DCIT CC 6(4), MUMBAI V. VIRENDRA JAIN, MUMBAI

ITA 3666/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8562 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N HEMALATHA
• Keywords: Fair market value; Notional interest; Reason to believe
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 3666 / MUM/2017 ( ASSESSMENT YEAR : 2011 - 12 ) DCIT CC 6(4) R.NO.1925, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 VS. SHRI VIRENDRA JAIN 82, MAKE R CHAMBER III NARIMAN POINT MUMBAI 400 021 PAN/GIR NO. AABPJ1882E APPELLANT ) .. RESPONDENT ) ITA NO. 3845/MUM/2017 ( ASSESSMENT YEAR : 2011 - 12 ) SHRI VIRENDRA JAIN 82, MAKER CHAMBER III NARIMAN POINT MUMBAI 400 021 VS. ACIT CC 6(4) 19 TH FLOOR,AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 PAN/GIR NO. AABPJ1882E APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI VIJAY MEHTA ASSESSEE BY MS. N. HEMALATHA DATE OF HEARING 03 / 10 /201 7 DATE OF PRONOUNCEME NT 14 / 11 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT(A) - 27/02/2017 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECOR D PERUSED. 3. FACTS IN BRIEF ARE THAT D URING THE YEAR UNDER REFERENCE, THE ASSESSEE WAS, IN T ERA L IA, THE OWNER OF PREMISES AT CENTRAL GARDEN COMPLEX, CHUNABHATTI, MUM B AI. THE SAID PREMISES WERE NOT GIVEN ON RENT AND ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 2 ACCORDINGLY THE SAID PREMISES WERE VACAN T THROUGHOUT THE PREVIOUS YEAR. WHILE FILING THE RETURN OF INCOME, THE ASSESSEE HAD OFFERED RS.3,86,376/ - AS ANNUAL RATEABLE VALUE (ALV) AS INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE SAID ALV SO OFFERED WAS BASED ON MUNICIPAL RATEABLE VALUE DE TERMINED BY THE MUNICIPAL CORPORATION IN RESPECT OF THE SAID PREMISES. THE ASSESSING OFFICER DID NOT ACCEPT THE ALV SO OFFERED BY THE ASSESSEE AND HE PROCEEDED TO RE - COMPUTE THE ALV BASED ON THE MARKET VALUE AND ACCORDINGLY HE DETERMINED THE ALV AT RS.68,3 6,502/ - . 4. ASSESSEE APPROACHED TO THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE VARIOUS JUDICIAL PRONOUNCEMENTS AND ALSO THE DECISION OF THE HONBLE BOMBAY HIGH COURT DIRECTED THE AO TO ADOPT ALV OF THE HOUSE PROPERTY AS PER THE RATEABLE VALUE FIXED BY THE MUNICIPAL AUTHORITY AT RS.4,63,651/ - . HOWEVER, THE CIT(A) DIRECTED FOR ENHANCEMENT OF SUCH MUNICIPAL RATEABLE VALUE BY 5% WHICH WORKS OUT TO RS.4,86,834/ - . THE PRECISE OBSERVATION OF CIT(A) WAS AS UNDER: - 7.4.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE APPELLANT HAS CHALLENGED THE ACTION OF THE LD. AO IN DETERMINING THE ALV OF PROPERTIES/FLATS AT RS. 68,36.502 / - AS AGAINST RS. 3,86,376 / - ADMITTED BY THE APPELLANT IN RESPECT OF FLATS/PROPERTIES AT CENTRAL GARDEN COMPLEX. THE APPELLANT'S MAIN CONTENTIONS ARE THAT THE FLATS/PROPERTIES UNDER CONSIDERATION WERE VACANT AND NOT LET OUT DURING THE YEAR; SINCE THE FLATS/PROPERTIES UNDER CONSIDERATION WAS NOT LET OUT SO THE ALV HAS TO BE COMPUTED ON THE B ASIS OF MUNICIPAL RATEABLE VALUE; THE INSPECTOR HAD NOT CARRIED OUT ANY SPECIFIC ENQUIRY AND THE INFORMATION AVAILABLE ON THE WEBSITES LIKE 99ACRES.COM AND MAGICBRICKS.COM ARE NOT RELIABLE. IN SUPPORT OF HIS CLAIMS THE APPELLANT HAS PLACED RELIANCE ON VARI OUS JUDICIAL PRONOUNCEMENTS, AS DETA ILED ABOVE. THE CONTENTIONS OF TH E APPELLANT HAVE BEEN CONSIDERED CAREFULLY. IT IS ADMITTED FACT THAT THE FLATS/PROPERTIES UNDER CONSIDERATIONS AT CENTRAL GARDEN COMPLEX WERE VACANT AND APPELLANT HAD OFFERED ANNUAL VALUE OF THE FLATS AS PER MUNICIPAL RATEABLE VALUE AT RS. 3,86,376/ - . HOWEVER, THE LD. AO DID NOT ACCEPT THE SAME AND DETERMINED THE ALV AT RS. 68,36,502/ - IN RESPECT OF ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 3 CENTRAL GARDEN COMPLEX, ON THE BASIS OF INSPECTOR'S REPORT/FIELD ENQUIRIES AND THE DATA AVA ILABLE ON WEBSITES 99ACRE.COM AND MAGICBRICK.COM. 7.4.2 WHILE COMPLETING THE ASSESSMENT THE LD. AO HAS OBSERVED THAT THE CORRECT TAXABLE ALV CAN BE DETERMINED AFTER CONSIDERING ACTUAL MARKET AND FIELD ENQUIRIES CONDUCTED AND THE RELEVANT FACTS PERTAINING TO THE PROPERTY OF THE ASSESSEE VIZ. AREA OF FLAT, COST OF FLAT AND ITS YEAR OF ACQUISITION BY THE ASSESSEE ETC, SHOULD BE TAKEN INTO ACCOUNT IN THE ENQUIRY TO ARRIVE AT THE CORRECT ALV OF THE PROPERTY. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. A O WAS DIRECTED U/S 250(4) OF THE ACT TO CONDUCT NECESSARY ENQUIRIES TO DETERMINE ALV IN THE LIGHT OF THE LAW LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY. IN PURSUANCE OF SAME THE LD. AO HAS NOT MADE ANY FRESH ENQUIRY AND SU BMITTED THAT IN THE PRESENT CASE THE IT1 HAD ALREADY MADE ENQUIRY IN A.Y. 2009 - 10 AND HAS PLACED RELIANCE ON THE SAME. THE LD. AO HAS SUBMITTED THAT WHILE COMPLETING THE ASSESSMENT HE/SHE HAD ALSO RELIED UPON THE DATA AVAILABLE ON INTERNET. HOWEVER, THE LD . AO HAS SUBMITTED THAT 'NO DETAILS ARE FOUND IN THE RENT ENQUIRY FOLDER REGARDING ENQUIRY FROM VARIOUS WEBSITES LIKE MAGICBRICKS.COM AND 99ACRES.COM,' FINALLY THE LD. AO HAS SUBMITTED THAT THE FACTS OF THE CASE OF TIP TOP TYPOGRAPHY ARE COMPLETELY DIFFERE NT FROM APPELLANT'S CASE AS IN THE SAID CASE THE ASSESSEE HAD RECEIVED SECURITY DEPOSIT AND RENTAL INCOME WAS MUCH LOWER AND IN THE PRESENT CASE THE ASSESSEE AND NOT LET OUT THE FLATS AND THE SAME WERE LYING VACANT AND IT IS ON ACCOUNT OF SUCH VACANCY THAT ALV HAS BEEN DETERMINED. 7.4.3 FROM THE ABOVE, IT IS EVIDENT THAT INSPITE OF GIVING OPPORTUNITIES THE LD. AO HAS CHOSEN NOT TO CARRY OUT ANY FURTHER ENQUIRIES AND HAS RELIED UPON THE ENQUIRY CONDUCTED BY THE IT I EARLIER. THE ITI IN HIS SAID REPORT DATED 23. 12.2 010 HAS SUBMITTED AS UNDER. 'AS DIRECTED I VISITED THE PREMISES AF CENTRAL GARDEN COMPLEX, CITY SURVEY NO. 477B, VILLAGE KURFA III, S.M. ROAD, CHUNABHA TTI / (EAST) MUMBAI. ! ENQUIRED WITH T HE SECURITY PERSON ABOUT THE SOCIETY'S OFFICE AND HE TOLD TH AT THERE IS NO SOCIETY FORMED HERE. THESE TOWER'S FLAT IS USED AS GUEST HOUSE. THEN I ENQUIRED MR. SEKHAR P MORE (OM SAI ESTATE, MAIT RY SHOPPING CENTRE, V.N. PUROV MARG, SION CHUNABHAFFI EAST WHO IS WORKING AS AN ESTATE CONSULTANTS IN T HE AREA ABOUT T HE RE NT FLATS. HE TOLD THAT THIS IS A CHAWL AREA, HERE IS NOT ANY GOOD BUILDING FOR RENT PURPOSES AND FURTHE R ADDED THAT T HE RENT OF ALIKE T HE SAME FLATS SIMILAR TO THE ABOVE SAID TOWER'S FLAT IS RS, 25000/ - PER MONTH FOR I 8HK APPROXIMATELY 600 SQ. F T S. (55.74 SQ. MTRS CARPET AREA. ACCORDINGLY, RATE IS APPROXIMATELY RS. 421 - PER SQ.FT/ RS. 446/ - PER SQ. MFRS. SIMILAR TO ANOTHER BUILDING IN CHUNABHATTI.' FURTHER THE IT I VIDE HIS REPORT DATED 13.03.2015 HAS SUBMITTED AS UNDER : - 'AS DIRECTED FOR VERIFICATION OF ALV IN CHUNABHATTI AREA NEAR CENTRAL GARDEN COMPLEX I VISITED THE AREA NEAR CENTRAL GARDEN COMPLEX, SWADESHI MILL ROAD'. I WENT PROPERTY BROKER FOR RENTING PROPERTY. THEY FOLD ME THAT IT WOULD COST RS. 28000/ - FOR ; I BHK ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 4 FLAT WITH AREA OF 450/ - SQ.F T AND RS. 22,000/ - FOR 380 SQ.FT. FIAT OF MAHADA. FOR 2 'BHK FIAT WITH AREA 680 SQ.FT. 3 MORE PROPERTY DEALER QUOTED PRICE IN T HE RANGE OF RS.35,000/ - TO RS, 37000/ - . FURTHER THE BROKERS ALSO FOLD ME THAT THE DEMAND HAS BEEN REDUCED IN PAST 2 YEARS IN THE AREA A S COMPARED WITH PREVIOUS YEARS AND HENCE RENT HAS NOT BEEN INCREASED FROM 2 YEARS. THE REPORT IS SUBMITTED FOR YOUR KIND PERUSAL AND NECESSARY ACTION PLEASE.' 7.4.4 THE APPELLANT HAS SUBMITTED THAT IN HIS CASE IN A.Y. 2009 - 10 SIMILAR ADDITION WAS MADE ON ACCOUNT OF ALV ON THE BASIS OF ITL'S REPORT AND DATA AVAILABLE ON WEBSITES MAGICBRICKS.COM AND 99ACRES.COM, AND THE LD. CIT[A) HAD ALLOWED THE APPEAL OF THE APPELLANT. HOWEVER, THE HON'BLE ITAT MUMBAI HAD SET ASIDE THE ISSUE TO THE FILE OF THE FILE OF THE LD. AO WITH A DIRECTION TO MAKE FURTHER ENQUIRY AND DETERMINE THE ALV AS PER LAW. THE LD. AO HAS VIDE ORDER DATED 29.07.2016 U/S 143(3) RWS 254 HAS MADE SIMILAR OBSERVATIONS AS MENTIONED ABOVE. FROM THE DECISION DATED 12.08.2015 OF THE HON'BLE ITAT, MUMBAI IN THE APPELLANT'S OWN CASE FOR A.Y. 2009 - 10 IN ITA NO. 2116/MUM/2017, IT IS OBSERVED THAT THE REVENUE HAD CHALLENGED THE ORDER OF THE LD. CIT(A} IN HOLDING THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ALV OF THE HOUSE PROPERTY CANNOT EXCEED RATEAB LE VALUE AS DETERMINED BY THE MUNICIPAL CORPORATION. THE HON'BLE ITAT HAD SET ASIDE THE ISSUE TO THE FILE OF THE LD. AO FOR DE - NOVO ADJUDICATION AFTER HOLDING AS UNDER. 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON R ECORD. WE FIND THAT THE DECISION OF THE HON'BLE JURISDICTICNAL HIGH COURT IN SMITA N AMBANI /SUPRA) HAS UPHELD THE MUNICIPAL RATABLE VALUE TO BE THE ANNUAL LETTAB L E VALUE OF WHICH THE PROPERTY IS EXPECTED TO BE LET. THE SAID JUDGEMENT WAS GIVEN IN THE CONT EXT OF WEALTH TAX ACT WHEREBY IT HAS BEEN OBSERVED IN THAT RULE J88 HAS THE SAME EXPRESSION I.E. 'THE SUM FOR WHICH THE PROPERTY MADE BE REASONABLY ACCEPTED TO LEI FROM YEAR TO YEAR' AS IS FOUND IN SECTION 23(1) (A) OF THE ACT IS USED. IT IS PERTINENT TO N OTE THAT IN THE RECENT JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S TIP TOP TYPOGRAPHY, 368 ITR 330 WHICH IS RENDERED IN CONTEXT OF SECTION 23 OF INCOME TAX ACT, 196S, THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT MARKET RATE IN THE LOCA LITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WHEN THE ASSESSING OFFICER IS CONVINCED THAT THE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATION BY THE PARTIES IS DOUBTFUL THEN HE CAN RESORT TO ENQUIRY ABOUT THE PREVAILING RATE IN THE LOCALITY. IT IS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT THAT MUNICIPAL RATABLE VALUE MAY NOT BE BINDING ON THE ASSESSING OFFICER IF THE AO ON THE BASIS OF MATERIAL HAS REASON TO BELIEVE THAT MUNICIPAL RATABLE VALUE IS NOT REPRESENTING THE COR RECT FMV. IT IS DEFINITELY A SAFE GUIDE UNLESS A COGENT AND RELIABLE MATERIAL TO DISCARD IT. IN THE EVENT, THE TRANSACTION IS INFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES OR VITIATED BY FRAUD OR LIKE WITH THE ASSESSING OFFICER CAN ADOPT FAIR RENTAL VALUE BAS ED ON THE DETAILS AND INFORMATION OBTAINED FROM RELIABLE SOURCE. IN THE IMPUGNED CASE, THE ASSESSING OFFICER HAS DOUBTED THE RATEABLE VALUE OF RS. 34,575/ - FOR FLATS OWNED BY THE ASSESSEE AND HAS MADE THE FIELD ENQUIRIES THROUGH AN INSPECTOR WHO HAS SURVEYE D THE AREA AND GAVE A REPORT THAT THE RENTAL VALUE OF A SIMILAR FLAT IN THE SAID TOWER IS APPROXIMATELY RS. 25,000 PER MONTH FOR ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 5 600 SQ.FT. AREA FLAT. BASED UPON THAT THE ASSESSING OFFICER HAS DETERMINED THE ALV OF HOUSE PROPERTY CONSISTING OF NINE FLATS A T RS. 6 8,36,052/ - . THUS, THE AO WAS HAVING THE MATERIAL AND FACTS TO NOT ACCEPT THE ON MUNICIPAL RATABLE VALUE. THE LEARNED CIT(A) HAS RELIED ON THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMITA N AMBANI (SUPRA) WHILE THE .HON'BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY (SUPRA) WHICH IS THE LATTER JUDGEMENT OF THE HON'BLE JURISDICTIONA L HIGH COURT, HELD THAT THE MARKET RATE IN THE LOCALITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WH EN THE ASSESSING OFFICER IS CONVINCED WITH THE CASE BEFORE HIM IS SUSPICIOUS THEN THE ASSESSING OFFICER CAN INQUIRE ABOUT THE PREVAILING RATE IN THE LOCALITY. THE ASSESSEE RE//ED ON THE DECISION OF T HE TRIBUNAL IN ASSESSEE'S RELATIVE'S CASE IN LAXM I JAIN, ANAND HA I N AND RAMETI DEVI (SUPRA,), IS MISCONCEIVED BECAUSE IN THE CASE OF THE ASSESSEE UNDER PRESENT APPEAL THERE IS AN ENQUIRY CONDUCTED BY THE INSPECTOR AT THE DIRECTION OF THE ASSESSING OFFICER WHEREBY THE INSPECTOR VISITED THE AREA AND ASCERTAINED TH E PREVAILING RATE OF RENT FROM THE ESTATE AGENT OF THE AREA AND THE FACTS BROU GHT BY INSPECTOR REPORT ARE STILL REMAIN UNCONTROVERTED AS THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY CONTRARY EVIDENCE EXCEPT THE MUNICIPAL RATABLE VALUE. FURTHER, WE ARE GUIDED BY THE RECENT JUDGEMENT OF JURISDICTIONAL HIGH COURT IN TIP TOP TYPOGRAPHY {SUPRA} WHICH WE RESPECTFULLY FOLLOW. SINCE THE AO HAS ACTED ON THE INSPECTOR REPORT WITHOUT CONDUCTING FURTHER ENQUIRY, THEREFORE, IN OUR VIEW, THE BEST COURSE OF JUSTICE WILL BE SERVED IF THE MATTER IS REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR PROPER ENQUIRY ON THIS POINT. ACCORDINGLY THE MATTER IS RESTORED TO THE FILE OF AO WITH DIRECTION TO CONDUCT COMPLETE AND PROPER VERIFICATION/INVESTIGATION TO ARRIVE AT ANNUAL LETTAB LE VALUE OF THE PROPERTY OWNED BY THE ASSESSEE STRICTLY IN ACCORD ANCE WITH THE MANDATE OF SEC 23(1 )( A ) OF THE ACT, I.E 'THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR'. NEEDLESS TO SAY THAT THE ASSESSEE BE GIVEN FAIR A ND ADEQUATE OPPORTUNITY TO PRESENT THEIR CASE. ACCORDINGLY, BOTH THE APPEALS ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION IN THE MANNER INDICATED ABOVE.' 7.4.5 FROM THE ABOVE IT IS OBSERVED THAT THE HON'BLE TRIBUNAL IN AY 2009 - 10 HAS OBSERVED THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY HAS HELD THAT MARKET RATE IN THE LOCALITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WHEN THE AO IS CONVINCED THAT THE CASE BEFORE HIM IS SUSPICIOUS AND DETERMINATION BY THE PARTIES IS DOUBTFUL THEN HE CAN RESORT TO ENQUIRY ABOUT THE PREVAILING RATE IN THE LOCALITY. THE HON'BLE TRIBUNAL FURTHER HELD THAT IN THE EVENT THE TRANSACTION IS INFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES OR VITIATED B Y FRAUD OR LIKE WITH THE ASSESSING OFFICER CAN ADOPT FAIR RENTAL VALUE BASED ON THE DETAILS AND INFORMATION OBTAINED FROM RELIABLE SOURCE, 'HE HON'BLE TRIBUNAL HAS ALSO HELD THAT RATEABLE VALUE IS SAFE GUIDE TO DETERMINE THE ALV UNLESS A COGENT AND RELIABL E MATERIAL TO DISCARD IT. FROM THE SAID FINDING OF THE HON'BLE TRIBUNAL IT IS EVIDENT THAT THE RATE ABL E VALUE AS PER MUNICIPAL AUTHORITIES IS A SAFE YARDSTICK TO DETERMINE ALV U/S 23(1)(A) UNLESS THE AO BRINGS COGENT AND RELIABLE MATERIAL TO DISCARD THE SA ME. THE HON'B L E ITAT HAS ALSO HELD THAT IN THE EVENT THE TRANSACTION IS INFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES OR VITIATED BY FRAUD THE AO CAN ADOPT FAIR RENTAL VALUE BASED ON ENQUIRY FRO M RELIABLE SOURCE. HOWEVER, SINCE THE HON'BLE ITAT HAD NOT FOUND THE ILL'S REPORTS UNDER CONSIDERATION, COGENT AND ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 6 RELIABLE MATERIAL ENOUGH TO DISCARD THE RATEABLE VALUE DETERMINED BY MUNICIPAL AUTHORITIES AND HENCE HAD SET ASIDE .THE ISSUE TO THE FILE OF THE LA. AO WITH THE DIRECTION TO CONDUCT COMPLETE AND PROPER VERI FICATION/INVESTIGATION. IT IS ADMITTED FACT, IN THE PRESENT CASE VIDE LETTER OF THIS OFFICE DATED 17.01.2017 THE LD. AO WAS DIRECTED U/S 250(4) OF THE ACT TO CARRY OUT NECESSARY ENQUIRIES IN THE LIGHT OF THE ABOVE REFERRED DECISION OF THE HON'BLE BOMBAY HI GH COURT IN THE CASE OF TIP TOP TYPOGRAPHY. HOWEVER, AS DISCUSSED ABOVE, IN SPITE OF GIVING AN OPPORTUNITY, THE LD. AC HAS CHOSEN NOT TO CARRY OUT ANY FRESH ENQUIRY/INVESTIGATION AND HAS RELIED UPON THE ILL'S ENQUIRIES CONDUCTED EARLIER AND AS DISCUSSED AB OVE, WHICH THE HON'BLE TRIBUNAL HAD NOT FOUND SUFFICIENT COGENT AND RELIABLE MATERIAL TO DISCARD THE RATEABLE VALUE AS PER MUNICIPAL AUTHORITIES. FURTHER, FROM THE COPY OF ORDER U/S 143(3) RWS 254 OF THE ACT DATED 29.07.2016 (WHICH WAS PASSED IN GIVING EFF ECT TO ABOVE REFERRED DECISION OF ( HON'BLE ITAT), IT IS OBSERVED THAT NO FRESH ENQUIRY HAS BEEN CONDUCTED BY THE LD. AO AS DIRECTED BY THE HON'BLE ITAT AND HAD PLACED RELIANCE ON ITI'S REPORTS AS CONDUCTED DURING THE ASSESSMENT PROCEEDINGS FOR AY 2009 - 10 AND 2012 - 13 AND DETERMINED THE ALV AS IN ORIGINAL ASSESSMENT ORDER. HENCE, FROM THE ABOVE FACTS IT IS EVIDENT THAT THE LD. AO HAS NOT BROUGHT ON RECORD ANY NEW FACTS OR MATERIAL OTHER THAN THE ILL'S REPORT, WHICH WAS ALREADY BEFORE THE HON'BLE TRIBUNAL. 