Vegesna Ananthankoti Raju, Visakhapatnam V. Dy CIT, (International Taxation), , Viskhapatnam

ITA 528/VIZ/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3948 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SATYANANDAM
• Keywords: Transfer pricing; Principle of natural justice; Opportunity of cross examination; International transaction; Fair market value; Set aside

Judgement Text

ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.528/VIZAG/2017 ( / ASSESSMENT YEAR: 2012-13) SRI VEGESNA ANANTHAKOTI RAJU VISAKHAPATNAM DCIT (INTERNATIONAL TRANSACTIONS) VISAKHAPATNAM [PAN NO. AFTPV6702Q ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T. SATYANANDAM, DR / DATE OF HEARING : 06.03.2018 / DATE OF PRONOUNCEMENT : 0 4.04.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)- 10 {CIT(A)}, HYDERABAD VIDE ITA NO.0012/CIT(A)-10/2015-16 DATED 12.6.2017 FOR THE ASSESSMENT YEAR 2012-13. ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 2 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADD ITION OF ` 13,11,158/- TOWARDS THE ANNUAL RENTAL VALUE AS PER FAIR MARKET RATE. THE ASSESSEE OWNS HOUSE BUILDING IN FLAT NO.242/A I N JUBILEE HILLS, HYDERABAD. THE ASSESSEE ADMITTED RENTAL INCOME OF ` 1,14,000/- @ ` 9,500/- PER MONTH FROM SHRI V. ANANDA RAJU. SINCE THE RENT ADMITTED BY THE ASSESSEE APPEARED TO BE GROSSLY LOW, THE A.O . CONDUCTED THE ENQUIRIES AND FOUND THAT IN THE VICINITY OF JUBILEE HILLS THE SIMILAR PROPERTIES ARE FETCHING THE RENTAL INCOME OF ` 10.26 PS. TO ` 47.13PS. PER SQ.FT., HENCE, THE A.O. ESTIMATED THE FAIR RENT AL VALUE AT ` 20/- PER SQ.FT AND DETERMINED THE ANNUAL LET OUT VALUE (ALV) AT ` 17,40,000/- FOR 6352 SQ.FT. OWNED BY THE ASSESSEE. THE ASSESSEE S UBMITTED BEFORE THE A.O. THAT THE ASSESSEE HAS LET OUT TO HIS HOUSE TO HIS BROTHER MR. V. ANANDA RAJU AND OUT OF THE 6352 SQ.FT, 50% OF THE H OUSE WAS LET OUT AND THE REMAINING 50% WAS USED FOR HIS PERSONAL PUR POSE AND OFFICIAL PURPOSES DURING HIS STAY IN INDIA. HE ELABORATELY GIVEN A DETAILED REPLY STATING HOW MANY DAYS HE STAYED IN INDIA FROM THE FINANCIAL YEARS 2009-10 TO 2011-12. THE ASSESSEE FURTHER SUBMITTED IN HIS REPLY THAT OUT OF 6352 SQ FEET OF HOUSE CONSISTING FOUR FLOORS LOW ER GROUND FLOOR ADMEASURING 1004 SQ FEET, GROUND FLOOR WITH 1883 SQ FEET AND SECOND FLOOR OF 1304 SQ FEET ARE UNDER THE OCCUPATION OF T HE ASSESSEE. THE ASSESSEE ALSO STATED THAT THOUGH THE PROPERTY WAS G IVEN TO HIS BROTHER, ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 3 AND THE SAME PROPERTY BEING USED BY HIMSELF, WHICH IS TRANSGRESSING THE PRIVACY OF THE TENANT BY USING COMMON AREAS AND THE STAIR CASE. SINCE THE ASSESSEE ALSO NEEDS THE HOUSE FOR HIS PER SONAL PURPOSES AND HE HAS TO USE 50% OF THE HOUSE, THE ASSESSEE SUBMIT TED THAT THE PROPERTY CANNOT FETCH THE NORMAL RENT AS PER THE MA RKET RATES IN AND AROUND THE AREA. NO OTHER TENANT WILL ALLOW THE AS SESSEE TO ENTER INTO PUJA ROOM, STAIR CASE AND COMMON AREAS IN THE HOUSE IF THE SAME IS LET OUT TO ANY OTHER THIRD PARTY. FURTHER, THE ASSESSE E SUBMITTED TO THE AO THAT THE IMPUGNED PROPERTY IS VERY VALUABLE PROPERT Y, HENCE CANNOT BE LET OUT TO ANY OTHER PERSONS SINCE THERE IS A POSSI BILITY OF ENTERING INTO LEGAL DISPUTES AT THE TIME OF VACATING THE HOUSE. T HE AO MADE THE ENQUIRIES WITH NEARBY HOUSES AND COLLECTED THE INFO RMATION WITH REGARD TO THE FAIR RENTAL VALUES AND THE AGREEMENTS AND SU PPLIED THE COPIES OF THE RENT AGREEMENTS AND CALLED FOR EXPLANATION OF T HE ASSESSEE AS TO WHY THE MARKET RENT SHOULD NOT BE CONSIDERED FOR IN COME TAX PURPOSE. THE ASSESSEE FILED HIS EXPLANATION AND REQUESTED FO R ALLOWING THE ASSESSEE FOR CROSS EXAMINATION OF THE PARTIES BUT T HE LD. AO NEITHER PROVIDED FOR CROSS EXAMINATION OF THE PARTIES NOR B EING CONVINCED WITH THE EXPLANATION SUBMITTED BY THE ASSESSEE, ARRIVE D AT THE GROSS ANNUAL VALUE AT ` 17,40,000/- @ 145000/- PER MONTH FOR PLOT NO.242A AND ASSESSED THE SAME TO THE TAX. ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 4 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FI LED APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. APPEARING FOR THE ASSESSEE, THE LD. A.R . ARGUED THAT THE ASSESSEE IS HAVING VALUABLE PROPERTY IN JUBILEE HIL LS AT PLOT NO.242/A. THE SAID PROPERTY WAS GIVEN ON RENT TO HIS BROTHER MR. V. ANANDA RAJU. THE ASSESSEE IS ENGAGED IN THE VARIOUS BUSINESS ACT IVITIES AND MADE THE INVESTMENTS IN SIFY TECHNOLOGIES AND RAJU VEGESNA I NVESTMENTS AND HE IS USING THE SAME HOUSE BOTH FOR HIS BUSINESS AS WE LL AS FOR PERSONAL STAY DURING HIS VISITS IN INDIA. IN THE PROCESS TH E ASSESSEE IS USING MORE THAN 50% OF THE HOUSE FOR OWN PURPOSE. AS PER TH E DETAILS GIVEN IN EXPLANATION OUT OF 6352 SQ.FT MORE THAN HOUSE, 50% OF THE HOUSE I.E. LOWER GROUND FLOOR, GROUND FLOOR, AND SECOND FLOOR ARE UNDER HIS OCCUPATION. APART FROM THE ABOVE, THE ASSESSEE IS A LSO HAVING ACCESS TO THE PUJA ROOM INTERNAL STAIR CASES, WHICH NORMALLY INTERFERE WITH THE PRIVACY OF THE TENANT. THE ASSESSEE HAS FURTHER AR GUED THAT THE HOUSE IS A VALUABLE ONE AND IT CANNOT BE LET OUT TO UNKNO WN PERSON AND IF IT IS LET OUT FOR HIGHER RATE ON RENT, THE PROPERTY MAY F ALL INTO UNWANTED HANDS, WHICH IN TURN MAY LEAD TO UNDESIRABLE CONSEQ UENCES. 5. THE LD. A.R. ALSO ARGUED THAT THE RENTAL INCOME ADMITTED BY THE ASSESSEE IS MORE THAN THE FAIR RENTAL VALUE FIXED B Y MUNICIPAL AUTHORITIES ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 5 I.E. GHMC. AS PER THE MUNICIPAL RENTAL VALUE, THE FAIR RENTAL VALUE WAS FIXED AT ` 58,020/- AS AGAINST WHICH THE ADMITTED INCOME WAS ` 1,14,000/-. THOUGH THE A.O. HAS DETERMINED THE ANN UAL VALUE ON COMPARATIVE BUILDINGS, HE HAS TAKEN UP THE RATE OF ` 20/- PER SQ.FT. EVEN THOUGH THERE WERE BUILDINGS LET OUT FOR ` 10/- PER SQ.FT. FURTHER LD. A.R. ARGUED THAT THE A.O. HAS NOT CONSIDERED THE FACTUAL CIRCUMSTANCES ON WHICH 50% OF THE HOUSE WAS LET OUT, HENCE, ARGUED T HAT THE RENTAL VALUE ADMITTED BY THE ASSESSEE IS REASONABLE WHICH SHOULD BE ACCEPTED. THE LD.A.R FURHER SUBMITTED THAT THOUGH THE LD.A.O COLL ECTED THE INFORMATION WITH REGARD TO THE RENTS IN THE LOCALITY AND SUPPLI ED THE CONFIRMATION AND RENT AGREEMENTS OF TENANTS/OWNERS OF THE LOCALITY T HE A.O. FAILED TO ALLOW CROSS EXAMINATION OF THE PARTIES AND WITHOUT ALLOWING THE PARTIES FOR CROSS EXAMINATION THE EVIDENCES COLLECTED BEHIN D THE BACK OF THE ASSESSEE SHOULD NOT BE USED AGAINST HIM. HENCE REQU ESTED TO IGNORE THE EVIDENCES COLLECTED BEHIND THE BACK OF THE ASSESSEE AND CONSIDER THE CASE OF THE ASSESSEE ON THE FACTS. THE LD. A.R. ALS O RELIED ON THE DECISIONS OF BOMBAY HIGH COURT IN THE CASE OF CIT V S. TIPTOP TYPOGRAPHY 368 ITR 330, ITAT MUMBAI DECISION IN THE CASE OF GAGAN TRADING COMPANY VS. DCIT (2012) 34 CCH 0223 AND THE DECISION OF MUMBAI D BENCH IN THE CASE OF RECLAMATION REALITY INDIA PVT. LTD. VS. ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 6 DCIT 10(1) IN ITA NO.1411/MUM/07 FOR THE ASSESSMENT YEAR 2004-05 DATED 26.11.2010. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIA LS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS OWNING A BUILDIN G IN FLAT NO.242A CONSISTING OF CELLAR, GROUND FLOOR, FIRST F LOOR AND SECOND FLOOR CONSISTING 6352 SQ.FT AND LET OUT THE HOUSE FOR AN ANNUAL RENT OF ` 1,14,000/- AGAINST MUNICIPAL ANNUAL FAIR RENTAL VALUE OF ` 58,020/-. THE A.O. WAS OF THE VIEW THAT THE RENTAL INCOME ADMITTED BY THE ASSESSEE IS FAR L OWER THAN THE RENTS ADMITTED BY THE OTHER OWNERS/TENANTS IN S IMILAR HOUSES IN THE SAME AREA. THEREFORE, THE A.O. CAUSE D THE ENQUIRIES AND COLLECTED THE INFORMATION REGARDING T HE FAIR MARKET RENT OF THE AREA AND OBSERVED THAT THE FAIR RENTAL VALUE IN THE AREA IS RANGING FROM ` 10/- TO ` 47.13PS DEPENDING ON THE NATURE OF TENANT AND THE BUILDING. THE HIGHER RENTS WERE PAID BY THE COMMERCIAL ORGANIZATI ONS SUCH AS STATE BANK OF INDIA, BANK OF BARODA, AMAR I MMUNE DIAGNOSTICS PVT. LTD. WHOSE RENTAL VALUE IS MORE ` 15/- TO ` 47/- PER SQFT. INITIALLY THE AO PROPOSED FOR ADOPTI NG THE ALV @RS.190000/- FOR MONTH ON CONSIDERING THE OBJECTION S ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 7 RAISED BY THE ASSESSEE THE AO SCALED DOWN THE ALV @ RS.1,45,000/- P.M. THE AO REJECTED THE OBJECTIONS R AISED BY THE ASSESSEE AND DETERMINED THE ALV@ RS.1,45,000/- AND ACCORDINGLY COMPLETED THE ASSESSMENT ON THE BASIS O F THE INFORMATION COLLECTED BY THE AO. THE AO HAS COLLECT ED THE INFORMATION WITH REGARD TO THE MARKET RENT IN THE V ICINITY AND SUPPLIED THE COPIES OF RENTAL AGREEMENTS AND CONFIRMATIONS TO THE ASSESSEE. THE ASSESSEE HAS REQ UESTED FOR CROSS EXAMINATION OF THE OWNERS/TENANTS BUT THE AO BRUSHED ASIDE THE REQUEST OF THE ASSESSEE TO CROSS EXAMINE THE OWNERS/TENANTS STATING THAT THE SAME IS NOT VAL ID SINCE THE DETAILS OF OWNERS/TENANTS ALONG WITH THE PROPER TY DETAILS WERE PROVIDED TO THE ASSESSEE. THE AO HAS COLLECTED THE INFORMATION BEHIND THE BACK OF THE ASSESSEE AND MER E FURNISHING OF THE COPIES OF AGREEMENTS AND THE DETA ILS OF THE OWNERS/TENANTS IS NOT SUFFICIENT. WE HAVE GONE THR OUGH THE LEASE AGREEMENTS AND THE SAME WERE UNREGISTERED AGREEMENTS. ANY AGREEMENT WITH REGARD TO THE TRANSA CTION OF IMMOVABLE PROPERTY REQUIRED TO BE REDUCED IN WRI TING AND DULY REGISTERED. UNLESS THE SAME IS REGISTERED THE SAME CANNOT BE TAKEN COGNIGENCE OFF. FURTHER CROSS EXAMI NATION ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 8 OF WITNESS IS NOT MERE FORMALITY AND IT IS THE RIGH T OF THE ASSESSEE AND SO MANY THINGS WILL CROP UP DURING THE CROSS EXAMINATION. ANY EVIDENCE COLLECTED BEHIND THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE UNLESS THE ASSESSEE IS ALLOWED CROSS EXAMINATION. IN THE INST ANT CASE THE ASSESSEE HAS NOT WAIVED HIS RIGHT TO CROSS EXAM INATION AND HE HAS REQUESTED FOR CROSS EXAMINATION. IN THES E FACTS AND CIRCUMSTANCES THE EVIDENCE COLLECTED BY THE AO WITH REGARD TO ALV FROM THE SURROUNDING AREAS CANNOT BE USED AGAINST HIM FOR DETERMINING THE ALV OF THE ASSESSEE S PROPERTY. IN THIS CONNECTION WE MAY REFER THE DECISION OF ITAT, AMRITSAR BENCH IN APEEJAY EDUCATION SOCIETY V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-III, JALANDHAR, 2017] 81 TAXMANN.COM 289 (AMRITSAR - TRIB.) WHEREIN HONB LE ITAT HELD AS UNDER THE AO IN HER ORDER HAS STATED THAT ASSESSEE WAS GI VEN OPPORTUNITY BY ISSUING COMMISSION TO GO TO PUNE AND CROSS EXAMINE THE WITN ESS BUT THE SAME WAS NOT AVAILED BY THE ASSESSEE. IT IS WRONG TO SAY ON THE PART OF THE AO. FROM THE DAY ONE WE MADE REQUEST TO GIVE US OPPORTUNITY TO CROSS EXAMINE THE WITNESS WITH A CONDITION THAT HE BEING WITNESS OF THE DEPARTMENT BE CALLED TO JALAND HAR AND ASSESSEE SHOULD NOT BE PUT TO HARDSHIP TO GO TO PUNE. BEING A LAWS ABIDING CITIZE N ASSESSEE EVEN OFFERED TO PAY FOR THE EXPENSES OF THE WITNESS FORGETTING THAT HE IS WITNE SS OF DEPARTMENT AND IT IS FOR THE DEPARTMENT TO PRODUCE HIM AT ITS OWN COST. THE HONO URABLE CALCUTTA HIGH COURT IN 210 ITR 103 HAS HELD AS UNDER: 'AS A MATTER OF FACT, THE RIGHT TO CROSS EXAMINE A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUNITY OF SUCH CRO SS EXAMINATION IS ONE OF THE CORNER- STONES OF NATURAL JUSTICE. HERE SHRI SUKLA IS THE W ITNESS OF THE DEPARTMENT. THEREFORE, THE DEPARTMENT CANNOT CUT SHORT THE PROCESS OF TAKING O RAL EVIDENCE BY MERELY HAVING ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 9 THE EXAMINATION IN CHIEF. IT IS THE NECESSARY REQUI REMENT OF THE PROCESS OF TAKING EVIDENCE THAT THE EXAMINATION IN CHIEF IS FOLLOWED BY CROSS EXAMINATION AND RE- EXAMINATION, IF NECESSARY.' THE AO HAS REJECTED THE REQUEST OF THE ASSESSEE CIT ING THE REASON THAT PUNE AND AMRITSAR ARE NOT HAVING DIRECT FLIGHT. HENCE IT IS CLEAR THA T STATEMENT WAS RECORDED BEHIND THE BACK OF THE ASSESSEE AND NO OPPORTUNITY WAS GIVEN T O CROSS EXAMINE THAT BEING BASIC RIGHT OF THE ASSESSEE. NO ADDITION CAN BE MADE ON T HE BASIS OF SUCH STATEMENT. THE HONOURABLE DELHI HIGH COURT IN CIT V. DHARAM CH AND PREM CHAND LIMITED 295 ITR 105 HAS HELD THAT: 'THE ASSESSING OFFICER HAD BASED HIS ASSESSMENT ORD ER ON THE REPORT OBTAINED FROM THE RESEARCH INSTITUTE. THE CORRECTNESS OF THAT REPORT ITSELF HAVING BEEN UNDER CHALLENGE BY THE ASSESSEE WHO HAD NOT ONLY FILED PETITIONS THERE TO BUT ALSO SOUGHT PERMISSION ON SEVERAL OCCASION TO CROSS EXAMINE THE ANALYST EVEN AGREEING TO PAY THE NECESSARY EXPENSES, THE REPORT COULD NOT AUTOMATICALLY HAVE B EEN ACCEPTED. SINCE THE ASSESSING OFFICER DID NOT PERMIT THE CORRECTNESS OR OTHERWISE OF THE REPORT TO BE TESTED, THERE WAS A CLEAR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTIC E BY HIM IN RELYING UPON IT TO THE DETRIMENT OF THE ASSESSEE. EVEN IF STRICT RULES OF EVIDENCE MAY NOT APPLY TO ASSESSMENT PROCEEDINGS, THE BASIC PRINCIPLES OF NATURAL JUSTIC E WOULD APPLY TO THE FACTS OF THE CASE.' HONOURABLE ITAT NEW DELHI 'G', BENCH IN INCOME-TAX OFFICER, WARD-9(1), DELHI. V. SOFTLINE CREATIONS (P.) LTD. * [2017] 81 TAXMANN.COM 139 (DELHI - TRIB.) HELD THAT AS UNDER: 9.. THERE IS NO DISPUTE THAT THE STATEMENT WHICH WAS RE LIED UPON BY THE AO WAS NOT RECORDED BY THE AO IN THE ASSESSMENT PROCEEDING BUT IT WAS PRE-EXISTING STATEMENT RECORDED BY THE INVESTIGATING WING AND THE SAME CANNOT BE A SOL E BASIS OF ASSESSMENT WITHOUT CONDUCTING A PROPER ENQUIRY AND EXAMINATION DURING THE ASSESSMEN T PROCEEDING ITSELF. FURTHER DESPITE THE SPECIFIC DEMAND OF THE ASSESSEE FOR CROSS EXAMINATION OF SHR I MAHESH GARG, THE LD. AO HAS NOT GIVEN ANY HEED TO THE REQUEST OF THE ASSESSEE FOR AFFORDING A NY OPPORTUNITY OF CROSS EXAMINATION AND USED THE STATEMENT OF SHRI MAHESH GARG AGAINST THE ASSESSEE WHICH IS NOT PERMISSIBLE UNDER THE LAW. AS IT IS A CASE OF CLEAR VIOLATION OF THE RULE OF PRINCIPAL OF NATURAL JUSTICE AND STATEMENT WHICH IS RECORDED AT THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE WITHOUT GIVING ANY OPPORTUNITY OF CROSS IN THE INSTANT CASE THE AO HAS COLLECTED THE INFOR MATION WITH REGARD TO THE ALV FROM THE SURROUNDING HOUSES AND FURNISHED THE COPIES OF AGREEMENTS TO THE ASSESSEE BUT DID ALLOW THE ASSESSEE TO CROSS EXAMINE THE OWNERS/TENA NTS. THE INFORMATION WAS COLLECTED BEHIND THE BACK OF THE AS SESSE WITHOUT ALLOWING CROSS EXAMINATION OF THE PARTIES I S AGAINST THE PRINCIPLES OF NATURAL JUSTICE HENCE THE SAME CANNOT BE USED ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 10 AGAINST HIM. THEREFORE WE HOLD THAT THE AO CANNOT A DOPT THE MARKET VALUE OF THE RENT AS COLLECTED BY HIM ACCORD INGLY THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE ARE S ET A SIDE. IN THE ASSESSEES CASE, THE ASSESSEE IS HAV ING 6352 SQ.FT. OF HOUSE, WHICH IS USED FOR PERSONAL PURPOSE AS WELL AS GIVE N TO HIS BROTHER MR. ANANDA RAJU ON RENT. AS PER THE INCOME TAX PROVISI ONS ANNUAL VALUE OF THE PROPERTY UNDER SELF-OCCUPATION IS NIL. IN THE INSTANT CASE AS ADMITTED BY THE LD. A.R. THIS IS PARTLY SELF-OCCUPI ED AND PARTLY LET OUT. AS STATED BY THE ASSESSEE, AS AND WHEN THE ASSESSEE IS VISITING INDIA HE USES THE HOUSE FOR PERSONAL PURPOSES AND ACCESSIBLE TO THE ENTIRE HOUSE INCLUDING POOJA ROOM. 50% OF THE HOUSE WAS UNDER S ELF-OCCUPATION AND THE ASSESSEE IS USING POOJA ROOM AND STAIR CASE WHI CH IS INTERFERING WITH THE PRIVACY OF TENANT. IN THESE CIRCUMSTANCES, THE LD. A.R. SUBMITTED THAT BECAUSE OF THE PECULIAR CIRCUMSTANCES DISCUSSE D ABOVE, NO OTHER TENANT WOULD COME FORWARD TO TAKE THE HOUSE WHICH W ILL CAUSE INCONVENIENCE TO THE TENANT. THEREFORE, THERE IS N O CASE TO FETCHING THE MARKET VALUE FOR LETTING OUT THE PROPERTY. AGAINST THE ANNUAL MUNICIPAL LETTING VALUE OF ` 58,020/-, THE ASSESSEE HAD ADMITTED A SUM OF ` 1,14,000/- WHICH IS MORE THAN ANNUAL LETTING VALUE. HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPH Y (SUPRA) HELD AS UNDER: ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 11 48. WE ARE NOT IN AGREEMENT WITH SHRI CHHOTARAY TH AT THE MUNICIPAL RATEABLE VALUE CANNOT BE ACCEPTED AS A BONAFIDE REN TAL VALUE OF THE PROPERTY AND IT MUST BE DISCARDED STRAIGHTWAY IN ALL CASES. THERE CANNOT BE A BLANKET REJECTION OF THE SAME. IF THAT IS TAKEN TO BE A SA FE GUIDE, THEN, TO DISCARD IT THERE MUST BE COGENT AND RELIABLE MATERIAL. 50. WE ARE OF THE OPINION THAT MARKET RATE IN THE LOCALITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WHEN THE ASSESSING OFFICER IS CONVINCED THAT THE CASE BEFORE HIM IS SU SPICIOUS, DETERMINATION BY THE PARTIES IS DOUBTFUL THAT HE CAN RESORT TO ENQUI RE ABOUT THE PREVAILING RATE IN THE LOCALITY. WE ARE OF THE VIEW THAT MUNICIPAL RATEABLE VALUE MAY NOT BE BINDING ON THE ASSESSING OFFICER BUT THAT IS ONLY I N CASES OF AFORE-REFERRED NATURE. IT IS DEFINITELY A SAFE GUIDE. 7. THE SIMILAR ISSUE WAS CONSIDERED BY THE ITAT, MU MBAI BENCH IN THE CASE OF GAGAN TRADING COMPANY LTD. . ACIT REPOR TED IN (2012) 34 CCH 223 (MUM) HELD AS UNDER: WE MODIFY THE IMPUGNED ORDER OF THE LEARNED CIT(AP PEALS) ON THIS ISSUE AND DIRECT THE A.O. TO ACCEPT THE INCOME FROM HOUSE PROPERTY DECLARED BY THE ASSESSEE ADOPTING THE MUNICIPAL RAT ABLE VALUE AS ANNUAL LETTING VALUE OF ITS PROPERTY. 8. ITAT, MUMBAI D BENCH IN ITA NO.1411/MUM/07 DAT ED 26.11.2010 ON THE SIMILAR FACTS AND CIRCUMSTANCES H ELD AS UNDER: 46. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN TH E CASE OF AKSHAY TEXTILES (SUPRA), THE FACTS BEFORE THE HON'BLE BOMB AY HIGH COURT WAS THAT A OWNER OF THE PROPERTY LET OUT THE SAME TO B. B SUB- LET THE PROPERTY TO C. WHILE DETERMINING THE ANNUAL VALUE OF THE PROPERTY IN THE CASE OF A, THE AO SUBSTITUTED THE RENT PAID BY C TO B BECAUSE THE RENT PAID BY B TO A WAS LESS COMPARED TO THE RENT PAID BY C TO B. THE HON'BLE BOMBAY HIGH COURT HELD THAT ANNUAL VALUE IS THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER FRO M THE TENANT IRRESPECTIVE WHETHER TENANT ON SUCH LETTING HAS RECEIVED HIGHER RENT. WE ARE ALSO OF THE VIEW THAT THE EXPRESSION USED IN SEC. 23(1 )(B) IS THE R ENT RECEIVED OR RECEIVABLE. THE EXPRESSION RECEIVABLE CANNOT MEAN ANYTHING MORE THA N WHAT IS ACTUALLY RECEIVED. THE CIT(A) IN OUR VIEW HAS OVERLOOKED THIS ASPECT I N SUBSTITUTING THE ACTUAL RENT RECEIVED BY THIS ASSESSEE BY THE RENT ACTUALLY RECE IVED BY M/S.RECLAMATION REAL ESTATE COMPANY INDIA (P) LTD., FROM J.P. MORGAN CHA SE BANK. WE THEREFORE HOLD THAT THE ANNUAL VALUE HAS TO BE ADOPTED AT THE ANNU AL RENT ACTUALLY RECEIVED BY THE ASSESSEE FROM ICICI LTD., VIZ., RS.1 ,12,64,400/-. ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 12 9. SINCE THE FACTS ARE SIMILAR IN THE CASE LAWS CIT ED (SUPRA) AND DUE TO THE PECULIAR CIRCUMSTANCES NARRATED IN THE SUBMI SSIONS OF THE ASSESSEE WE HOLD THAT THE RENT ADMITTED BY THE ASSE SSEE IS REASONABLE AND ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 10. THE NEXT ISSUE IN THIS APPEAL IS RELATED TO THE ANN UAL LETTING VALUE OF THE BUILDING IN PLOT NO.215, JUBILEE HILLS, HYDE RABAD. THE A.O. ESTIMATED THE ANNUAL LETTING VALUE AT ` 75,000/- PER MONTH FOR 2 MONTHS IN JUNE AND JULY, 2011 AND BROUGHT TO TAX ` 1,50,000/- AS INCOME FROM PROPERTY. THE LD. D.R. SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. THE ASSESSEES A.R. STATED DURING THE APPEAL HEARIN G THAT THIS BUILDING WAS SOLD DURING THE PREVIOUS YEAR IN THE MONTH OF A UGUST, 2011. THE ASSESSEE FURTHER SUBMITTED THAT THE BUILDING WAS IN COMPLETE, HENCE NOT READY FOR OCCUPATION BY THE END OF MAY, 2011. THE A.O. HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT THE BUILDING WAS READY FOR OCCUPATION. HENCE, SUBMITTED THAT THE A.O. IS NOT JUSTIFIED IN SUBJECTING TO TAX THE ANNUAL VALUE OF THE BUILDING @ ` 75,000/- PER MONTH FOR THE MONTHS OF JUNE & JULY, 2011. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE MUNICIPAL ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 13 ASSESSMENT WAS DONE FOR THIS BUILDING IN THE YEAR 2 008. THOUGH CERTAIN REPAIR WORKS ARE CARRIED OUT BY THE ASSESSEE, SUCH AS EXTERNAL PAINTING, ETC. IT IS FOR THE ASSESSEE TO ESTABLISH THAT BUILD ING IS NOT READY FOR OCCUPATION AFTER THE MUNICIPAL ASSESSMENT WAS COMPL ETED. HAVING DONE THE MUNICIPAL ASSESSMENT, WE ARE UNABLE TO AGREE WI TH THE CONTENTION OF THE ASSESSEE THAT THE BUILDING WAS NOT READY FOR OC CUPATION. IT IS FOR THE ASSESSEE TO BRING THE EVIDENCE TO PROVE THAT THE BU ILDING WAS NOT READY FOR OCCUPATION. WITH REGARD TO THE DETERMINATION O F FAIR MARKET RENT, AS PER THE DETAILED DISCUSSION MADE IN THIS ORDER WITH REGARD TO THE PLOT NO.242, WE HOLD THAT THE A.O. CANNOT ADOPT THE FAIR MARKET VALUE WITHOUT ALLOWING THE CROSS EXAMINATION OF THE OWNER S OR TENANTS BY THE ASSESSEE. IN THIS CASE, THE ASSESSEE SUBMITTED THA T THE BUILDING WAS NOT LET OUT AND NOT READY FOR OCCUPATION. THEREFORE, W E DIRECT THE A.O. TO ADOPT THE FAIR MARKET VALUE DETERMINED BY THE MUNIC IPAL AUTHORITIES (GHMS) AS THE FAIR RENTAL VALUE AND ASSESS THE SAME FOR INCOME TAX PURPOSE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH APR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ITA NO.528/VIZAG/2017 SRI VEGESNA ANANTHAKOTI RAJU, VSKP 14 # /VISAKHAPATNAM: ' /DATED : 04.04.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI VEGESNA ANANTHAKOTI RAJU, D. NO.10-27-2/4, FACOR LAYOUT, KAILASHMETTA, WALTAIR UPLANDS, VISAKHAPATNA M 2. / THE RESPONDENT THE DCIT (INTERNATIONAL TRANSAC TION), VISAKHAPATNAM 3. + / THE PRINCIPAL CIT (IT&TP), HYDERABAD 4. + ( ) / THE CIT (A)-10, HYDERABAD 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM