS CLEAR FROM THE AFORESAID EXPOSITION OF LAW THAT CHA RGE UNDER SECTION 22 IS NOT ON THE MARKET RENT; BUT IS ON THE ANNUAL VALUE AND IN THE CASE OF PROPERTY WHICH IS NOT LET OUT, MUNICIPAL VALUE WOULD BE A PROPER YARD STICK FOR DETERMINING THE ANNUAL VALUE. DECISION IN THE CASE OF MRS. SHEILA K AUSHISH (SUPRA) MENTIONS STANDARD RENT UNDER THE RENT CONTROL ACT AS ONE OF THE YARDSTICKS. THIS DOES NOT MEAN THAT STANDARD RENT ALONE IS TO BE CONSIDERED. IN THE PRESENT CASE, WE ALSO NOTICE THAT THE ASSESSING OFFICER HAS NOT CHOSEN TO ADOPT THE STANDARD RENT AS PER THE RENT CONTROL ACT AS YARDSTICK FOR DETERMINI NG THE ANNUAL VALUE. WE ALSO FIND FROM THE DECISION OF HON'BLE CALCUTTA HIGH COU RT IN THE CASE OF SMT. PRABHABATI BANSALI (SUPRA) THAT STANDARD RENT, IF I T DOES NOT EXCEED THE MUNICIPAL VALUATION ALONE CAN BE ADOPTED IN PLACE OF MUNICIPA L VALUATION. FOR ALL THE ABOVE REASONS, WE HOLD THAT THE MUNICIPAL VALUATION SHOULD BE THE BASIS OF DETERMINING ANNUAL VALUE IN THE PRESENT CASE. ACTIO N OF THE REVENUE AUTHORITIES IN ADOPTING ANNUAL VALUE ON THE BASIS OF INQUIRIES CONDUCTED REGARDING MARKET RENT IN THE VICINITY OF THE PROPERTY IS NOT IN ACCO RDANCE WITH LAW. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE INCOME FROM HOUSE PROPERTY ON THE BASIS OF MUNICIPAL VALUATION . [EMPHASISED NOW] 12. TAKING INTO CONSIDERATION ENTIRE FACTS, I DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECT ION TO DETERMINE THE EXACT AREA OF THE SHOPS AND THEREAFTER, COMPUTE ANNUAL RENTAL VALUE I N LINE WITH THE DECISION OF TRIBUNAL RENDERED IN THE CASE OF PARK PAPER P. LTD. (SUPRA). IT IS FURTHER MADE CLEAR THAT ANY MUNICIPAL TAXES ACTUALLY PAID BY THE ASSESSEE QUA T HE SHOPS UNDER QUESTION FOR THE 4 ITA NO.3305/MUM/2019 (A.Y.2009-10) IMPUGNED ASSESSMENT YEARS ARE TO BE ALLOWED AS DEDU CTION. THE GROUND NO.1 TO 8 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE, IN THE T ERMS AFORESAID. SINCE, THE FACTS AND THE GROUNDS OF APPEAL NO.1 TO 8 IN THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO ASSESSMENT YEAR 2007-08 AND 2 008-09, THE ISSUE RAISED IN GROUND NO. 1 TO 8 OF APPEAL IS RESTORED TO ASSESSIN G OFFICER WITH SIMILAR DIRECTIONS. THE GROUND NO.1 TO 8 ARE ALLOWED FOR STATISTICAL PU RPOSE. 5. IN GROUND NO.9 OF APPEAL, THE ASSESSEE HAS ASSAI LED LEVY OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT. CHARGING OF INTEREST UNDER AFORESAID SECTIONS IS MANDATORY AND CONSEQUENTIAL HENCE, GROUND NO.9 O F THE APPEAL IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDA Y, THE 16 TH DAY OF JULY, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3(/ DATED 16/07/2021 VM , SR. PS (O/S) 5 ITA NO.3305/MUM/2019 (A.Y.2009-10) COPY OF THE ORDER FORWARDED TO : 1. * / THE APPELLANT , 2. +, / THE RESPONDENT. 3. 4, ( )/ THE CIT(A)- 4. 4, CIT 5. 56 +,( , . . . , / DR, ITAT, MUMBAI 6. 678 9: / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI