DILNAVAZ MANEK DAVER, MUMBAI V. ITO (IT) 1(1), MUMBAI

ITA 6072/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56252 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: VIPUL B JOSHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DUR GA RAO, J.M. ITA NO. 6072/MUM/2009 ASSESSMENT YEAR : 2006-07 DILNAVAZ MANEK DAVER, APPELLANT 13, SHREYS, 180 BACKBAY RECLAMATION MUMBAI 400 020 (PAN AAIPD4151F) VS. INCOME-TAX OFFICER,( INT. TAXATION) - 1(1), R ESPONDENT 1 ST FLOOR, SCINDIA HOUSE, BALLARD PIER, N.M. ROAD, MUMBAI 400 038. APPELLANT BY : MR. VIPUL B. JOSHI RESPONDENT BY : MR. C.G.K. NAIR DATE OF HEARING : 13/12/2011 DATE OF PRONOUNCEMENT : 16/1 2/2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- 10, MUMBAI, PASSED ON 22/09/2009 FOR THE AS SESSMENT YEAR 2006-07. 2. THE SUBSTANTIAL GROUND RAISED BY THE ASSESSEE IN THIS APPEAL READS AS UNDER:- THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN DENYING YOUR PETITIONER THE DEDUCTION OF SO CIETY CHARGES AMOUNTING TO RS. 1,32,300/- AND NON-OCCUPANCY CHARG ES OF RS. 6,300/-, TOTALING TO RS. 1,38,600/- UNDER THE HEAD PROPERTY INCOME IN RESPECT OF THE BELVERDERE COURT, MAHALAXM I. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD SHO WN INCOME FROM HOUSE PROPERTY AT RS. 6,17,881/- AFTER REDUCING THE MUNICIPAL TAX OF RS. 61,380/-, SOCIETY CHARGES OF RS. 1,32,000/- AND NON-OCCUPANCY ITA NO. 6072/M/2009 DILNAVAZ MANEK DAVERI 2 CHARGES OF RS. 6,300/- FROM THE RENT RECEIVED AND T HEN DEDUCTION @ 30% U/S 24 OF ANNUAL VALUE IS TAKEN RESULTING IN PR OPERTY INCOME AT RS. 6,17,881/-. IN SUPPORT OF HIS CLAIM THE ASSESSE E RELIED ON THE DECISIONS OF THE ITAT. THE AO, HOWEVER, NOTED THAT PROVISIONS OF SECTION 24 HAVE BEEN AMENDED BY THE FINANCE ACT, 20 01 W.E.F. 01/04/2002 WHEREIN STANDARD DEDUCTION @30% OF ANNUA L VALUE HAS BEEN PROVIDED TO TAKE CARE OF WHATEVER EXPENSES ASS ESSEE HAS TO INCUR FOR REALIZING THE RENT OF THE PROPERTY. THE AO ALSO OBSERVED THAT THE DECISIONS QUOTED BY THE ASSESSEE WERE PERTAINING TO EARLIER YEARS BEFORE AMENDMENT TO THE SECTION 24 EXCEPT THE CASE OF GOVIND SINGHANIA VS. ITO, 449 BCAT 40-A(2008). THE AO ALSO OBSERVED THAT THERE ARE VARIOUS HIGH COURT DECISIONS IN FAVOUR OF THE DEPARTMENT LIKE INDIAN CITY PROPERTIES LTD., 551 ITR 262, (CAL .), GULABSINGH & SONS P. LTD., 94 ITR 538 (DEL.) SG GUPTA & SONS, 14 9 ITR 283 (DEL.) WHEREIN IT IS HELD THAT DEDUCTION U/S 24 ARE EXHAUS TIVE. THEREFORE, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND COMPUTED HOUSE PROPERTY AT RS. 7,14,901/- AFTER DISALLOWING THE CL AIM OF RS. 1,32,300/- BEING SOCIETY CHARGES AND RS. 6,300/- BE ING NON- OCCUPANCY CHARGES. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE LEARNED AR OF THE ASSESSE E CONTENDED THAT THE AO HAD INCORRECTLY DISALLOWED THE CLAIM ON THE GROUND THAT THERE IS NO SUCH PROVISION UNDER INCOME-TAX ACT FOR SAID DEDUCTION. THE AR OF THE ASESSSEE PLACED RELIANCE ON VARIOUS CASES BE FORE THE CIT(A) IN SUPPORT OF ASSESSEES CLAIM. THE CIT(A) AFTER EXAMI NING THE ISSUE WITH VARIOUS CASE LAWS IN DETAIL HELD THAT I AM OF THE C ONSIDERED OPINION THAT THE AO WAS JUSTIFIED IN DISALLOWING THE CLAIM OF SOCIETY AND NON- OCCUPANCY CHARGES AS THESE ARE NOT SPECIFIED UNDER SECTION 24 OF THE ACT AND STANDARD DEDUCTION @ 30% OF ALV HAS BEEN PR OVIDED FOR TO TAKE CARE OF SUCH EXPENSES. STILL AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US. ITA NO. 6072/M/2009 DILNAVAZ MANEK DAVERI 3 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF ITAT MUMBAI BENCH A, MUMBAI IN THE CASE OF MS. ALOO BEJAN DAVER IN ITA N OS. 2381 & 2382/MUM/10 FOR AYS 2005-06 & 2006-07 ORDER DATED 2 9 TH APRIL, 2011. THE LEARNED DR, ON THE OTHER HAND, DID NOT CO NTROVERT THE SUBMISSION MADE BY THE ASSESSEE NOR BROUGHT ANY CON TRARY DECISION IN THIS REGARD. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS COVERED BY THE DE CISION OF A CO- ORDINATE BENCH (SUPRA) WHEREIN THE TRIBUNAL HELD AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE AO AND LD. CIT(A ) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. T HE ONLY DISPUTE IN THE IMPUGNED APPEAL IS REGARDING THE ALLOWABILIT Y OF DEDUCTION OF SOCIETY CHARGES FROM THE RENTAL INCOME FOR THE P URPOSE OF CALCULATION OF ANNUAL LETTING VALUE U/S 23(1)(B). W E FIND THE MUMBAI BENCH OF THE ITAT IN THE CASE OF VARMA FAMIL Y TRUST (SUPRA) HAS HELD THAT SECTION 23(1)(B) PROCEEDS ON THE BASIS OF ACTUAL RENT RECEIVED OR RECEIVABLE AND THEREFORE AL L THE OUTGOINGS FOR EARNING THE SAID RENTAL INCOME WOULD BE ADMISSI BLE DEDUCTION. WE FIND THE TRIBUNAL IN THE CASE OF BOMB AY OIL INDUSTRIES (SUPRA) HAS HELD THAT MAINTENANCE CHARGE S AND MUNICIPAL TAXES PAID BY THE ASSESSEE ARE TO BE DEDU CTED FROM GROSS RENT TO ARRIVE AT THE ANNUAL VALUE. WE FIND T HAT IN THE CASE OF SHARMILA TAGORE (SUPRA), THE TRIBUNAL HELD THAT MAINTENANCE CHARGES PAID TO HOUSING SOCIETY HAVE TO BE DEDUCTED EVEN WHILE COMPUTING ANNUAL LETTING VALUE. SIMILAR VIEW HAS BE EN TAKEN IN VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSE L FOR THE ASSESSEE. THE DECISIONS RELIED ON BY THE LD. CIT(A) , IN OUR OPINION, ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 8. WE FIND THE MUMBAI BENCH OF THE TRIBUANL IN THE CASE OF GOPICHAND P. GODHWANI (SUPRA), AFTER CONSIDERING TH E DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF J.K. I NVESTORS (BOMBAY) LTD. [20010 168 CTR (BOM) 189 HAS HELD THA T FOR THE PURPOSE OF DETERMINING ANNUAL VALUE OF THE PROPERTY ALL THE TAXES CESSES AND OUTGOINGS BEING LIABILITIES OF THE ASSES SEE, HAVE TO BE EXCLUDED FROM ASSESSABLE INCOME IN VIEW OF S. 23(1) (B). SO FAR AS THE DECISION OF THE TRIBUNAL IN THE CASE OF BARODAW ALA PROPERTIES LTD. (SUPRA) IS CONCERNED, WE FIND THAT THE TRIBUNA L IN SUBSEQUENT JUDGMENTS HAVE HELD THAT WHILE CALCULATING ANNUAL V ALUE OF THE ITA NO. 6072/M/2009 DILNAVAZ MANEK DAVERI 4 LET OUT PROPERTY, MAINTENANCE CHARGES PAID TO THE S OCIETY BY THE ASSESSEE IS ADMISSIBLE DEDUCTION FROM THE ANNUAL LE T OUT VALUE U/S 23(1)(B). IN VIEW OF THE SERIES OF DECISIONS RE LIED ON BY THE LD. COUNSEL FOR THE ASSESSEE SUPPORTING THE DEDUCTIBILI TY OF SOCIETY CHARGES FROM THE GROSS RENT FOR THE PURPOSE OF DETE RMINING THE ANNUAL LET OUT VALUE U/S 23(1)(B), WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION OF SOCIETY CHARGES AMOUNTING TO RS. 1,26,000/- FROM THE RENT SO RECEIVED FOR THE PURPOS E OF DETERMINING ALV U/S 23(1)(B) OF THE IT ACT. THE GRO UND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 7. SINCE THE ISSUE AS REGARDS THE SOCIETY CHARGES I S IDENTICAL TO THAT OF THE CASE DECIDED BY THE TRIBUNAL IN THE CAS E OF MS. ALOO BEJAN DAVER (SUPRA), WE RESPECTFULLY FOLLOW THE SAME AND IN THE LIGHT OF THAT WE SET ASIDE THE ORDER OF THE CIT(A) AND HOLD THAT THE ASESSSEE IS ENTITLED TO DEDUCTION OF SOCIETY CHARGES OF RS. 1,3 2,300/- FROM THE RENT SO RECEIVED FOR THE PURPOSE OF DETERMINING THE ALV U/S 23(1)(B) OF THE ACT. 8. AS REGARDS THE NON-OCCUPANCY CHARGES, THE LEARNE D COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISION OF THE TR IBUNAL IN THE CASE OF SHARMILA TAGORE VS. JT. CIT, 2005 93 TTJ (MUMBAI ) 483 WHEREIN IT WAS HELD THAT NON-OCCUPANCY CHARGES LEVIED BY THE H OUSING SOCIETY HAVE TO BE CONSIDERED EVEN WHILE ARRIVING AT THE AL V OF THE PROPERTY. RESPECTFULLY FOLLOWING THE SAID DECISION, WE SET AS IDE THE ORDER OF THE CIT(A) AND HOLD THAT THE ASSESSEE IS ENTITLED TO DE DUCTION OF NON- OCCUPANCY CHARGES OF RS. 6,300/- FROM THE RENT SO R ECEIVED FOR THE PURPOSE OF DETERMINING THE ALV U/S 23(1)(B) OF THE ACT. 9. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE I S ALLOWED. ITA NO. 6072/M/2009 DILNAVAZ MANEK DAVERI 5 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF DECEMBER, 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 16 TH DECEMBER, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.