SRIPAN LAND DEVELOPEMEMT P. LTD, MUMBAI V. ITO WD 8(3)(2), MUMBAI

ITA 541/MUM/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6743 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 18-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 27-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NOS.540 & 541/MUM/2009 : ASST.YEARS 2000-2001 & 2002-2003 M/S.SRIPAN LAND DEVELOPMENT PVT.LTD. 31 CHITRAKOOT, ALTAMOUNT ROAD MUMBAI 400 026. PAN :AAECS9686H. VS. THE INCOME TAX OFFICER WARD 8(3)-2 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH K.JOTWANI RESPONDENT BY : SHRI G.P.TRIVEDI O R D E R PER R.S.SYAL, AM : THESE TWO APPEALS BY THE ASSESSEE ARISE OUT OF TH E ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN RELATION TO THE ASSESSMENT YEARS 2000- 2001 & 2002-2003. 2. THESE APPEALS ARE TIME BARRED BY 45 DA YS. AN AFFIDAVIT HAS BEEN FILED BY THE ASSESSEES COUNSEL ADMITTING THAT THE DELA Y IN FILING THE APPEAL OCCURRED IN HIS OFFICE. NO SERIOUS OBJECTION WAS TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. WE, THEREFORE, CONDONE THE DE LAY AND ADMIT THESE APPEAL S FOR HEARING ON MERITS. 3. FIRST GROUND CHALLENGING THE RE-AS SESSMENT U/S.147 IN BOTH THE APPEALS WAS NOT PRESSED BY THE LEARNED A.R. THE SAME, THEREFORE, STAND DISMISSED. 4. THE ONLY OTHER GROUND IS AGAINST THE INCLUSION OF 10% NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT WHILE DE TERMINING INCOME FROM HOUSE PROPERTY. BRIEFLY STATED THE FACTS OF THE CASE FOR ASSESSMENT YEAR 2000-2001 ARE THAT FROM THE BALANCE SHEET OF THE ASSESSEE , THE ASSESSING OFFICER NOTED THAT THE AS SESSEE RECEIVED SECURITY DEPOSIT OF RS.1.25 CRORES FOR GI VING THE PREMISES ON RENT. IT WAS OPINED THAT 10% INTEREST ON SUCH SECURITY DE POSIT WAS LIABLE TO BE INCLUDED WHILE ITA NOS.540 & 541/MUM/2009 M/S.SRIPAN LAND DEVELOPMENT PRIVATE LIMITED. 2 DETERMINING THE ANNUAL LETTIN G VALUE OF THE PROPERTY. HE, THEREFORE, ENHANCED THE ANNUAL RENT ACCORDINGLY. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 5. WE HAVE HEARD BOTH SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE QUESTION RAISED IN THESE APP EALS HAS BEEN RECENTLY ANSWERED BY FULL BENCH OF THE HONBLE DELHI HIGH COURT IN CIT VS. MONI KUMAR SUBBA [(2011) 333 ITR 38 (DELHI) (FB)] HOLDING THAT NO ADDITION CAN BE MADE TO ANNUAL LETTING VALUE FOR NOTIONAL INTEREST U/S.23(1)(A). IN THE CONTEXT OF SECTION 23(1)(B) THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. J.K.INVESTORS (BOMBAY) LTD. [(2001) 248 ITR 723 (BOM.)] HAS HELD THAT IN CASE OF INTEREST FREE DEPOSIT FROM LANDLORD, THE ALV CANNOT INCLUDE HYPOTHET ICAL INTEREST. SIMILAR VIEW HAS BEEN TAKEN BY THE MUMBAI BENCH OF THE TRIBUNAL IN ITO VS. M/S S. SUDARSHAN & CO. IN ITA NO.3847/MUM/2008 VIDE ITS ORDER DATED 11 TH MAY, 2011, A COPY OF WHICH HAS BEEN PLACED ON RECORD. IN VIEW OF THE FOREGOING DISCUSSION, WE HOLD THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN INCLUDING THE NOTIONAL INTERE ST WHILE DETERMINING THE A NNUAL LETTING VALUE OF THE PROPERTY. THE IMPUGNED OR DERS ARE OVERTURNED PRO TANTO. 6. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 22 ND DAY OF JULY, 2011. SD/- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 22 ND JULY, 2011. DEVDAS*` ITA NOS.540 & 541/MUM/2009 M/S.SRIPAN LAND DEVELOPMENT PRIVATE LIMITED. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXIX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.