SURESH SHIVLAL BHASIN, MUMBAI V. ASST CIT 25(1), MUMBAI

ITA 6583/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7326 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: MUKESH B ADANI
• Keywords: Deemed to accrue or arise in india; Fair market value; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6583/M/2017 ASSESSMENT YEAR: 2010-11 MR. SURESH SHIVLAL BHASIN, 301, GREEN ACRES, LOKHANDWALA COMPLEX, ANDHERI (W), MUKMBAI 400 053 PAN: AADPB0721E VS. ACIT 25(1), ROOM NO.402, 4 TH FLOOR, C-10, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400051 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MUKESH B. ADANI, A.R. REVENUE BY : SHRI CHAUDHARY ARUN KUMAR SINGH, D. R. DATE OF HEARING : 10.04.2019 DATE OF PRONOUNCEMENT : 26.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 21.08.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE ASUNDER: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3 7 HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER OF R S. 2,12,4367-U/S 23(L)(A) OF THE INCOME TAX ACT 1961, WHILE ESTIMATING THE GROSS ANN UAL VALUE OF THE SECOND RESIDENTIAL HOUSE PROPERTY AT FAIR MARKET VALUE OF RS. 3,03,4807- WHICH IS ALSO SELF OCCUPIED BY THE ASSESSEE. IN THE PRECEDING PREVIOUS YEAR, RELEVANT TO THE ASS ESSMENT YEAR 2009-10, THE LEARNED ASSESSING OFFICER WHILE PASSING THE ASS ESSMENT ORDER U/S 143(3) ESTIMATED THE GROSS ANNUAL VALUE OF THE SAME PROPER TY AT FAIR MARKET VALUE OF RS. 12,000/- & ADDITION WAS MADE OF RS. 7,426/- AFTER A LLOWING DEDUCTION OF MUNICIPAL ITA NO.6583/M/2017 MR. SURESH SHIVLAL BHASIN 2 TAXES PAID OF RS. 1,392/- & STANDARD DEDUCTION U/S 24(A) OF THE INCOME TAX ACT, 1961. HENCE, THERE IS NO REASON AS TO WHY THE GROSS ANNUAL VALUE OF THE SAME PROPERTY SHOULD NOW BE ESTIMATED AT RS. 3,03,480/-. IN LIGHT OF THE ABOVE SAID FACTS & CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS. 2,12,436/- CONFIRMED BY THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS)- , 37 IS OUGHT TO BE REDUCED TO RS.7,426/- AS ESTIMATE D BY THE LEARNED ASSESSING / OFFICER IN ASSESSMENT YEAR 2009-10 WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961. 3. THE ONLY ISSUE RAISED IS AGAINST THE ORDER OF CI T(A) UPHOLDING THE ALV OF FLAT NO. 25 , SHREE MAHANT KR UPA CHS LTD, MANISH NAGAR, ANDHERI AT RS. 3,03,480/- WHICH IS ALSO CLAIMED TO BE SELF OCCUPIED THEREBY CONFIRMING THE ADDITION OF RS. 2,12,436/-. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS TWO FLATS ONE AT GREEN ACRES WHERE THE ASSESSEE WAS ACTUALLY RESIDIN G WITH HIS FAMILY AND SECOND AT SHREE MAHANT KRUPA CHD LTD., M ANISH NAGAR, ANDHERI. THE ASSESSEE HAS SHOWN RS. 266/- AS DEEMED INCOME FROM THE SECOND FLAT. ACCORDINGLY, THE AO CA LLED UPON THE ASSESSEE AS TO WHY NOTIONAL RENT SHOULD NOT BE BROU GHT TO TAX. THE LD AR REPLIED VIDE WRITTEN SUBMISSIONS DATED 14 .11.2014 SUBMITTING THAT THE ASSESSEE HAS OFFERED TO TAX THE SAID FLAT AT RS. 266/- P.M. AS NOTIONAL RENT. THE AO ,NOT FINDI NG THE REPLY OF THE ASSESSEE AS TENABLE, CAME TO THE CONCLUSION THA T THE SECOND FLAT AT ANDHERI HAS TO BE BROUGHT TO TAX U/S 23(1)( A) OF THE ACT. THE AO ASCERTAINED THE MARKET RENT OF THE FLATS IN THE SAME LOCALITIES AFTER GETTING A ENQUIRY CONDUCTED AT R S. 45 TO RS. 50/- PER SQ FT. AND ESTIMATED THE FAIR RENT AT RS. 25,290/-P.M. THUS ANNUAL FMV OF THE FLAT WAS CALCULATED AT RS.3, 03,480/- AND AFTER ALLOWING THE 30% STANDARD DEDUCTION, THE NET ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE OF RS. 2,12, 436/-. ITA NO.6583/M/2017 MR. SURESH SHIVLAL BHASIN 3 5. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DISM ISSED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE AO IS NO T BOUND BY THE ALV AT MUNICIPAL RATEABLE VALUE AS PER BMC AND U PHELD THE ORDER OF AO ON THIS POINT THAT ALV HAS TO BE DETERM INED AT FAIR MARKET RENT WHICH THE FLAT IS EXPECTED TO REASONABL Y FETCH FROM THE MARKET. 6. THE LD AR SUBMITTED BEFORE THE BENCH THAT THE AL V OF THE FLAT AT MARKET RENT IS UNFAIR AND AGAINST THE DECIS IONS OF THE JURISDICTIONAL HIGH COURT. THE LD AR SUBMITTED THAT THE ISSUE INVOLVED IN THE ASSESSEES APPEAL IS SQUARELY COVE RED BY THE DECISIONS OF BOMBAY HIGH COURT IN THE CASE OF PCIT VS HARSH JAIN ITA NO. 1438 OF 2016 DATED 5.2.2019 AND PR CIT VS LAXMI JAIN ITA NO. 1285 OF 2015 DATED 16.4.2018. IN BOTH THE DECISIONS THE HONBLE HIGH COURT HAS FOLLOWED ITS EARLIER DECISION IN THE CASE OF SMT. SMITABEN N. AMBANI VS COMMISSIONER OF WEALTH TAX 323 ITR 104 AND HELD THA T ALV OF THE FLAT HAS TO BE CALCULATED AS PER MUNICIPAL RAT EABLE VALUE. THE LD AR SUBMITTED THAT SINCE THE ASSESSEE HAS ALR EADY OFFERED TO TAX THE ALV AT MRV AND ALSO IN THE EARLIER YEAR I. E. AY 2009- 10, THE AO HAS ESTIMATED THE GROSS ANNUAL VALUE AT RS. 12,000/- AND NET ADDITION WAS MADE OF RS. 7,426/- AFTER ALLO WING DEDUCTION OF MUNICIPAL TAXES AND STANDARD DEDUCTION . 7. THE LD DR ON THE OTHER HAND RELIED HEAVILY ON TH E ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ALV OF THE VACANT PROPERTY HAS TO BE DETERMINED ACCORDING TO THE PROV ISIONS OF SECTION 23(1)(A) OF THE ACT AND WAS RIGHTLY CALCULA TED BY THE AO. THE LD AR PRAYED HAT THE ORDER OF CIT(A) MAY BE UPH ELD. ITA NO.6583/M/2017 MR. SURESH SHIVLAL BHASIN 4 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORDS INCLUDING THE DECISIONS OF THE JURISDICT IONAL HIGH COURT AS REFERRED TO ABOVE, WE OBSERVE THAT THE CAS E OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO IN DECISI ONS OF THE HIGH COURT. THE HONBLE HIGH COURT HAS HELD THAT IN CASE OF VACANT FLATS/PROPERTY THE ALV HAS TO BE FIXED ON THE BASIS OF MUNICIPAL RATEABLE VALUE AND NOT ON THE BASIS OF MARKET RENT. THEREFORE, THE ORDER OF THE CIT(A) CANNOT BE SUSTAINED AND IS SET ASIDE. THE AO IS DIRECTED TO TAKE THE ALV AT RS. 12000/- AND C ALCULATE THE ADDITION ON THE BASIS WHICH THE AO HAS ACCEPTED AS ALV IN THE PRECEDING ASSESSMENT YEAR 2009-10 IN THE ORDER PASS ED U/S 143(3) OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.