MANISHA TRADING & INVESTMENTS PVT. LTD, MUMBAI V. ACIT 6(3), MUMBAI

ITA 5321/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1401 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D CHANDA SHRI S S RANA
• Assessee Lawyers: R MURALIDHAR
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER I T A NO: 5321/MUM/2008 (ASSESSMENT YEAR: 2005-06) MANISHA TRADING & INVESTMENTS PVT. LTD., MUMBAI A PPELLANT (PAN: AACCM1996N) VS ASSISTANT COMMISSIONER OF INCOME TAX 6(3), MUMBAI RESPONDENT APPELLANT BY: SHRI R MURALIDHAR RESPONDENT BY: SHRI D CHANDA / SHRI S S RANA O R D E R R V EASWAR, PRESIDENT: THERE IS ONLY ONE GROUND IN THIS APPEAL BY THE ASS ESSEE FOR THE ASSESSMENT YEAR 2005-06 AND IT IS THAT THE CIT(A) E RRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF ESTIMATING T HE RENTAL INCOME FROM THE PROPERTY AT RS.37,25,463/-, EXTRAPOLATED BY 5% ON THE BASIS OF THE RENTAL INCOME FOR THE ASSESSMENT YEAR 2003-04, IGNO RING THE ACTUAL RENT RECEIVED. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF INVESTMENT AND LETTING OUT PROPERTIES. FOR THE ASS ESSMENT YEAR 2005- 06 IT DECLARED RENTAL INCOME OF RS.3,00,000/- ACTUA LLY RECEIVED IN RESPECT OF THE PROPERTY AT PLOT NO.1, KUMARAM, WORL I SEA FACE, MUMBAI. AFTER CLAIMING 30% DEDUCTION UNDER SECTION 24(A) OF THE INCOME TAX ACT, 1961, NET INCOME OF RS.2,10,000/- W AS SHOWN IN THE RETURN. THE ASSESSING OFFICER NOTED THAT FOR THE A SSESSMENT YEAR 2003-04 THE ASSESSEE HAD SHOWN RENTAL INCOME OF RS. 28,82,230/- FOR ITA NO: 5321/MUM/2008 2 THE SAME PROPERTY AND AN ADDITIONAL RENT OF RS.4,80 ,000/- FOR THE FURNITURE IN THE SAID PROPERTY. HE APPLIED SECTION 23(1)(A) OF THE INCOME TAX ACT, UNDER WHICH THE ANNUAL LETTING VALU E OF THE PROPERTY IS BROUGHT TO ASSESSMENT AND HELD THAT SINCE THE SAME PROPERTY HAD BEEN LET OUT FOR RS.33,62,230/- (INCLUDING FURNITUR E) FOR THE ASSESSMENT YEAR 2003-04, THAT FIGURE FURNISHED AN INDICATION O F THE TRUE ANNUAL LETTING VALUE OF THE PROPERTY. HE EXTRAPOLATED 5% TO THE AFORESAID FIGURE AND ASSESSED THE ANNUAL LETTING VALUE OF THE PROPERTY FOR THE YEAR UNDER APPEAL AT RS.37,25,463/-, SUBJECT TO THE DEDUCTION UNDER SECTION 24. 3. THE ASSESSEE APPEALED TO THE CIT(A), WHO UPHELD THE COMPUTATION OF THE ANNUAL LETTING VALUE AND HENCE T HE PRESENT APPEAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. THE ANNUAL LETTING VALUE OF THE PROPERTY, FOR THE PURPOSES OF SECTION 23(1)( A), IS TO BE DETERMINED ON THE BASIS OF THE MUNICIPAL VALUATION AND NOT ON THE BASIS OF WHAT THE PROPERTY ACTUALLY FETCHED IN AN E ARLIER ASSESSMENT YEAR. THIS IS THE GIST OF THE ORDERS OF THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF DCIT, SPECIAL RANGE 22 VS. SHRIPAL S MORAKHIA (2006) 7 SOT 609 (MUM) AND PARKPAPER INDUSTRIES (P) LTD. VS. ITO (2008) 25 SOT 406 (MUM). IN THESE CASES IT HAS BEE N HELD, FOLLOWING THE JUDGMENTS OF THE SUPREME COURT IN DEWAN DAULAT RAI KAPOOR VS. NEW DELHI MUNICIPAL COMMITTEE (1980) 122 ITR 700 (S C), MRS SHEILA KAUSHISH VS. CIT (1981) 131 ITR 435 (SC) AND THE JU DGMENT OF THE BOMBAY HIGH COURT IN M V SONAVALA VS. CIT (1989) 17 7 ITR 246 (BOM) THAT THE CHARGE UNDER SECTION 22 IS NOT ON TH E MARKET RENT BUT IS ITA NO: 5321/MUM/2008 3 ON THE ANNUAL VALUE AND FOR THE PURPOSE OF DETERMIN ING THE ANNUAL VALUE OF THE PROPERTY, THE MUNICIPAL VALUATION SHOU LD BE THE DETERMINING FACTOR OR THE BASIS. THE ACTUAL RENT F ETCHED BY THE VERY SAME PROPERTY IN AN EARLIER YEAR OR PROPERTIES IN T HE VICINITY OF THE ASSESSEES PROPERTY IS NOT TO BE THE BASIS OF DETER MINING THE ANNUAL LETTING VALUE. WE THEREFORE HOLD, RESPECTFULLY FOL LOWING THE AFORESAID JUDGMENTS AND THE ORDERS OF THE CO-ORDINATE BENCHES THAT THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN TAKI NG THE ANNUAL LETTING VALUE OF THE PROPERTY AT RS.37,25,463/- ON THE BASI S OF THE ACTUAL RENT RECEIVED BY THE ASSESSEE IN RESPECT OF THE SAME PRO PERTY IN AN EARLIER YEAR. FOR THE YEAR UNDER APPEAL THE RENT ACTUALLY RECEIVED FROM THE PROPERTY WAS ONLY RS.3,00,000/-. THE LEARNED COUNS EL FOR THE ASSESSEE HAS SUBMITTED A COPY OF THE CERTIFICATE IS SUED BY THE HOUSING SOCIETY, DATED 18.12.2009, WHICH SAYS THAT THE RATEABLE VALUE OF THE PROPERTY IS RS.8008.75 FOR THE YEAR APRIL 20 04 TO MARCH 2005 AND THE PROPERTY TAX THEREON IS RS.6687.31. THIS C ERTIFICATE IS ACCOMPANIED BY AN APPLICATION FOR ADMISSION OF THE SAME AS ADDITIONAL EVIDENCE. SINCE THE CERTIFICATE IS RELEVANT FOR TH E PURPOSE OF APPLYING THE STATUTORY PROVISIONS, WE ADMIT THE SAME. WHILE HOLDING THAT THE ASSESSING OFFICER SHALL DETERMINE THE ANNUAL LETTIN G VALUE OF THE PROPERTY IN QUESTION ON THE BASIS OF THE ANNUAL MUN ICIPAL VALUATION AS HELD IN THE AFORESAID AUTHORITIES, WE RESTORE THE I SSUE TO HIM FOR THE LIMITED PURPOSE OF ASCERTAINING THE ANNUAL MUNICIPA L VALUATION OF THE PROPERTY IN THE LIGHT OF THE EVIDENCE ADDUCED BY TH E ASSESSEE. THE ASSESSING OFFICER SHALL GIVE ADEQUATE OPPORTUNITY T O THE ASSESSEE ITA NO: 5321/MUM/2008 4 BEFORE DETERMINING THE ANNUAL MUNICIPAL VALUATION. SUBJECT TO THIS REMARK, THE APPEAL OF THE ASSESSEE IS ALLOWED AS IN DICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE 2010. SD/- SD/- (J SUDHAKAR REDDY) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 30 TH JUNE 2010 SALDANHA COPY TO: 1. MANISHA TRADING & INVESTMENTS PVT. LTD. 254-B, NIRLON HOUSE, DR A B ROAD WORLI, MUMBAI 400 030 2. ACIT 6(3) 3. CIT-6 4. CIT(A)-XXVI 5. DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI