DR. BALKRISHNA R. NAIK, MUMBAI V. ITO 11(2)(2), MUMBAI

ITA 3632/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59922 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: S V VINZE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHIRI G.E. VEERABHADRAPPA, HONBLE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. : 3632/MUM/2011 ASSESSMENT YEAR : 2006-07 DR. BALKRISHNA R. NAIK BRIGHTLANDS BUILDING, 22, MAHAKAVI BHUSHAN MARG, APOLLO BUNDER, MUMBAI PAN NO: AAAPN 6434 H VS. INCOME TAX OFFICER, 11(2)(2), ROOM NO.479, AYAKAR BHAVAN, M.K. MARG, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. V. VINZE RESPONDENT BY : SHRI P. C. MAURYA DATE OF HEARING : 05.03.2012 DATE OF PRONOUNCEMENT : 20 .03.2012 ORDER PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE APPELLANT AGA INST ORDER DATED 16.02.2011 PASSED BY CIT(APPEALS)-3, MUMBAI F OR THE QUANTUM OF ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07. IN THE GROUNDS OF APPEAL, THE APPELLANT HAS RAISED FOLLOWING GROUNDS OF APPEA LS:- ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN 1. HOLDING THAT THE ORDER OF THE HONOURABLE INCOME TA X APPELLATE TRIBUNAL, MUMBAI, GIVEN ON THE SAME FACTS IN THE APPELLANTS OWN CASE FOR THE ASSESSMENT YEAR 1996-9 7, FOR DETERMINING THE INCOME FROM HOUSE PROPERTY, IS NOT APPLICABLE FOR THE ASSESSMENT YEAR IN THE PRESENT APPEAL I.E. FOR ASSESSMENT YEAR 2006-07. ITA NO :3632/MUM/2011 DR. BALKRISHNA R. NAIK 2 2. HOLDING THAT FOR THE ASSESSMENT 1996-97, THE HO NOURABLE INCOME TAX APPELLATE TRIBUNAL HELD THAT THE PROVISI ONS OF RENT CONTROL ACT WERE NOT APPLICABLE, WHEREAS THE ACTUAL OBSERVATION WAS THAT NO STANDARD RENT OF THE HOUSE PROPERTY INVOLVED IN THIS CASE STANDS DETERMINED. 3. NOT APPRECIATING THAT EVEN UNDER THE MAHARASHTR A RENT CONTROL ACT, 1999, APPLICABLE FOR THE ASSESSMENT YE AR IN THE PRESENT APPEAL NO STANDARD RENT OF THE HOUSE PROPER TIES INVOLVED STANDS DETERMINED. 4. NOT CONSIDERING THE OBJECTIONS OF THE APPELLANT FOR ESTIMATING THE ANNUAL LETTING VALUE AT RS.15000/- PER MONTH FO R EACH OF THE HOUSE PROPERTIES IN QUESTION. 5. UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ARBITRARILY ESTIMATING THE ANNUAL LETTING VALUE AT RS.15000/- P ER MONTH, WITHOUT ANY SCIENTIFIC BASIS & CONTRARY TO THE PROV ISIONS OF THE INCOME TAX ACT, 1961. THE APPELLANT PRAYS THAT THE INCOME FROM HOUSE PROP ERTY AT RS.2444/- AS DECLARED BY THE APPELLANT BE ACCEPTED. 2. THE APPELLANT IS A SENIOR ADVOCATE PRACTISING AT SUPREME COURT OF INDIA AND BOMBAY HIGH COURT. APART FROM PROFESSION AL INCOME, HE HAS DECLARED INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE RELEVANT FACTS AS CULLED OUT FROM THE ASSESSMEN T ORDER ARE THAT THE ASSESSEE OWNS AN OFFICE AT BRIGHTLAND BUILDING, MUM BAI, RESIDENTIAL FLAT AT MEHER NAZ CO-OP. HOUSING SOCIETY, CUFFEE PARADE, MUMBAI AND OTHER RESIDENTIAL FLAT SEA LOARDS CO-OP. HOUSING SOCIETY, CUFFEE PARADE, MUMBAI IN WHICH ASSESSEES SHARE IS 22.62% AND 3 RD RESIDENTIAL FLAT CHASM-E-SHAHI CO-OP. HOUSING SOCIETY, KOREGAON PARK , PUNE IN WHICH ASSESSEES SHARE IS 52.72%. HE HAS OPTED A FLAT AT MEHER NAZ, CUFFE PARADE, MUMBAI AS SELF OCCUPIED PROPERTY (SOP). TH E INCOME FROM HOUSE PROPERTY WAS DECLARED AT `. 2,147/- FROM FLAT AT KOREGAON PARK, PUNE AND `. 297/- BEING 22.62% SHARE FROM A FLAT AT SEA LORD, M UMBAI. THE ANNUAL VALUE WAS TAKEN ON THE BASIS OF MUNICIPAL RA TEABLE VALUE. ITA NO :3632/MUM/2011 DR. BALKRISHNA R. NAIK 3 3. THE ASSESSING OFFICER TOOK A VIEW THAT EVEN THOU GH THE MARKET RATE OF RENT IS MUCH MORE HIGHER IN THE LOCALITY, THE AN NUAL VALUE U/S.23(1)(A) TAKEN BY THE ASSESSEE IS LESSER AMOUNT. AFTER RELY ING UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS PRIVATE LTD. V. COMMISSIONER OF INCOME-TAX REPORTED IN [1964] 51 ITR 353 , HON'BLE BOMBAY HIGH COURTS JUDGMENT IN THE CASE OF JAMANADAS PRABHUDAS VS. CIT REPORTED IN 20 ITR 160 AND THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAKARLAL BALABHAI REPORTED IN 100 ITR 97 HE ESTIMATED THE RENT FOR WHICH THE PROPERTY MIGHT BE LET OUT U/S.23(1)(A) AT `. 15,000/- PER MONTH AND ACCORDINGLY, COMPUTED THE INCOME FROM HOUSE PROPERTY AS UNDER : (I) REASONABLE RENT FOR FLAT AT SEA LORDS, MUMBAI FOR THE YEAR IS 15,000/- X 12 1,80,000/- LESS : MUNICIPAL TAX AS PER STATEMENT 2,736/- 1,77,264/- LESS : DEDUCTION U/S.24(1)(A) @ 30% 53,179/- 1,24,085/- ASSESSEES SHARE IS 22.62% 28,068/- (II) REASONABLE RENT FOR FLAT AT PUNE FOR THE YEAR IS 15,000/- X 12 1,80,000 LESS: MUNICIPAL TAX AS PER STATEMENT 10,233/- 1,69,767/- LESS: DEDUCTION U/S. 24(1)(A) @ 30% 50,930/- 1,18,837/- ASSESSEES SHARE IS 52.72% 62,651/- 4. BEFORE THE CIT(APPEALS), THE APPELLANT CONTENTED THAT THE HON'BLE ITAT IN ASSESSEES OWN CASE IN SIMILAR SET OF FACTS AND CIRCUMSTANCES FOR THE ASSESSMENT YEAR 1996-97, HAS TAKEN THE FIGURE O F MUNICIPAL VALUATION AND ALLOWED THE APPEAL IN HIS FAVOUR. TH E CIT(APPEALS) HOWEVER, TRIED TO DISTINGUISHED THE ORDER OF THE IT AT (IN THE APPELLANTS OWN CASE) ON THE GROUND THAT SELF OCCUPIED PROPERTY (SOP) HAS BEEN ITA NO :3632/MUM/2011 DR. BALKRISHNA R. NAIK 4 CHANGED IN THE IMPUGNED ASSESSMENT YEAR AND THAT TH E PROVISIONS OF RENT CONTROL ACT SHOULD BE APPLIED. HE, THEREFORE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER AFTER OBSERVING AND HOLDING A S UNDER :- 2.3.1 FACTS AND MATERIAL ON RECORD ARE CONSIDERED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS A MAT ERIAL DIFFERENCE BETWEEN THE POSITION IN LAW AS APPLICABL E IN A.Y. 96-97 WHICH HAS BEEN DECIDED BY HONBLE ITAT AND TH E FACTS IN THE IMPUGNED ASSESSMENT YEAR ON THE ISSUE OF APP LICABILITY OF RENT CONTROL ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, WITH DUE RESPECT THE DECISION OF HONBLE MUMBAI ITAT IN APPELLANTS OWN CASE IN A.Y. 96-97 WAS GIVE N UNDER DIFFERENT PROVISIONS OF LAW AND THEREFORE, NOT APPL ICABLE TO THE FACTS OF THE CASE. IN SO FAR AS THE MERITS OF THE A LV DETERMINED BY THE AO, APPELLANT STATES THAT THOUGH THE PROVISI ONS ARE APPLICABLE, NO STANDARD RENT HAS BEEN DETERMINED UN DER THE RENT CONTROL ACT AND THEREFORE, THE ONLY BASIS CAN BE OF MUNICIPAL VALUATION. THIS SUBMISSION IS NOT IN CONS ONANCE WITH THE VARIOUS JUDICIAL PRONOUNCEMENTS NARRATED B Y THE -AC IN THE ORDER. APPELLANT HAS NOT- FORWARDED ANY OTHE R GROUNDS FOR CHALLENGING THE ALV ESTIMATED AT `. 15,000/- P.M. FOR EACH OF THE TWO PROPERTIES. THE DESCRIPTION OF THE TWO D EEMED LET OUT PROPERTIES INDICATE THAT THEY ARE INDEED LOCALI TIES WHICH ARE POSH AND WHERE HIGH RENTALS ARE THE NORM. IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO CAUSE TO DISTURB THE ALV ESTIMATED BY THE AO AND THE CONSEQUENT ADDITION REGARDING INCOME FROM HOUSE PROPERTY IN THE IMPUGNE D MATTER. 5. THE LEARNED AR APPEARED ON BEHALF OF THE APPELLA NT SUBMITTED THAT THERE HAS BEEN NO CHANGE EITHER ON THE FACTS OR MAT ERIAL CHANGE IN THE PROVISIONS OF THE LAW. EVEN THE MUNICIPAL VALUATIO N REMAINS THE SAME, HENCE THE ORDER OF THE ITAT SHOULD BE FOLLOWED. ON THE OTHER HAND, THE LEARNED SR. DR HEAVILY RELIED UPON THE FINDINGS OF THE LEARNED CIT AND CONTENTED THAT THE RENT ESTIMATED AT `. 15,000/- LOOKING TO THE AREA IN WHICH THE FLATS ARE LOCATED IS FAIR AND REASONABLE AND NO INTERFERENCE SHOULD BE MADE IN SUCH A VALUATION. ITA NO :3632/MUM/2011 DR. BALKRISHNA R. NAIK 5 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND ALSO THE JUDGMENT OF THE CO-ORDINATE BENCH IN THE APPELL ANTS OWN CASE FOR THE ASSESSMENT YEAR 1996-97 (ITA NO.5897/MUM/1999). BO TH THE PARTIES HAVE NOT DISPUTED THE FACT THAT THE MUNICIPAL VALUA TION OF THE PROPERTY AS SHOWN BY THE APPELLANT IS THE SAME AS WAS PREVAL ENT IN THE ASSESSMENT YEAR 1996-97. IT IS ALSO UNDISPUTED THA T BOTH THE PROPERTIES WERE NOT LET OUT EITHER IN PART OR FOR ANY PERIOD I N THE RELEVANT ASSESSMENT YEAR OR IN THE EARLIER YEARS. SECTION 2 3 ENVISAGES THE DETERMINATION OF ANNUAL VALUE OF THE PROPERTY AND NO WHERE IT HAS BEEN PROVIDED THAT FOR DETERMINING THE ANNUAL VALUE, MUN ICIPAL VALUE CANNOT BE TAKEN INTO CONSIDERATION. WE, THEREFORE, FIND T HAT THE FINDINGS OF THE ITAT ORDER IN THE CASE OF THE APPELLANT IS SQUARELY COVERS THE ISSUE IN THIS YEAR ALSO. THE RELEVANT FINDING OF ITAT AFTER CONS IDERING THE CATENA OF CASE LAWS HAS OBSERVED AND HELD AS UNDER : CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE TOGETHER WITH THE FACT THAT THE ASSESSMENT YEAR INV OLVED IS 1996-97 I.E. AFTER THE AMENDMENT OF SECTION 23 BY I NSERTION OF CLAUSE (B) OF SECTION 23(1) AS ALSO THE LEGAL POSIT ION, WE ARE OF THE VIEW THAT THE ALV HAS TO BE DETERMINED AS PER S ECTION 23(1)(A) FOR THE REASON THAT THE FLAT BEING SELF-OC CUPIED THERE IS NO QUESTION OF THERE BEING ANY ACTUAL RENT RECEIVED BY THE ASSESSEE FROM THE TENANT. IN AS MUCH AS NO STANDAR D RENT OF THE HOUSE PROPERTY INVOLVED IN THIS CASE STANDS DET ERMINED, THE SUM FOR WHICH THIS FLAT MIGHT REASONABLY BE EXP ECTED TO LET FROM YEAR TO YEAR NEED APPROPRIATELY BE TAKEN AT A FIGURE OF MUNICIPAL VALUATION AS HAS BEEN HELD BY HON'BLE CAL CUTTA HIGH COURT IN 73 TAXMAN 437 AND AS HAS BEEN TAKEN B Y ASSESSEE. WE HOLD ACCORDINGLY. THIS DISPOSES OF G ROUND NO. 1(A) IN FAVOUR OF ASSESSEE. 7. THUS FOLLOWING THE ABOVE DECISION, THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM HOUSE PROPERTY IS HEREBY DELETED AND THE INCOME DECLARED BY THE APPELLANT IS ACCEPTED. ITA NO :3632/MUM/2011 DR. BALKRISHNA R. NAIK 6 8. IN THE RESULT, THE APPEAL FILED BY THE APPELLANT IS ALLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF MARCH, 2012. S D/ - S D/ - ( G. E. VEERABHADRAPPA ) ( AMIT SHUKLA ) PRESIDENT JUDICIAL MEMBER MUMBAI, DT: 20.03.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI