DCIT CC 23, MUMBAI V. R.S. CONSTRUCTIONS, MUMBAI

ITA 5245/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5181 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: R MURLIDHAR
• Keywords: Notional interest
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 5245/MUM/2012 (ASSESSMENT YEAR: 2009-10) ASTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-23 CENTRAL RANGE-7 ROOM NO.409, 4 TH FLOOR AAYAKAR BHAVAN, MK ROAD MUMBAI-400 020. VS. M/S. R.S. CONSTRUCTIONS INTERNATIONAL BUSINESS PARK OBERI GARDEN CITY OFF WESTERN EXPRESS HIGHWAY GOREGAON(E) MUMBAI-63. (APPELLANT) (RESPONDENT) P.A. NUMBER : AAAFR 0417 J. ASSESSEE BY : SHRI R. MURLIDHAR REVENUE BY : SHRI S.K. SINGH DATE OF HEARING : 08/10/2013 DATE OF PRONOUNCEMENT : 08/10/2013 O R D E R PER I.P. BANSAL, JM: THIS APPEAL IS FILED BY THE REVENUE. IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) DATED 26/06/2012 FOR THE ASSES SMENT YEAR 2009-10. THE GROUNDS OF APPEAL READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.24,76,2 48/- ON ANNUAL LETTING VALUE BEING NOTIONAL INTEREST OF THE PROPER TY IN TERMS OF SECTION 23(1)(A) OF THE I.T. ACT, 1961. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ABOVE ADDITION HAD BE EN MADE ON ANNUAL VALUE AS OFFERED BY THE ASSESSEE WAS GROSSLY UNDERSTATED AND AO WAS JUSTIFIED IN DETERMINING FAIR MARKET VAL UE IN TERMS OF ITA NO.5245/M/12 A.Y.09-10 2 SECTION23(1)(A) BY ADDING NOTIONAL INTEREST @ 8% ON THE INTEREST FREE DEPOSIT OF RS.3,09,53,112/-. 2. IN ADDITION TO RENT RECEIVED BY THE ASSESSEE IN RESPECT OF PREMISES LET OUT BY IT TO UTI BANK LTD. THE ASSESSEE HAD REC EIVED INTEREST FREE SECURITY DEPOSIT OF RS.3,09,53,112/-. THE AO COMPUT ED 8% NOTIONAL INTEREST ON SECURITY DEPOSIT WHICH WAS A SUM OF RS. 24,76,248/- AND THE SAME WAS ADDED TO THE ANNUAL LETTING VALUE (ALV) OF THE PROPERTY. THE LD. CIT(A) HAS DELETED SUCH ADDITION FOLLOWING HIS PREDECESSORS ORDER FOR ASSESSMENT YEAR 2008-09 AND HE FOUND THAT IN THE CA SE OF SISTER CONCERN OF THE ASSESSEE SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. DURING THE COURSE OF HEARING THE LD. AR HAS PLACED BEFORE US COPY OF THE TRIBUNAL ORDER IN CASE OF THE ASSESSEE FOR ASSESSME NT YEAR 2008-09 WHICH IS DATED 22.02.2013 IN ITA NO.5869/MUM/2011 V IDE WHICH THE APPEAL FILED BY THE REVENUE WAS DISMISSED WITH THE FOLLOWING OBSERVATIONS. 3. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT THERE IS NO NEED TO DISTURB THE FINDINGS OF THE CIT (A). FIRST OF ALL, THE ACTION OF AO CANNOT BE UPHELD AS ADDITION OF NOTION AL RENT UNDER SECTION 23(1)(B) WAS NOT UPHELD BY THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF CIT VS. J.K. INVESTORS (BOM.) LTD. ( 2001) 248 ITR 723 (BOM.). THEREFORE, IN THE GUISE OF INVOKING SECTION 23(1)(A), AO ADDED 8% OF THE SECURITY DEPOSIT AS NOTIONAL INTEREST TO THE RENT RECEIVED ACTUALLY. THE ESTIMATION OF ANNUAL VALUE OF PROPERT Y, EVEN UNDER THE PROVISIONS OF SECTION 23(1)(A) HAS GONE THROUGH VAR IOUS JUDICIAL ANALYSIS AND IT IS ALREADY HELD THAT THE SUM FOR WH ICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YE AR IS TO BE CONSIDERED ON MUNICIPAL RATEBALE VALUE. SINCE ASSE SSEES ACTUAL RENT RECEIVED IS MORE THAN THE MUNICIPAL RATEABLE V ALUE, WE ARE OF THE OPINION THAT NO FURTHER ADDITION IS REQUIRED UN DER SECTION 23(1) OF THE ACT. THEREFORE, THE REVENUE GROUND ON THIS IS D ISMISSED. 2.1 THE LD. DR COULD NOT CONTROVERT THE CONTENTION OF THE LD. AR THAT FACTS AND CIRCUMSTANCES ARE SIMILAR IN THE PRESENT YEAR. ITA NO.5245/M/12 A.Y.09-10 3 3. IN THIS VIEW OF THE SITUATION, WE FIND THAT THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS SQUARELY COVERED B Y AFOREMENTIONED DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. TH EREFORE, RESPECTFULLY FOLLOWING THE SAID ORDER WE, DECLINE TO INTERFERE I N THE RELIEF GRANTED BY THE LD. CIT(A) AND DISMISS THE DEPARTMENTS APPEAL. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER, 2013. SD/- SD/- (RAJENDRA ) ACCOUNTANT MEMBER (I.P. BANSAL ) JUDICIAL MEMBER MUMBAI, DATED: 08/10/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.