ASST CIT 16(2), MUMBAI V. GOVINDBHAI L. KAKADIA, MUMBAI

ITA 6663/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3396 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2016
• Appeal Filed By: Department
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2014
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Deemed owner of house property; Charitable institution
• Section: 143(3)

Judgement Text

, , G , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6663/MUM/2014 ASSESSMENT YEAR: 2011-12 ACIT CIT 16( 2 ), 2 ND FLOOR, MATRU MANDIR, TARDEO RD. MUMBAI-400007 / VS. GOVINDBHAI L. KAKADIA , 1001 PRASAD CHAMBERS, OPERA HOUSE, TATA RD. NO.2 MUMBAI-400004 ( REVENUE ) (R EVENUE) P.A. NO. AFTPK4028A REVENUE BY SHRI A. RAMACHANDRAN (D R) RESPONDENT BY NONE (A R) / DATE OF HEARING: 31/05/2016 / DATE OF ORDER: 03/06/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI- 27 {(IN SHORT CIT(A)}, DATED 20.08.2014 PASSED AG AINST ASSESSMENT ORDER U/S 143(3) DATED 20.02.2013 FOR TH E ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS: GOVINDBHAI L. KAKADIA 2 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THE A SSESSEE WAS ELIGIBLE FOR MUNICIPAL RATABLE VALUE EVEN THOUG H THE ASSESSEE HAS OFFERED THE NOTIONAL INCOME ON DEEMED LET OUT PROPERTY @ 8.50% OF THE TOTAL INVESTMENT MADE T O ACQUIRE SUCH RESIDENTIAL AND COMMERCIAL PROPERTIES IN PRECEDING ASSESSMENT YEAR I.E. A.Y.2010-11' 2.ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD . CIT(A) GROSSLY ERRED ON FACTS OF THE CASE IN DIRECT ING THE ASSESSING OFFICER TO TAX THE PROPERTIES BASED ON AN NUAL LETTING VALUE AS PER MUNICIPAL RATABLE VALUATION, W HICH IS AN AFTERTHOUGHT OF THE ASSESSEE AND CHANGE OF ST AND FROM THE PREVIOUS YEAR. 3.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. DURING THE COURSE OF HEARING, NONE WAS APPEARED ON BEHALF OF THE ASSESSEE AND BY SHRI A. RAMACHANDRAN, DEPARTMENTAL REPRESENTATIVE (LD. DR) ON BEHALF OF T HE REVENUE. 3 . DURING THE COURSE OF HEARING NONE APPEARED ON BEH ALF OF THE ASSESSEE AND LD. DR RELIED UPON THE ORDER OF THE AO . 4. THE SOLITARY ISSUE RAISED IN THIS APPEAL BY THE RE VENUE IS WITH REGARD TO THE GRIEVANCE OF THE REVENUE AGAINST THE ORDER OF LD. CIT(A) WHEREIN LD. CIT(A) HAS GIVEN DIRECTION T O AO FOR ASSESSING, THE ANNUAL RATABLE VALUE OF THE PROPERTY ON THE GOVINDBHAI L. KAKADIA 3 BASIS OF MUNICIPAL RATABLE VALUE IN RESPECT OF THE HOUSE PROPERTY OF THE ASSESSEE. 4.1. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES. IT IS NOTED THAT THE ASSESSEE CLAIMED BEFORE THE LD . CIT(A) THAT ANNUAL LETTING VALUE OF ITS PROPERTY SHOULD BE TAKE N AS NIL AS THE PROPERTIES WERE NEVER LET OUT. THE ALTERNATIVE SUBMISSION OF THE ASSESSEE WAS THAT IF ALV(ANNUAL LETTING VALU E) CANNOT BE TAKEN AT NIL, THEN AO SHOULD BE DIRECTED TO ADOP T THE MUNICIPAL RATABLE VALUE AS DEEMED VALUE OF PROPERTY IN QUESTION. THE LD. CIT(A) REJECTED THE PRIMARY SUBMI SSION OF THE ASSESSEE BUT ACCEPTED THE ALTERNATIVE SUBMISSIO N OF THE ASSESSEE AND DIRECTED THE AO TO VERIFY THE MUNICIPA L RATABLE VALUE IN RESPECT OF THE IMPUGNED PROPERTIES AND MOD IFY THE ASSESSMENT ORDER ACCORDINGLY. 4.2. BEING AGGRIEVED, THE REVENUE FILED AN APPEAL BEFOR E US. 4.3. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES. THE ASSESSEE HAD MADE CLAIM FOR VACANCY ALLOWANCE O N THE GROUND THAT PROPERTIES WERE NEVER LET OUT. IN OUR V IEW, LD. CIT(A) HAS RIGHTLY REJECTED THE PRIMARY CLAIM OF TH E ASSESSEE AS VACANCY ALLOWANCE CAN BE CLAIMED BY THE ASSESSEE, I F THE PROPERTY HAS BEEN LET OUT FOR A PART OF THE YEAR AN D IT REMAINS VACANT FOR SOME PART OF THE YEAR. IF THE PROPERTY I S NEVER LET OUT, THEN ITS ALV HAS TO BE DETERMINED ON DEEMED BA SIS AS PER LAW CONTAINED IN SECTION 23 OF THE ACT. IN OUR CONS IDERED VIEW THE LD. CIT(A) HAS RIGHTLY HELD THAT UNDER THESE CI RCUMSTANCES GOVINDBHAI L. KAKADIA 4 MUNICIPAL RATABLE VALUE SHOULD BE ADOPTED AS DEEMED ANNUAL LETTING VALUE IN RESPECT OF VACANT PROPERTIES, THE RELEVANT PART OF HIS ORDER IS REPRODUCED BELOW: I ALSO FIND THAT THE LD. AR HAS FAIRLY MADE AN EQU ITABLE STATEMENT THAT WITHOUT PREJUDICE TO THE STAND TAKEN REGARDING THE DEEMED VALUE TO BE TAKEN AT NIL, THE LD. AO COULD HAVE AT BEST ADOPTED THE MINICIPAL RATABLE VA LUE AS THE DEEMED VALUE OF THE PROPERTY IN QUESTION. IT HA S BEEN HELD IN A NUMBER OF DECISIONS THAT WHAT IS TO BE BR OUGHT TO TAX AS INCOME FROM HOUSE PROPERTY U/S.23(1) IS THE HIGHER OF THE RENT ACTUALLY RECEIVED OR THE MUNICIPAL RATA BLE VALUE OR THE STANDARD RENT AS PER THE RENT CONTROL ACT. R EFENCE IN THIS REGARD IS MADE TO: 1. SHEILA KAUSHISH V. CIT [1981] 131 ITR 435 (SC); 2. AMOLAK RAM KHOSLA V. CIT [1981] 131 ITR 589 (SC) 3. DEWAN DAULAT RAM KAPOOR V. NDMC [1980] 122 ITR 700(SC) 4. DR. BALBIR SINGH V. MCD [1985] 152 ITR 388 (SC) 5. CIT V. MAYUR RECREATIONAL & DEVELOPMENT LTD.(AIT - 2008-189 ITA-SB); 6. CIT V. RAGHUBIR SALAN CHARITABLE TRUST 183 ITR 2 97 - (DELHI); 7. L.BANSIDHAR & SONS HUF 201 ITR 655 (DELHI) 8. CIT V. VINAY BHARAT RAM & SONS (HUF) 261 ITR 632 (DELHI) 2.4.5 IN VIEW OF THE ABOVE, AND CONSIDERING THE 'WI THOUT PREJUDICE' PLEADINGS MADE BY THE LD. AR AS IN THE APPELLATE PROCEEDINGS FOR A.Y.2010-11 IN HIS OWN CA SE, I GOVINDBHAI L. KAKADIA 5 AM OF THE CONSIDERED OPINION THAT THE DECISION OF T HE HON'BLE SUPREME COURT AND OTHER COURTS ARE CRYSTAL CLEAR THAT THE VALUE WHICH COULD BE ADOPTED BY THE LD. AO IS THE MUNICIPAL RATABLE VALUE EVEN WHILE BRINGING TO TAX THE DEEMED ANNUAL LETTING VALUE IN RESPECT OF THE VACAN T PROPERTIES. THE LD. AO, IS THEREFORE, DIRECTED TO V ERIFY THE MUNICIPAL RATABLE VALUE IN RESPECT OF THE ABOVE PRO PERTIES AND MODIFY HIS ORDER ACCORDINGLY. GROUND NOS.1 TO 5 ARE, THEREFORE, PARTLY ALLOWED. 3.1. WE HAVE GONE THROUGH THE CASES RELIED UPON BY THE LD. CIT(A) AND FACTS OF THIS CASE AND FIND THAT ORD ER OF LD. CIT(A) IS IN ACCORDANCE WITH LAW AND FACTS. THE LD. CIT(A) HAS RIGHTLY DIRECTED THE AO TO ADOPT THE MUNICIPAL RATABLE VALUE FOR THE PURPOSE OF DETERMINING DEEMED ANNUAL LETTING VALUE IN RESPECT OF VACANT PROPERTIES. WE U PHOLD THE ORDER OF LD.CIT(A) AND FINDING, NO SUBSTANCE IN THE APPEAL FILED BY THE REVENUE, SAME IS HEREBY DISMISSED. 4. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2016. SD/- (AMIT SHUKLA ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; # DATED : 3/06/2016 CTX? P.S/. .. GOVINDBHAI L. KAKADIA 6 #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. % &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. * * ( % ) / THE CIT, MUMBAI. 4. * * / CIT(A)- , MUMBAI 5. -. / (01 , * % 012 , / DR, ITAT, MUMBAI 6. / 34 5 / GUARD FILE. / BY ORDER, ) -% ( //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI