RAMESH D.L SHAH, MUMBAI V. DCIT CEN CIR 39, MUMBAI

ITA 614/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78817 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURINDER JIT SINGH
• Keywords: Principle of natural justice
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI , ! BEFORE SHRI SANJAY ARORA, AM AND DR. S. T. M. PAVA LAN, JM ' # I.T.A. NOS. 614 TO 616/MUM/2011 ( / ASSESSMENT YEARS: 2006-07 TO 2008-09) RAMESH D. SHAH 142, ANDHERI INDUSTRIAL ESTATE, OPP. VEER DESAI ROAD, ANDHERI (W), MUMBAI-400 053 # VS. DY. CIT-CENTRAL CIRCLE 39, MUMBAI $ #'%' ./PAN/GIR NO. AACPS 9581 N ( $& /APPELLANT ) : ( '($& / RESPONDENT ) $&)* / APPELLANT BY : SHRI VIJAY MEHTA '($&)* / RESPONDENT BY : SHRI SURINDER JIT SINGH + ,)- / DATE OF HEARING : 13.02.2014 ./0 )- / DATE OF PRONOUNCEMENT : 25.04.2014 '1# O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF THREE APPEALS BY THE ASSESSEE DIRE CTED AGAINST THE COMMON ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-41, MUM BAI (CIT(A) FOR SHORT) DATED 06.12.2010, PARTLY ALLOWING THE ASSESSEES APPEALS CONTESTING ITS ASSESSMENTS U/S.143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE CAPTIONED ASSESSMENT YEARS VIDE ORDERS OF EVEN DATE, I.E., 31 .12.2009. 2 ITA NOS. 614 TO 616/MUM/2011 (A.YS. 06-07 TO 08-09) RAMESH D. SHAH VS. DY. CIT 2. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEA LS, RAISED PER GROUND # 3 FOR AY 2006-07 AND GROUND # 2 FOR THE OTHER TWO YEARS, IS AS TO WHAT CONSTITUTES A RESIDENTIAL HOUSE. WE SHALL PROCEED BY DELINEATING THE FACTS O F THE CASE LEADING TO THE PRESENT CONTROVERSY. THE ASSESSEE IS THE OWNER OF THE FOLLO WING PROPERTIES: 1. FLAT NO.601, JAY MAHARASHTHRA VASTU VIKAS CO-OP. H. SOC., SURVEY NO. 287, GULMOHAR CROSS ROAD NO. 5, VILE PARLE (W), MUMBAI-4 9 2 A/601, 7 TH FLOOR, YARI ROAD, OFF PANCH MUKHI VERSOVA, MUMBAI-61 3 A/701, 8 TH FLOOR, YARI ROAD, OFF PANCH MUKHI VERSOVA, MUMBAI-61 [VILE PARLE (W) AND VERSOVA PROPERTIES BEING HEREIN AFTER REFERRED TO AS LOCATION A AND B RESPECTIVELY FOR THE SAKE OF EASY REFERENCE]. FLAT NO. 601 AT LOCATION B IS AGREEABLY A SELF-OC CUPIED PROPERTY, SO THAT ITS ANNUAL VALUE (AV) IS TO BE IN TERMS OF SECTION 23(2) OF THE ACT TAKEN AT NIL. THE AV OF THE OTHER TWO FLATS, I.E., FLAT NO. 601 AT LOCATION A AND FLAT NO. 701 AT LOCATION B, WAS TAKEN AT RS.96,000/- AND RS.72,000/- RESPECTIVELY BY THE ASS ESSING OFFICER (A.O.), NOT ACCEPTING THE ASSESSEES CLAIM OF THE TWO FLATS AT LOCATION B BEING, IN FACT, A SINGLE PROPERTY BY WAY OF ONE DUPLEX FLAT, SO THAT THE SAME MUST THERE FORE BE REGARDED AS ONE RESIDENTIAL HOUSE U/S.23(2) AND, ACCORDINGLY, ITS ANNUAL VALUE ASSESSED TOGETHER AT NIL. THE REVENUES STAND IS THAT THE TWO FLATS STOOD PURCHASED PER TWO SEPARATE SALE DEEDS AND ALSO REFLECTED AS SUCH IN THE RECORDS OF THE HOUSING SOCIETY AS WE LL AS THE CORPORATION (BMC). AS SUCH, MERELY BECAUSE THE TWO FLATS AT DIFFERENT (ADJACENT ) FLOORS OF A BUILDING HAVE BEEN JOINED BY THE ASSESSEE THROUGH AN INTERNAL STAIRWAY, WOULD NOT OPERATE TO CONVERT TWO SEPARATE, INDEPENDENT FLATS INTO ONE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE CONTROVERSY ARISES AS THE STATUTE EXEMPTS ONE RESIDENTIAL HOUSE TO AN ASSESSEE FOR THE PURPOSE OF BEING 3 ITA NOS. 614 TO 616/MUM/2011 (A.YS. 06-07 TO 08-09) RAMESH D. SHAH VS. DY. CIT ASSESSED TO TAX AT ITS ANNUAL VALUE, WHERE EITHER S ELF-OCCUPIED OR THOUGH NOT SO OCCUPIED OWING TO EMPLOYMENT OR BUSINESS OR PROFESSION BEING CARRIED OUT AT ANOTHER PLACE, THE ASSESSEE RESIDES IN A HOUSE NOT BELONGING TO HIM AN D HIS OWN RESIDENTIAL HOUSE IS NOT LET NOR OTHERWISE ANY OTHER BENEFIT DERIVED THERE-FROM (SECTIONS 23(2) TO 23(4)). THE ACT DOES NOT DEFINE A RESIDENTIAL HOUSE, SO T HAT WE SHALL HAVE TO NECESSARILY ADOPT THE COMMON MEANING OF THE TERM, EVEN THE CONT EXT OF THE PROVISION WARRANTING SO, I.E., ADOPTION OF AN UNDERSTATING AS CONFORMS TO TH E NATURAL AND COMMON PERCEPTION OF THE TERM. INTERESTINGLY, THERE IS NO DOUBT OR CONTROVER SY WITH REGARD TO THE MEANING OF THE TERMS RESIDENTIAL AND HOUSE, THE AMALGAM OF WHI CH FORMS THE EXPRESSION RESIDENTIAL HOUSE, WHICH IS THE SUBJECT MATTER OF DISPUTE AND, THUS, ADJUDICATION IN THE INSTANT CASE. THE WORD RESIDENTIAL QUALIFYING THE WORD HOUSE, WOULD CHARACTERIZE ITS NATURE AS ONE USED FOR OR HELD FOR BEING USED FOR RESIDENTIAL PUR POSES. A RESIDENTIAL HOUSE OR EVEN A HOUSE FOR THAT MATTER CANNOT BE DEFINED IN TERMS OF ANY QUANTITATIVE PRESCRIPTION/S. A SPRAWLING BUNGLOW AND A ONE ROOM APARTMENT WOULD BO TH EQUALLY QUALIFY TO BE CONSIDERED AS A RESIDENTIAL HOUSE. ITS DEFINITION , HOWEVER, HAS NECESSARILY TO BE IN TERMS OF THE PHYSICAL ATTRIBUTES WHICH SATISFY THE ESSENT IAL CONDITION OF ITS USER, I.E., FOR RESIDENTIAL PURPOSES. AS SUCH, ANY PROPERTY THAT ME ETS THIS BASIC CONDITION INDEPENDENTLY WOULD PRIMARILY BE ELIGIBLE TO BE CONSIDERED AS SO. THAT OF COURSE DOES NOT IMPLY THAT ANY CONSTRUCTION BEYOND THAT WHICH QUALIFIES TO BE A R ESIDENTIAL HOUSE WOULD AUTOMATICALLY LEAD TO THE INFERENCE OF IT BEING OR CONSTITUTING A SEPARATE RESIDENTIAL HOUSE, UNLESS OF COURSE THE SAME, CONSIDERED AS A WHOLE, INDEPENDENT LY MEETS THE STIPULATED CRITERIA OF BEING CAPABLE OF BEING USED SEPARATELY FOR RESIDENT IAL PURPOSES. TOWARD THIS, A RESIDENTIAL HOUSE MUST NECESSARILY HAVE AN INDEPENDENT IDENTITY , WHICH IS GENERALLY TERMED AS ITS ADDRESS, SIGNIFIED BY A SEPARATE ENTRANCE FOR ENT RY AND EXIT. THEN, THERE MUST BE A KITCHEN FOR COOKING FOOD AS ALSO DINING (IF OR WHER E THERE IS NO SEPARATE DINING AREA). FURTHER, THERE WOULD BE A COMMON AREA WHERE THE FAM ILY OR INMATES SIT TOGETHER, WATCH TV, ETC., CALLED VARIOUSLY AS OR SIGNIFIED BY THE W ORDS LOBBY, LIVING ROOM, LOUNGE, ETC. OF COURSE, THE EXISTENCE OF THE SAME CANNOT BE CONSIDERED AS ESSENTIAL AND WOULD DEPEND BOTH UPON THE SIZE OF THE HOUSE AS WELL AS T HE PREFERENCE/S OF THE RESIDENTS. A 4 ITA NOS. 614 TO 616/MUM/2011 (A.YS. 06-07 TO 08-09) RAMESH D. SHAH VS. DY. CIT RESIDENTIAL HOUSE WOULD ORDINARILY HAVE ONE MUNICIP AL NUMBER, ONE ELECTRIC CONNECTION, ETC. COMING TO THE FACTS OF THE CASE, THE ASSESSEE CLAIM S TO HAVE ONE ENTRANCE AND ONE KITCHEN, THE TWO ESSENTIAL ATTRIBUTES OF A RESIDENT IAL HOUSE, FOR THE TWO FLATS LOCATED AT LOCATION B. THE SAME, HOWEVER, GOES AGAINST THE V ERY CONCEPT OF A RESIDENTIAL FLAT, UNLESS THE TWO FLATS WERE SPECIFICALLY DESIGNED FOR CONSTITUTING A SINGLE RESIDENTIAL UNIT, I.E., A DUPLEX FLAT. IN THAT CASE, THE ASSESSEE WOU LD HAVE RATHER ALSO INSISTED ON AN INTERIOR STAIRCASE JOINING THE TWO AND, RATHER, PURCHASED TH E SAME AS ONE UNIT, AND NOT SEPARATELY AS TWO INDEPENDENT FLATS PER TWO SEPARATE SALE DEED S. FOR ALL WE KNOW, THESE MAY HAVE WELL BEEN PURCHASED FROM TWO DIFFERENT OWNERS USING THE SAME SEPARATELY AS RESIDENTIAL HOUSES. AT THE SAME TIME, IT MAY WELL BE THAT THE F LATS WERE NOT PURCHASED FROM THE BUILDER/DEVELOPER, SO THAT THEY HAD TO BE PURCHASED SEPARATELY, AND THE TWO FLATS WERE DELIBERATELY PURCHASED BY THE ASSESSEE AS SO FOR BE ING USED AS ONE RESIDENTIAL HOUSE. WE HAVE ALREADY NOTED THAT A RESIDENTIAL HOUSE CANNOT BE DEFINED IN QUANTITATIVE TERMS ALONE. THE ASSESSEE REQUIRING A LARGER SPACE FOR HIMSELF A ND HIS FAMILY MAY HAVE DELIBERATELY PURCHASED TWO FLATS ON CONSECUTIVE FLOORS, JOINING THEM THROUGH A STAIRCASE, USING IT AS A SINGLE RESIDENTIAL HOUSE BY CLOSING ONE ENTRANCE (E ITHER PERMANENTLY OR EFFECTIVELY BY NOT USING IT AS SUCH) AND, FURTHER, ONE KITCHEN, ONE DI NING AREA, ETC., I.E., AS A DUPLEX FLAT, AS BEING CLAIMED. 4. THE MATTER, THUS, IS ESSENTIALLY AND PRIMARILY F ACTUAL, AND WOULD ACCORDINGLY REQUIRE BEING FACTUALLY DETERMINED. THE SAME, QUITE SIMPLY, IS AS TO WHETHER IT IS A CASE OF TWO SEPARATE RESIDENTIAL HOUSES JOINED TOGETHER FOR EASY ACCESS OR TO PROVIDE PROXIMITY, OR THE TWO FLATS REPRESENT A SINGLE RESIDENTIAL HOUSE, IN VIEW OF ITS USER AS ONE SUCH, I.E., WOULD STAND TO BE DECIDED ON THE BASIS OF THE USER TEST. THE INITIAL ONUS IS ON THE ASSESSEE IN-AS-MUCH AS THE TWO FLATS BEAR SEPARATE IDENTITIE S. THE MATTER WOULD STAND TO BE DECIDED ON THE BASIS OF THE FACTS RATHER THAN PRESUMPTIONS, AND THE A.O. IS REQUIRED TO DECIDE BY ISSUING DEFINITE FINDINGS OF FACT AFTER SATISFYING HIMSELF ON THE BASIS OF THE MATERIAL BROUGHT ON RECORD BY THE ASSESSEE OR THE CONTENTION S MADE BY HIM, AND UPON VERIFICATION 5 ITA NOS. 614 TO 616/MUM/2011 (A.YS. 06-07 TO 08-09) RAMESH D. SHAH VS. DY. CIT WHERE AND TO THE EXTENT DEEMED FIT AND PROPER. THE MATTER IS, ACCORDINGLY, RESTORED BACK TO THE FILE OF THE A.O. FOR THE PURPOSE. FOR A.Y. 2008-09, WE OBSERVE THE ASSESSEE TO OWN A DIFFERENT SET OF PROPERTIES, FIVE (FOUR) IN NUMBER, OF WHICH TWO (ONE) (I.E., TH E FLATS AT LOCATION B) STOOD SOLD DURING THE YEAR; THE BALANCE BEING AS UNDER, WITH THE CONT ROVERSY RELATING, LIKEWISE, TO THE FLATS AT LOCATION A FOR THE EARLIER YEARS: 1. SHIV SHAKTI HEIGHTS, 6 TH FLOOR, FLAT NO.605, VILLAGE KIROL, GHATKOPAR (E), MUMBAI 2 FLAT NO. 701, JAY MAHARASHTHRA VASTU VIKAS CO-OP. H. SOC., SURVEY NO. 287, GULMOHAR CROSS ROAD NO. 5, VI LE PARLE (W), MUMBAI-49 3 FLAT NO. 801, JAY MAHARASHTHRA VASTU VIKAS CO-OP. H. SOC., SURVEY NO. 287, GULMOHAR CROSS ROAD NO. 5, VI LE PARLE (W), MUMBAI-49 AS IT APPEARS, FOUR FLATS HAVE BEEN CONVERTED INTO ONE GIANT FLAT, AND THE ONLY CONTROVERSY ARISING IS CONFINED TO THAT AS STATED A T PARA 2 ABOVE (REFER PG. 5 OF THE ASSESSMENT ORDER). NO SEPARATE ARGUMENTS IN THE MAT TER WERE RAISED FOR THIS YEAR. THOUGH THE DYNAMICS OF THE CONVERSION, THE FLATS BEING FOU R, WOULD INDEED BE DIFFERENT, OUR OBSERVATIONS QUA THE CONTROVERSY, MADE WITH REFERENCE TO THE PROPERT IES AT LOCATION B, WOULD APPLY IN EQUAL MEASURE FOR THE FLATS AT STATE D (AT SERIAL NUMBER 2,3 ABOVE) AS WELL. NEEDLESS TO ADD, THE ASSESSEE SHALL BE ALLOWED THE AV ONLY IN RESPECT OF ONE SELF OCCUPIED PROPERTY. THE ASSESSEES ALTERNATE CONTENTION OF BEING ALLOWE D STANDARD DEDUCTION, BECOMES, IN VIEW OF THE SET ASIDE, INFRUCTUOUS. WE DECIDE AC CORDINGLY. 5. THIS LEAVES GROUND NO. 1, AGITATING VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, FOR ALL THE YEARS, AND GROUND NO. 2 QUA A DISALLOWANCE OF PROFESSIONAL CHARGES AT RS. 25,0 00/- FOR AY 2006-07. THE SAME BEING NOT PRESSED DURING HEARI NG, ARE DISMISSED AS NOT PRESSED. WE DECIDE ACCORDINGLY. 6 ITA NOS. 614 TO 616/MUM/2011 (A.YS. 06-07 TO 08-09) RAMESH D. SHAH VS. DY. CIT 6. IN THE RESULT, THE ASSESSEES APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 20 -34 52-) 6 7)89:; ';1 < -) -=>! ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 25, 201 4 SD/- SD/- (DR. S. T. M. PAVALAN) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + ?, MUMBAI; @ DATED : 25.04.2014 # ROSHANI , SR. PS !' # $%&' (!'% # COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. '' + A- B C / THE CIT(A) 4. '' + A- / CIT CONCERNED 5. DE F'-G4 ' G40 + ?, / DR, ITAT, MUMBAI 6. F 5H , # GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , + ?, / ITAT, MUMBAI