NAROTAM SATYANARAYAN SEKHSARIA, MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 5318/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8404 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Section: 143(3)

Judgement Text

ITA NO.5318/MUM/2012 SHRI NAROTAM SATYANARAYAN SEKSHARIA ASSESSMENT YEAR 2009-2010 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI .. , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO. 5318/MUM/2012 ( / ASSESSMENT YEAR: 2009-2010) SHRI NAROTAM SATYANARARAN SEKHSARIA FLAT NO. 3 RUSHILLA CHS LTD. 17C, CARMICHAEL ROAD MUMBAI 400 026. / VS. DEPUTY COMMISSIONER OF INCOME TAX- 3(1) ROOM NO. 7 AAYKAR BHAVAN MUMBAI 400 020. ./ ./PAN/GIR NO. AALPS0205L ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA, AR / RESPONDENT BY : SHRI SUMAN KUMAR, DR / DATE OF HEARING : 16/02/2017 / DATE OF PRONOUNCEMENT : 17/02/2017 2 ITA NO.5318/MUM/2013 NAROTAM SATYANARAYAN SEKSHARIA / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-7 [CIT(A)], MUMBAI DATED 08/05/2012 QUA CERTAIN ADDITIONS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 2. BRIEFLY STATED THE ASSESSEE IS RESIDENT INDIVIDUAL WHO FILED ITS RETURN OF INCOME FOR IMPUGNED AY ON 29/07/2009 DECLARING TOTAL INCOME OF RS.7,08,39,800/- WHICH WAS PICKED UP FOR SCRUTINY ASSESSMENT U/S. 143(3) VIDE ASSESSING OFFICER [AO] ORDER DATED 15/12/2011 WHEREIN THE TOTAL INCOME WAS DETERMINED AT RS.7,17,00,410/- AFTER MAKING CERTAIN ADJUSTMENTS AND DISALLOWANCES. AO NOTED THAT THE ASSESSEE WAS IN OCCUPATION OF THREE RESIDENTIAL PROPERTIES WHICH CALLED FOR ADDITION OF HOUSE PROPERTY INCOME FROM TWO PROPERTIES ON DEEMED TO BE LET OUT BASIS AS PER THE PROVISIONS OF SECTION 23. THE ASSESSEE EXPLAINED THAT THE MUNICIPAL ANNUAL LETTING VALUE [ALV] OF THE FIRST PROPERTY SITUATED AT LONAVALA AREA MEASURING APPROX. 4296 SQ. FT. WAS RS.35,499/- AND THE SAME SHOULD BE TAKEN AS THE FAIR RENTAL VALUE OF THE PROPERTY. THE SECOND PROPERTY WAS SITUATED AT CHIRAWA AND STATED TO BE AN OLD ANCESTRAL PROPERTY IN WHICH ASSESSEE HOLD ONE HALF SHARE. AS PER ASSESSEES CONTENTION, THE SAME WAS LYING VACANT AND COULD NOT BE TENANTED DUE TO LACK OF DEMAND AND HENCE, KEEPING IN VIEW THE PREVALENT MARKET RATE, THE SAME COULD NOT FETCH AN ANNUAL RENT OF MORE THAN RS.5,000/- PER ANNUM. REJECTING THE CONTENTIONS OF THE ASSESSEE, THE AO WORKED OUT THE ALV OF THE TWO PROPERTIES AT RS.11,08,278/- & RS.25,000/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AFTER PROVIDING FOR THE STATUTORY DEDUCTIONS OF 30%. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE CIT(A) BUT REMAINED UNSUCCESSFUL VIDE ORDER DATED 08/05/2012. CIT(A) NOTED THAT THE AO ARRIVED AT THE ALV OF THE FIRST PROPERTY ON THE BASIS OF DATA OBTAINED FROM ONE WEBSITE NAMELY MAGICBRICKS.COM AND THE SAME WAS 3 ITA NO.5318/MUM/2013 NAROTAM SATYANARAYAN SEKSHARIA PROPER, JUSTIFIED AND HENCE, DID NOT CALL FOR ANY INTERFERENCE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR ASSESSEE [AR], WHILE PLACING RELIANCE ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CIT VS. TIP TOP TYPOGRAPHY [368 ITR 330] , CONTENDED THAT THE METHOD ADOPTED BY AO TO ARRIVE AT ALV OF THE FIRST PROPERTY WAS NOT PROPER AND REASONABLE. THE RATES QUOTED ON THE WEBSITE WERE SUBJECT TO HEAVY NEGOTIATIONS AND RENTALS OF THE PROPERTY WAS DEPENDENT UPON NUMBER OF FACTORS SUCH AS LOCATION OF THE PROPERTY, CONSTRUCTION QUALITY, PROXIMITY TO VARIOUS FACILITIES ETC. AND HENCE, THAT DATE PROVIDED BY THE WEBSITE WAS NOT TRUE MEASURE OF ALV OF THE PROPERTY. PER CONTRA, LD. DR SUPPORTED THE STAND TAKEN BY THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CITED CASE LAW. THE ONLY QUESTION IS TO BE DECIDED IS THE FAIR RENTAL VALUE OF THE TWO PROPERTIES IN TERMS OF SECTION 23(1)(A). WE FIND STRENGTH IN THE ARGUMENTS OF LD. AR THAT THE METHOD ADOPTED BY AO WAS NOT TRUE DETERMINATIVE TO ARRIVE AT FAIR RENTAL VALUE OF THE PROPERTY IN TERMS OF SECTION 23(1)(A) AS THE RENTAL VALUE OF THE PROPERTY WOULD BE DEPENDENT ON NUMEROUS FACTORS AND NO SINGLE FORMULA COULD BE APPLIED TO ARRIVE AT THE FAIR RENTAL VALUE OF THE PROPERTY. THE HONBLE BOMBAY HIGH COURT IN THE CITED CASE LAW HAVE CLEARLY ESTABLISHED THAT THE AO MUST HAVE COGENT AND SATISFACTORY MATERIAL IN HIS HAND TO ARRIVE AT TRUE RENTAL VALUE. HE SHOULD NOT MAKE GUESS WORK OR ACT ON CONJECTURE OR SURMISES. THERE MUST BE DEFINITE POSITIVE MATERIAL TO INDICATE THAT THE PARTIES HAVE SUPPRESSED THE PREVAILING MARKET RATE. THE AO CAN MAKE COMPARATIVE STUDY BY IDENTIFYING THE SIMILAR TRANSACTIONS. THERE WAS NO MAGIC FORMULA AND EVERYTHING DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IF THESE OBSERVATIONS ARE APPLIED TO THE INQUIRIES MADE BY THE AO IN THE PRESENT CASE, WE FIND THAT THE SAME WAS A MERE GUESS WORK AND NOT A TRUE OR CORRECT ESTIMATION. NO COGENT MATERIAL WAS PLACED ON RECORD AND NO COMPARATIVE STUDY WAS MADE TO ARRIVE AT ALV OF THE PROPERTY. THE LD. AR FAIRLY CONCEDED THAT, THE ALV OF THE PROPERTY MAY BE TAKEN ON 4 ITA NO.5318/MUM/2013 NAROTAM SATYANARAYAN SEKSHARIA SOME ESTIMATION BASIS ONLY AND KEEPING IN VIEW THE PREVAILING MARKET RATES, THE PROPERTY COULD NOT FETCH MORE THAN RS.2/- PER SQUARE FEET PER MONTH. THE LD. DR OPPOSED THE SAME ON THE GROUND THAT THE VALUE ADOPTED BY AO WAS RS.21.50 PER SQUARE FEET AND THERE COULD NOT BE SUCH A LARGE VARIATION IN THE RENTAL VALUES. HENCE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DECIDE THAT THE ALV OF THE PROPERTY SHALL BE DETERMINED AT RS.5/- PER SQUARE FEET PER MONTH AND ACCORDINGLY, THE ALV OF THE PROPERTY SITUATED AT LONAVALA WOULD BE RS.4296 X 5/- X 12 = RS.2,57,760/- PER ANNUM. THE STATUTORY DEDUCTION AS AVAILABLE TO THE ASSESSEE SHALL BE PROVIDED. THE AO IS DIRECTED TO RE-COMPUTE THE SAME ON THE BASIS OF THESE OBSERVATIONS. SO FAR AS THE ALV OF THE SECOND PROPERTY IS CONCERNED, WE SEE NO REASON TO INTERFERE IN THE ORDER OF LOWER AUTHORITIES AND MORE SO, NO SERIOUS ARGUMENTS FOR THE SAME ARE RAISED BY EITHER SIDE. 5. THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2017 SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17.02.2017 PS:- POOJA K. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. () / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE 5 ITA NO.5318/MUM/2013 NAROTAM SATYANARAYAN SEKSHARIA / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 6 ITA NO.5318/MUM/2013 NAROTAM SATYANARAYAN SEKSHARIA SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTACHED YES SR.PS/PS 2 DRAFT DICTATED ON 16/02/17 SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 7 ORDER PRONOUNCEMENT ON SR.PS/PS 8 FILE SENT TO THE BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER