DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(4), MUMBAI V. SATYAPAL JAIKUMAR JAIN, MUMBAI

ITA 436/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8769 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 19-01-2018
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 436/MUM/2018 (ASSESSMENT YEAR 2014-15 ) JT. CIT (OSD) CC - 6(4) ROOM NO. 1925, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. VS. SHRI SATYAPAL JAIKUMAR JAIN, 82, MAKER CHAMBER-III, NARIMAN POINT, MUMBAI-400021 PAN: AABPJ1888Q APPELLANT RESPONDE NT ITA NO. 549/MUM/2018 (ASSESSMENT YEAR 2014-15 ) SHRI SATYAPAL JAIKUMAR JAIN, 82, MAKER CHAMBER-III, NARIMAN POINT, MUMBAI-400021 PAN: AABPJ1888Q VS. JT. CIT (OSD) CC - 6(4) ROOM NO. 1925, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. APPELLANT RESPONDE NT APPELLANT BY : SHRI SATISH RAJORE (SR. DR) RESPONDENT BY : SHRI ANUJ KISNADWALA (ADVOCATE) DATE OF HEARING : 13.06.2019 DATE OF PRONOUNCEMEN T : 13.06.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE CROSS APPEAL ARE DIRECTED AGAINST THE ORDER O F LD. COMMISSIONER OF INCOME TAX (APPEALS)-54, [THE LD. CIT(A)], MUMBAI D ATED 23.10.2017 FOR ASSESSMENT YEAR 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE ESTIMATION OF ANNUL LE TTING VALUE (ALV) ITA NO. 436 & 549 MUM 2018-SHR I SATYAPAL JAIKUMAR JAIN. 2 DETERMINED BY THE AO AT RS. 1,83,01,836/- AND ADOPT ING THE ONE OFFERED BY THE ASSESSEE AT RS. 8,58,457/- BASED ON THE MUNICIPAL R ATABLE VALUE OF THE PROPERTIES AS THE YARDSTICK WHILE FAILING TO CONSIDER THAT SEC TION 23(1)(A) MANDATES THAT THE ANNUAL VALUE IS DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT BE EXPECTED TO BE LET FROM YEAR TO YEAR??' II. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN IGNORING THE, FACT THAT THE ASSESSI NG OFFICER HAD MADE LOCAL ENQUIRIES TO DETERMINE THE SUM FOR WHICH THE PROPER TIES COULD BE EXPECTED TO BE LET FOR THE YEAR AS PER SECTION 23(1)(A) OF THE I. T. ACT, 1961 ?' III. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN IGNORING THE FACTS AS BROUGHT ON RE CORD BY THE ASSESSING OFFICER REGARDING THE ESTIMATED RENT FOR THE PROPERTIES FOR THE PURPOSES OF COMPUTING INCOME U/S 23(1)(A) OF THE INCOME TAX ACT, 1961?' 2. THE ASSESSEE IN ITS CROSS APPEAL HAS RAISED THE FOL LOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ANNUAL LETTING VALUE (ALV) OF THE PREMISES OWNED BY THE APPELLANT AT CENTRAL GARDEN COMPLEX CHUNABHATTI, MU MBAI AND GREEN FIELDS B CO-OP HOUSING SOCIETY LTD. ANDHERI, MUMBAI AT RS. 1 2,87,183 INSTEAD OF RS. 8,58,457/- AND RS. 26,027/- OFFERED BY THE APPELLAN T BASED ON THE MUNICIPAL RATABLE VALUE OF THE SAID PREMISES. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AF ORESAID PREMISES WERE VACANT THROUGHOUT THE PREVIOUS YEAR AND ACCORDINGLY THE AP PELLANT HAD RIGHTLY ADOPTED THE MUNICIPAL RATABLE VALUE FOR THE PURPOSE OF DETE RMINING INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' 2. THE ORDER PASSED BY THE LEARNED CIT(A) IS ILLEGA L, BAD IN LAW, ULTRA VIRES AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS AND IS PASSED WITHOUT APPLICATION OF MIND AND IN VIOLATION OF THE PRINCIPLES OF THE NATU RAL JUSTICE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 24.07.2014 DECLARING TO TAL INCOME AT RS. 50,29,320/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 26.10.2016. I N THE RETURN OF INCOME, ITA NO. 436 & 549 MUM 2018-SHR I SATYAPAL JAIKUMAR JAIN. 3 THE ASSESSEE HAS SHOWN THE INCOME UNDER THE HEAD I NCOME FROM HOUSE PROPERTY OF RS. 51,15,465/- AND INCOME UNDER THE H EAD INCOME FROM OTHER SOURCES OF RS. 51,358/-. DURING THE ASSESSMENT, TH E ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN HIS FOUR FLATS BEARING FLAT NO. B-4/ 64 TO 67 AT CENTRAL GARDEN COMPLEX AS VACANT AND OFFERED ANNUAL LETTING VALUE (ALV) AS PER MUNICIPAL RATABLE VALUE AT RS. 8,58,457/-. THE ASSESSEE ALSO OWNED FOUR FLATS AT GREEN FIELD COMPLEX AND HAS OFFERED ALV OF FLATS AS PER MUNICIPAL RATABLE VALUE AT RS. 5,856/- EACH (4 X 5856 = 23,42 4) . THE ASSESSEE WAS ASKED TO JUSTIFY THE ANNUAL LETTING VALUE (ALV) ADO PTED BY ASSESSEE IN RESPECT OF THE SAID FLATS. THE ASSESSEE FILED ITS R EPLY, WHICH HAS BEEN RECORDED BY ASSESSING OFFICER IN PARAGRAPH-3 OF HIS ORDER. T HE REPLY OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OF FICER NOTED THAT DURING ASSESSMENT YEAR 2009-10, THE INCOME TAX INSPECTOR C ONDUCTED A FIELD ENQUIRY AND FILED DETAILED REPORT DATED 23.12.2010 ON THE BASIS OF WHICH A RENTAL OF RS. 42 PER SQ. FT. WAS DETERMINED BY ASSE SSING OFFICER. THE ASSESSING OFFICER FURTHER NOTED THAT DURING ASSESSM ENT FOR AY 2013-14, FURTHER FIELD ENQUIRY WAS CONDUCTED BY INSPECTOR AN D FURNISHED ITS REPORT DATED 13.03.2015 ON THE BASIS OF WHICH THE ALV WAS DETERMINED AT RS. 45 PER SQ. FT. THE ASSESSING OFFICER PROPOSED TO ADOPT THE SAME BASIS IN THE YEAR UNDER CONSIDERATION. THE REPRESENTATIVE OF ASSESSEE THOUGH OBJECTED FOR INCREASE OF 10% IN EVERY YEAR ON THE GROUND THAT IT WAS JUST AN ESTIMATE OF RENT AND INCREASE IN RENT IN EVERY YEAR IS NOT POSS IBLE. THE ASSESSING OFFICER ITA NO. 436 & 549 MUM 2018-SHR I SATYAPAL JAIKUMAR JAIN. 4 ON THE BASIS OF AVERAGE RATE BY VARIOUS INSPECTOR R EPORTS CALCULATED THE ALV FOR ASSESSMENT YEAR 2013-14 ADOPTED THE SAME VALUE FOR THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2014-15 I.E. @ O F RS. 48/- PER SQ. FT. AND WORKED OUT THE ALV ACCORDINGLY. THE ASSESSING OFFIC ER ADOPTED ALV OF RS. 183,01836/- FOR FLAT SITUATED AT CENTRAL GARDEN COM PLEX. AND RS. 741,682/- FOR FLATS SITUATED AT GREEN FIELD COMPLEX AND AFTER GRATING DEDUCTION UNDER SECTION 24 OF 30% AND MUNICIPAL TAX PAID BROUGHT TH E REMAINING AMOUNT FOR TAXED ACCORDINGLY. 4. ON APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) BY FOLLOWED THE ORDER OF HIS PREDECESSOR IN AY 2013-14 AND DIRECTED THE ASSESSIN G OFFICER TO RECOMPUTE THE ALV. THEREFORE, AGGRIEVED BY THE ORDER OF LD. C IT(A), BOTH THE PARTIES HAVE FILED THEIR PRESENT APPEAL BEFORE THIS TRIBUNA L. 5. AT THE OUTSET OF HEARING, THE LD. AR OF THE ASSESSE E SUBMITS THAT THE GROUNDS OF APPEAL RAISED IN BOTH THE APPEALS ARE COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY VARIOUS DECISIONS OF CO-ORDI NATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 TO 2013-14 AND BY THE DECISION OF JURISDICTIONAL HIGH COURT IN ASSESSEES FAMILY MEMBER CASE. IT FURTHER SUBMITTED THAT WHERE PROPERTIES NOT OCCUPIE D OR RENTED OUT, IN THAT CASE, THE ALV HAS TO BE DETERMINED ON THE BASIS OF RATABLE VALUE ADOPTED BY MUNICIPAL AUTHORITIES AND NOT AT THE MARKET RATE. T HE LD. AR FOR THE ASSESSEE FILED THE COPIES OF THE ORDER OF ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE. THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION S OF HONBLE BOMBAY ITA NO. 436 & 549 MUM 2018-SHR I SATYAPAL JAIKUMAR JAIN. 5 HIGH COURT IN PCIT VS. LAXMI JAIN IN ITA NO. 1285 O F 2015 AND IN PCIT VS. HARSH JAIN IN ITA NO. 1438 OF 2016 AND FILED THE CO PIES OF THE DECISION. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE RELIED UPON THE ORDER OF ASSESSING OFFICER. THE LD. DR FURTHER SUBMITS THAT ALV OF THE VACANT FLATS WHICH WERE LET OUT DURING T HE YEAR HAS TO BE CALCULATED ON THE BASIS OF MARKET RATE AS DETERMINE D BY THE ASSESSING OFFICER AFTER MAKING PROPER INVESTIGATION AND MAKING FILED ENQUIRIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER ADOPTED THE SAME ALV AS ADOPTED IN ASSESSMENT YEAR 2013-14. THE LD. CIT(A) GRANTED THE RELIEF BY FOLLOWING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE OR BY T HE ORDER OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES FAMILY MEMB ERS CASE IN PCIT VS HARISH JAIN AND PCIT VS LAXMI JAIN (SUPRA). 8. WE HAVE ALSO NOTED THAT THE CO-ORDINATE BENCH OF TR IBUNAL IN ASSESSEES OWN CASE (CROSS APPEALS) FOR ASSESSMENT YEAR 2013-14 IN ITA NO. 6884/MUM/2017 AND ITA NO. 444/MUM/2018 DATED 26.04. 2019 AFTER FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN PCIT VS. LAXMI JAIN (SUPRA) AND IN PCIT VS. HARSH JAIN (SUPRA) HELD THA T ALV OF THE VACANT FLATS HAVE TO BE DETERMINED ON THE BASIS OF RATABLE VALUE FOR THE PURPOSE OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ITA NO. 436 & 549 MUM 2018-SHR I SATYAPAL JAIKUMAR JAIN. 6 9. WE HAVE SEEN THAT THE FACTS OF THE YEAR UNDER CONSI DERATION ARE SIMILAR AS OF AY 2013-14, THEREFORE, RESPECTFULLY FOLLOWING THE D ECISION OF CO-ORDINATE BENCH IN ITA NO. 6884/MUM/2017 AND ITA NO. 444/MUM/ 2018 DATED 26.04.2019, THE ASSESSING OFFICER IS DIRECTED TO CO MPUTE THE ALV BY FOLLOWING THE ORDER OF TRIBUNAL FOR AY 2013-14. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AND TH E APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /06/2019. SD/- SD/- M. BALAGANESH, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 13 .06.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI