DY.CIT., CENTRAL CIR. 23, MUMBAI V. OBEROI REALITY LTD., MUMBAI

ITA 4441/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9417 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R MURLIDHAR
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.A. NO. 4441/M/2011 ASSESSMENT YEAR:2007-2008 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-23, R.NO.464, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. VS. M/S. OBEROI REALITY LTD., COMMERZ, 3 RD FLOOR, INTERNATIONAL BUSINESS PARK, OBEROI GARDEN CITY, OFF W.E. HIGHWAY, GOREGAON (EAST), MUMBAI 400 063. PAN: AABCKO235H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJARSHI DWIVEDY, SR. DR RESPONDENT BY : SHRI R. MURLIDHAR DATE OF HEARING: 8.11.2012 DATE OF ORDER: 21.11.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 2.6.2011 AGAINS T THE ORDER OF CIT (A)-40, MUMBAI DATED 22.3.2011 FOR THE ASSESSMENT YEAR 2007 -2008. 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS. A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ANNUAL VALUE AS OFFERED BY THE ASSESSEE WAS GROSSLY UNDERSTAND AND THE AO WAS JUSTIFIED IN DETERMINING FAIR MARKET VALUE IN TERMS OF SEC. 23(1)(A) BY RE-COMPUTING ANN UAL LETTING VALUE OF THE PROPERTY ON THE BASIS OF CIRCUMSTANTIAL EVIDENCES. B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D CIT (A) ERRED IN DELETING THE ADDITION MADE AT RS. 96,25,875/- BEING NOTIONAL ANNUAL LETTING VALUE, WHICH WOULD FORM A PART OF ANNUAL LETTING V ALUE OF THE PROPERTY, IN TERMS OF SEC. 23(1)(A) OF THE I.T. ACT, 1961. C. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT THE RETABLE VALUE UND ER THE MUNICIPAL LAWS HAS TO BE MANDATORILY ADOPTED AS ANNUAL VALUE U/S 23(1) (A), DISREGARDING THE FACTS THAT THE ACTUAL RENTAL VALUE RECEIVED WERE TO TALLY DISPROPORTIONATE CONSIDERING THE VALUE OF THE PROPERTY. 3. FROM THE ABOVE GROUNDS, IT IS EVIDENT THAT THE R EVENUE IS AGGRIEVED AGAINST THE DECISION OF THE CIT (A), WHO HELD THAT THE RATABLE VALUE UNDER THE MUNICIPAL 2 LAWS HAS TO BE MANDATORILY ADOPTED AS ANNUAL VALUE U/S 23(1)(A) AS AGAINST NOTIONAL VALUE ADOPTED BY THE REVENUE ON THE REASONING THAT THE ANNUAL LETTING VALUE (ALV) DECLARED BY THE ASSESSEE IS NOT PROPORTIONATE TO TH E ALV OF THE PROPERTY. IN THIS REGARD, LD COUNSEL READ OUT PARA 6.11.1 OF THE IMPU GNED ORDER AND MENTIONED THAT THE CIT (A), WHILE GRANTING RELIEF TO THE ASSESSEE, FOLLOWED THE COORDINATE BENCH DECISION OF THIS TRIBUNAL IN CASE OF THE BADA SAAB PROPERTIES PVT. LTD . VS. ACIT IN ITA NO.3150/M/2008 AS WELL AS THE DECISION OF THE T RIBUNAL IN THE CASE OF DCIT VS. RECLAMATION REALTY INDIA PVT. LTD. (ITAT MUMBAI) ITA NO. 1411/MUM/2007 (AY:2004-2005) WHEREIN IT WAS HELD THAT FOR THE PUR POSE OF SECTION 23(1)(A) OF THE ACT, ONLY MUNICIPAL VALUATION HAS TO BE TAKEN INTO CONSIDERATION. HE ALSO MENTIONED THAT THE CONTRARY VIEW TAKEN IN THE CASE OF MAKRUPA CHEMICAL (108 ITD 95) (MUM) AND BAKER TECHNICAL SERVICES (P) LTD 126 TTJ (MUMBAI) TM 455 WERE ALSO DISTINGUISHED. THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF M.V. SONAVALA (177 ITR 246) (BOM) IS HEAVILY RELIED ON BY THE AS SESSEE FOR THE PROPOSITION THAT THE RATABLE VALUE UNDER THE MUNICI PAL LAW HAS TO BE ADOPTED AS ANNUAL VALUE FOR THE PURPOSE OF SECTION 23(1)(A) OF THE ACT. FURTHER, LD COUNSEL ALSO RELIED UPON THE DECISION OF THIS TRIBUNAL IN ASSESS EES OWN CASE VIDE ITA NO. 4331 TO 4334/MUM/2011 WHICH WAS DECIDED IN FAVOUR OF THE AS SESSEE, RELYING ON THE AFORESAID DECISIONS OF THE TRIBUNAL. IN THIS REGAR D, THE LD COUNSEL BROUGHT OUR ATTENTION TO GROUND NO. C IN PARA 4 AND GROUND NO. D IN PARA 20 OF THE ORDER OF TRIBUNAL DATED 13.6.2012 AND MENTIONED THAT THE FIN DINGS GIVEN IN PARA 9 TO 11 WERE SPECIFICALLY MENTIONED AS EVIDENT FROM PARA 22 OF T HE SAID ORDER OF THE TRIBUNAL. FOR THE PURPOSE OF COMPLETENESS OF THIS ORDER, WE R EPRODUCE PARAS 9 TO 11 HERE UNDER: 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE RATABLE VALUE OF THE PROPERTY AS PER MUNICIPAL CORPORATION IS RS. 1,58,3 72/- WHEREAS THE ASSESSEE HAS SHOWN RENT OF RS. 31,66,667/- FOR 12 MONTHS WHI CH IS MUCH HIGHER THAN THE ANNUAL MUNICIPAL VALUATION. 10. IN OBEROI CONSTRUCTIONS LTD. (SUPRA) THE TRIBUN AL AFTER CONSIDERING THE PROVISIONS OF SECTION 23 AND THE DECISION OF THE TR IBUNAL IN THE CASE OF RECLAMATION REALTY INDIA PVT. LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT WE FIND THAT THE BOMBAY HIGH COURT WHICH IS THE JURISD ICTIONAL HIGH COURT HAS HELD THAT THE RATABLE VALUE UNDER THE MUNICIPAL LAW HAS TO BE ADOPTED AS ANNUAL VALUE U/S 23(A) OF THE ACT, HAS HELD THAT T HE AO HAS GROSSLY ERRED BY 3 CALCULATING THE ANNUAL LET OUT VALUE BY ESTIMATING THE MARKET VALUE OF THE PROPERTY AT RS. 7 CRORES AND AT THE SAME TIME IGNOR ING THE FACT THAT THE MUNICIPAL RATABLE VALUE GIVEN BY THE GOVERNMENT AUT HORITY I.E. MUMBAI MUNICIPAL CORPORATION AT RS. 1,55,310/- , IS MUCH L OWER THAN THE ACTUAL RENT RECEIVED BY THE ASSESSEE AND ACCORDINGLY UPHELD THE ORDER PASSED BY THE LD. CIT (A) IN DELETING THE ADDITION MADE BY THE AO. SI MILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN OTHER CASES CITED SUPRA. 11. IN THE ABSENCE OF ANY CONTRARY MATERIAL OR DIST INGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY F OLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL, HOLD THAT THE AO WAS NOT JUST IFIED IN TAKING THE GROSS ALV AT RS. 1,20,00,000/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD CIT (A) IN DELETING THE ADDITION MADE BY THE AO. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 4. THE ABOVE PARAGRAPHS WERE RELIED UPON BY THE TRI BUNAL FOR DECIDING THE IDENTICAL ISSUES RAISED IN THE APPEAL BY THE ASSESS EE FOR THE EARLIER YEARS 2002-2003 TO 2006-2007. 5. LD DR FOR THE REVENUE DUTIFULLY RELIED UPON THE ORDER OF THE AO. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RD AS WELL AS THE DECISION OF THE TRIBUNAL AS CITED BY THE LD COUNSEL. THE CORE I SSUE RELATES TO IF THE AO IS JUSTIFIED MAKING ADDITIONS ADOPTING THE NOTIONAL VA LUES WHEN THE JUDICIAL DECISIONS ADVOCATES FOR ADOPTING THE RATABLE VALUE OF THE M UNICIPAL AUTHORITIES FOR THE MAKING ASSESSMENT OF THE ALV OF A PROPERTY U/S 23(1)(A) OF THE ACT. IN OUR OPINION, THE ISSUE STANDS COVERED BY THE ABOVE REFERRED DECISION S. REVENUE HAS NOT BROUGHT ANY INCRIMINATING MATERIAL ON THE RECORDS TO DEMONSTRAT E THAT THE RENT INVOLVED IS MORE THAN THE ONE WHICH IS DISCLOSED IN THE RETURN OF IN COME. IN THAT CASE, THE JUDGMENTS IN THE CASE OF MAKRUPA CHEMICAL (108 ITD 95) (MUM) AND BAKER TECHNICAL SERVICES (P) LTD 126 TTJ (MUMBAI) TM 455 BECOME DISTINGUISHABLE ON FACTS. THEREFORE, WE ARE OF THE OPINION THAT ORDER OF THE CIT (A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND S RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF NOVEMBER, 2012. SD/- SD/- (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCO UNTANT MEMBER DATE : 21.11.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI