ITO 7(2)(4), MUMBAI V. STANDARD DISTILLERIES & BREWERIES P. LTD, MUMBAI

ITA 6087/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0937 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 18-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Question of law; Notional interest

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. 6087/MUM/2009 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER - 7(2)(4) M/S.STANDARD DISTILLE RIES & BREWERIES ROOM NO. 618, 6TH FLOOR PVT. LTD., 12, EVERGREEN IN DL ESTATE AAYAKAR BHAVAN, M.K. ROAD VS. SHAKTI MILLS LANE, MAHALAXMI MUMBAI 400020 MUMBAI 400011 PAN - AABCS 9375 E APPELLANT RESPONDENT APPELLANT BY: SHRI A.K. NAYAK RESPONDENT BY: SHRI K.P. DEWANI 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 19.08.2009. 2. THE ISSUE IN THE APPEAL IS WITH REFERENCE TO ESTIMA TION OF NOTIONAL INCOME AT 12% ON INTEREST FREE DEPOSIT RECEIVED BY THE ASSESSEE ON THE PROPERTY LEASED OUT TO BANK OF AMERICA AT NCPA FLAT S. THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.10,000/- PER MONTH AS LICE NCE FEES AND A DEPOSIT OF RS.1,55,00,000/- FROM THE SAID BANK. ASSESSEE HA S RETURNED THE LICENCE FEES OF RS.1,20,000/- PER YEAR. SINCE THE ASSESSEE S MAINTENANCE WERE RS.2,24,995/-, THE A.O. FELT THAT THE RENT RECEIVED FROM THE FLAT IS INSUFFICIENT TO MEET THE EXPENSES ON MAINTENANCE AND ACCORDINGLY CONSIDERED 12% OF THE INTEREST FEE DEPOSIT AS PART OF INCOME OF THE H OUSE TOWARDS RENT AND HE WORKED OUT THE ANNUAL VALUE AS UNDER: - ANNUAL VALUE RS.1,65,000 X 12 RS.19,80,000/- LESS: DEDUCTION @ 30% RS. 5,94,000/- INCOME FROM HOUSE PROPERTY RS.13,86,000/- ============= ITA NO. 6087/MUM/2009 2 3. THE CIT(A), FOLLOWING THE ORDER OF THE ITAT IN THE IMMEDIATELY PRECEDING YEAR, DELETED THE ADDITION SO MADE. 4. AT THE OUTSET THE LEARNED COUNSEL SUBMITTED THAT TH IS ISSUE WAS FINALISED BY THE JUDGEMENT OF THE HON'BLE BOMBAY HI GH COURT IN ASSESSEES OWN CASE IN CIT VS. STANDARD DISTILLERIES & BREWERI ES P. LTD. IN ITA NO. 1252 OF 2009 WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER: - 2. THE QUESTION SOUGHT TO BE RAISED IN THIS APPEAL IS COVERED BY THE JUDGEMENT OF THIS COURT IN THE CASE OF J.K. INVESTO RS LTD. V. C.I.T. REPORTED IN 248 ITR 723 (BOM.). IN THIS VIEW OF THE MATTER, WE SEE NO SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS APPEAL . APPEAL IS, THEREFORE, DISMISSED IN LIMINE WITH NO ORDER AS TO COSTS. 5. RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COUR T JUDGEMENT, WE HOLD THAT NOTIONAL INTEREST ON INTEREST FREE DEPOSI T CANNOT BE TREATED AS PART OF INCOME FOR COMPUTING ANNUAL LETTING VALUE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY, THE GROUNDS OF THE RE VENUE ON THIS ARE 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