HITEN MAHIMTURA, MUMBAI V. INCOME TAX OFFICER-12(2)(3)(NOW ASSESSED WITH INCOME TAX OFFICER-17(1)(5), MUMBAI

ITA 6339/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0241 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 24-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SINGH LD
• Assessee Lawyers: BHUPENDRA SHAH LD

Judgement Text

ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6339/MUM/2017 ( / ASSESSMENT YEAR: 2009-10 SHRI HITEN MAHIMTURA UNIQUE HOUSE 25 S.A. BRELVI ROAD,FORT MUMBAI-400 001. / VS. INCOME TAX OFFICER - 12(2)(3 ) (NOW ASSESSED WITH ITO-17(1)(5) MUMBAI. ./ ./PAN/GIR NO. AABPM-5688-F ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : BHUPENDRA SHAH- LD.AR REVENUE BY : MANOJ KUMAR SINGH-LD. DR / DATE OF HEARING : 12/11/2018 / DATE OF PRONOUNCEMENT : 05/12/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-28, MUMBAI [CIT(A)], APPEAL NO.CIT(A)-28/IT-211/ITO-17(1)(5)/2011-12 DATED 16/06/2017 BY RAISING FOLLOWING EFFECTIVE GRO UNDS OF APPEAL:- ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 2 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED ASSESSING OFFICER ERRED IN ADDING SUM OF RS.21,18,213/- AS IN COME FROM HOUSE PROPERTY ON A NOTIONAL BASIS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION. THE ASSESSMENT FOR THE IMPUGNED AY WAS FRAMED BY LD . INCOME TAX OFFICER-WARD 12(2)(3) IN SCRUTINY ASSESSMENT U/S 14 3(3) ON 12/12/2011 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T RS.70.71 LACS AFTER CERTAIN ADJUSTMENTS AND DISALLOWANCES AS AGAI NST RETURNED INCOME OF RS.49.63 LACS FILED BY THE ASSESSEE ON 30/09/200 9. AS EVIDENT FROM GROUNDS OF APPEAL, THE ADDITION OF RS.21.18 LACS AS MADE UNDER THE HEAD INCOME FROM HOUSE PROPERTY IS THE SOLE SUBJECT MATTER OF THIS APPEAL. THE ASSESSEE IS A STRUCTURAL ENGINEER BY PROFESSION AND DIRECTOR OF FAMILY OWNED COMPANY NAMELY M/S MAHIMTURA CONSULTANTS PVT. LTD. WHICH WAS STATED TO BE ENGAGED IN CARRYING ON STRUCTURAL DESIGN WORK, INFRASTRUCTURE WORKS AND PROJECT MANAGEMENT. 2. THE REGISTRY HAS NOTED A DELAY OF 21 DAYS IN FIL ING THE APPEAL, THE CONDONATION OF WHICH HAS BEEN SOUGHT BY THE ASSESSE E ON THE STRENGTH OF AN AFFIDAVIT DATED 03/11/2017. THE DELAY HAS BEE N ATTRIBUTED TO THE FACT THAT THE ASSESSEES CONSULTANT WAS BUSY WITH A UDIT WORK AND THE ASSESSEE DID NOT HAVE SUFFICIENT KNOWLEDGE TO HANDL E APPEAL MATTER. ALTHOUGH THE REASONS ADDUCED ARE NOT VERY CONVINCIN G, HOWEVER, KEEPING IN VIEW THE QUANTUM OF DELAY AND IN THE INT EREST OF JUSTICE, WE CONDONE THE DELAY AND PROCEED TO DISPOSE-OFF THE SA ME ON MERITS. 3. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THA T THE ASSESSEE OWNED A FLAT AT SARASWATI SADAN WHICH WAS CLAIMED TO BE UNDER SELF- ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 3 OCCUPATION. BESIDES THIS PROPERTY, THE ASSESSEE WAS FOUND TO BE THE OWNER / CO-OWNER OF THE FOLLOWING OTHER PROPERTIES: - NO. DESCRIPTION AMOUNT (RS.) 1. CO-OWNERSHIP FLAT AT THAKKAR TOWER-FLAT-1201 63, 68,770/- 2. CO-OWNERSHIP FLAT AT THAKKAR TOWER-FLAT-1202 63, 68,770/- 3. CO-OWNERSHIP FLAT AT THAKKAR TOWER-FLAT 901 63,6 8,770/- 4. CO-OWNERSHIP FLAT AT PALM APARTMENT 6,75,000/- 5. CO-OWNERSHIP FLAT AT ELDORA 29,84,610/- 6. BUNGLOW AT KASHID 1,04,30,115/- 3,31,96,035/- OFFICE PREMISES 7. COOWNERSHIP