M/S. ANAND AUTOMOBILES, MUMBAI V. THE ACIT CIR 23(2),

ITA 5984/MUM/2007

• Counselvise Citation: 598419914 RSA 2007
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 01-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-09-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIVAS RAO
• Keywords: Opportunity of being heard; Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI, J. SUDHAKAR REDDY, ACCOUNTANT MEMBER A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 6167/MUM./2007 (ASSESSMENT YEAR : 2004-05 ) DATE OF HEARING 1.6.2011 DATE OF DICTATIO N : 22.6.2011 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-23(2), AAYAKAR BHAVAN 101 M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. ANAND AUTOMOBILES S-304. L.B.S. MARG MULUND (W), MUMBAI 400 081 PAN AADFA9171D .... RESPONDENT ITA NO. 5984/MUM./2007 (ASSESSMENT YEAR : 2004-05 ) M/S. ANAND AUTOMOBILES S-304. L.B.S. MARG MULUND (W), MUMBAI 400 081 PAN AADFA9171D .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-23(2), AAYAKAR BHAVAN 101 M.K. ROAD, MUMBAI 400 020 .... RESPONDENT REVENUE BY : MR. GOLI SRINIVAS RAO ASSESSEE BY : MR. SANTOSH L. PARAB ANAND AUTOMOBILES ITA NO.6167/M./2007 ITA NO.5984/M./2007 2 O R D E R PER J. SUDHAKAR REDDY, A.M. THESE CROSS APPEAL ARE DIRECTED AGAINST THE IMPUGN ED ORDER DATED 17 TH JULY 2007, PASSED BY THE COMMISSIONER (APPEALS)-XXI II, MUMBAI, FOR ASSESSMENT YEAR 2004-05. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF TRADING OF FILTERS AND ALSO DERIVES INC OME FROM INVESTMENTS AND LETTING OUT OF PROPERTY. 3. THE ISSUES THAT ARISE IN THE ASSESSEES APPEAL ARE (I) WHETHER COMPENSATION RECEIVED FOR GRANTING LICENSE IS ASSES SABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY OF UNDER THE HEAD INCOME FROM BUSINESS ; (II) DETERMINATION OF FAIR RENT UNDER SECTION 23(1) (A) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ); (III) WHETHER THE DIRECTIONS OF THE COMMISSIONER (APPEALS) TO ASSESS THE BALANCE RENT RECEIVED AFTER DEDUCTING PROPORTIONATE RENT RELATABLE TO 8,722 SQ.MTRS. UNDER THE HEAD INCOME FROM OTHER SOURCES IS CORRECT; (IV) DISALLOWANCE OF REPAIR EXPENSES A ND LEGAL & PROFESSIONAL FEES EXPENSES. 4. THE ISSUES THAT ARISE IN THE REVENUES APPEAL ARE (I) DETERMINATION OF ANNUAL LETTING VALUE UNDER SECTION 23(1)(A) AND (II ) DIRECTIONS OF THE COMMISSIONER (APPEALS) TO ASSESS PART OF RENT RECEI VED UNDER THE HEAD INCOME FROM OTHER SOURCES . 5. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE IS SUE HAS COME UP BEFORE THE MUMBAI G BENCH OF THE TRIBUNAL IN ASSE SSEES OWN CASE FOR ASSESSMENT YEARS 1999-2000, 2001-02 AND 2002-03 IN ITA NO.1451/MUM./ 2006, & ORS., VIDE ORDER DATED 20 TH APRIL 2011, WHEREIN THE TRIBUNAL FOLLOWED THE FULL BENCH JUDGMENT OF THE HON'BLE DELHI HIGH C OURT IN CIT V/S MONI KUMAR SUBBA & ORS., I.T. APPEAL NO.499/2008, VIDE J UDGMENT DATED 30 TH ANAND AUTOMOBILES ITA NO.6167/M./2007 ITA NO.5984/M./2007 3 MARCH 2011, AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT CANNOT BE RECKONED FOR THE PURPOSE OF DETERMINATION OF ANNUAL LETTING VALUE. 6. ON THE OTHER ISSUE, AS AGREED BY BOTH THE PARTIES, THE MATER WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER. AT PARA-13, THE TRIBUNAL HELD AS FOLLOWS:- 13. WITH REGARD TO THE OTHER ISSUES, WE FIND THAT T HE LEARNED CIT(A), FOLLOWING THE DECISION OF MUMBAI BENCH OF ITAT IN T HE CASE OF CHEM MECH P. LTD., 83 ITD 427, HAS CALCULATED THE RENT A T 8.5% OF THE TOTAL MARKET VALUE OF THE PROPERTY. HOWEVER, WE FIND THAT IN THE SAID CASE THE PROPERTY WAS UNDER BOMBAY RENT CONTROL ACT WHER EAS THE IMPUGNED PROPERTY IS AT DELHI WHICH FALLS UNDER THE DELHI RENT CONTROL ACT, THEREFORE, THE LEARNED CIT(A) WAS NOT JUSTIFIE D IN APPLYING RATE AT 8.5% OF THE MARKET VALUE OF THE PROPERTY AND WORKED OUT THE ANNUAL LETTING VALUE OF THE PORTION OF THE HOUSE PROPERTY AT ` 1,79,04,085 LESS PROPORTIONATE RENT RECEIVED. SINCE THE RELEVANT MAT ERIAL WITH REGARD TO THE OCCUPIED SPACE AND OPEN SPACE AND THE BASIS OF COMMERCIAL RATE APPLIED BY THE LEARNED CIT(A) AT ` 24,150 ON THE LET OUT PORTION OF THE PROPERTY OF 8,722 SQ.MTRS. IS NOT AVAILABLE ON RECO RD AND THE SAME WAS NEITHER BEFORE THE A.O. NOR THERE IS ANY FINDING OF THE A.O. IN THIS REGARD AND ALSO THERE IS NO MATERIAL ON RECORD TO S HOW AS TO WHETHER THE LEARNED CIT(A) HAS PROVIDED ANY OPPORTUNITY TO THE A.O. IN THIS REGARD AS PROVIDED UNDER RULE 46A OF THE I.T. RULES , 1962, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTE R SHOULD GO BACK TO THE FILE OF A.O. AND ACCORDINGLY WE SET ASIDE THE O RDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK T HE MATTER TO THE FILE OF A.O. WHO SHALL DECIDE THE ISSUE AFRESH IN T HE LIGHT OF OUR OBSERVATIONS HEREIN ABOVE AND ACCORDING TO LAW AFTE R PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE GROUNDS TAKEN BY THE ASSESSEE AND REVENUE IN THIS REGARD AR E, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. KEEPING IN VIEW THE AFORESAID DECISION OF THE TRIB UNAL, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE MAT TER TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION AFTER PRO VIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IN A CCORDANCE WITH LAW. 8. ON THE ISSUE OF DISALLOWANCE OF REPAIR EXPENSES AND LEGAL & PROFESSIONAL FEES, THIS ISSUE IS DECIDED AGAINST TH E ASSESSEE BY THE TRIBUNAL ANAND AUTOMOBILES ITA NO.6167/M./2007 ITA NO.5984/M./2007 4 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1999-20 00, 2001-02 AND 2002- 03 AND CONSEQUENTLY, THE SAME IS DISMISSED. 9. IN THE RESULT, ASSESSEES APPEAL AS WELL AS REVENUE S APPEAL ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.7.2011. SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 15.7.2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, H BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI