MILAN PLAST P.LTD, MUMBAI V. DCIT 10(2)(2), MUMBAI

ITA 5859/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6138 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKASH KR AGARWAL
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH , MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER . / ITA NO. 5859 /MUM/201 7 ( [ [ / ASSESSMENT YEAR : 20 1 2 - 20 1 3 ) MILAN PLAST PVT. LTD., B - 16, NAND BHAWAN INDL. ESTASTE MAHAKALI CAVES ROAD, ANDHERI (E) - 400093 VS. DCIT - 10(2)(2), MUMBAI ./ PAN NO. : A AACM 3478 M ( / APPELLANT ) .. ( / RESPONDENT ) [ /AS SESSEE BY : SHRI VISHWAS MEHENDALE, AR /REVENUE BY : SHRI VIKASH KR. AGARWAL , DR / DATE OF HEARING : 02 / 01 /201 9 / DATE OF PRONOUNCEMENT 10 / 01 /201 9 / O R D E R PER SHRI RAJESH KUMAR , A M : THIS APPEAL BY ASSESSEE ARISES OUT OF THE ORDER OF THE CIT(A) 17 , MUMBAI, DATED 19.06.2017 , WHICH IN TURN HAS ARISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 20 1 2 - 20 1 3 . 2. THE COMMON ISSUE RAISED BY THE ASSESSEE IN ALL THE GROUNDS OF APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS. 3,96,627/ - BY THE CIT(A) UPHOLDING THE ORDER OF AO TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF DEEMED NOTIONAL RENT. 3. F ACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING & EXPORT OF HOUSEHOLD ITEMS. DURING THE YEAR UNDER CONSIDERATION THE ITA NO . 5669 / 1 7 2 ASSESSEE OWNED A RESIDENTIAL FLAT NO. B - 42, SWAPNASHILP AND THE ASSESSEE HAS NOT OFFERED ANY INCOME IN RESPECT OF THE SAID F LAT. THE AO ACCORDINGLY ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DEEMED RENT SHOULD NOT BE TAXED IN RESPECT OF THE SAID FLAT UNDER THE HEAD OF INCOME FROM HOUSE PROPERTY IN THE HANDS OF THE ASSESSEE. THE AO BY FOLLOWING THE DECISION OF MUMBAI TRIBUNAL I N THE CASE OF ITO VS. CHEM MECH PVT. LTD. (2002) 83 ITD 427 (MUM) , DETERMINED THE STANDARD RENT BY APPLYING THE NOTIONAL RENT AT 8.5% ON THE TOTAL INVESTMENT IN THE PROPERTY WHICH WORKS OUT TO BE RS.5,66,611/ - AND AFTER ALLOWING STANDARD DEDUCTION OF 30% U/S.24(A) OF THE ACT THE AO CALCULATED THE INCOME FROM DEEMED RENT OF PROPERTY AT RS. 3,96,627/ - BY FRAMING ASSESSMENT U/S.143(3) OF THE ACT, DATED 27.02.2015. 4. T HE CIT(A), I N APPEAL, UPHELD THE ADDITION MADE BY THE AO BY FOLLOWING THE ORDER OF HIS PREDE CESSOR FOR THE ASSESSMENT YEAR 2009 - 2010 AND DECISION OF ITAT FOR THE SAID YEAR. 5. LD. AR, AT THE OUTSET, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AS IN ASSESSEES OWN CASE WHEREIN ISSUE WAS RESTORED TO THE FILE OF THE AO IN ITA NO. 7187/MUM/2013, ORDER DA TED 09.11.2015, ON THE GROUND THAT IT WAS NOT ON RECORD WHE THER THE DIRECTOR HAS OFFERED PERQUISITE VALUE IN ITS INCOME TAX RETURN OR NOT AND WHETHER THE PROPERTY IS USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. LD.AR SU BMITTED THAT SINCE THE DIRECTORS OF THE COMPANY HAVE OFFERED THE SAID PERQUISITES IN THEIR RESPECTIVE RETURN OF INCOME, COPIES OF WHICH ARE FILED AT PAGE NOS.5 TO 12 COMPRISING COMPUTATION OF TOTAL INCOME, FORM 16, FORM ITA NO . 5669 / 1 7 3 NO.12BA SHOWING THE VALUATION OF PER QUISITES IN RESPECT OF TWO DIRECTORS SHRI VIPUL P. SHAH AND SMT. CHANDRIKA VIPUL SHAH. LD. AR DREW OUR ATTENTION TO THE COP Y OF BOARD RESOLUTION PASSED IN THE MEETING HELD ON 01.06.2006, WHEREIN THE BOARD HAS DECIDED TO USE THE FLAT NO.B - 42, SWAPNASHILP CO .OP HOUSING SOCIETY LTD., MAHANT ROAD, VILE PARLE(EAST), MUMBAI - 400057 FOR THE USE OF DIRECTORS AS THE SAME IS REQUIRED FOR THE BUSINESS PURPOSES . LD.AR FAIRLY SUBMITTED THAT IN THE PREVIOUS YEAR THE ISSUE WAS RESTORED TO THE FILE OF AO AS THE NECESSARY DE TAILS WERE NOT RECORD BUT SINCE IN THE PRESENT CASE FACTS AND EVIDENCE S ARE AVAILABLE AND THEREFORE, THE ISSUES SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. 6 . LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDER OF THE ITAT IN ITA NO. 7187/MUM/13, DATED 09.11.2015. WE OBSERVE THAT THE FLAT OWNED BY THE COMPANY HAS BEEN USED BY ITS DIRECTOR IN VIEW OF THE BUSINESS CONSIDERATION WHICH HAS BEE N OFFERED TO TAX BY THE DIRECTORS IN THEIR RESPECTIVE RETURN S OF INCOME . THE VALUATION OF THE SAID PERQUISITES W AS ALSO ADDED IN THE INCOME OF THE ASSESSEE AS IS CLEAR FROM THE FORM NO.12BA AND FORM NO.16 FILED IN THE PAPER BOOK IN RESPECT OF TWO DIRECTOR S ALONG WITH COMPUTATION OF INCOME AT PAGE NOS.5 TO 12 OF THE PAPER BOOK. WE HAVE PERUSED THE BOARD RESOLUTION AUTHORISING THE DIRECTORS TO USE THE SAID FLAT AS THE SAME WAS REQUIRED TO BE USED IN THE INTEREST OF BUSINESS OF THE ASSESSEE. UNDER THESE CIRCU MSTANCES, WE ARE ITA NO . 5669 / 1 7 4 NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD.CIT(A). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE DISALLOWANCES. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 / 01 /201 9 . SD/ - ( RA M LAL NEGI ) SD/ - (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10 / 01 /201 9 . . / PRAKASH KUMAR MISHRA , S R.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT 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//