OF PREMISES AT PHEONIX MILL COMPOUN D 22,80,141/- 8. OFFICE PREMISES AT SIKANDERABAD 1,24,050/- 24,04,191/- GROSS TOTAL 3,56,00,226/- SINCE NO INCOME WAS OFFERED BY THE ASSESSEE AGAINST THE AFORESAID PROPERTIES, THE LD. AO PROCEEDED TO COMPUTE THE ANNUAL VALUE OF THE SAME TO TAX THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE DEFENDED HIS STAND BY SUBMITTING THAT THE PROPERTIES LISTED FROM SERIAL NUMBERS 1 TO 3 WERE NOT PROVIDED WITH B ASIC AMENITIES LIKE WATER & LIFT ETC. WHEREAS THE OTHER PROPERTIES WERE SIMPLY STATED TO BE UNDER JOINT OWNERSHIP, WITHOUT ADDUCING ANY FURTHER DETAILS. RESULTANTLY, LD. AO ESTIMATED ANNUAL VALUE OF ALL THE PROPERTIES @8.5% OF AGGREGATE COST OF RS.356 LACS WHICH CAME TO RS.30.26 LACS. AF TER PROVIDING FOR STATUTORY DEDUCTION OF 30%, NET ADDITION WAS WORKED OUT TO BE RS.21.18 LACS WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. THE SAME, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY, IS UNDER APPEAL BEFORE US. 4. THE LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI BHUPENDRA SHAH, TAKING US THROUGH DOCUMENTS PLACED IN THE PAPER-BOOK SUBMITTED THAT SOME OF THE PROPERTIES WERE NOT IN H ABITABLE CONDITIONS WHEREAS SOME OF THE PROPERTIES WERE BEING USED BY T HE ASSESSEE FOR THE ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 4 PURPOSE OF BUSINESS / PROFESSION. RELIANCE HAS BEEN PLACED ON THE DECISION OF THIS TRIBUNAL RENDERED IN ITO VS. METAOXIDE PRIVATE LIMITED [92 TAXMANN.COM 302] TO SUBMIT THAT VACANCY ALLOWANCE WAS AVAILABLE TO THE ASSESSEE WITH RESPECT TO THOSE PROPERTIES WH ICH COULD NOT BE LET OUT DURING THE IMPUGNED AY. IT HAS ALSO BEEN SUBMIT TED THAT NO SUCH ESTIMATION HAS BEEN MADE BY THE REVENUE EITHER DURI NG ANY PRECEDING YEAR OR SUCCEEDING YEAR. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR], SHRI MANOJ KUMAR SINGH SUBMITTED THAT THE ADDITIONS WERE JUSTIFIED SINCE ONLY ONE PROPERTY COULD BE CONSIDERED TO BE U NDER SELF OCCUPATION AS PER LAW AND OTHER PROPERTIES WERE TO BE CONSIDER ED AS DEEMED TO BE LET OUT. 5.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING JUDICIAL PRONOUNCEMENTS AS CITE D BEFORE US. SO FAR AS THE PROPERTIES LISTED AT SERIAL NUMBERS 1 TO 3 ARE CONCERNED, THE LD. AR HAS SUBMITTED THAT THESE PROPERTIES WERE UNDER-CONS TRUCTION PROPERTIES AND THE SAME WERE NOT IN HABITABLE CONDITION DURING IMPUGNED AY. THE SUPPORTING DOCUMENTS, IN THIS REGARD, HAS BEEN PLAC ED ON PAGE NUMBERS 19 TO 178 OF THE PAPER-BOOK. THE DEMAND LETTER ISSUED BY THE SOCIETY AGAINST THE SAME HAS BEEN PLACED ON PAGE NUMBERS 17 9 TO 181 OF THE PAPER-BOOK, THE PERUSAL OF WHICH, PRIMA FACIE, REVEAL THAT CERTAIN PAYMENT HAS BEEN DEMANDED BY THE SOCIETY FROM THE A SSESSEE TO COMPLETE THE BALANCE WORK OF THE BUILDING AND TO OB TAIN OCCUPATION CERTIFICATE FOR THE BUILDING. BOTH THE LOWER AUTHOR ITIES HAVE NOT DISCUSSED THIS ASPECT IN THE RESPECTIVE ORDERS. THEREFORE, TH E MATTER OF NOTIONAL RENTAL VALUE AGAINST THESE BUILDING STANDS RESTORED BACK TO THE FILE OF LD. ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 5 AO TO RE-ADJUDICATE THE SAME IN THE LIGHT OF THESE EVIDENCES BEING SUBMITTED BY LD. AR BEFORE US. 5.2 THE PROPERTY LISTED AT SERIAL NUMBER-6 IS STATE D TO BE FARMHOUSE ON AGRICULTURAL LAND AND THEREFORE, IT HAS BEEN CONTEN DED THAT NO INCOME COULD BE ESTIMATED AGAINST THE SAME. THE PROPERTIES LISTED AT SERIAL NUMBER 7 & 8 ARE STATED TO BE COMMERCIAL ESTABLISHM ENTS WHICH ARE USED FOR THE PURPOSE OF ASSESSEES BUSINESS. HOWEVE R, WE FIND THAT LD. AO HAS NOT MADE ANY DISCUSSION ABOUT THE SAME IN HI S ORDER AND HAS NOT RENDERED ANY FINDINGS AGAINST THE SAME. THEREFO RE, THE MATTER OF ESTIMATION OF NOTIONAL RENT AGAINST THE SAME ALSO S TANDS RESTORED BACK TO THE FILE OF LD. AO FOR ASCERTAIN THE FACTUAL MATRIX AND RE-ADJUDICATE THE SAME IN THE LIGHT OF SUBMISSIONS MADE BY LD. AR. 5.3 REGARDING REMAINING PROPERTIES LISTED AT SERIAL NUMBER 4 & 5, LD. AR HAS SUBMITTED THAT THE SAME WERE NOT LET OUT AT ALL DURING THE IMPUGNED AY AND THEREFORE, VACANCY ALLOWANCE AGAINS T THE SAME WAS AVAILABLE TO THE ASSESSEE IN TERMS OF SECTION 23(1) (C) AS PER THE CITED DECISION OF THE TRIBUNAL. IT HAS ALSO BEEN CONTENDE D THAT THE ESTIMATION OF 8.5% WAS NOT JUSTIFIED UNDER THE CIRCUMSTANCES. UPON PERUSAL, PRIMA FACIE, IT APPEARS THAT THESE PROPERTIES WERE NEVER LET OUT AT ANY TIME BEFORE IMPUGNED AY. AT THE OUTSET, WE DEEM IT APPRO PRIATE TO CONSIDER THE RELEVANT STATUTORY PROVISIONS AS CONTAINED IN S ECTION 23 WHICH READ AS FOLLOWS:- ANNUAL VALUE HOW DETERMINED. 23. (1) FOR THE PURPOSES OF SECTION 22, THE ANNUAL VALU E OF ANY PROPERTY SHALL BE DEEMED TO BE (A)THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B)WHERE THE PROPERTY OR ANY PART OF THE PROPERTY I S LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EX CESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE; OR ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 6 (C)WHERE THE PROPERTY OR ANY PART OF THE PROPERTY I S LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VAC ANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE : PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORITY IN RE SPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHIC H THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD OF AC COUNTING REGULARLY EMPLOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THA T PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION.FOR THE PURPOSES OF CLAUSE (B) OR CLAU SE (C) OF THIS SUB-SECTION, THE AMOUNT OF ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER SHA LL NOT INCLUDE, SUBJECT TO SUCH RULES AS MAY BE MADE IN THIS BEHALF, THE AMOUNT OF RENT WHIC H THE OWNER CANNOT REALISE. (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PART OF A HOUSE WHICH (A) IS IN THE OCCUPATION OF THE OWNER FOR THE PURPO SES OF HIS OWN RESIDENCE; OR (B)CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY REAS ON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSION CARRIED ON AT AN Y OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLACE IN A BUILDING NOT BELONGING TO HIM, THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APP LY IF (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE O WNER. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN ONE HOUSE (A) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ONLY IN RESPECT OF ONE OF SUCH HOUSES, WHICH THE ASSESSEE MAY, AT HIS OPTION, SPECIFY IN THIS BE HALF; (B) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, OTHER THAN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISED AN OPTION UNDER CLAUSE (A), SHALL BE DETERMINED UNDER SUB-SECTION (1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET. AS PER THE ABOVE PROVISIONS, THE ANNUAL VALUE OF TH E PROPERTY IS DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONAB LY BE EXPECTED TO LET [IN SHORT REFERRED TO AS ALV] FROM YEAR TO YEAR. IN CASE THE PROPERTY OR ANY PART OF THE PROPERTY WAS LET, THE ACTUAL RENT R ECEIVED OR RECEIVABLE WAS DEEMED TO BE THE ANNUAL VALUE, IF IT EXCEEDS TH E ALV. THE SUB- CLAUSE (C) PROVIDES FOR A SITUATION WHERE-IN THE PR OPERTY OR ANY PART OF THE PROPERTY WAS LET OUT AND WAS VACANT DURING THE WHOL E OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER WAS LESS THAN ALV, THEN THE AMOUNT SO RECEIVED OR RECEIVABLE IS DEEMED TO BE ANNUAL VALUE OF THE P ROPERTY. FURTHER, IN ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 7 TERMS OF SUB-CLAUSE (B) OF CLAUSE (4), THE ANNUAL V ALUE OF THE HOUSES OTHER THAN ONE HOUSE AS ELECTED BY THE ASSESSEE ARE TO BE DETERMINED AS PER CLAUSE (1) AS IF SUCH HOUSE OR HOUSES HAD BE EN LET OUT. 5.4 APPLYING THESE STATUTORY PROVISIONS TO THE FACT UAL MATRIX OF THE CASE, WE FIND THAT THE ASSESSEE HAS ALREADY ELECTED ONE H OUSE SITUATED AT SARASWATI SADAN AS SELF OCCUPIED PROPERTY, THE VALUE OF WHICH HAS B EEN TAKEN AS NIL. THEREFORE, IN TERMS OF CLAUSE (4)(B), THE ANNUAL VA LUE OF THE OTHER PROPERTIES ARE TO BE DETERMINED AS PER CLAUSE (1) WHICH ENVISAGES THAT THE ANNUAL VALUE OF THE SAME ARE TO BE CONSIDE RED AS THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET OUT FROM YEAR TO YEAR. WE HAVE ALREADY NOTED THAT THE PROPERTIES OR ANY PART THEREOF, AS LISTED AT SERIAL NUMBER 4 & 5, WERE NEVER LET OUT B Y THE ASSESSEE IN ANY OF THE PRECEDING YEAR OR DURING IMPUGNED AY. THEREF ORE, THE SUB- CLAUSES (1)(B) OR (1)(C) BECOMES INAPPLICABLE TO TH E SAME SINCE BOTH THESE APPLIES IN SITUATION WHERE PROPERTY OR ANY PA RT THEREOF IS LET OUT, WHICH IS NOT THE CASE HERE. THE EXPRESSION LET AS USED BY BOTH THESE SUB-CLAUSES, IN OUR OPINION, DO NOT INCLUDE MERE IN TENTION TO LET OUT BUT THE ACTUAL LET OUT OF THE PROPERTY KEEPING IN VIEW THE DOCTRINE OF LITERAL INTERPRETATION . IF THE ANNUAL VALUE OF THE SAME ARE TAKEN AS NIL IN TERMS OF SUB-CLAUSE (1)(C) AS CONTENDED BY LD. AR, THEN THE PROVISIONS OF CLAUSE (4) SHALL BECOME OTIOSE AND SHALL HAVE NO APPLICABI LITY AT ALL IN ANY SITUATION, WHICH DO NOT APPEAR TO BE THE INTENTION OF THE LEGISLATURES. THEREFORE, WE DO NOT AGREE WITH THE SAID CONTENTION . HAVING SAID SO, THE ESTIMATION OF ANNUAL VALUE @8.5% APPEARS TO BE WITH OUT ANY BASIS SINCE THE ANNUAL VALUE HAS TO BE DETERMINED AS THE VALUE FOR THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YE AR. THEREFORE, LD. AO ITA NO.6339/MUM/2017 SHRI HITEN MAHIMTURA ASSESSMENT YEAR: 2009-10 8 IS DIRECTED TO RE-COMPUTE THE SAME IN TERMS OF THE STATUTORY PROVISIONS. THE ASSESSEE, IN TURN, IS DIRECTED TO PROVIDE SUFFI CIENT DOCUMENTARY EVIDENCES / INFORMATION IN THIS REGARD. 6. THE APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH DECEMBER, 2018. SD/- SD/- (PAWAN SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05/12/2018 SR.PS:- JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. * +!$, , , , / DR, ITAT, MUMBAI 6. + -./ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.