SUNIL HINGORANI, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 3578/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9739 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: DILKHUSH MALESHA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 3578/MUM/2017 : A.Y : 2012 - 13 SHRI SUNIL HINGORANI 8 - B, NIBBANA ANNEXE, PALI HILL, BANDRA (W), MUMBAI 400 006 PAN : AAAPH1482P (APPELLANT) VS. ITO 16(1)(4), MUMBAI (RESPONDENT) APPELLANT BY : SHRI DILKHUSH MALESHA RESPONDENT BY : MS. N. HEMALATHA DATE OF HEARING : 26/07/2017 DATE OF PRONOUNCEMENT : 31 /07/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 4 , MUMBAI DATED 3.2.2017 , PERTAINING TO THE ASSESSMENT YEAR 2012 - 13 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 30.1.2015 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). 2. IN HIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 2 SHRI SUNIL HINGORANI ITA NO. 3578/MUM/2017 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4 [ HEREINAFTER REFERRED TO AS LD.CIT(A)] ERRED IN CO NFIRMING ACTION OF LD AO OF HOLDING THAT THE PROVISIONS OF 'DEEMED TO BE LET OUT' APPLY IN RESPECT OF SHOP AT BANDRA USED BY THE PARTNERSHIP FIRM IN WHICH APPELLANT IS A PARTNER. 2. WITHOUT PREJUDICE TO THE FOREGOING GROUND OF APPEAL AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING ACTION OF LD AO COMPUTING GROSS ANNUAL VALUE OF THE PROPERTY AT RS.644, 000 / - BY TAKING 8% OF BOOK VALUE AS ANNUAL LETTING OUT VALUE WHILE APPELLANT'S SHARE IN THE SAID SHOP IS ONLY 5 0%. 3. THAT THE ORDER OF LD CIT (A) IS BAD IN LAW AND ON FACTS. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO, INTER - ALIA , OWNS A PROPERTY BEING SHOP NO. 4, MAKHIJA CHAMBERS, 196, TURNER ROAD, BANDRA, MUMBAI 400 050, WHICH WAS USED FOR BUSINESS PURPOSES BY M/S. PAYLESS OPTICS, A PARTNERSHIP FIRM IN WHICH THE ASSESSEE IS A PARTNER. THE ASSESSING OFFICER NOTED THAT IN THE RET URN OF INCOME, ASSESSEE DID NOT DECLARE ANY INCOME UNDER THE HEAD HOUSE PROPERTY WITH RESPECT TO THE AFORESAID SHOP AS IT WAS CANVASSED TO BE USED FOR BUSINESS PURPOSE. THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF THE ASSESSEE AS , ACCORDING TO HIM , THE SAID PROPERTY WAS BEING USED FOR THE PURPOSES OF BUSINESS BY THE PARTNERSHIP FIRM , AND NOT THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER ADOPTED 8% OF THE COST OF THE PROPERTY AS ITS GROSS ANNUAL VALUE AT RS.6,44,000/ - AND , AFTER ALLOWING DEDUCTION U/S 24(1) OF THE ACT OF RS.1,93,200/ - , BROUGHT TO TAX A SUM OF RS.4,50,800/ - . THE CIT(A) HAS ALSO AFFIRMED THE DECISION OF THE ASSESSING OFFICER. 3 SHRI SUNIL HINGORANI ITA NO. 3578/MUM/2017 4. BEFORE ME , THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE CONTROVERSY IS FULLY COVERED BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. INDIRA S. JAIN, [2012] 21 TAXMANN.COM 471 (MUM.) , WHEREIN IT HAS BEEN HELD THAT THE PROPERTY USED BY THE PARTNERSHIP FIRM IN WHICH THE ASSESSEE IS A PARTNER IS LIABLE TO BE TREATED AS USER FOR THE PURPOSES OF BUSINESS OF ASSESSEE. 5. ON THE OTHER HAND, THE LD. DR DID NOT CONTROVERT THE RELIANCE PLACED BY THE ASSESSEE ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. INDIRA S. JAIN (SUPRA), BUT RELIED ON THE ORDER OF THE ASSESSING OFFICER. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE MOOT QUESTION IS AS TO WHILE COMPUTING THE INCOME FROM HOUSE PROPERTY, WHETHER THE PROPERTY OWNED BY THE ASSESSEE, BUT WHICH IS USED FOR THE PURPOSES OF BUSINESS BY THE PARTNERSHI P FIRM IN WHICH THE ASSESSEE IS A PARTNER, IS LIABLE TO BE EXCLUDED OR NOT? THE SAID POINT HAS BEEN DIRECTLY ANSWERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. INDIRA S. JAIN (SUPRA), WHEREIN THE FOLLOWING DISCUSSION IS RELEVANT : - 5.1 AS REGARDS THE PORTION USED FOR THE BUSINESS PURPOSES, SECTION 22 PROVIDES THAT ANY PORTION OF THE PROPERTY WHICH THE ASSESSEE MAY OCCUPY FOR THE PURPOSE OF ANY BUSINESS OR OCCUPATION HAS TO BE EXCLUDED FROM THE INCOME UNDER THE HEAD HOUSE PROPERTY. THE HON 'BLE HIGH COURT OF ALLAHABAD IN CASE OF CIT VS. SHRI MUSTAFA KHAN (276 ITR 601) AND HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. RASIKLAL BALABHAI (119 ITR 303) HAVE TAKEN THE VIEW THAT THE PROPERTY USED BY THE PARTNERSHIP FIRM IN WHICH THE ASSESSE E IS A PARTNER HAS TO BE TREATED AS THE USER FOR PURPOSE OF BUSINESS OF THE ASSESSEE. THE HONBLE HIGH COURTS HAD FOLLOWED THE VIEW EARLIER TAKEN BY THE 4 SHRI SUNIL HINGORANI ITA NO. 3578/MUM/2017 HON'BLE HIGH COURTS OF BOMBAY IN THE CASE OF SHANTIKUMAR NAROTTAM MORARJI V. CIT (27 ITR 69) IN WHICH I T WAS HELD THAT WHEN PARTNERSHIP CARRIED ON BUSINESS, EACH PARTNER THEREOF CARRIED ON THAT BUSINESS AND A PARTNER THUS CARRIED ON BUSINESS ALTHOUGH THAT BUSINESS HAPPENED TO BE PARTNERSHIP BUSINESS. FOLLOWING THESE JUDGMENTS, WE HOLD THAT PORTION OF THE PR OPERTY USED BY THE PARTNERSHIP FIRM IN WHICH ASSESSEE IS A PARTNER HAS TO BE EXCLUDED FROM THE TOTAL INCOME. 7. FOLLOWING THE AFORESAID DECISION, IT HAS TO BE HELD THAT THE IMPUGNED PROPERTY, WHICH IS BEING USED FOR THE BUSINESS PURPOSE BY THE PARTNERSHIP FIRM IN WHICH THE ASSESSEE IS A PARTNER, IS TO BE CONSTRUED AS BEING USED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE. THEREFORE, THE SAME IS LIABLE TO BE EXCLUDED FROM THE INCOME UNDER THE HEAD HOUSE PROPERTY IN VIEW OF SEC. 22 OF T HE ACT. THUS, I SET - ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T JULY, 2017. SD/ - ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 3 1 S T JULY, 2017 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 5 SHRI SUNIL HINGORANI ITA NO. 3578/MUM/2017 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI