Shri Haroon Saleem, Meerut V. ACIT, Meerut

ITA 4657/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0106 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS MONA MOHANTY
• Assessee Lawyers: H G MALIK; SANJAY MAIK S
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.4657/DEL/2010 ASSESSMENT YEAR : 2006-07 SHRI HAROON SALEEM, ACIT, C/O M/S MALIK & CO. CIRCLE-1, 305-THAPAR NAGAR, MEERUT. V. BHANSALI GROUND, MEERUT. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AANPH AANPH AANPH AANPH- -- -6739 6739 6739 6739- -- -A AA A APPELLANT BY : SHRI H.G. MALIK & SHRI SANJAY MAIK, ADVOCATES. RESPONDENT BY : MRS. MONA MOHANTY, SR. DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A), MEERUT DATED 16.8.2010 FOR ASSESSMENT YEAR 2006-07. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE HOUSE PROPERTY AT DELHI WAS KEPT SOLELY AND E XCLUSIVELY FOR PERSONAL RESIDENCE OF THE ASSESSEE AND NO PORTION WAS LET OUT ON RENT TO ANY PERSON. THUS ON FACTS AND IN LAW, NO I NCOME WAS CHARGEABLE TO TAX IN RESPECT OF DELHI PROPERTY ON TH E GROUND THAT THERE WAS NEITHER ANY ACCRUAL NOR RECEIPT OF ANY INC OME. PAGE 2 OF 7 ITA NO4657/DEL/10 ASSESSMENT OF INCOME IN RESPECT OF THE SAID PROPERTY WAS VOID, ILLEGAL AND WITHOUT JURISDICTION. 2. THAT WHILE COMPUTING THE NET INCOME DEDUCTION OF HO USE TAX OF `.4705/- WAS ALLOWED FROM THE GROSS ALV FROM DELHI PRO PERTY AT `.3,90,000.-. THE HOUSE TAX OF `.4705/- WAS BASED ON G ROSS ALV OF `.55,350/- AND NOT ALV OF `.3,90,000/- AS REPORTE D BY INCOME TAX INSPECTOR. THUS ON FACTS AND IN LAW, THE GROSS ALV OF `.3,90,000/- DESERVES TO BE QUASHED AND GROSS ALV OF ` .55,350/- ON THE BASIS OF WHICH HOUSE TAX LIABILITY AS DETERMINED DESERVES TO BE MADE THE BASIS FOR COMPUTATION OF NET INCOME. 3. THAT THE LD CIT(A) ON FACTS AND IN LAW AND ON THE GR OUNDS TAKEN AND BASIS ADOPTED WENT WRONG TO UPHOLD THE COMPUTATI ON OF NET INCOME AT `.2,69,707/- BASED ON GROSS ALV AT `.3,90,00 0/- AS CAPITAL NET TAXABLE INCOME OF `.35,452/-:- GROSS ALV FROM DELHI PROPERTY `.55,350/- LESS: HOUSE TAX `. 4,705/- --------------- `.50,645/- LESS: DEDUCTION @ 30% `.15,193/- ---------------- `.35,452/- --------------- 4. THAT ON FACTS AND IN LAW THE COMPUTED NET INCOME FROM DELHI PROPERTY AT `.2,69,707/- WARRANTS DELETION AND NET I NCOME OF `.35,452/- DESERVES TO BE ACCEPTED FOR THE PURPOSE OF COMPUTATION OF TAXABLE INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT IN ADDITION TO THE RESIDENT IAL HOUSE AT PAGE 3 OF 7 ITA NO4657/DEL/10 MEERUT, THE ASSESSEE ALSO OWNS A FLAT IN DELHI, WHICH IS M EANT FOR USE AS RESIDENCE BY THE ASSESSEE AND HIS FAMILY MEMBERS. THE ASSE SSING OFFICER NOTED THAT AS PER THE PROVISIONS OF SECTION 22 READ WITH SECTION 23(2) AND 23(4) OF THE INCOME TAX ACT, 1961, THE ASSE SSEE WAS LIABLE TO PAY INCOME TAX ON DEEMED INCOME FROM DELHI HOUSE PROPERTY/FLAT WHICH IS TO BE COMPUTED AS PER THE PROVISIONS OF SECTION 23(1) OF THE ACT. IT IS ALSO NOTED BY THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER THAT THE ASSESSEE COULD NOT FURNISH ANY DETAIL/EVIDENCE REGARDING ANNUAL VALUE OF THE PROPERTY FOR WHICH THIS PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET DURING THE FINANCIAL YEAR 200 5-06. HENCE, THE ASSESSING OFFICER DEPUTED AN INSPECTOR TO CONDUCT THE LO CAL ENQUIRY AND TO FIND OUT THE SUM FOR WHICH THE FLAT OWNED BY THE ASSESSEE MIGHT REASONABLY BE EXPECTED TO BE LET FOR THE YEAR UNDER CONSIDERATION. AFTER LOCAL ENQUIRES CONDUCTED BY THE INSPECTOR, IT W AS FOUND BY THE ASSESSING OFFICER THAT THIS FLAT IS SITUATED IN THE POSH L OCALITY OF GREEN PARK AND HAVING AREA OF 1200-1300 SQ. FT. AND IS HAV ING ALL THE LATEST FACILITIES LIKE POWER BACKUP, LIFT AND PARKING ETC. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE ENQUIRY CONDUCTED ALSO REVEA LED THAT THIS TYPE OF FLAT IN THE SAME LOCALITY MIGHT FETCH A MO NTHLY RENT OF ABOUT `.32,000/- - TO `.33,000/- DURING THE FINANCIAL YEA R 2005-06. THE ASSESSING OFFICER BROUGHT THE CONTENTS OF ENQUIRY REPORT TO THE NOTICE OF THE ASSESSEE ON 24.10.2008 AND HE ASKED THE ASSESSEE TO E XPLAIN AND SHOW AS TO WHY THE DEEMED ALV OF THIS FLAT SHOULD NOT BE TAKEN AT AVERAGE RATE OF `.32,500/- P.M. THE ASSESSING OFFICER A LSO DRAWN ATTENTION OF THE ASSESSEE TO THE PROVISIONS OF RENT CAPIT ALIZATION METHOD PROVIDED IN SCHEDULE-III OF WEALTH TAX RULES, ACCORDING TO WHICH, THE FAIR RENT FOR THE FINANCIAL YEAR 2005-06 COMES AT `.32,533/- PER MONTH BY DIVIDING THE VALUE OF THE PROPERTY DEC LARED BY THE ASSESSEE AT `.48.80 LAKHS AS ON 31.3.2006 BY FACTOR OF 12 .5 WHICH ALSO RESULT INTO MONTHLY RENTAL INCOME AT `.32,500/- (APP ROXIMATELY) WHICH PAGE 4 OF 7 ITA NO4657/DEL/10 IS COMPARABLE WITH THE FAIR MARKET VALUE OF THE RENT DETERMINED ON THE BASIS OF LOCAL ENQUIRIES CONDUCTED BY THE INSPECTOR. I N REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE INSPECTOR IS NOT A TECHNICAL AND EXPERT PERSON IN THIS REGARD AND HIS ESTIMATE AND INFORMATION GATHERED WAS NOT FULLY AND C OMPLETELY RELIABLE AND THE ASSESSEE IS NOT INCLINED TO AGREE WITH SUCH VALUATION OR ESTIMATION GIVEN BY THE INCOME TAX INSPECTOR. THE ASSE SSEE SUBMITTED THAT IN ORDER TO AVOID LITIGATION AND TO BUY PEACE, THE ASSESSEE IS WILLING TO ACCEPT RENTAL INCOME OF `.25,000/- P.M. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS NOT GIVEN ANY BASIS OR EVID ENCE IN RESPECT OF ESTIMATION OF RENT OF `.25,000/- PER MONTH . MOREOVER, HE HAS NOT BEEN ABLE TO POINT OUT ANY LOGICAL OR LEGAL MET HOD OF ESTIMATING THE FAIR RENTAL INCOME OF THIS PROPERTY AT `.25,500/-P. M. AND THE BASIS OF SCHEDULE-III OF W.T. ACT AND ALSO THE LOCAL ENQUIRIE S CONDUCTED BY THE INCOME TAX INSPECTOR SUGGESTED RENTAL INCOME OF `.32,5 00/- P.M. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HE HAS ASSESSED THE INCOME OF THE ASSESSEE ON ACCOUNT OF RE NT OF DELHI FLAT AT `.3,90,000/- ON THE BASIS OF `.32,500/- PER M ONTH. THE ASSESSING OFFICER ALLOWED REDUCTION OF HOUSE TAX PAID BY THE A SSESSEE AT `.4705/- WITH REGARD TO THIS FLAT. HE ALSO ALLOWED STANDARD DED UCTION OF 30% TO THE EXTENT OF `.1,15,588/- AND ASSESSED THE NET INCOME FROM HOUSE PROPERTY AT `.2,69,707/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT (A). BEFORE LD CIT(A ), THE ASSESSEE SUBMITTED THAT FOR THE PURPOSE OF LEVY OF PROPERTY TA X, GROSS ALV FOR DELHI PROPERTY HAS BEEN DETERMINED AT `.55,650/- AN D HENCE, THAT FIGURE SHOULD BE ADOPTED FOR THE PURPOSE OF ASSESSING INC OME FROM HOUSE PROPERTY. LD CIT(A) HAS NOTED IN PARA NO.4.4 O F HIS ORDER THAT NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE HIM, AN Y EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO SHOW ANY ASSESSMEN T MADE BY THE LOCAL AUTHORITY. IT IS HELD BY HIM THAT IN THE ABSENCE OF PAGE 5 OF 7 ITA NO4657/DEL/10 ANY EVIDENCE, HE DID NOT FIND ANY REASON TO INTERFER E IN THE ORDER OF THE ASSESSING OFFICER. HE CONFIRMED THE ASSESSMENT ORDER ON TH IS ISSUE AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, LD AR OF THE ASSESSEE HAS SUBMITTED A PHOTO COPY OF SELF ASSESSMENT PROPERTY TAX FORM (2009-10) AS PER WHICH THE ASSESSEE HAS MADE PAYMENT OF PROPERTY TAX OF `.4705/- FO R FINANCIAL YEAR 2009-10 ON 29.6.2009. HE SUBMITTED THAT THE SAM E ALV HAS BEEN DETERMINED AT `.55,650/- AND HENCE, FOR INCOME TAX PURPOSE ALSO, THE SAME VALUE SHOULD BE ADOPTED AS ALV. LD DR OF THE REV ENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT A FINDIN G IS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE H AS NOT FURNISHED ANY DETAIL/EVIDENCE REGARDING ALV OF THE P ROPERTY FOR WHICH THIS PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET DURING THE FINANCIAL YEAR 2005-06. LD CIT(A) HAS ALSO GIVEN A FINDING THAT THE ASSESSEE HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT ANY ASS ESSMENT WAS MADE BY THE LOCAL AUTHORITY. IN SPITE OF THIS FIN DING OF LD CIT(A), NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE LD AR OF THE ASSESSEE BEFORE US TO SHOW ANY DETERMINATION OF ANNUAL VALUE BY MUNICIPAL CORPORATION OF DELHI (MCD) AND WHAT HAS BEEN FURNISHE D BEFORE US IS A COPY OF SELF ASSESSMENT PROPERTY TAX FORM FOR FINANCIA L YEAR 2009-10 AS PER WHICH PROPERTY TAX OF `.4705/- HAS BEEN PAID B Y THE ASSESSEE FOR FINANCIAL YEAR 2009-10 ON 29.6.2009. THE SAME AMOUNT OF PROPERTY TAX OF `.4705/- WAS PAID BY THE ASSESSEE IN THE PRESENT YEAR ALSO BUT IN THE ABSENCE OF ANY DETERMINATION OF ANNUAL VALUE BY THE LOCAL AUTHORITY, IT CANNOT BE ACCEPTED THAT THIS SELF ASSESSMENT OF THE ASSESSE E HAS BEEN ACCEPTED BY THE MCD. BUT AT THE SAME TIME, WE FEEL T HAT IN THE INTEREST PAGE 6 OF 7 ITA NO4657/DEL/10 OF JUSTICE, THE ASSESSEE SHOULD BE PROVIDED ONE MORE OPPO RTUNITY TO PRODUCE EVIDENCE REGARDING ASSESSMENT OF RATEABLE VALUE BY MCD. WE, THEREFORE, SET ASIDE THE ORDER OF LD CIT(A) ON TH IS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER F OR A FRESH DECISION. THE ASSESSEE SHOULD FURNISH THE ASSESSMENT ORDER, IF ANY, PA SSED BY MCD. IF NO SUCH ASSESSMENT ORDER IS PASSED BY MCD, THE ASSE SSEE SHOULD FURNISH THE BASIS OF SELF ASSESSMENT AND IF REQUIRED , THE ASSESSING OFFICER CAN VERIFY FROM THE MCD ABOUT THE RAT EABLE VALUE AS PER MCD. THE ALV SHOULD BE DETERMINED AT RATEABLE V ALUE DETERMINED BY MCD AND NOT BEYOND IT. THE ASSESSING OFFICER SHOULD PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAY OF 18TH MARCH, 2011. SD/- SD/- (I.P. BANSAL) (A.K. GAR ODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 18.3.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER PAGE 7 OF 7 ITA NO4657/DEL/10 (ITAT, NEW DELHI).