GAGAN TRADING CO.LTD, MUMBAI V. ITO 5(1)(2), MUMBAI

ITA 5288/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93337 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 22-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2012
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA SR
• Keywords: Question of law; Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 5288/M/2012 (AY:2009 - 2010 ) M/S. GAGAN TRADING CO. LTD., JINDAL MANSION, 5A DR. G. DESHMUKH MARG, MUMBAI - 026. / VS. INCOME TAX OFFICER - 5(1)(2), R.NO.580, AAYAKAR BHAVAN, MUMBAI - 20. ./ PAN : AAACG1829G ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO. 5468/M/2012 (AY:2009 - 2010 ) INCOME TAX OFFICER - 5(1)(2), R.NO.580, AAYAKAR BHAVAN, MUMBAI - 20. / VS. M/S. GAGAN TRADING CO. LTD., JINDAL MANSION, 5A DR. G. DESHMUKH MARG, MUMBAI - 026. ./ PAN : AAACG1829G ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI HIRO RAI, / REVENUE BY : SMT. S. PADMAJA, SR. AR / DATE OF HEARING : 16.07.2015 / DATE OF PRONOUNCEMENT :29 .07.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THE CAPTIONED CROSS APPEALS RELATE TO THE ASSESSMENT YEAR 2009 - 2010 ARE FILED AGAINST TH E ORDER OF THE CIT (A) - 9, MUMBAI DATED 5.6.2012. SINCE, THE ISSUES RAISED IN BOTH THE APPEALS ARE CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUB BED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. THE I SSUE RAISED BY THE REVENUE IN ITS APPEAL ITA NO.5468/M/2012 TO CONSIDER ING OF THE NOTIONAL INTEREST ON INTEREST FREE DEPOSITS GIVEN BY THE TENANT FOR THE PURPOSE OF COMPUTING THE ALV OF A PROPERTY U/S 23 OF THE ACT . THE GROUND READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN DIRECTING THE AO NOT TO TAKE NOTIONAL INTEREST OF RS. 14,04,00,000/ - ON INTEREST FREE DEPOSIT OF RS. 78 CRS RECEIVED BY THE ASSESSEE WHILE COMPUTING THE ANNUAL LETTING VALUE OF THE PROPERTY FOR THE PURPOSE TO WORK OUT INCOME FROM HOUSE PROPERTY UNDER SECTION 23 OF THE ACT . 2 3. THE ISSUE RAISED IN ASSESSEES APPEAL ITA NO.5288/M/2012 RELATES TO NECESSITY OF COMPUTATION OF SAID ALV BASED ON MUNICIPAL RATEABLE VALUE OF THE PROPERTY AND THE GROUND READS AS UNDER: THE LD CIT (A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN HOL DING THAT THE ANNUAL LETTING VALUE OF THE PROPERTY CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AMOUNTS TO RS. 1,99,75,488/ - AS AGAINST THE MUNICIPAL RATABLE VALUE OF RS. 10,61,190/ - OFFERED TO TAX BY THE APPELLANT. 4. AT THE OUTSET, LD COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE AFORESAID TWO ISSUES RAISED IN BOTH THE APPEALS WERE THE SUBJECT MATTER OF ADJUDICATION BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AYS 2006 - 2007 AND 2008 - 2009, COPIES OF THE SAID ORDERS OF THE TRIBUNAL ARE PLAC ED ON TO THE RECORD. REFERRING TO THE TRIBUNALS ORDER FOR AY 2006 - 07, COPY OF WHICH IS PLACED AT PAGE 1 OF THE CITATIONS PAPER BOO, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT VIDE PARA 10 OF THE SAID ORDER OF THE TRIBUNAL, THE AO WAS DIRECTED TO ACCEPT T HE INCOME FROM HOUSE PROPERTY DECLARED BY THE ASSESSEE ADOPTING THE MUNICIPAL RATEABLE VALUE AS ALV OF THE PROPERTY. FURTHER, INFORMING THAT THE MATTER WAS CARRIED TO THE HONBLE BOMBAY HIGH COURT , LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PAGE 22 OF THE SAID PAPER BOOK WHEREIN THE RATIO RELATING TO THE ADOPTING OF THE MUNICIPAL RATEABLE VALUE AS ALV OF THE PROPERTY WAS QUESTIONED IN THE SUBSTANTIAL QUESTION OF LAW (A) AND MENTIONED THAT THE SUBSTANTIAL QUESTION OF LAW C RELATES TO THE COMPU TATION OF ALV BASED ON THE NOTIONAL INTEREST COMPUTED ON THE INTEREST FREE DEPOSITS KEPT WITH THE PROPERTY OWNER. THE SAID SUBSTANTIAL QUESTION OF LAW (A) AND (C) READ AS UNDER: - (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW HO NBLE ITAT WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO ACCEPT THE INCOME FROM HOUSE PROPERTY DECLARED BY THE ASSESSEE ADOPTING THE MUNICIPAL RATABLE VALUE AS ANNUAL LETTING VALUE OF ITS PROPERTY? (C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, HONBLE ITAT WAS RIGHT IN DISMISSING THE REVENUES APPEAL WITHOUT APPRECIATING THE FACT THAT THE RENT WAS UNDERVALUED ON THE GROUND OF INTEREST FREE DEPOSIT OR NOTIONAL INTEREST WHICH IS SET ASIDE BY THE APEX COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. TRANSMARINE CORPORATION (SLP (C) NO.8999 OF 2010 DATE OF ORDER 15.7.2011] BY REMITTING TO THIS HONBLE HIGH COURT FOR DENOVO HEARING? 5. FURTHER, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PAGE 48 OF THE PAPER BOOK, WHEREIN THE SAID QUESTIONS WERE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY RELYING ON THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPHY [2014] 48 TAXMANN.COM 191 (BOMBAY). FURTHER, REFERRING TO PAGE 28 OF THE PAPER BOOK, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT VIDE THE ORDER OF THE TRIBUNAL FOR THE AY 2008 - 2009, AN IDENTICAL ISSUES WERE RAISED 3 IN THE SAID APPEAL AND THE SAME WERE AGAIN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 29.1.2014 IN ITA NOS.6104 AND 6578/M/2011 AND THE CONTENTS OF PARA 6 OF THE SAID TRIBUNALS ORDER ARE RELEVANT IN THIS REGARD, WHICH READ AS UNDER: 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF T HE LOWER AUTHORITIES AND THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE. WE FIND FORCE IN THE CONTENTION OF THE LD AR. THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE AS MENTIONED HEREINA BOVE. WE FIND THAT IN ITA NO.4088/M/10 AND 4657/M/2011 FOR AY 2006 - 07, THE TRIBUNAL AT PARA 10 ON PAGE 8 HAS HELD AS UNDER: IN OUR OPINION, THE SIMILAR ISSUE AS INVOLVED IN THE PRESENT CASE THUS, HAS BEEN DECIDED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE CASE OF RECLAMATION REALITY INDIA PVT LTD (SUPRA) AND SINCE THE SAID DECISION HAS BEEN RENDERED BY THE TRIBUNAL RELYING ON AND FOLLOWING THE JUDGMENTS OF HONBLE APEX COURT AND THE HONBLE JURISDICTIONAL HIGH COURT, WE ARE OF THE VIEW THAT THE JUDICIAL PROPRIETY AND JUDICIAL DISCIPLINE REQUIRE US TO FOLLOW THE SAME. ACCORDINGLY, RESPECTFULLY FOLLOWING THE SAID JUDICIAL PRONOUNCEMENT, WE MODIFY THE IMPUGNED ORDER OF THE LD CIT (A) ON THIS ISSUE AND DIRECT THE AO TO ACCEPT T HE INCOME FROM HOUSE PROPERTY DECLARED BY THE ASSESSEE ADOPTING THE MUNICIPAL RATABLE VALUE AS ANNUAL LETTING VALUE OF ITS PROPERTY. GROUND NO.1 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED WHEREAS THE SOLITARY GROUND RAISED IN THE REVENUES APPEALS IS DISMISSED. RESPECTFULLY, FOLLOWING THE FINDINGS OF THE COORDINATE BENCH, REVENUES APPEAL IS DISMISSED AND ASSESSEES APPEAL IS ALLOWED. 6. THUS, IT IS A DECIDED ISSUE THAT AO IS PREVENTED IN THIS CASE AND PROPERTY FROM DISTURBING THE ALV QUA THE (I) CONSIDERING THE NOTIONAL INTEREST ON DEPOSIT AND (II) NOT CONSIDERING THE MUNICIPAL RATABLE VALUE - BASED - ALV OF THE PROPERTY. IN THIS YEAR, AO HAS NOT GARNERED ANY INCRIMINATING MATERIAL AGAINST THE ASSESSEES CLAIM RELATING TO ALV OF THE PROPERTY IN QUESTION. AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE ARGUMENTS OF THE LD DR FOR THE REVENUE, WHO ESSENTIALLY ARGUED FOR SETTING ASIDE THE APPEAL TO THE FILE OF THE AO, WE FIND THE NEED FOR DISMISSING THE ARGUMENTS OF THE LD DR. THEREFORE, CONSIDERING THE BINDING NATURE OF THE JURISDICTIONAL HIGH COURT JUDGMENT (SUPRA) IN ASSESSEES OWN CASE, THE GROUND RAISED BY THE REVENUE IS DISMISSED AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESU LT, APPEAL OF THE REVENUE IS DISMISSED AND THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 29 TH JULY, 2015. SD/ - SD/ - (AMIT SHUKLA) (D. KARUNAKRA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 29 .7 .2015 . . ./ OKK , SR. PS 4 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI