DEEPAK SANGHVI, MUMBAI V. ITO 13(1)(2), MUMBAI

ITA 6215/MUM/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3637 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Deemed to accrue or arise in india; Fair market value
• Section: 143(3); 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I.T.A. NO.6215/M/13 ( / ASSESSMENT YEAR: 2009-10) DEEPAK SANGHVI GROUND FLOOR, BHANU BHAWAN, 147, NARAYAN DHURU STREET, NAGDVEVI, MUMBAI - 400093 / VS. ITO 13(1)(2) MUMBAI ./ ./PAN/GIR NO. : AAJPS8840B ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 26.10.2015 /DATE OF PRONOUNCEMENT: 15.01.2016 / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-24, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 02.07.2013 RELEVANT TO THE A.Y. 2009-10. 2. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 29.03.2010 DECLARING TOTAL INCOME OF RS.6,70,080/-. THE RETURN OF INCOME WAS ASSESSEE BY: SHRI MAYUR KISNADWALA DEPARTMENT BY: SHRI K.RAVI RAMACHANDRAN ITA NO. 6215/M/13 A.Y. 2009-10 2 PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). THEREAFTER, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY. FINALLY, THE ASSESSMENT WAS COMPLETED U/S. 143(3) ADDING A SUM OF RS.57,926/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SINCE THE ASSESSEE WAS NOT SATISFIED WITH THE SAID ADDITION THEREFORE, THE APPEAL WAS FILED BEFORE LEARNED CIT(A) WHO ALSO DISMISSED THE APPEAL. THEREFORE THE ASSESSEE IS BEFORE US. 3. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES: 1. THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER WHICH IS BAD IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN UPHOLDING THAT DEEMED INCOME FROM SELF OCCUPIED HOUSE PROPERTY SHOULD BE CALCULATED ON THE BASIS OF FAIR MARKET VALUE INSTEAD OF MUNICIPAL RATEABLE VALUE. 3. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE PROPERTY OF THE ASSESSEE IS SUBJECT TO RENT CONTROL ACT AND HENCE FAIR MARKET VALUE CANNOT BE CONSIDERED AS NOTIONAL RENT FOR DETERMINING DEEMED INCOME FROM SELF OCCUPIED HOUSE PROPERTY IN CASE OF ASSESSEE. ITA NO. 6215/M/13 A.Y. 2009-10 3 4. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE PROPERTY WAS SELF OCCUPIED AND NO ACTUAL RENT WAS RECEIVED BY ASSESSEE. 4. SINCE ALL THE ISSUES ARE INTERCONNECTED THEREFORE THEY ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION FOR THE SAKE OF CONVENIENCE. IN BRIEF THERE IS ONLY ONE ISSUE WHICH HAS BEEN RAISED BY THE APPELLANT I.E. THE CIT(A) HAS ERRED IN LAW AND FACTS IN UPHOLDING THIS FACT THAT DEEMED INCOME FROM SELF OCCUPIED HOUSE PROPERTY SHOULD BE CALCULATED ON THE BASIS OF FAIR MARKET VALUE INSTEAD OF MUNICIPAL RATEABLE VALUE. THE CONTENTION OF THE ASSESSEE IS THAT THE HOUSE OCCUPIED BY HIM WAS VACANT THEREFORE, THE ANNUAL VALUE OF THE PROPERTY CANNOT BE VALUED AS ACTUALLY LET OUT FOR THE PURPOSE OF SECTION 21A EXCEEDED TO THE MUNICIPAL VALUATION OF THE PROPERTY AS ADOPTED BY THE MUNICIPAL AUTHORITIES. IT IS NOT DISPUTED THAT THE ASSESSEE PURCHASED THE SAID PROPERTY BY VIRTUE OF AGREEMENT DATED 11.11.2008 AND ALSO TOOK THE POSSESSION OF THE PROPERTY IN DECEMBER 2008. HE HOLDS THE FLAT FOR FOUR MONTHS AND THIS YEAR OF THE ASSESSEES SHARE IN THE SAID FLAT AS STATED TO BE 79%. THE ASSESSING OFFICER CONSIDERED THE RATE OF RENT WHICH WAS PREVAILING IN THE AREA. THE ASSESSING OFFICER ASSESSED THE RENT OF RS.77,900/- PER MONTH (WHICH IS RS.79/- PER SQ.FT. PER MONTH FOR 986 SQ. FT.). HE ASSESSED THE RENT @77,900/- PER MONTH SINCE THE SHARE OF THE ASSESSEE WAS 79% THEREFORE THE RENT WAS WORKED OUT TO RS.61,550/- PER MONTH AND THE TOTAL RENT WAS ITA NO. 6215/M/13 A.Y. 2009-10 4 ASSESSED TO RS.2,46,200/- AND ACCORDINGLY ASSESSED INCOME. SUBSEQUENTLY, THE ASSESSEE FILED THE APPEAL BEFORE LEARNED CIT(A) BUT LEARNED CIT(A) DISMISSED THE APPEAL. FEELING AGGRIEVED THE ASSESSEE IS BEFORE US. 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORDS. THE FACTS AND FIGURE TO PURCHASE THE PROPERTY AND TO TAKE THE POSSESSION THEREOF IS NOT DISPUTED. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE TOOK POSSESSION OF HIS SECOND FLAT ON 19.10.2011 AND HE WAS HAVING SHARES @79%. THE SAID FLAT WAS NOT LET OUT TO ANYONE. ASSESSING OFFICER ASSESSED THE INCOME FROM THE SAID HOUSE PROPERTY ON THE BASIS OF ACTUAL RATES PREVAILING IN THE AREA @ RS.79/- PER SQ.FT. AND ASSESSED THE INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE SHARES OF THE ASSESSEE @ 79% PER MONTH. IN THE INSTANT CASE THE FLAT WAS NOT GIVEN ON RENT TO ANYONE THEREFORE IN THE SAID CIRCUMSTANCES WHAT SHOULD BE PARAMETER TO ASSESS THE INCOME OF THE ASSESSEE IS REQUIRED TO BE DECIDED ASSESSEE THEN THE MATTER OF CONTROVERSY HAS ALREADY BEEN DECIDED IN THE CASE CITED AS VEENA D. MUNGANAHALLI VS. ITO 21(3)(2) DATED 07.12.2012 WHEREIN IT IS HELD THAT THE ANNUAL LETTING VALUE OF THE PROPERTY WHICH WAS NOT GIVEN ON RENT SHOULD BE DETERMINED AS PER MUNICIPAL VALUATION. THE FACTS OF THE INSTANT CASE IS QUITE IDENTICAL OF THE CASE DECIDED BY THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN ITA NO.2516/M/12 TITLED AS VEENA D. MUNGANAHALLI VS. ITO 21(3)(2). ITA NO. 6215/M/13 A.Y. 2009-10 5 6. IN VIEW OF THE ORDER PASSED BY THE CO-ORDINATE BENCH OF MUMBAI WE ARE OF THE VIEW THAT THE ORDER OF LEARNED CIT(A) IN QUESTION IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW THEREFORE WE SET ASIDE THE ORDER IN QUESTION DATED 02.07.2013 AND RESTORED THE FILE BEFORE ASSESSING OFFICER TO ADOPT THE MUNICIPAL VALUE /RATEABLE VALUE ADOPTED BY THE MUNICIPAL AUTHORITIES TO ASSESS THE INCOME OF THE DISPUTED FLAT IN QUESTION IN ACCORDANCE WITH THE SHARE OF APPELLANT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2016 . SD/- SD/- (N.K.BILLAIYA) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 15 TH JANUARY, 2016. MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI