PURUSHOTAMDAS GOENKA, MUMBAI V. ACIT C 17 (2), MUMBAI

ITA 4684/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3519 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 10-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Corroborative evidences; Set aside
• Section: 133(6); 22; 23(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4684/M/2019 ASSESSMENT YEAR: 2016-17 M/S. PURUSHOTAMDAS GOENKA, 13, 2 ND FLOOR, INDU CHAMBER, 349/358, SAMUEL STREET, VADGADI, MUMBAI- 400003 PAN: ATWPG3750C VS. ACIT, CIRCLE-17(2), ROOM NO.123A, AAYAKAR BHAVAN, MAHARASHI KARVE ROAD, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SHEKHAR GUPTA, A.R. REVENUE BY : MS. SHREEKALA PARDESHI, D.R. DATE OF HEARING : 13.09.2021 DATE OF PRONOUNCEMENT : 13.10.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 31.05.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2016-17. 2. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE O RDER OF LD. CIT(A) UPHOLDING THE ORDER OF AO THEREBY CONFIRMING THE ADDITION OF RS.1,09,924/- IN RESPECT OF THREE PROPERTIES IN AMRITSAR BY IGNORING THE FACT THAT THESE PROPERTIES WERE VACANT DURING THE YEAR AND ANNUAL INCOME SHOULD HAVE BEEN COMPUTED AT NIL UNDER SECTION 23(1)(C) OF THE ACT. ITA NO.4684/M/2019 M/S. PURUSHOTAMDAS GOENKA 2 3. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE HAD OFFE RED RENTAL INCOME IN RESPECT OF ONE PROPERTY SITUATED AT MADAN MOHAN MALVIYA ROAD, AMRITSAR, PUNJAB, HOWEVER, NOT OFFERE D ANY INCOME IN RESPECT OF OTHER THREE PROPERTIES NAMELY PROPERTY AT MOONLIGHT BUILDING, AT KATRA AHLUWALIA AND RAMKIN J OINT PROPERTY AT MM MALVIYA ROAD, AMRITSAR. ACCORDING T O THE AO THE INCOME FROM THE SAID VACANT PROPERTY SHOULD HAV E BEEN OFFERED ON THE BASIS OF DEEMED RENTAL VALUE WHICH T HE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET OUT FROM YEA R TO YEAR FOR THE PURPOSE OF ASSESSMENT OF INCOME UNDER SECTION 2 2 OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE AO THAT SIN CE THESE PROPERTIES WERE NOT LET OUT DURING THE YEAR AT ALL AND THEREFORE THE ASSESSEE HAS CLAIMED VACANCY ALLOWANCE UNDER SE CTION 23(1)(C) IN RESPECT OF THESE THREE PROPERTIES. HOW EVER, REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE ESTIMATED THE ANNUAL VALUE (ALV) OF THE THREE PROPERTIES AND A FTER ALLOWING DEDUCTION OF MUNICIPAL TAXES AND OTHER DEDUCTION UN DER SECTION 24 COMPUTED THE DEEMED RENT AT RS.1,09,924/- AS PER DETAILED CHART APPENDED ON PAGE NO.4 OF THE ASSESSMENT ORDER AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. THE LD. CIT(A) ALSO AFFIRMED THE ORDER OF AO ON THE GROUND THAT ASSESSEE HAS FAILED TO GIVE ANY INDEPENDENT AN D CORROBORATIVE EVIDENCES TO DEMONSTRATE THAT ASSESSE E WAS ENTITLED TO VACANCY ALLOWANCE IN TERMS OF SECTION 2 3(1)(C) OF THE ACT. ITA NO.4684/M/2019 M/S. PURUSHOTAMDAS GOENKA 3 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT IN THIS CASE ,THREE PROPERTIES OWNED BY THE ASSESSEE IN AMRITSAR NAMELY MADANMOHAN MALVIYA ROAD , AMRITSAR, PUNJAB, PROPERTY AT MOONLIGHT BUILDING, K ATRA AHLUWALIA AND RAMKIN JOINT PROPERTY AT MM MALVIYA R OAD, AMRITSAR REMAINED VACANT THROUGHOUT THE YEAR THOUGH THE SAME WERE LET OUT IN A.Y. 2015-16. WE FIND THAT ASSESSE E HAS LET OUT THESE PROPERTIES IN THE SUBSEQUENT YEAR AND ACCORDI NGLY OFFERED THE RENTAL INCOME TO TAX. NOW THE ISSUE BEFORE US IS WHETHER THE DEEMED RENT OF THE ASSESSEE HAS TO BE TAKEN AS ANNUAL VALUE (ALV) UNDER SECTION 23(1)(A) FOR THE PURPOSE OF ASS ESSMENT OF INCOME UNDER SECTION 22 OF THE ACT OR WHETHER THE A SSESSEE IS ENTITLED TO VACANCY ALLOWANCE AS PROVIDED UNDER SEC TION 23(1)(C) OF THE ACT. 6. AFTER CAREFULLY PERUSING THE PROVISIONS OF SECTI ON 22, SECTION 23(1)(A) AND SECTION 23(1)(C) OF THE ACT, W E ARE OF THE CONSIDERED VIEW THAT THE ALV OF THE PROPERTY, WHICH COULD NOT BE LET OUT DURING THE YEAR, WOULD BE NIL IN ACCORDANCE WITH THE PROVISIONS OF SECTION 23(1)(C) OF THE ACT. THE ASS ESSEE IS ENTITLED FOR THE VACANCY OF ALLOWANCE IN RESPECT OF THE SAID PROPERTIES AND ARMED LENGTH PRICE HAS TO BE ASSESSED AS RENT RECEI VED OR RECEIVABLE AND NOT THE AMOUNT FOR WHICH THE PROPERT Y IS EXPECTED TO BE LET OUT FROM YEAR TO YEAR IS TO BE C ONSIDERED FOR THE PURPOSE OF ASSESSING THE ALV. IN THE PRESENT C ASE SINCE THE PROPERTIES HAVE NOT BEEN LET OUT AT ALL DURING THE YEAR, THEREFORE THE ALV HAS TO BE TAKEN AS NIL. THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. METAOXIDE PVT. LTD. VS . ITO IN ITA ITA NO.4684/M/2019 M/S. PURUSHOTAMDAS GOENKA 4 NO.5773/M/2016 A.Y. 2010-11, THE OPERATIVE PART WHE REOF IS REPRODUCED AS UNDER: 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MA TERIAL ON RECORD. UNDISPUTEDLY, THE FLATS IN RESPECT OF WHICH THE ASS ESSING OFFICER HAS DETERMINED THE ALV UNDER SECTION 23(1)(A) REMAINED VACANT DURING T HE RELEVANT PREVIOUS YEAR. IT IS EVIDENT, THE ASSESSING OFFICER ON THE BASIS OF INFO RMATION OBTAINED UNDER SECTION 133(6) WITH REGARD TO THE RENTAL INCOME RECEIVED IN RESEPCT OF SOME OTHER FLATS IN THE SAME AREA HAS DETERMINED THE ALV IN TERMS OF SE CTION 23(1)(A) OF THE ACT, WHICH PROVIDES THAT THE ANNUAL VALUE OF ANY PROPERTY SHAL L BE DEEMED TO BE THE SAME FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR IN OTHER WORDS, THE MARKET VALUE OF THE RENT RECEIVED/RECEIV ABLE. HOWEVER, THE ISSUE WHICH IS TO BE DECIDED IS, WHEN THE PROPERTIES WERE ADMIT TEDLY REMAINED VACANT DURING THE RELEVANT PREVIOUS YEAR, WHETHER THE ASSESSEE CA N AVAIL DEDUCTION UNDER SECTION 23(1)(C) OF THE ACT OF ALV DETERMINED UNDER SECTION 23(1)(A) OF THE ACT. FOR THE BETTER CLARITY, SUB-CLAUSE (C) OF SECTION 23(1) OF THE ACT IS REPRODUCED BELOW:- ANNUAL VALUE HOW DETERMINED. 23. (1) (C) WHERE THE PROPERTY OR ANY PART OF THE P ROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY T HE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE : PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORI TY IN RESPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PRE VIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWN ER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THAT PREVIOUS YEAR IN WHIC H SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION.FOR THE PURPOSES OF CLAUSE (B) OR CLAU SE (C) OF THIS SUB-SECTION, THE AMOUNT OF ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES AS MAY BE MADE IN TH IS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CANNOT REALISE. 9. A READING OF THE SAID PROVISION REVEALS THAT WHE RE ANY PART OF THE PROPERTY IS LET OUT AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND DUE TO SUCH VACANCY RENT RECEIVED / RECEIVABLE BY THE OWNE R IS LESS THAN THE ALV DETERMINED UNDER SECTION 23(1 )(A) IN THAT CASE THE ACTUAL RENT RECEIVED OR RECEIVABLE IS TO BE TREATED AS THE ALV. THEREFORE, THE ISSUE TO BE CONSIDERED IS, WHETHER THE PROVISIONS OF SECTION 23(1)(C) IS APPLI CABLE OR NOT. IN THIS REGARD, THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE IS, SINCE THE PROPERTIES IN DISPUTE WERE NOT LET OUT EARLIER, THE ASSESSEE WILL NOT BE ELIGIBLE TO AVAIL THE BENEFIT OF SECTION 23(L)(C) OF THE ACT. HOWEVER, WE ARE M/S . METAOXIDE PVT. LTD. UNABLE TO ACCEPT THE AFORESAID CONTENTION OF THE L EARNED DEPARTMENTAL REPRESENTATIVE. THE EXPRESSIONTHE PROPERTY OR ANY PART OF THE PROPERTY IS LET AS USED IN CLAUSE (C) OF SECTION 23(1) DOES NOT MEAN T HAT FOR AVAILING THE BENEFIT OF THE SAID SUB-CLAUSE THE PROPERTY MUST HAVE BEEN LET OUT EARLIER. THE TRIBUNAL, MUMBAI ITA NO.4684/M/2019 M/S. PURUSHOTAMDAS GOENKA 5 BENCH, IN PREMSUDHA EXPORTS PVT. LTD. (SUPRA) HAS A LSO HELD THAT THE EXPRESSION PROPERTY IS LET UNDER CLAUSE (C) OF SECTION 23(1) D OES NOT MEAN THAT THE PROPERTY SHOULD HAVE BEEN ACTUALLY LET IN THE RELEVANT PREVI OUS YEAR OR DURING ANY TIME PRIOR TO THE RELEVANT PREVIOUS YEAR. BUT IT WILL MEAN THE PROPERTY IS INTENDED TO BE LET OUT. SIMILAR VIEW WAS ALSO EXPRESSED IN CASE OF DR. PRABHA SINGHI. THEREFORE, APPLYING THE RATIO LAID DOWN IN THE DECISIONS REFER RED TO ABOVE, WE HOLD THAT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DIR ECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 23(1)(C) TO THE A SSESSEE. THUS, GROUNDS RAISED IN ALL THESE APPEALS ARE DISMISSED. 10. IN THE RESULT, ALL THESE APPEALS ARE DISMISSED. 7. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISI ON OF THE CO- ORDINATE BENCH OF THE TRIBUNAL SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION MADE OF RS .1,09,924/- IN RESPECT OF THREE VACANT PROPERTIES AT AMRITSAR. THE GROUND NO 1 IS ALLOWED. 8. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.8,12,790/- AS MADE BY THE AO IN R ESPECT OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE. 9. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS CLAIME D TO HAVE MADE AGRICULTURAL SALE OF RS.8,12,790/- DURING THE YEAR WHICH WAS CLAIMED AS AGRICULTURAL INCOME IN THE RETURN OF INCOME. ACCORDINGLY, THE AO CALLED UPON THE ASSESSEE TO FUR NISH THE BILLS AND VOUCHERS TO SUBSTANTIATE AGRICULTURAL INCOME WI TH PROOFS OF AGRICULTURAL LAND AND BILLS FOR TRANSPORTATION OF S ALE OF AGRICULTURAL PRODUCE ETC. HOWEVER, THE ASSESSEE CO ULD NOT FURNISH THESE EVIDENCES AND ACCORDINGLY THE AO ADDE D THE ENTIRE AGRICULTURAL INCOME OF RS.8,12,790/- TO THE INCOME OF THE ASSESSEE. ITA NO.4684/M/2019 M/S. PURUSHOTAMDAS GOENKA 6 10. THE LD. CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE ON THIS ISSUE BY HOLDING THAT THE 7/12 EXTRACTS OF THE AGRICULTURAL LAND AS WELL AS PROOFS OF SUBSIDY FROM GOVERNMENT A RE NOT THE PROOFS OF EARNING OF AGRICULTURAL INCOME AND ACCORD INGLY JUSTIFIED THE ADDITION. 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS UNDISPUTEDLY O WNER OF AGRICULTURAL LAND WHICH WAS SUBSTANTIATED BY PRODUC ING 7/12 EXTRACT OF AGRICULTURAL LAND AS WELL AS DOCUMENTS I N RESPECT OF SUBSIDY RECEIVED FROM GOVERNMENT. WE ALSO NOTE THA T THE SIMILAR INCOME HAS BEEN DECLARED BY THE ASSESSEE IN THE YEA R A.Y. 2011- 12 ALSO. IN THE A.Y. 2011-12, THE ASSESSEE HAS DE CLARED INCOME OF RS.7,63,472/- AND THE AO HAS TREATED THE 50% AS AGRICULTURAL INCOME OF THE ASSESSEE AND 50% WAS ADDED TO THE INC OME OF THE ASSESSE AND TAXED ACCORDINGLY. THE LD. A.R. SUBMIT TED THAT IN THE CURRENT YEAR ALSO SINCE THE FACTS AND CIRCUMSTA NCES ARE SUBSTANTIVELY SAME, THEREFORE THE 50% OF THE SAID A GRICULTURAL INCOME MAY BE ALLOWED TO BE TREATED AS AGRICULTURAL INCOME WHEREAS THE REST OF 50% MAY BE ADDED TO THE INCOME OF THE ASSESSEE. WE FIND MERIT IN THE CONTENTION OF THE L D. A.R. AFTER PERUSING THE ASSESSMENT ORDER FOR A.Y. 2011-12 WHER EIN THE AO HAS TREATED THE AGRICULTURAL INCOME ON THE SAME BAS IS. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) A ND DIRECT THE AO TO TREAT 50% OF RS.8,12,790/- WHICH COMES TO RS. 4,06,395/- AS AGRICULTURAL INCOME AND TO TREAT THE REMAINING 5 0% OF RS.4,06,395/- AS REGULAR TAXABLE INCOME. ACCORDING LY, GROUND IS PARTLY ALLOWED. ITA NO.4684/M/2019 M/S. PURUSHOTAMDAS GOENKA 7 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.10.2021. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13.10.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.