ITO 7(2)(2), MUMBAI V. SANJOG ESTATE P. LTD, MUMBAI

ITA 6064/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0935 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2002-2003
• Appeal Filed On: 17-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 6064/MUM/2009 (ASSESSMENT YEAR: 2002-03) INCOME TAX OFFICER - 7(2)-2 M/S. SANJOG ESTATE PVT . LTD. ROOM NO. 670, 6TH FLOOR 8/163, HARI OM NIWAS AAYAKAR BHAVAN, M.K. ROAD VS. MUMBAI TAMIL SANGAM ROAD MUMBAI 400020 SION (E), MUMBAI 400020 PAN - AABCS 8603 D APPELLANT RESPONDENT APPELLANT BY: SHRI D. SONGATE RESPONDENT BY: NONE O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A)-VII, MUMBAI DATED 28.08.2009. 2. REVENUE HAS RAISED THE FOLLOWING GROUND: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ANNUAL LET TING OUT VALUE OF THE 15 FLATS SHOULD BE TAKEN AS STANDARD RENT AS PR ESCRIBED IN THE MAHARASHTRA RENT CONTROL ACT/OR THE MUNICIPAL VALUA TION WHICHEVER IS HIGHER WHEN THE SAID ACT DETERMINES ONLY THE VAL UE FOR DETERMINING THE TAX LIABILITY UNDER MUNICIPAL LAWS. 3. BRIEFLY STATED, THE ASSESSEE IS THE OWNER OF 14 RES IDENTIAL FLATS AT HIGHLAND PARK, MULUND. SINCE THE ASSESSEE HAS NOT O FFERED ANY INCOME THE A.O. HAS BROUGHT TO TAX NOTIONAL HOUSE PROPERTY INC OME AFTER VERIFICATION OF THE MARKET RENT BY THE INSPECTOR. IT WAS THE CONTEN TION OF THE ASSESSEE THAT THESE FLATS WERE HELD AS BUSINESS ASSETS AND ARE LY ING VACANT, HENCE RENT SHOULD NOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE A.O. REJECTED THE CONTENTIONS AS THE ASSESSEE HAS S HOWN PURCHASE OF FLATS AS INVESTMENT IN THE BOOKS OF ACCOUNT. FOLLOWING THE O RDERS OF THE ITAT IN ASSESSEES OWN CASE FROM A.Y. 1995-96 TO 1998-99 WH EREIN IT WAS HELD THAT ITA NO. 6064/MUM/2009 2 PROPERTIES IN QUESTION WERE HELD AS INVESTMENT AND NOT AS STOCK-IN-TRADE THE CIT(A) UPHELD THE ACTION OF THE AO IN ASSESSING THE INCOME FROM HOUSE PROPERTY. HOWEVER, WITH REFERENCE TO ANNUAL LETTING VALUE OF THE PROPERTIES HE DIRECTED AS UNDER: - 3.1 SINCE THESE FLATS ARE HELD AS INVESTMENTS AND NOT LET OUT PROVISIONS OF SEC. 23(2) SHALL NOT APPLY. THE ANNUA L LET OUT VALUE OF THESE FLATS SHALL BE DETERMINED AS PER PROVISIONS OF SEC. 23(1)(A) I.E. SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET OUT FROM YEAR TO YEAR. 3.2. WHERE THE PROPERTY IS SUBJECT RENT CONTROL LEG ISLATION, THE STANDARD RENT DETERMINABLE UNDER THE RELEVANT RENT CONTROL A CT WOULD CONSTITUTE THE CORRECT MEASURE OF THE ANNUAL VALUE OF THE BUIL DING. DEWAN DAULAT RAJ KAPOOR V. NEW DELHI MUNICIPAL COMMITTEE (1980) 122 ITR 700 (SC). THE RATIO DECIDENDI OF DEWAN DAULAT RAJ KAPOORS CA SE (1980) 122 ITR 700 (SC) WAS APPLIED IN MRS. SHEILA KAUSHISH VS CIT (1981) 131 ITR 435 & AMALOK RAM KHOSAL VS CIT (1981) 131 ITR 589 ( SC) THE SUPREME COURT HELD THAT SUCH ANNUAL VALUE SHOULD NOT EXCEED WHAT THE REGULATORY LEGISLATION FOR TENANCY OF PREMISES DETERMINES AS S TANDARD RENT OR, FOR THAT MATTER, THE FAIR RENT UNDER THE TENANCY ACT OF THE STATE. IF THIS PRINCIPLE IS CORRECT FOR A TENANT-OCCUPIED PORTION OF THE PROPERTY, IT SHOULD BE EQUALLY CORRECT FOR VALUING THE SELF-OCCU PIED PORTION OF THE PROPERTY. KISHORILAL DHANDHANIA V. CWT (1992) 197 ITR 595 (C A.) 3.3 THE A.O. IS THEREFORE DIRECTED TO WORK OUT THE ANNUAL LET OUT VALUE OF THESE 14 FLATS AS PER THE STANDARD RENT (IF AP PLICABLE) AS PRESCRIBED IN THE MAHARASHTRA RENT CONTROL ACT/OR THE MUNICIPA L VALUATION (AS PER MUNICIPAL VALUATION RULES) WHICHEVER IS HIGHER. REVENUE IS AGGRIEVED ON THE ABOVE DIRECTION. 4. THE ASSESSEE WAS NOT REPRESENTED BY ANYBODY AND WE HAVE HEARD THE LEARNED D.R. IN THIS REGARD, EXPARTE THE RESPONDENT . 5. AFTER CONSIDERING THE ARGUMENTS OF THE LEARNED D.R. AND ORDERS OF THE CIT(A) ON THIS ISSUE, WE DO NOT SEE ANY REASON TO I NTERFERE WITH THE DIRECTIONS OF THE CIT(A). AS FAR AS TREATMENT OF TH E PROPERTIES ARE CONCERNED, THEY ARE CORRECTLY ASSESSED AS INVESTMENT ASSETS AN D INCOME FROM HOUSE PROPERTY IS TO BE NOTIONALLY ARRIVED AT UNDER SECTI ON 23(1)(A). AS PER THE EXISTING LEGAL PRINCIPLES, THE ANNUAL LETTING VALUE HAS TO BE CONSIDERED IF THE PROPERTIES ARE COVERED BY RENT CONTROL ACT AS PER S TANDARD RENT APPLICABLE OR THE MUNICIPAL RATEABLE VALUE, WHICH EVER IS HIGH ER, SINCE THE PROPERTIES ITA NO. 6064/MUM/2009 3 WERE NOT LET OUT. IN VIEW OF THIS, WE DO NOT SEE AN Y REASON TO INTERFERE WITH THE ORDER THE CIT(A). GROUND REJECTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY 2010. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH JULY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) VII, MUMBAI 4. THE CIT VII, MUMBAI CITY 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.