RAJKUMAR ASARPOTA, MUMBAI V. ITO WD 19(2)(2), MUMBAI

ITA 6590/MUM/2010

• Counselvise Citation: 659019914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: A C BOHRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHIRI RAJENDRA SINGH, A.M. ITA NO. : 6590/MUM/2010 ASSESSMENT YEAR : 2005-06 SHRI RAJKUMAR ASARPOTA ROOPMANGAL, 7 TH FLOOR, G-52, CORNER OF MAIN AVENUE & 16 TH ROAD, SANTACRUZ (W), MUMBAI-400 054. PAN NO : AGMPA 0481 B VS. THE INCOME TAX OFFICER, WARD - 19 (2) (2), PIRAMAL CHAMBERS, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.C. BOHRA RESPONDENT BY : SHRI P. C. MAURYA DATE OF HEARING : 30 .11.2011 DATE OF PRONOUN CEMENT : 02.12.2011 ORDER PER RAJENDRA SINGH (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 11.06.2010 OF THE LD. CIT(A)-30 FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IN THIS APPEAL HAS RAISED DISPUTE REGARDIN G COMPUTATION OF INCOME FROM DIFFERENT PROPERTIES OWNED BY HIM. 2. THE FACTS IN BRIEF ARE THAT THE AO DURING THE AS SESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE OWNED A FLAT AT DHEERAJ HEIGHTS, KANDIVALI (W), FROM WHICH THE ASSESSEE HAD DECLARED INCOME OF `. 33,600/- AS HOUSE PROPERTY INCOME. THE ASSESSEE A LSO OWNED FLAT NO.203 IN DHEERAJ HEIGHTS, ANDHERI (W), WHICH AS PE R AO WAS NEITHER ITA NO : 6590/MUM/2010 SHRI RA JKUMAR ASARPOTA 2 SELF OCCUPIED NOR UTILISED FOR ANY BUSINESS PURPOSE S. THE AO OBSERVED THAT UNDER THE PROVISIONS OF SECTION 22 OF THE I.T. ACT, THE ANNUAL VALUE OF THE PROPERTY IS THE SUM FOR WHICH THE PROPERTY M IGHT BE REASONABLY EXPECTED TO LET OUT FROM YEAR TO YEAR. IT WAS NOTED BY HIM THAT THE ASSESSEE HAD ACQUIRED THE ANDHERI PROPERTY IN THE F INANCIAL YEAR 2000- 01 FOR A SUM OF `. 24,45,000/-. HE DETERMINED THE INDEXED COST OF THE PROPERTY IN THE RELEVANT YEAR AT `. 28,90,640/- AND ESTIMATED THE FAIR RENTAL VALUE OF THE PROPERTY AT 7% OF THE INVESTMEN T, WHICH CAME TO `. 2,02,345/- AND ASSESSED THE INCOME AT `. 1,41,642/- AFTER ALLOWING DEDUCTION @ 30% U/S.24(A). SIMILARLY, THE AO NOTED THAT THE ASSESSEE OWNED FLAT NO.15 IN ROHIT CLASSICS AT PUNE FROM WHI CH NO INCOME HAD BEEN OFFERED. IT WAS OBSERVED BY HIM THAT THE PROPE RTY WAS NEITHER SELF OCCUPIED NOR UTILISED FOR ANY BUSINESS PURPOSES. HE NOTED THAT THE PROPERTY HAD BEEN ACQUIRED FOR `. 10,02,000/- DURING THE FINANCIAL YEAR 1995-96, THE INDEXED COST OF WHICH IN THE RELEVANT YEAR WAS `. 17,11,600/-. HE, THEREFORE, ESTIMATED THE ANNUAL VA LUE OF THE PROPERTY AT 7% OF THE INVESTMENT. THE INDEX COST OF THE PROPERTY CAME TO `. 1,19,812/- AND AFTER ALLOWING DEDUCTION @ 30% U/S.2 4(A), HE ASSESSED THE INCOME FROM THE SAID PROPERTY AT `. 83,868/-. IN APPEAL, THE ASSESSEE SUBMITTED THAT THE FLAT NO.203 IN DHEE RAJ HEIGHTS, ANDHERI WAS IN THE OCCUPATION OF THE ASSESSEE FOR S ELF USE DURING HIS STAY IN INDIA AND, THEREFORE, INCOME FROM THE SAME HAS TO BE TREATED AS NIL. AS REGARDS, THE FLAT AT ROHIT CLASSICS, PUNE IT WAS SUBMITTED THAT THE SAME WAS LYING VACANT AND THE ANNUAL VALUE OF W HICH MAY BE TAKEN AT MUNICIPAL RATEABLE VALUE. CIT(A), HOWEVER, DID N OT ACCEPT THE CONTENTIONS RAISED AND CONFIRMED THE ORDER OF THE A O AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 3. BEFORE ME THE LD. AR FOR THE ASSESSEE SUBMITTED THAT UNDER THE PROVISIONS OF LAW, THE INCOME FROM ONE SELF OCCUPIE D PROPERTY HAS TO BE ITA NO : 6590/MUM/2010 SHRI RA JKUMAR ASARPOTA 3 TREATED AS NIL. THE ASSESSEE WHO WAS NON-RESIDENT HAD KEPT THE FLAT NO.203 AT DHEERAJ HEIGHT, ANDHERI FOR SELF OCCUPATI ON AND FOR HIS SELF USE DURING HIS STAY IN INDIA AND, THEREFORE, INCOME FROM THE SAID FLAT HAD TO BE TREATED AS NIL. AS REGARDS THE FLAT NO. 15 IN ROHIT CLASSICS, IT WAS SUBMITTED THAT THE SAME WAS LYING VACANT AND, T HEREFORE, MUNICIPAL RATEABLE VALUE SHOULD BE ADOPTED AS THE A NNUAL VALUE. HE PLACED RELIANCE ON THE JUDGMENT OF FULL BENCH OF TH E DELHI HIGH COURT IN THE CASE OF CIT VS. MONI KUMAR SUBBA (199 TAXMAN 301). THE LD. DR ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE JUDGMENT CITED BY THE LD. AR WAS DISTINGUISHABLE. 4. I HAVE PERUSED THE RECORDS AND CONSIDERED THE RI VAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING COMPUTATION OF INCOME FROM DIFFERENT PROPERTIES OWNED BY THE ASSESSEE. THERE IS NO DISPU TE THAT THE FLAT AT DHEERAJ HEIGHTS, KANDIVALI HAD BEEN LET OUT BY THE ASSESSEE AND INCOME FROM WHICH HAD BEEN OFFERED AS HOUSE PROPER TY INCOME WHICH HAS ALSO BEEN ACCEPTED BY THE AO. THE DISPUTE IS RE GARDING COMPUTATION OF INCOME FROM FLAT NO.203 IN DHEERAJ H EIGHTS, ANDHERI AND THE FLAT AT ROHIT CLASSICS, PUNE WHICH WERE LYI NG VACANT. UNDER THE PROVISIONS OF SECTION 23(2), THE ANNUAL VALUE OF ON E HOUSE WHICH IS IN THE OCCUPATION OF THE OWNER FOR THE PURPOSE OF HIS OWN RESIDENCE OR WHICH CANNOT BE ACTUALLY OCCUPIED BY THE OWNER OWIN G TO HIS EMPLOYMENT, BUSINESS OR PROFESSION CARRIED OUT AT A NY OTHER PLACE WHERE HE HAS TO RESIDE, HAS TO BE TREATED AS NIL. THE AUTHORITIES BELOW HAVE GIVEN A FINDING THAT THE FLAT AT DHEERAJ HEIGH TS, ANDHERI WAS NOT IN SELF USE, BUT THE SAID FINDING IS NOT BASED ON ANY MATERIAL. THE ASSESSEE HAS CLAIMED THAT HE WAS A NRI AND HAS OCCUPIED THE SAID FLAT FOR HIS SELF USE WHILE STAY IN INDIA. SUCH A SITUATION IS C LEARLY COVERED BY THE PROVISIONS OF SECTION 23(2)(B), AS PER WHICH, IN CA SE THE ASSESSEE CANNOT ITA NO : 6590/MUM/2010 SHRI RA JKUMAR ASARPOTA 4 OCCUPY THE HOUSE DUE TO HIS EMPLOYMENT, BUSINESS OR PROFESSION BEING CARRIED OUT AT ANY OTHER PLACE, THE ANNUAL VALUE OF SUCH HOUSE PROPERTY HAS TO BE TREATED AS NIL, IF NO BENEFIT HAS BEEN DERIVED BY THE ASSESSEE. THE AUTHORITIES BELOW HAVE NOT PLACED ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAD DERIVED ANY BENEFIT. THEREFOR E, IN MY VIEW, THE INCOME FROM THE FLAT AT DHEERAJ HEIGHT, ANDHERI HAS TO BE TREATED AS NIL, BEING SELF OCCUPIED PROPERTY. 4.1 AS REGARDS THE FLAT AT ROHIT CLASSICS THERE IS NO DISPUTE THAT THE SAME WAS LYING VACANT DURING THE ENTIRE YEAR. IN CA SE, THE FLAT IS VACANT FOR THE ENTIRE YEAR, THE ASSESSEE WILL NOT ENTITLED FOR VACANCY ALLOWANCES U/S.24(C). THIS VIEW IS SUPPORTED BY THE JUDGEMENT OF HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF VIVEK JAIN V S. ACIT (337 ITR 74). THE ANNUAL VALUE OF THE SAID FLAT HAS TO BE TA KEN AS THE FAIR RENTAL VALUE OF THE FLAT IN CASE THE FLAT IS NOT COVERED B Y THE RENT CONTROL ACT. IN CASE THE FLAT IS COVERED BY THE RENT CONTROL ACT , THE STANDARD RENT DETERMINED OR DETERMINABLE UNDER THE RENT CONTROL A CT HAS TO BE TAKEN AS THE ANNUAL VALUE. THE LD. AR HAS PLACED RELIA NCE ON THE FULL BENCH JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. MUNI KUMAR SUBBA (SUPRA). IN THE SAID CASE, THE HON'BLE HIGH COURT HAS HELD THAT MUNICIPAL RATEABLE IF CORRECTLY DETERMINE D UNDER THE MUNICIPAL LAWS, CAN BE TAKEN AS ANNUAL VALUE BUT TH E SAID VALUE IS NOT BINDING ON THE AO IF HE COULD SHOW THAT THE RATEABL E VALUE UNDER THE MUNICIPAL LAW DOES NOT REPRESENT THE CORRECT FAIR R ENT. IN THAT CASE, THE AO COULD DETERMINE THE FAIR RENT ON THE BASIS OF MA TERIAL/EVIDENCE ON RECORD. IT IS ALSO PERTINENT TO POINT OUT HERE THAT THE BOMBAY TRIBUNAL IN A THIRD MEMBER CASE IN THE CASE OF ITO VS. BAKER TECHNICAL SERVICES PVT. LTD. (125 ITD 1) HAS HELD THAT IN CASE OF PROP ERTIES NOT COVERED UNDER THE RENT CONTROL ACT, THE FAIR RENTAL VALUE O F THE PROPERTY HAS TO BE ADOPTED AS ANNUAL VALUE AND THE FAIR RENTAL VA LUE HAS TO BE ITA NO : 6590/MUM/2010 SHRI RA JKUMAR ASARPOTA 5 DETERMINED AFTER TAKING INTO ACCOUNT ALL RELEVANT F ACTORS. IN MY VIEW, THE COMPUTATION OF ANNUAL VALUE OF THE SAID FLAT CA N BE DONE ONLY AFTER EXAMINING THE VARIOUS ASPECTS MENTIONED ABOVE, WHIC H HAS NOT BEEN DONE BY THE AUTHORITIES BELOW. I, THEREFORE, SET AS IDE THE ORDER OF THE CIT(A) ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR PASSING A FRESH ORDER AFTER MAKING NECESSARY EXAMIN ATION IN THE LIGHT OF OBSERVATIONS MADE ABOVE AND AFTER GIVING AN OPPORTU NITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 2 ND DAY OF DECEMBER, 2011. SD/ - ( RAJENDRA SINGH ) ACCOUNTANT MEMBER MUMBAI, DT: 02/12/2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, SMC - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI