Appeal Details
Counselvise Citation
490219914 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-08-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2006-2007
Appeal Filed On
14-06-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D.K. AGARWAL, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.4902/MUM/2010 ASSESSMENT YEAR : 2006-07 MR. MOHINI MOHAN DUTTA 251, VENUS APARTMENTS, 87, CUFFE PARADE, COLABA, MUMBAI-400 005. ..( APPELLANT ) P.A. NO. (ABAPD 0548 H) VS. ADDL. CIT RANGE (OSD) 2(2), AAYKAR BHAVAN, M.K. ROAD, MUMBAI ..( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SHRI R. K. GUPTA DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 17 TH AUGUST, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 8.10.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. T HE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING ANNUAL VALUE OF THE PROPERTY OWNED BY THE ASSESSEE. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE WAS OWNER OF T WO RESIDENTIAL PROPERTIES ONE OF WHICH WAS SELF-OCCUPIED PROP ERTY(SOP) AND THEREFORE, INCOME FROM SAID PROPERTY WAS EXEMPT. HO WEVER, THE ANNUAL VALUE OF THE OTHER PROPERTY UNDER SECTION 23(4 )(B) HAD TO BE ITA NO.4902/M/10 A.Y:06-07 2 DETERMINED UNDER THE PROVISIONS OF SECTION 23(1) AS PER WHICH THE ANNUAL VALUE WILL BE THE SUM FOR WHICH THE PROPERTY I S EXPECTED TO BE LET OUT FROM YEAR TO YEAR. THE ASSESSEE EXPLAINED THA T THE PROPERTY REMAINED VACANT THROUGHOUT THE YEAR AND THEREFORE TH E ANNUAL VALUE COULD NOT BE THE SAME AS MARKET RENT. THE AO HOWEVER DID NOT ACCEPT THE CONTENTION RAISED. IT WAS OBSERVED BY HIM THAT T HE PROPERTY HAD EARLIER BEEN LET VIDE AGREEMENT DATED 25.9.2000 AT MONTHLY RENT OF RS.24,000/- FOR TWO YEARS COMMENCING FROM 1.10.2000. HE , THEREFORE, COMPUTED THE ANNUAL VALUE OF THE PROPERTY FOR THIS YEAR AT RS.2,88,000/- (24,000 X 12) AND COMPUTED THE INCOME FR OM PROPERTY AT RS.2,01,600/- AFTER MAKING ALLOWANCE OF 30% OF THE ANNUAL VALUE UNDER SECTION 24(A). IN APPEAL THE CIT(A) CONFIRMED TH E ORDER OF THE AO AGGRIEVED, BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE ARGUED THAT I N CASE THE PROPERTY WAS LET AND WAS VACANT DURING THE WHOLE OR PA RT OF THE PREVIOUS YEAR, THEN ANNUAL VALUE HAS TO BE COMPUTED UN DER THE PROVISIONS OF SECTION 23(1)(C) AS PER WHICH ACTUAL RENT RE CEIVED OR THE ANNUAL VALUE DETERMINED UNDER SECTION 23(1)(A) WHICHEV ER IS LOWER WILL BE THE ANNUAL VALUE. IN THIS CASE, THE RENT RECEIVED OR RECEIVABLE WAS NIL AND, THEREFORE, ANNUAL VALUE HAS TO BE TREATED AS NIL. THE LD. AR PLACED RELIANCE ON THE DECISION OF THE DELHI BENCH OF TH E TRIBUNAL IN CASE OF SMT. POONAM SAWHNEY VS. AO (20 SOT 69) AND THE DECISION OF ANOTHER BENCH OF THE DELHI TRIBUNAL IN THE CASE OF KA MAL MISHRA VS. ITO (19 SOT 251). THE LD. DR SUPPORTED THE ORDERS O F AUTHORITIES BELOW AND RELIED ON THE FINDINGS OF THE RESPECTIVE ORD ERS. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING THE DET ERMINATION OF ANNUAL VALUE OF THE PROPERTY OWNED BY THE ASSESSEE WHICH REMAINED ITA NO.4902/M/10 A.Y:06-07 3 VACANT THROUGHOUT THE YEAR. THE ANNUAL VALUE OF A PR OPERTY IS REQUIRED TO BE DETERMINED UNDER THE PROVISIONS OF SECTION 23(1) AND AS PER CLAUSE (A) OF SECTION 23(1) THE ANNUAL VALUE IS THE SUM F OR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR AND AS PER CLAUSE (B), IN CASE THE PROPERTY OR ANY PART OF T HE PROPERTY IS LET AND ACTUAL RENT RECEIVED OR RECEIVABLE IS IN EXCESS OF TH E SUM REFERRED TO UNDER CLAUSE(A), THEN THE SUM RECEIVED OR RECEIVABLE WOULD BE THE ANNUAL VALUE. FURTHER, CLAUSE (C) OF SECTION 23(1) PROVI DES THAT WHERE THE PROPERTY OR PART OF THE PROPERTY 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 IS LESS THAN THE SUM RE FERRED TO IN CLAUSE (A), THEN AMOUNT SO RECEIVED OR RECEIVABLE WILL B E THE ANNUAL VALUE. IN THE PRESENT CASE THERE IS NO DISPUTE THAT THE PROPERTY WAS EARLIER LET AND REMAINED VACANT THROUGHOUT THE YEAR AND, THEREFORE, ANNUAL VALUE HAS TO BE DETERMINED UNDER THE PROVISION S OF SECTION 23(1)(C). SINCE RENT RECEIVED OR RECEIVABLE IS NIL BECAU SE PROPERTY WAS VACANT THROUGHOUT THE YEAR, THE ANNUAL VALUE IN SUCH A CASE HAS TO BE TAKEN AS NIL. THIS VIEW IS SUPPORTED BY THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CASE OF SMT. POONAM SAWHNEY VS. IT O (SUPRA) IN WHICH IT HAS BEEN HELD THAT IN CASE PROPERTY IS VACANT DU RING THE WHOLE OR PART OF THE YEAR THE ANNUAL VALUE HAS TO BE DETER MINED UNDER THE PROVISIONS OF SECTION 23(1)(C). THE SAME VIEW HAS BEEN TA KEN BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF KAMAL MISHR A VS. ITO (SUPRA). IN THAT CASE THE PROPERTY WAS LET OUT TILL DE CEMBER 2000 AND AFTER THAT, THE PROPERTY WAS LYING VACANT TILL APRIL 2002. THE ISSUE WAS DETERMINATION OF ANNUAL VALUE FOR THE FINANCIAL YEA R 2001-02. THE AO HAD DETERMINED THE ANNUAL VALUE UNDER SECTION 23(1)(A ). THE TRIBUNAL HELD THAT THERE WAS NO JUSTIFICATION FOR DETERMINING T HE ANNUAL VALUE UNDER SECTION 23(1)(A) AS PROPERTY WAS VACANT THROUGHOUT THE YEAR ITA NO.4902/M/10 A.Y:06-07 4 AND PROVISIONS OF SECTION 23(1)(A) WERE APPLICABLE. IT WAS ACCORDINGLY HELD THAT ANNUAL VALUE HAD TO BE DETERMINED UNDER SE CTION 23(1)(C) AD THE AO WAS DIRECTED TO DELETE THE ADDITION MADE IN RE SPECT OF THE VACANT PROPERTY. THE FACTS IN THE CASE OF THE ASSESSEE ARE IDENTICAL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF T HE DELHI BENCH OF THE TRIBUNAL (SUPRA) AND FOR THE REASONS GIVEN EARL IER SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION MADE IN RESP ECT OF THE VACANT PROPERTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.8.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.8.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.
Mehul