ANIL KASHIPRASAD MURARKA, MUMBAI V. ACIT 10(2), MUMBAI

ITA 5514/MUM/2012

• Counselvise Citation: 551419914 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUDOLPH N DSOUZA
• Assessee Lawyers: NISHID GANDHI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ITA N O. 5514 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 9 - 2010 ) SHRI ANIL KASHIPRASAD MURARKA, B - 30, VIRWANI INDUSTRIAL ESTATE, OFF WESTERN HIGHWAY, GOREGAON (E), MUMBAI - 400 063 VS. ACIT - 10(2), MUMBAI PAN/GIR NO. : A A C PM 4936 D ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI NISHID GANDHI /REVENUE BY : SHRI RUDOLPH N. DSOUZA DATE OF HEARING : 2 ND DECEMBER , 201 4 DATE OF PR ONOUNCEMENT 17 TH DECEMBER , 201 4 O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , DATED 4 - 5 - 2012 FOR THE ASSESSMENT YEAR 2009 - 2010 , IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF THE I.T. A CT , WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY ASSESSEE : - 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 21, MUMBAI[THE LD.CIT(A)] ERRED IN CONFIRMING THE ACTION OF THE ASST. COMMISSIONER OF INCOME TAX - 10(2), MUMBAI [THE AO] IN HOLDING THAT T HE STANDARD RENT OR MUNICIPAL VALUATION WAS NOT APPLICABLE WHILE DETERMINING THE ANNUAL VALUE U/S.23(1)(A) OF THE INCOME TAX ACT, 1961 [THE ACT] OF THE APPELLANTS VACANT HOUSE PROPERTY. 1.2 THE LD. CIT(A) FAILED TO APPRECIATE THAT THE STANDARD RENT OR MUNICIPAL VALUATION SHOULD BE TAKEN INTO CONSIDERATION EVEN WHEN THE NOTIONAL RENT IS TO BE DETERMINED U/S.23(1)(A) OF THE ACT . ITA NO. 5514 / 1 2 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO NOTICED THAT THE PROPE RTY AT FLAT NO.402, BHOOMI PARK (IISOP) WAS PURCHASED IN NOVEMBER, 2007 AND DURING THE YEAR THE ASSESSEE WAS IN SELF OCCUPATION OF THIS II SOP. THE A.O. ALSO NOTICED THAT ON PURCHASE OF THIS II SOP THE STAMP DUTY VALUATION WAS RS. 11 ,50,700/- WHEREAS ACTUAL PURCHASE PRICE WAS RS.31,87,500 / - (NEARLY THREE TIMES OF THE STAMP DUTY VALUATION). THE A.O. ASKED ASSESSEE AS TO WHY INCOME FROM II SOP U/S.23(4) WAS NOT OFFERED FOR TAXATION. THE ASSESSEE EXPLAINED TO THE A.O. THAT WHERE A PERSON HAS TWO OR MORE THAN T WO HOUSES THE ANNUAL VALUE U/S.23(2) SHALL BE TAKEN TO BE NIL ONLY IN RESPECT OF ANYONE HOUSE OF HIS CHOICE AND THE AN NUAL VALUE OF THE REMAINING HOUSE USED FOR SELF OCCUPATION BY THE OWNER WILL BE COMPUTED U/S.:23(1) IN THE MANNER EXPLAINED U/S.23(4). THE ASSESSEE EXPLAINED TO THE A.O. THAT MUNICIPAL VALUATION IS ONE OF THE TESTS TO BE APPLIED IN DETERMINING THE BONAFIDE VALUE OF THE PROPERTY. UNDER THE MUNICIPAL CORPORATION ACT, THE MUNICIPAL AUTHORITIES DETERMINED THE MUNICIPAL VALUATION OF THE PROPERTY WITH REFERENCE TO THE SUM OF WHICH THE PROPERTY COULD REASONABLY BE - EXPECTED TO LET FROM YEAR TO YEAR. IF THE PROPERTY IS GIVEN ON LEAVE AND LICENCE BASIS THE MUNICIPAL AUTHORITIES TAKE THE LICENCE FEE INTO CONSIDERATION FOR FIXING THE MUNICIPAL VALUATION . THEREFORE, UNLESS THE ACTUAL REALIZATION BY WAY OF RENT OF LICENCE FEE IS HIGHER THAN THE MUNICIPAL RATABLE VALUE, THE MUNICIPAL VALUATION IS TO BE TREATED AS ANNUAL VALUE. THE ASSESSEE WORKED OUT MUNICIPAL VALUATION AND NOTIONAL TAXABLE INCOME IN RESPEC T OF 2 ND PROPERTY AT RS.11,144/ - . THE AO HELD THAT STANDARD RATE OF MUNICIPAL VALUATION WAS NOT APPLICABLE WHILE ITA NO. 5514 / 1 2 3 DETERMINING ANNUAL VALUE U/S.23(1)(A) . ACCORDINGLY, THE ASSESSED THE LETTING VALUE U/S.23(1)(A) AT RS. 3 LAKHS PER ANNUM. 3. BY THE IMPUGNED ORD ER, THE CIT(A) CONFIRMED THE ACTION OF THE AO . 4. AGAINST THE ABOVE ORDER OF CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. SMITABEN N. AMBANI VS. CWT, REPORTED IN (2010) 323 ITR 104 (BOM) , WHEREIN IT WAS HELD THAT THE BASIS ON WHICH A SELF - OCCUPIED PROPERTY IS VALUED UNDER RULE 1BB OF THE WEALTH - TAX RULES AND MUNICIPAL RATABLE VALUE IS ARRIVED AT UNDER THE MU NICIPAL LAW IS THE SAME I.E. A REASONABLE AMOUNT OF RENT THAT CAN BE EXPECTED BY THE OWNER FROM A HYPOTHETICAL TENANT. THAT WHILE ARRIVING AT SUCH REASONABLE AMOUNT OF RENT THAT CAN BE EXPECTED BY THE OWNER FROM A HYPOTHETICAL TENANT, THE AMOUNT OF STATU TORY DEDUCTION, IF ANY, PERMISSIBLE UNDER THE LOCAL MUNICIPAL LAW MUST BE ADDED TO THE RATABLE VALUE. THUS, THE HONBLE HIGH COURT HELD THAT WHILE APPLYING THE PROVISIONS OF RULE 1BB FOR VALUING THE SELF - OCCUPIED PROPERTY, MUNICIPAL RATEABLE VALUE WITH ADD ITION OF STATUTORY DEDUCTIONS, IF ANY, MAY BE ADOPTED INSTEAD OF STANDARD RENT, FOR ARRIVING AT THE GROSS MAINTAINABLE RENT. RESPECTFULLY FOLLOWING THE ORDER OF JURISDICTIONAL HIGH COURT, MATTER IS RESTORED BACK TO THE FILE OF AO WITH A DIRECTION TO RECOMP UTE THE ALV IN TERMS OF ABOVE DECISION OF HONBLE BOMBAY HIGH COURT. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , IN TERMS INDICATED HEREINABOVE . ITA NO. 5514 / 1 2 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17/12 / 201 4 . 17/12 / 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 17/12 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( A SSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//