ITO 20(3)(4), MUMBAI V. THE KEM HOSPITAL AND SETH GSM COLLEGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD., MUMBAI

ITA 4552/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9079 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2014-2015
• Appeal Filed On: 04-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAHENDRA GOHEL
• Assessee Lawyers: GURBINDER SINGH
• Keywords: Question of law
• Section: 143(3); 142(1); 250; 80IA; 201; 251; 13; 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 4605/MUM/2019 (A.Y: 2013-14 ) HERCULES HOISTS LTD., 2 ND FLOOR, BAJAJ BHAVAN, 226, JAMNALAL BAJAJ MARG, NARIMAN POINT, MUMBAI, MAHARASHTRA 400021. / VS. CIT 15(2)(1) ROOM NO. 403, 4 TH FLOOR, AAYAKAR BHAWAN M.K. MARG, MUMBAI. ./ ./ PAN/GIR NO. : AAACH2706D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MAHENDRA GOHEL, AR / RESPONDENT BY : SHRI GURBINDER SINGH, DR / DATE OF HEARING 06/01/2021 !'# / DATE OF PRONOUNCEMENT 07/01/2021 / O R D E R PER PAVAN KUMAR GADALE: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 24, MUMBAI, PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 13,00,681/- MADE ON ASSESSMENT BY COMPUTING ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 2 - INCOME FROM HOUSE PROPERTY UNDER SECTION 23(1)(A) O F THE ACT. 2. THE LD. CIT(A) AND LD. AO FAILED TO APPRECIATE THAT THE PROVISIONS OF SEC. 22 AND 23 WERE CLEARLY NOT APPLICABLE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW. IT IS SUBMITTED THAT EVEN IF THE CONT ENTIONS OF THE LD. AO ARE ACCEPTED, THE APPELLANT IS ENTITLED TO DEDUCTION FOR VACANCY ALLOWANCE U/S 23(1)(C) OF THE ACT AS THE SAID PROPERTY REMAINED VACANT THROUGHOUT THE YE AR. 3. THE CIT(A) AND AO FAILED TO APPRECIATE THAT INC OME FROM HOUSE PROPERTY SECTION 23(1)(C) OF THE ACT CAN NOT EXCEED THE STANDARD RENT AND OR MUNICIPAL RATABLE V ALUE THEREOF. 4. IT IS SUBMITTED THAT THE ADDITION MADE BY THE A O AND CONFIRMED BY THE CIT(A) IS ARBITRARY AND BASED ON CONJECTURE AND SURMISES AND HENCE BAD IN LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE O F MATERIAL HANDLING EQUIPMENTS AND GENERATION OF POWER. THE ASSESSEE HAS FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE A.Y 2013-14 ON 13.09.2013 WI TH TOTAL INCOME OF RS. 37,32,29,970/- .SUBSEQUENTLY TH E CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2 ) AND 142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE T HE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE DETAILS. ON PERUSAL OF THE FINANCIAL STATEMENTS, THE A.O FOUND THAT THE ASSESSEE HAS ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 3 - CLAIMED DEDUCTION U/S 80IA OF THE AC RELYING ON TH E EARLIER YEAR ORDERS OF THE ASSESSEES OWN CASE. HOWEVER THE A.O HAS DISALLOWED THE CLAIM OF 80IA OF THE ACT. FURTHER THE A.O. FOUND THAT THE ASSESSEE W AS RECEIVING INCOME FROM HOUSE PROPERTY SITUATED AT NARIMAN POINT, MUMBAI AND IT WAS LEASED OUT TO IDBI PRINCIPLE ASSET MANAGEMENT COMPANY IN THE EARLIER YEARS. THE LEASE WAS EXPIRED, AND THE ASSESSEE COMPANY HAS RECEIVED 23 DAYS RENT PRO RATA FOR THE F.Y 2004-05 AND AFTER THAT THE PREMISES REMAINED VACANT AND NO RENT WAS RECEIVED. THEREFORE, THE A.O IS OF THE OPINION THAT THE NOTIONAL RENT HAS BE TAXED UNDER THE PROVISIONS OF SEC. 22 AND 23 OF THE ACT A ND ISSUED SHOW CAUSE. IN COMPLIANCE, THE ASSESSEE HAS FILED THE EXPLANATIONS VIDE LETTER DATED 09.03.2016 BUT THE A.O WAS NOT SATISFIED WITH THE EXPLANATIONS AND APPLIED THE PROVISIONS OF SEC. 23(1) OF THE ACT AND CALCULATED NOTIONAL INCOME FROM HOUSE PROPERTY AND ALLOWED THE STATUARY DEDUCTION U/S 24 OF THE ACT A ND DETERMINED INCOME FROM HOUSE PROPERTY OF RS. 13,00681/- AND PASSED THE ORDER U/S 143(3) DATED 27.03.2016 WITH TOTAL INCOME OF RS. 39,83,81,500/-. ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 4 - 3. AGGRIEVED BY THE A.O ORDER, THE ASSESSEE HAS FIL ED AN APPEAL WITH THE CIT(A), THE LD. CIT(A) CONSIDERE D THE GROUNDS OF APPEAL AND FINDINGS OF THE A.O AND SUBMISSIONS OF THE ASSESSEE REFERRED AT PARA 4.1 OF THE ORDER ON CHARGEABILITY OF INCOME FROM HOUSE PROPERTY. THE CIT(A) FOUND THAT IN ASSESSEES OWN CASE FOR A.Y 2014-15 THE APPELLATE AUTHORITY HAS DECIDED AGAINST THE ASSESSEE AND THEREFORE IN THE PRESENT ASSESSMENT YEAR, THE CIT(A) HAS CONFIRMED THE ACTION OF THE A.O AND DISMISSED THIS GROUND OF APPEAL AND PARTLY ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE HAS FIL ED AN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING THE LD. AR SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF THE A.O UNDER PROVISIONS OF SEC. 23(1)(A) OF THE AC T AS THE RENTAL INCOME EXCEEDED THE STANDARD RENT AND MUNICIPAL RATABLE VALUE OF THAT AREA. FURTHER IT WA S SUBMITTED THAT FOR THE EARLIER ASSESSMENT YEARS 201 2- 13 AND 2014-15THE HONBLE TRIBUNAL AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE HAS RESTORED THE MATTER TO THE FILE OF THE A.O WITH SPECIFIC DIRECTI ONS AND PRAYED FOR ALLOWING THE APPEAL. ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 5 - 5. CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE LD. CIT(A). 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE DISPUTED ISSUE AS ENVISAGED BY THE LD. AR IS WITH RESPECT TO INCOME FROM HOUSE PROPERTY CONSIDERED ON NOTIONAL BASIS U/ S 23(1)(A) OF THE ACT. THE LD.AR ENVISAGED THAT FOR T HE EARLIER A.Y 2012-13 AND 2013-14, THE COORDINATE BENCH OF THE HONBLE TRIBUNAL HAS CONSIDERED THE SIMILAR ISSUE AND WITH SPECIFIC DIRECTIONS HAS REST ORED TO THE FILE OF THE ASSESSING OFFICER. WE CONSIDER I T APPROPRIATE TO REFER THE ASSESSEES OWN CASE IN ITA NO.7372/MUM/2017 &ITA NO. 2210/MUM/2018 DATED 25.10.2019 WITH THE OBSERVATIONS AT PAGE 3 PARA 7 T O 9 OF THE ORDER IS READ AS UNDER: 7. WE HEARD BOTH THE COUNSEL AND PERUSED THE RECOR DS. SENIOR COUNSEL ON BEHALF OF THE ASSESSEE SHRI JD MI STRY CONTENDED THAT PREMISE HAS NOT AT ALL BE LET OUT DU RING THE CONCERNED ASSESSMENT YEAR. HE SUBMITTED IN SEV ERAL CASE LAWS, IT HAS BEEN HELD BY THE TRIBUNAL THAT IF THE HOUSE PROPERTY COULD NOT BE LET OUT THE ASSESSEE WA S VERY MUCH ENTITLED TO VACANCY ALLOWANCE AND HENCE, NO NOTIONAL RENT SHOULD BE ATTRIBUTABLE. IN THIS REGA RD HE REFERRED TO CATENA OF DECISIONS OF ITAT IN THIS REG ARD AS UNDER:- ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 6 - PREMSUDHA (P). LTD VS. ACIT (2008) 110 ITD 158. INFORMED TECHNOLOGIES INDIA LTD., VS. DCIT, 162 IT D 153 VIKAS KESHAV GARUD VS. ITO, 160 ITD 7 ITO VS. METAOXIDE LTD, 170 ITD 235 SACHIN R. TENDULKAR VS. DCIT, 169 DTR 169 ACIT VS PRABHA SANGHI, 139 ITD 504 KAMAL MISHRA VS. ITO, 19 SOT 251 8. HOWEVER, LD COUNSEL OF THE ASSESSEE FAIRLY AGRE ED THAT ON IDENTICAL ISSUE IN ASSESSEES OWN CASE HON BLE BOMBAY HIGH COURT HAS ADMITTED THE QUESTION OF LAW FOR A.Y 2006-07. HOWEVER, LEARNED COUNSEL ALSO POINTED OUT THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS NOT BE EN ABLE TO CONSIDER THE JUDGMENT OF HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPH Y (368 ITR 330). LD. COUNSEL SUBMITTED THAT IN THE S AID CASE HONBLE JURISDICTIONAL HIGH COURT HAS EXPOUNDE D THAT THE MUNICIPAL RATABLE VALUE CANNOT BE BRUSHED ASIDE UNLESS THE AO IS ABLE TO SHOW THAT THERE WAS EFFORT ON THE PART OF THE ASSESSEE TO SHOW LESSER RENT. IN THIS REGARD WE NOTE THAT HONBLE JURISDICTIONAL HIGH COURT DECI SION IS BINDING UPON THE TRIBUNAL. AS HELD BY HONBLE SUPR EME COURT IN THE CASE SAURASHTRA KUTCH STOCK EXCHANGE L TD. (225 ITR 234) NOT CONSIDERATION OF HONBLE JURISDIC TIONAL HIGH COURT DECISION WILL RENDER THE DECISION OF THE ITAT SUFFERING FROM MISTAKE APPARENT FROM RECORD. ACCORDINGLY, IN OUR CONSIDERED OPINION THE ISSUE IN THIS REGARD NEEDS TO BE EXAMINED ON THE TOUCHSTONE OF HO NBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF T IP TOP TYPOGRAPHY (SUPRA). IN THE CASE OF TIP TOP TYPOGRA PHY (SUPRA), HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 7 - (I) WE ARE NOT IN AGREEMENT WITH THE DEPARTMENT HA T THE MUNICIPAL RATABLE VALUE CANNOT BE ACCEPTED AS A BON AFIDE RENTAL VALUE OF THE PROPERTY AND IT MUST BE DISCARD ED STRAIGHTWAY IN ALL CASES. THERE CANNOT BE A BLANKE T REJECTION OF THE SAME. IF THAT IS TAKEN TO BE A SA FE GUIDE, THEN, TO DISCARD IT THERE MUST BE COGENT AND RELIAB LE MATERIAL. (II) THE MARKET RATE IN THE LOCALITY IS AN APPROV ED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONL Y WHEN THE AO IS CONVINCED THAT THE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATION BY THE PARTIES IS DOUBTFU L THAT HE CAN RESORT TO ENQUIRE ABOUT THE PREVAILING RATE IN THE LOCALITY. THE MUNICIPAL RATABLE VALUE MAY NOT BE B INDING ON THE AO BUT THAT IS ONLY IN CASES OF AFORE REFERR ED NATURE. IT IS DEFINITELY A SAFE GUIDE. 9. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE AO IF THE DECISION OF JURISDICTIONAL HIGH COURT IN ASS ESSEES OWN CASE IS AVAILABLE THE SAME HAS TO BE FALLOWED. OTHERWISE THE AO IS DIRECTED TO EXAMINE THE ISSUE I N LIGHT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TIP TOP TYPOGRAPHY (SUPRA). NEEDLESS TO ADD THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEA RD. 7. WE FOUND THE FACTS ARE SIMILAR TO THE PRESENT ASSESSMENT YEAR AND FOLLOW THE JUDICIAL PRECEDENCE. ACCORDINGLY, WE RESTORE THE DISPUTED ISSUE TO THE F ILE OF THE A.O FOR LIMITED PURPOSE WITH SIMILAR DIRECTI ONS TO EXAMINE THE ISSUE AND ALLOW THE GROUNDS OF APPEA L OF THE ASSESSEE FOR STATISTICAL PURPOSES. ITA NO . 4605 /MUM/2019 HERCULES HOISTS LTD., MUMBAI. - 8 - 8. IN THE RESULT THE ASSESSEE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.01.2021 SD/- SD/- (M. BALAGANESH) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL ME MBER MUMBAI, DATED 07.01.2021 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) !' #, / ITAT, MUMBAI