7.4.6 FROM PERUSAL OF SAID ILL'S ENQUIRY REPORTS IT IS OBSERVED THAT THE SAME IS VERY GENERAL IN NATURE AND NO SPECIFIC INSTANCES OF COMPARABLE FAIR RENT HAS BEEN BROUGHT ON RECORD. THERE IS NO REFERENCE OF COMPARABLES LIKE AREA OF FLATS, YEAR OF ACQUISITI ONS, LOCALITY OF FLATS, AVAILABILITY OF DIFFERENT AMENITIES IN SOCIETY AND PUBLIC UTILITIES SERVICE CENTERS, VIZ. SCHOOL, HOSPITALS ETC. FURTHER, THE LD. AO HAS RELIED UPON THE DATA AVAILABLE ON WWW.MAGICBRICKS.COM AND WWW.99ACRES.COM BUT IN HER REPORT THE LD. AO HAS SUBMITTED THAT NO DETAILS ARE FOUND IN THE RENT ENQUIRY FOLDER REGARDING ENQUIRY FROM VARIOUS WEBSITES LIKE MAGICBRICK.COM, 99ACRES.COM ETC. FURTHER THE APPELLANT HAS SUBMITTED THAT THE ABOVE REFERRED WEBSITES ISSUED DISCLAIMER THAT THEY ARE NO T RESPONSIBLE FOR THE INFORMATION CONTAINED THEREIN AND THE DATA AVAILABLE THEREIN IS BASED ON ASKING PRICES OF THE PROPERTIES AND THE SAME IS NOT BASED O N ACTUAL TRANSACTIONS. IN VIEW OF FACTS DISCUSSED ABOVE, NO RELIANCE CAN BE PLACED ON THE SAME. 7.4.7 IN HER REPORT THE LD. AO HAS ALSO SUBMITTED THAT THE FACTS ADJUDICATED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY IS COMPLETELY DIFFERENT FROM .THE FACTS OF THE PRESENT CASE, AS IN THE SAID CASE OF TIP TOP TYPOGRAPHY THE ASSESSEE H AD RECEIVED SECURITY DEPOSITS, WHEREAS IN THE PRESENT CASE THE PROPERTIES UNDER CONSIDERATIONS WERE VACANT. THE SAID SUBMISSION OF THE LD. AO IS FOUND TO BE CORRECT. FROM PARA 2 OF THE SAID DECISION OF THE HON'BLE BOMBAY HIGH COURT IT IS OBSERVED THAT THE PROPERTIES THEREIN WERE RENTED AND THE ASSESSES HAD RECEIVED HUGE INTEREST FREE SECURITY DEPOSITS. WHILE ADJUDICATING THE ISSUE THEREIN THE HON'BLE BOMBAY HIGH COURT HELD THAT 'THE NEXT QUESTION WOULD BE AS FO WHETHER THE ANNUAL LETTING VALUE FIXED BY THE MUNICIPAL AUTHORITIES UNDER THE DELHI MUNICIPAL CORPORATION ACT CAN BE THE BASIS OF ADOPTING ANNUAL LETTING VALUE FOR THE PURPOSES OF SECTION 23 OF THE ACT. THIS QUESTION WAS ANSWERED IN AFFIRMATIVE BY THE CALCUTTA HIGH COURT IN C1T V. SATYA CO. LTD. 1997] ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 7 140 CTR {COL.) 569 ON THE GROUND THAT THE PROVISIONS CONTAINED IN THE DELHI MUNICIPAL CORPORATION ACT FOR FIXING ANNUAL LETTING VALUE IS IN PARI MATERIA WITH SECTION 23 OF THE ACT. THE COURT OPINED THAT THE FAIR RENT FIXED UNDER THE MUNICIPAL LAWS, WHICH TAKES INTO CONSIDERATION EVERYTHING, WOULD FORM THE BASIS OF ARRIVING AT ANNUAL VALUE TO BE DETERMINED UNDER SECTION 23(1 ){AJ AND TO BE COMPARED WITH ACTUAL RENT AND NOTIONAL ADVANTAGE IN THE FORM OF NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT COU LD NOT BE TAKEN INTO CONSIDERATION, !T IS CLEAR FROM THE FOLLOWING DISCUSSION THEREIN:' THE HON'BLE BOMBAY HIGH COURT FURTHER HELD THAT 'WE ARE NOT IN AGREEMENT WITH SHRI CHHOTARAY THAT THE MUNICIPAL RATEABLE VALUE CANNOT BE ACCEPTED AS A BONA FIDE RENTAL VALUE OF THE PROPERTY AND IT MUST BE DISCARDED STRAIGHTWAY IN ALL CASES. THERE CANNOT BE A BLANKET REJECTION OF THE SAME. IF THAT IS TAKEN TO BE A SAFE ' GUIDE, THEN, TO DISCARD IT THERE MUST BE COGENT AND RELIABLE MATERIAL. WE ARE OF THE OPINION THAT MA RKET RATE IN THE LOCALITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WHEN THE ASSESSING OFFICER IS CONVINCED THAT THE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATION BY THE PARTIES IS D OUBTFUL THAT HE CAN RESORT TO ENQUIRE AB OUT THE PREVAILING RATE IN THE LOCALITY. WE ORE OF THE VIEW THAT MUNICIPAL RATEABLE VALUE MAY NOT BE BINDING ON THE ASSESSING OFFICER BUT THAT IS ONLY IN CASES OF AFORE - REFERRED NATURE. IT IS DEFINITELY A SAFE GUIDE.' FROM THE ABOVE IT IS EVIDENT THAT THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT THE MUNICIPAL RATEABLE VALUE IS A SAFE GUIDE TO DETERMINE ALV AND ;O DISCARD THE SAME THERE MUST BE COGENT AND RELIABLE MATERIAL. IN THE PRESENT CASE THE LD. AO HAS NOT POINTED OUT ANY DEFECT IN THE RATEABLE VALUE F IXED BY THE MUNICIPAL AUTHORITIES AND NO COGENT AND RELIABLE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE LD. AO TO DISCARD THE SAME. THE HON'BIE BOMBAY HIGH COURT HAS ALSO HELD THAT THE MARKET RATE IN THE LOCALITY IS AN APPROVED METHOD FOR DETERMINING ALV B UT IT IS ONLY WHEN THE AO IS CONVINCED, THAT THE CASE BEFORE HIM IS SUSPICIOUS AND DETERMINATION BY THE PARTIES IS DOUBTFUL THEN HE CAN RESORT TO ENQUIRE ABOUT THE PREVAILING RATE IN LOCALITY. FROM THE SAME IT IS EVIDENT THAT THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT THE ID. AO CAN RESORT TO ENQUIRY WHEN THE DETERMINATION BY THE PARTIES IS DOUBTFUL I.E THE PROPERTY IS RENTED AND THE RENT IS AFFECTED BY EXTRANEOUS CONDITIONS LIKE SUPPRESSION IN RENT DUE TO INTEREST FREE SECURITY DEPOSITS, ETC. 7,4.8 FROM PERUSAL OF ABOVE REFERRED DECISION OF THE HON'BLE TRIBUNAL IN APPELLANT'S OWN CASE FOR AY 2009 - 10, IT IS OBSERVED THAT THE HON'BLE TRIBUNAL HAD NOT FOLLOWED THE DECISION OF HON'BTE TRIBUNAL IN APPELLANT'S FAMILY MEMBERS NAMELY LAXMI JAIN, ANAND JAIN AND RA METI DEVI JAIN ON THE GROUND THAT IN THE CASE BEFORE THEM THERE IS ENQUIRY CONDUCTED BY THE INSPECTOR TO ASCERTAIN THE FAIR MARKET RENT. IN THIS RESPECT, DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS ALSO SUBMITTED THE COPY OF THE DECISION OF HON'BLE ITAT MUMBAL IN THE CASE OF SHRI SATYAPA! JAIN FOR A.Y. 2008 - 09 AND 2009 - 10, WHEREIN AFTER CONSIDERING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY AND ILL'S REPORT THE HON'BLE TRIBUNAL HAS ALLOWED THE APPEAL ON SIMILAR ISSUE. FROM THE PERUSAL OF SAID DECISION OF HON'BLE ITAT, MUMBAI IN THE CASE OF SHRI SATYAPAL JAIN ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 8 FOR A.Y. 2008 - 09 AND 2009 - 10 IN ITA NO. 2119 & 2)20/MUM/2012 IT IS OBSERVED THAT THE HON'BLE TRIBUNAL HAS HELD AS UNDER. 'IN BOTH THESE APPEALS, TH E REVENUE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN DETERMINING THE ALV OF THE PROPERTY AS FIXED BY THE MUNICIPAL AUTHORITIES. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITS THAT THE ISSUE IN BOTH THESE APPEALS HAS BEEN DECIDED IN FAVO UR OF THE ASSESSEE FOR ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NOS. 2719 & 2718/M/2Q13 DATED 26.11. 2015. 4. HOWEVER, THE LD . DEPARTMENTAL REPRESENTATIVE, REFERRING TO PARA - 8 OF THE TRIBUN AL'S ORDER SUBMITS THAT THE FINDINGS OF THE TRIBUNAL THAT 'IN THE ASSESSMENT ORDER THE AO HAS NOT REFERRED TO ANY MATERIAL THAT ANNUAL RENTAL VALUE SHOWN BY THE ASSESSEE IS NOT CORRECT' ARE NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL. ACCORDING TO T HE LD. DR, SINCE THE ASSESSING OFFICER POINTED OUT CERTAIN MATERIALS IN THE ASSESSMENT ORDER I.E. THE SUMMONS ISSUED U/S. 131 OF THE LT. ACT TO THE SOCIETY AND THE INSPECTOR'S ENQUIRY REPORT DT. 23.12.2010, WHICH GOES TO SHOW THAT THE ALV IS MUCH MORE THAN THE VALUE FIXED BY MUNICIPAL AUTHORITIES, THE TRIBUNAL ORDER FOR THE EARLIER YEARS CANNOT BE RELIED UPON. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE INSPECTOR'S REPORT, WHICH DR IS REFERRING TO HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE CASE O F ASSESSEE'S WIFE SMT. LAXMI JAIN, IN ITA NO. 2118/M/2Q12 DATED 26.1 /.20J4 FOR ASSESSMENT YEAR 2009 - 10, WHERE THE PROPERTIES ARE SITUATED IN THE SAME COMPLEX AND HELD THAT THE ALV AS DETERMINED BY THE MUNICIPAL AUTHORITIES SHOULD BE CONSIDERED. HE SUBMITS THAT THE ASSESSING OFFICER IS RELYING ON THE VERY SAME INSPECTOR'S REPORT DATED 23.12.2010 IN THE ASSESSEE'S CASE ALSO AND DETERMINED THE ALV. 6. WE HAVE PERUSED THE ORDERS FURNISHED BEFORE US IN THE CASE OF THE ASSESSEE AND HIS WIFE AND FIND THAT THERE IS NO MATERIAL DIFFERENCE IN THE ORDERS PASSED IN EARLIER YEARS AND THIS YEAR. NO NEW MATERIAL HAS COME ON RECORD TO SUGGEST THAT THE ALV OF THE VACANT FLATS SHOULD NOT BE FIXED AT SOME OTHER VALUE OTHER THAN THE MUNICIPAL VALUE. THERE IS NO CHANGE IN FACT THEREFORE, THE CONTENTION OF THE LD. DR THAT DURING THIS YEAR THERE ARE MATERIALS TO SHOW THAT THE ALV IS MORE THAN THE MUNICIPAL VALUATION MAY NOT BE CORRECT. WE FIND FROM THE CO - ORDINATE BENCH ORDER DATED 26.11.201 5 IN I TA NO S. 27I9/M/20 1 3 A ND 27 18 /M/ 1 3 IN ASSES S EE'S OWN CASE THAT THIS ISSUE HAS BEEN DECIDED IN ASSESSEE'S FAVOUR HOLDING AS UNDER: 'APART FROM THE AFORESAID CONTENTION, HE SUBMITTED THAT ON MERITS ALSO, THE ISSUE OF ALV OF VACANT FLATS U/S 23 (1)(A) IN THE SAME VERY COMPLEX STANDS COVERED I N FAVOUR OF THE ASSESSEE BY SERIES OF DECISIONS OF THE TRIBUNAL IN THE GROUP/FAMILY CONCERNS OF THE ASSESSEE, WHEREIN THE HON'BLE TRIBUNAL UPHELD THAT THE ALV ON THE VACANT FLAT CAN BE DETERMINED AT A MUNICIPAL RATABLE VALUE. NOT ONLY THAT NOW THE DETERMIN ATION OF ALV AS PER THE MUNICIPAL RATABLE VALUE HAS BEEN PRINCIPALLY UPHELD BY THE HON'BLE ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 9 JURISDICTIONAL H IGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY, REPORTED IN ( 20 1 4 ) 368 ITR 330. ON THE OTHER HAND, LD, DR ON BOTH THE ISSUES I.E. LEGAL AS WELL AS ON ME RITS, STRONGLY RELIED UPON THE ORDER OF THE CIT(A). WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING IN THE ORDER AND ALSO THE VARIOUS TRIBUNAL ORDERS AS REFERRED AND RELIED UPON BY THE ID. COUNSEL. THE ASSESSEE HAD SHOWN FLAT NOS. 8 - 4/64, D - 4/65, D - 4/66 & 8 - 4/67 AT GREEN FIELD COMPLEX, HEAVEN VIEW, 4TH FLOOR, JOGESHWARI - 4 VIKROLI LINK ROAD, ANDHERI (EAST), MUMBAI - 400 093 AS VACANT' AND HAS OFFERED THE ANNUAL RENTAL VALUE OF THE FLATS AS PER THE MUNICIPAL RATABLE VALUE. THE AO REJECTED THE ASSESSEE'S CONTENTION WITHOUT ASSIGNING ANY REASON AND SOUGHT FOR INFORMATION FROM THE SOCIETY OF GREEN FIELD COMPLEX. IN RESPONSE, THE SOCIETY IN ITS REPLY, FURNISHED A COPY OF LEAVE AND LICENSE AGREEMENT OF A FLAT IN THE SAME COMPLEX SHOWING A MONTHLY RENT OF RS. 17,000/ - FOR THE FINANCIAL YEAR 2010 - 11. THE AO AFTER REDUCING/INDEXING T HE AVERAGE ANNUAL RENT FEES OF 10 % AND APPLYING THE SAME FOR AY 2006 - 07, HE WORKED OUT MONTHLY RENT OF RS. I0,550/ - FOR EACH FLAT AND DETERMINED THE DEEMED ALV AT RS. 5, 0 6,400/ - IN TERMS OF SECTION 23{U(A). THIS ACTION OF THE AO HAS BEEN CONFIRMED BY THE LD. CIT(A). FROM THE PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT NOWHERE AO HAS REFERRED TO ANY MATERIAL THAT ANNUAL RENTAL VALUE SHOWN BY THE ASSESSEE IS NOT CORRECT ALV AS PER MUNICIPAL RATABLE VALUE IS AN ACCEPTED METHOD OF VALUATION AT LEAST IN CASES OF VACANT PREMISES. AS POINTED OUT BY ID. COUNSEL TRIBUNAL IN SERIES OF DECISIONS IN CROUP CASES THE TRIBUNAL ON SIMILAR FACTS AND FOR SIMILAR C OMPLEX HAS HELD - THAT, WHERE THE FLAT HAS BEEN LYING VACANT THEN THE ALV U/S 23(1 )(A) CAN BE VALUED AT MUNICIPAL RATABLE VALUE. THE LISTS OF SUCH CASES ORE AS UNDER: - SR . N O . NAME OF THE ASSESSEE RELATION WITH ASSESSEE AY ITA NO . ITAT MUMBAI DATE OF ORDER PARTICULAR S OF PROPERTY WHETHER VACANT OR NOT REMARKS 1 HARISH JAIN NEPHEW 2009 - 10 2710 OF 2013 17.07.15 CENTRAL GARDEN COMPLEX VACANT HONBLE ITAT HELD THAT AMOUNTS TO BE TAXED U/S.23(1)(A) OF THE ACT WOULD BE MUNIC IPAL RATABLE VALUE 2 ANAND JAIN BROTHER 10 2709/13 17.04.15 CENTRAL GARDEN COMPLEX VACANT HONBLE ITAT HELD THAT AMOUNTS TO BE TAXED U/S.23(1)(A) OF THE ACT WOULD BE MUNICIPAL RATABLE VALUE ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 10 3 LAXMI JAIN WIFE 10 2118/12 26.11.14 CENTRAL GARDEN COMPLEX VAC ANT HONBLE ITAT HELD THAT AMOUNTS TO BE TAXED U/S.23(1)(A) OF THE ACT WOULD BE MUNICIPAL RATABLE VALUE 4 RAMETIDEVI JAIN MOTHER 2005 - 06 2006 - 07 3268/11 3269/11 25.4.12 VACANT HONBLE ITAT HELD THAT AMOUNTS TO BE TAXED U/S.23(1)(A) OF THE ACT WOULD BE MU NICIPAL RATABLE VALUE NOT ONLY IN THE AFORESAID CASES, BUT NOW HON'B L E JURISDICTIONAL HIGH COURT IN THE CASE OF T IP TOP TYPOGRAPHY, REPORTED IN ( 20I4 ) 368 ITR 330 HAS UPHELD THAT MUNICIPAL RATAB L E VALUE CAN BE ADOPTED FOR DETERMINING THE AL V U/S 23(1)(A) . THE HON'BL E HIGH COURT HELD THAT FOR DISTURBING THE ALV OR RENT SHOWN BY THE ASSESSEE, THE AO MUST HAVE COGENT AND SATISFACTORY M A T ERIAL IN HIS POSSESSION INDICATING THAT THE PARTIES HAVE CONCEALED THE REAL POSITION. HE MUST NOT MAKE A GUESS WORK OR ACT ON CONJECTURES AND SURMISES. THERE MUST BE DEFINITE AND POSITIVE MATERIAL TO INDICATE THAT THE PARTIES HAVE SUPPRESSED THE PREVAILING RATE AND THEN ONLY THE ENQUIRIES CAN BE MADE, FOR ASCERTAINING THE MARKET RATE. THE HON'BLE HIGH COURT HAS ALSO HELD THAT, IF THE STANDARD RENT IS FIXED BY THE RENT CONTROLLER OR MUNICIPAL RATABLE VALUE IS AVAILABLE THEN SAME IS TO BE ACCEPTED AS AN ALV. HERE, IT IS NOT A CASE THAT ASSESSEE HAS RENTED OUT THE PROPERTY AND THE RENT RECEIVED OR RECEIVABLE IS LESS BUT THE FLAT H AS BEEN LYING VACANT, THUS, IT CANNOT BE HELD THAT MUNICIPAL RATABLE VALUE CANNOT BE THE BASIS FOR DETERMINATION OF DEEMED AIV. ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECISIONS OF THE TRIBUNAL AND ALSO THE PRINCIPLE LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, GROUND NO, 2 & 3 ARE TREATED AS ALLOWED.' SIMILARLY IN THE ASSESSEE'S WIFE'S CASE THIS TRIBUNAL BY ORDER DATED 26.11.2014 IN ITA NO. 21I8/M/20 1 2 FOR ASSESSMENT YEAR 2009 - 10 HELD AS UNDER: 'BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN SHOWING THE HOUSE PROPERTY INCOME ON ACCOUNT OF C OUPLE OF PROPERTIES IE., (1) GALA NO.311 AND ( II ) CENTRAL GARDEN COMPLEX, IN THE RETURN OF I NC OME, FOR THE PURPOSE OF COMPUTATION OF ALV OF THE PROPERTIES, ASSESSEE RELIED ON 'THE RATEABLE VALUES OF THESE PROPERTIES. AO COMPLETED THE ASSESSMENT U/S 1 43(3 ) OF THE ACT AND REJECTED THE COMPUTATION OF ALV OF THE SAID PROPERTIES AND HELD THAT A PERCEN TAGE OF INVESTMENT IN THE PROPERTIES SHOULD REFLECT CORRECT ALV. ACCORDINGLY, NE QUANTIFIED THE ALVS AND THE CUMULATIVE ALV OF THE PROPERTIES WAS TAKEN AT RS. 65,51,632/ - (GALAS ALV IS RS. 3,94,508/ - AND RS. 1,61,57,124/ - IS THE ALV OF OTHER PROPERTIES. OTH ERWISE, ASSESSEE'S COMPUTATION IN THIS REGARD WORKED OUT AT RS.94,181/ - ., GALAS RATEABLE VALUE IS RS.5,880/ - AND OTHER ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 11 PROPERTIES IS RS.88,301/ - . AO RELIED ON THE INSPECTOR'S REPORT OF COMPARABLE CASES IN THIS REGARD. AGGRIEVED WITH THE SAME, ASSESSEE IS I N APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) REJECTED THE AO'S METHOD OF COMPUTATION OF ALV OF THE SAID TWO PROPERTIES AND UPHELD THE ASSESSEE'S RATEABLE VALUE. FOR THIS, CIT(A) RELIED ON VARIOUS DECISIONS INCLUDING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SMITABEN N AMBANI VS. CWT, 323 ITR 104 WHEREIN IT WAS HELD THAT RATEABLE VALUE OF THE PROPERTIES DETERMINED BY THE MUNICIPAL AUTHORITIES SHALL BE THE YARD STICK. A GGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON VARIOUS DECISIONS TO STATE THAT THE ALV AS DETERMINED BY THE MUNICIPAL AUTHORITIES IS ONLY ONE OF THE FACTORS AND SAME CAN BE IGNORED IF IT DOES NOT REFLECT THE TRUE ALV, LD DR RELIED ON THE ORDER OF THE AO, ON THE OTHER HAND, L D COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFOR E THE LOWER AUTHORITIES. WE HAVE HEARD BATH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THAT T HE CU (A) HAS RIGHTLY RELIED ON THE BINDING JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMITABEN N AMBANI (SUPRA). THERE ARE MANY OTHER DECISIONS FROM THE JURISDICTIONAL NIGH COURT IN THE SIMILAR LINES, THE COPIES OF WHICH ARE PLACED I N THE PAPER BOOK OF THE ASSESSEE. THE REVENUE HAS NOT DEMONSTRATED THAT THE FACTS OF THE ASSESSEE'S CASE ARE COVERED BY THE DECISIONS CITED IN GROUND NO. 1 OF THE PRESENT APPEAL. CONSIDERING THE BINDING NATURE OF THE JURISDICTIONAL HIGH COURT JUDGMENT IN TH E CASE OF SMITABEN N AMBANI (SUPRA), WE ARE OF THE OPINION THAT THE FINDING OF THE CIT (A) IS IN ORDER AND IT DOES NOT CALL FOR ANY INTERFERENCE ON THIS ISSUE. IN ANY CASE, THE PERCENTAGE OF INVESTMENT IN THE IMPUGNED PROPERTIES IS NO BASIS FOR ARRIVING AT THE ALV OF THE PROPERTIES. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. RESPECTFULLY FOLLOWING THE SAID DECISIONS OF THE CO - ORDINATE BENCH, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND REJECT THE GROUND OF THE REVENUE. 7. IN THE RE SULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ' 7.4.9 THE APPELLANT HAS SUBMITTED COPY OF DECISION DATED 02.08.2016 OF HON'BLE ITAT IN THE CASE OF SHRI ANAND JAIN FOR A.Y. 2010 - 1 1 IN ITA NO. 4243 & 3830/MUM/2014, WHICH WAS RENDERED SUBSEQUEN T TO THE DECISIO N OF THE HON'BL E ITAT IN APPELLANT'S OWN CASE FOR A.Y. 2009 - 10 AND THEREIN THE HON'BLE ITAT HAS DECIDED SIMILAR ISSUE OF IN FAVOUR OF THE APPELLANT. 7.4.10 THE APPELLANT HAS ALSO SUBMITTED COPY OF DECISION OF HON'BLE ITAT MUMBAI IN THE CAS E OF JUBIL IANT ENTERPRISES P LTD FOR A.Y. 2009 - 1 0 IN IT A NO. 7101 & 7282/MUM/20 L4. THE SAID DECISION IS DATED 20.07.2016, I.E. S UBSEQUENT TO THE DECISION DATED 12.08.2015 IN APPELLANT'S OW N CASE FOR AY 2009 - 10, WHEREIN T HE HON'BLE TRIBUNAL HAS SET ASIDE T HE ISSUE OF ALV TO THE FILE OF THE LD. AO. IN THE SAID CASE OF JUBILANT ENTERPRISES, THE PROPERTIES ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 12 UNDER CONSIDERATIONS WERE LET OUT AND HAD ALSO RECEIVED HUGE DEPOSITS, AND THEREIN THE LD. C1T(A) HAD REJECTED SIMILAR REPORT OF INSPECTOR ON THE GROUND THA T THE SAME ARE GENERAL IN NATURE AND NOT SPECIFIC; THE SAID REPORT DID NOT CONTAIN THE NAMES AND ADDRESSES OF THE PROPERTY AGENTS/DEALERS CONTACTED BY THE INSPECTOR FOR THE PURPOSE OF ASCERTAINING THE PREVAILING MARKET RATE; THERE WAS NO SPECIFIC REFERENCE TO ANY COMPARABLE PROPERTY; THE INSPECTOR HAD SIMPLY REPORTED THAT HE HAD CONTACTED CERTAIN AGENTS WHO ARE SAID TO HAVE BEEN PROVIDING LET OUT CHARGES TO VARIOUS PARTIES; THE SAID REPORT OF THE INSPECTOR WAS VAGUE AND ONLY RATES PER SQUARE FEET WERE MENTI ONED, HOWEVER NO DETAILS OF THE SPECIFICATION OR INFRASTRUCTURE ETC. WERE MENTIONED TO WHICH THOSE RATES WERE APPLICABLE. FINALLY THE LD. CIT(A) IN SAID CASE HAS HELD THAT THE INSPECTOR'S REPORT CANNOT BE CONSIDERED TO BE RELIABLE AND CREDIBLE EVIDENCE AND AFTER PLACING RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTI ONAL BOMBAY HIGH COURT IN THE CA SE OF TIP TOP TYPOGRAPHY (SUPRA) DELETED THE ADDITION MADE BY THE AO TO THE ALV OF THE PROPERTIES. THE HON'BLE ITAT HAS UPHELD THE DECISION OF THE LD. CIT(A) A ND DISMISSED THE APPEAL FILED BY THE REVENUE AFTER HOLDING AS UNDER. 'WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE A/SO GONE THROUGH THE RECORDS. AS DISCUSSED ABOVE, THE LEARNED CIT( A) HAS THOROUGHLY DISCUSSED TH E FACTUAL ASPECTS AND HAS FOUND THAT THE AO HAS DETERMINED THE FAIR MARKET VALUE ON THE BASIS OF A VAGUE AND GENERAL REPORT OF THE INSPECTOR. THERE WAS NO CREDIBLE AND RELIABLE EVIDENCE BEFORE THE AO FOR ARRIVING AT THE FAIR MARKET VALUE OF THE PROPERTIES. EVEN, THE MUNICIPAL VALUATION OF THE PROPE RTIES WAS MUCH LOWER THAN THE ACTUAL RENT RECEIVED BY THE ASSESSEE. THERE IS NO EVIDENCE ON RECORD THAT SIMILARLY PLACED PROPERTIES LIKE THAT OF THE ASSESSEE WERE HAVING HIGHER RENTAL VALUE THAN THAT WAS OFFERED BY THE ASSESSEE. THE IMPUGNED ORDER OF THE L EARNED CIT (A) IS QUITE E L ABORA T IVE AND IS BASED ON A VERY WELL REASONING. WE DO NOT FIND ANY INFIRMITY IN HIS ORDER WHILE DELETING THE ADDITION MADE BY THE AO IN RESPECT TO THE ALV OF THE PROPERTIES IN QUESTION. ACCORDINGLY, WE UPHOLD THE SAME AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE'. 7.4.11 FROM THE ABOVE, IT IS OBSERVED THAT THE LD. AO HAS NOT BROUGHT ON ANY NEW FACTS/MATERIAL ON RECORDS, INSPITE OF GIVING OPPORTUNITY DURING THE APPELLATE PROCEEDIN GS, OTHER THE ABOVE REFERRED ITI 'S REPORT AND I NFORMATION AS PER WEBSITES, WHICH HAS BEEN HELD NON - RELIABLE. IT IS ONUS OF THE LD. AO TO BRING COGENT AND RELIABLE MATERIALS TO DISCARD THE MUNICIPAL RATEABLE VALUE AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY AND THE HON'B L E ITAT, MUMBAI IN APPELLANT'S OWN CASE FOR AY 2009 - 10, WHICH THE LD. AO HAS FAILED. AS, DISCUSSED ABOVE, 'THE HON'BLE ITAT, MUMBAI AFTER CONSIDERING SIMILAR ENQUIRY REPORT OF THE INSPECTOR/FIELD .ENQUIRY AND AFTER CONSIDERING THE LAW LAID DOWN BY THE HON'BL E 'BOMBAY HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY, IN THE CASES OF APPELLANT'S FAMILY MEMBERS HAS HELD THAT IN CASE OF PROPERTY WHICH IS VACANT THE ALV SHOULD BE DETERMINED ON THE BASIS OF RATEABLE VALUE FIXED BY THE MUNICIPAL AUTHORITIES, IN VIEW OF THE/FACTS AND CIRCUMSTANCES OF THE CASE, ESPECIALLY THAT THE LD. AO HAS FAILED TO ANY COGENT AND RELIABLE ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 13 MATERIAL ON RECORD TO DISCARD THE RATEABLE VALUE AND R ESPECTFULLY FOLLOWING THE ABOVE REFERRED DECISIONS OF HON'BLE TRIBUNAL, I AM OF THE CONSIDERED O PINION THAT IN ALV OF THE PROPERTIES UNDER CONSIDERATION NEED TO BE DETERMINED ON THE BASIS OF RATEABLE VALUE AS PER MUNICIPAL AUTHORITIES. 7.4.12 THE RECORDS REVEAL THAT MY LD. PREDECESSOR, VIDE HIS ORDER DATED 28.02.2014 IN APPEAL NO. CIT{A) - 41/DCCCX39/ IT - 415/2012 - 13 IN APPELLANT'S OWN CASE FOR A.Y. 2010 - 11, AFTER CONSIDERING VARIOUS DECISIONS HAD DIRECTED THE LD. AO TO ADOPT THE MUNICIPAL RATEABLE VALUE AS ALV. THE LD. CIT(A) OBSERVED THAT THE RATEABLE VALUE WAS FIXED BY THE MUNICIPAL AUTHORITIES IN THE YEAR 2006 - 07 AND HAD FURTHER HELD THAT 5% ANNUAL INCREASE THEREOF IN SUBSEQUENT YEARS AS REASONABLE AND HAD THEN COMPUTED THE REASONABLE RATEABLE VALUE FOR THE FINANCIAL YEAR UNDER CONSIDERATION. MY LD. PREDECESSOR HAS FURTHER HELD THAT RATEABLE VALUE SO ARRIVED IN THE RELEVANT FINANCIAL YEAR SHOULD BE ENHANCED BY L/9 IH OF SAID VALUE, AND THE RESULTANT VALUE WILL BE THE ALV OF THESE PROPERTIES FOR THE RELEVANT ASSESSMENT YEAR. RESPECTFULLY FOLLOWING THE SAME IT IS HELD THAT THE ALV OF THE FLATS/PROPERTIES UNDER CONSIDERATIONS NEED TO BE DETERMINED ACCORDINGLY. SINCE MY LD. PREDECESSOR HAS DETERMINED THE ANNUAL RATEABLE VALUE OF FLATS AT CENTRAL GARDEN COMPLEX FOR A.Y. 2010 - 11 AT RS. 4,63,651/ - , SO FOR THE RELEVANT ASSESSMENT YEAR THE SAME NEED TO BE INCREAS ED BY 5% AND THEREBY WORKS OUT BE RS. 4,86,834/ - . THE SAID RATEABLE VALUE FOR THE FINANCIAL YEAR 2010 - 11 NEED TO BE FURTHER INCREASED BY L/9 LH OF SAID VALUE TO ARRIVE AT THE ALV OF F.Y. 2010 - 1 1 WHICH IS RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. AO IS DIRECTED TO SUBSTITUTE THE ALV OF SAID FLATS AT RS. 4,86,834 / - (AS ENHANCED BY 1 /9 TH OF SAID VALUE) AS AGAINST RS. 68,36,502/ - CONSIDERED BY HIM IN THE IMPUGNED ORDER. THE LD. AO IS DIRECTED TO RE - COMPUTE THE INCOME FORM HOUSE PROPERTY AS PER AB OVE DIRECTIONS. HENCE, THE GROUND NO. 3 RAISED IN APPEAL IS PARTLY ALLOWED, AS INDICATED ABOVE. 5. AGAINST THE ABOVE ORDER OF CIT(A) BOTH ASSESSEE AND REVENUE ARE IN FURTHER APPEAL BEFORE US. 6. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROU GH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT RATEABLE VALUE WAS OFFERED BY ASSESSEE AT RS.3,86,376/ - IN RESPECT OF PREMISES SITUATED AT CENTRAL GARDEN COMPLEX, CHUNABHATTI, MUM B AI. THE SAID PREMISES WERE VACANT THROUGHOUT THE PREV IOUS YEAR. THE ALV SO OFFERED BY THE ASSESSEE WAS BASED ON THE MUNICIPAL RATEABLE VALUE. HOWEVER, THE AO DID NOT ACCEPT THE SAME AND RECOMPUTED ALV AT RS.68,36,502/ - . THE ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 14 CIT(A) CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISION OF BOMBAY HI GH COURT IN THE CASE OF TIP TOP TYPOGRAPHY 368 ITR 330 AND ALSO DECISION OF THE CO - ORDINATE BENCH IN CASE OF OTHER FAMILY MEMBERS OF THE ASSESSEE DIRECTED THE AO TO ADOPT ALV AS PER THE RATEABLE VALUE FIXED BY MUNICIPAL AUTHORITY AT RS.4,63,651/ - . CONSIDER ING THE DECISION OF HONBLE BOMBAY HIGH COURT AND OTHER HIGH COURTS AS DISCUSSED BY CIT(A) IN HIS ORDER AND AFTER APPLYING THE SAME TO THE FACTS OF THE CASE REACHED TO THE CONCLUSION THAT ALV OF THE HOUSE PROPERTY SHOULD BE AS PER THE RATEABLE VALUE FIX ED BY MUNICIPAL AUTHORITY. I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE CIT(A) AFTER CONSIDERING THE FACT THAT IN THE IMMEDIATELY PRECEDING YEAR 2010 - 11, THE AL V HAS BEEN DETERMINED AT RS.4,63 ,651/ - , ENHANCED THE SAME BY 5% AND WORKED OUT TO RS.4,86,834/ - . THE DETAILED REASONING GIVEN BY CIT(A) IS AS PER MATERIAL ON RECORD, THEREFORE, DO NOT REQUIRE A NY INTERFERENCE ON OUR PART. 7. IN THE RESULT, BOTH THE APPEALS BY THE ASSESSEE AND REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 14 / 11 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 14 / 11 /201 7 KARUNA SR. PS ITA NO. 3666/MUM/2017 & 3845/MUM/2017 SHRI VIRENDRA JAIN 15 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//