DCIT CIR 7(1), MUMBAI V. PERCEPT FINSERVE P.LTD, MUMBAI

ITA 4698/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3275 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 29-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-06-2013
• Court: TRIBUNAL
• Department Lawyers: DR DARSHI SUMAN RATNAM
• Keywords: Notional interest
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 4698 /MUM/ 20 13 (ASSESSMENT YEAR 200 8 - 0 9 ) DCIT CIRCLE 7(1) ROOM NO. 622 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. PERCEPT FIN SERVE PVT. LTD. 22, RAGHUVANSHI ESTATE 11/12, SENAPATI BAPAT MARG, LOWER PAREL MUMBAI - 400 013. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCP2392Q ASSESSEE BY NONE DEPARTMENT BY DR. DARSHI SUMAN RATNAM DATE OF HEARING 8 . 6. 201 6 DATE OF PRONOUNCEMENT 8 . 6 . 201 6 O R D E R PER B.R. BASKARAN, A M : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25.3. 201 3 PASSED BY LEARNED CIT(A) - 1 3, MUMBAI AND IT RELATES TO A.Y. 2008 - 0 9 . 2. NONE APPEARED ON BEHALF OF THE ASS ESSEE EVEN THOUGH TH E CASE WAS ADJOURNED ON THE LAST OCCASION AT THE SPECIFIC REQUEST OF THE ASSESSEE. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX PARTE, WITHOUT PRESENCE OF THE ASSESSEE. 3. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. THE RE VENUE HAS RAISED GROUNDS ON FOLLOWING ISSUES : A) DELETION OF NOTIONAL INTEREST OF ` 44.97 LAKHS ASSESSED AS RENTAL INCOME. B) DISALLOWANCE MADE U/S. 14A. 4. THE FIRST ISSUE RELATES TO DETERMINING THE ANNUAL LETTING VALUE IN RESPECT OF THE PROPERTIES LET OUT B Y THE ASSESSEE. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RENTED OUT CERTAIN PREMISES TO ITS ASSOCIATE CONCERNS AND THE 2 AGGREGAT E AMOUNT OF RENT RECEIVED BY IT WAS ` 47.74 LAKHS. IN RESPECT OF ONE ASSOCIATE CONCERN NAMED M/S. HAKUHUDO PERCENT P. LTD., THE ASSESSEE HAS COLLECTED RENT OF ` 62/ - PER SQUARE FT. PER MONTH AND IN RESPECT OF OTHER ASSOCIATE CONCERNS THE ASSESSEE HAS COLLECTED RENT OF ` 2/ - PER SQ.FT. PER MONTH. IT WAS NOTICED THAT THE ASSESSEE HAS COLLECTED HUGE SECURITY DEPOSIT FROM O THER CONCERNS . ACCORDINGLY, THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS C HARGED LOWER RENT FROM THEM IN VIEW OF HUGE AMOUNT OF SECURITY DEPOSITS RECEIVED BY IT. ACCORDINGLY THE ASSESSING OFFICER ESTIMATED INTEREST ON THE SECURITY DEPOSITS @ 11.75% AND ADDED THE SAME TO THE ANNUAL LETTING VALUE. LEARNED CIT(A) HOWEVER DELETED THE ADDITION BY FOLLOWING DECISION RENDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MONI KUMAR SUBBA (333 ITR 38) AND ALSO DECISION RENDERED BY MUMBAI BENCH O F THE TRIBUNAL BY FOLLOWING DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF J.K. INVESTORS (248 ITR 723). 5. DURING THE COURSE OF HEARING LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION RENDERED BY HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS. K. STREETLITE ELECTRIC CORPORATION ( 20 TAXMANN.COM 532). 6. WE NOTICED THAT LEARNED CIT(A) HAS NOT BROUGHT OUT THE FACTS RELATING TO THE PROPERTY UNDER CONSIDERATION. THE ANNUAL VALUE OF THE PROPERTY IS DETERMINED UNDER SECTION 23 OF TH E ACT . UNDER SEC. 23(1)(A) THE ANNUAL VALUE OF THE PROPERTY SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. UNDER CLAUSE (B) OF SEC. 23(1), IF THE ACTUAL RENT RECEIVED OR RECEIVABLE IS MORE THAN THE SUM REFERRED TO IN SEC. 23(1)(A), THEN THE AMOUNT SO RECEIVED OR RECEIVABLE SHALL BE TAKEN AS ANNUAL LETTING VALUE. THE MANNER OF DETERMINING THE ANNUAL LETTING VALUE U/S 23(1)(A) HAS BEEN SETTLED BY VARIOUS HIGH COURT DECISIONS. HENCE, THE QUESTION OF ADDING THE NOTIONAL RENT COMPUTED ON THE SECURITY DEPOSITS HAS TO BE EXAMINED IN TERMS OF THE PROVISIONS OF SEC. 23 ONLY. WE NOTICE THAT THIS MANNER OF DETERMINING THE ANNUAL LETTING VALUE AS PRESCRIBED U/S. 23 OF THE ACT HAS NOT BEEN EXAMINED BY LEARN ED CIT(A). ACCORDINGLY, WE ARE OF THE VIEW 3 THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE LEARNED CIT(A). ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND RESTORE THE SAME TO HIS FILE FOR FRESH CONSIDERATION. 7. THE NEXT ISSUE RELA TES TO DISALLOWANCE MADE U/S. 14A OF THE ACT. THE ASSESSING OFFICER WORKED OUT THE DISALLOWANCE OF ` 14,59,560/ - BY APPLYING RULE 8D OF THE I.T. RULES. LEARNED CIT(A), HOWEVER, DELETED THE DISALLOWANCE OF INTEREST WORKED OUT U/R. 8D(2)(II) ON THE REASONIN G THAT THE LOANS TAKEN BY THE ASSESSEE WERE USED FOR SPECIFIC PURPOSE S AND HENCE NO DISALLOWANCE OF INTEREST IS CALLED FOR. 8. AT THE TIME OF HEARING LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRADICT THE FIN D INGS GIVEN BY LEARNED CIT(A) AND ACCORD INGLY WE UPHOLD THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 8 .6 .2016 . SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 8 / 6/ 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS