M/S. RECORD INVESTMENTS AND LEASING PVT. LTD., MUMBAI V. ITO, WARD-3(3)(1), MUMBAI

ITA 67/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8514 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: H S RAHEJA
• Keywords: Depreciation
• Section: 143(3); 207

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.67/MUM/2019 ( ASSESSMENT YEAR: 2013-14) M/S RECORD INVESTMENTS & LEASING PVT. LTD., 92, MAKER CHAMBERS VI, 220, NARIMAN POINT, MUMBAI- 400021. VS. I.T.O. WARD 3(3)(1), MUMBAI. PAN/GIR NO.AAACR 7607 M (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI H.S. RAHEJA (AR) REVENUE BY SHRI AKHTAR H ANSARI (DR) DATE OF HEARING 13/01/2020 DATE OF PRONOUNCEMENT 21/01/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 22/11/2018 OF LD. CIT(A)-08, MUMBAI FOR THE A.Y. 20 13-14 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) WHEREIN ADDITION OF RS. 10,00,808/- WAS MADE BY INVOKING PROVISIONS OF SECTION 23(2) OF THE ACT ASS ESSING ALV OF THE FLAT AT APSARA COOPERATIVE HOUSING SOCIETY, NCPA, N ARIMAN POINT, MUMBAI. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY AND FILED ITS RETURN OF INCOME ITA NO. 67/MUM/2019 M/S RECORD INVESTMENT & LEASING P LTD. VS ITO 2 ON 24/09/2013 DECLARING INCOME OF RS. 1,26,340/- AS INCOME FROM OTHER SOURCES ON ACCOUNT OF INTEREST INCOME ON FIXE D DEPOSIT SINCE THE ASSESSEE HAS NOT BEEN ABLE TO DO ANY BUSINESS. THE SHARE HOLDERS OF THE ASSESSEE COMPANY ARE TWO IN NUMBERS AND BOTH AR E NON- RESIDENTS. DURING THE COURSE OF SCRUTINY ASSESSMENT , THE A.O. MADE ADDITION ON ACCOUNT OF NOTIONAL VALUE OF FLAT OWNED BY THE ASSESSEE COMPANY. THE A.O. OBSERVED AT PARA 4.5 THAT SINCE T HE DIRECTOR'S PASSPORT SHOWS THE ADDRESS OF FLAT B-29 IN STERLING APARTMENTS, PEDDAR ROAD, MUMBAI 400026, THE RETURN OF INCOME SH OWS THE ADDRESS AS 26, SILK HOUSE, 6390 GIRGAUM ROAD, MUMBA I 400002, AND THE RETURN OF THE COMPANY SHOWS THE ADDRESS OF THE DIRECTOR AS B27 STERLING APARTMENTS, PEDDAR ROAD, MUMBAI 400026, IT STANDS CONCLUDED THAT THE DIRECTOR ALREADY HAS A RESIDENTI AL HOUSE AND THAT NO EVIDENCE HAS BEEN FURNISHED THAT THE PREMISES OF TH E COMPANY AT APSARA CHS LTD., NCPA IS USED BY THE DIRECTOR. ACCO RDINGLY THE A.O. HELD THAT THE PREMISES IS NOT USED FOR BUSINESS PUR POSE AND HENCE INCOME FROM HOUSE PROPERTY HAS TO BE COMPUTED AS AS SESSABLE U/S 23(1) OF THE ACT. THE ASSESSEE OBJECTED TO THE SAME AND SUBMITTED THAT BOTH FLAT B27 AND B29 AT STERLING BELONGED TO THE DIRECTORS BROTHER MR. SURESH KEWALRAMANI, AND THE SAID ADDRES S WAS ON THE OLD PASSPORT BEING THE ADDRESS OF COMMUNICATION SINCE T HE DIRECTOR WAS A NON RESIDENT. SIMILARLY IT WAS EXPLAINED THAT THE A DDRESS OF 26, SILK ITA NO. 67/MUM/2019 M/S RECORD INVESTMENT & LEASING P LTD. VS ITO 3 HOUSE, 630 GIRGAUM ROAD, MUMBAI 400002 WAS AN OFFIC E PREMISES WHICH BELONGED TO KEWALRAMANI BROS. A PROPRIETARY C ONCERN OF MR. SURESH KEWALRAMANI. IT WAS FURTHER EXPLAINED THAT T HE PROOF OF RESIDENCE OF MR. CHANDROO KEWALRAMANI, DIRECTOR OF THE COMPANY AT THE APSARA C.H.S. LTD., NCPA PREMISES OF THE COMPAN Y WAS AS UNDER:- I. COPY OF BOARD RESOLUTION CONFIRMING THAT THE FLA T IS BEING OCCUPIED BY THE DIRECTOR HAS ALREADY BEEN FILED VID E SUBMISSION DATED 23/02/2016. II. COPY OF LEDGER ACCOUNT OF THE ASSESSEE EVIDENCI NG THE FACT THAT PAYMENTS FOR THE SOCIETY AND UTILITY BILLS HAV E BEEN REIMBURSED BY MR. CHANDROO KEWALRAMANI HAVE ALREADY BEEN FILED EARLIER ALONG WITH COPIES OF THE BILLS. III. EVIDENCE OF THE GAS CONNECTION IN THE SAID FLA T STANDS IN THE NAME OF MR. CHANDROO KEWALRAMANI AT THE REFERRED AD DRESS IS ANNEXED HEREWITH. IV. LETTER FROM THE SOCIETY CONFIRMING THAT MR. CHA NDROO KEWALRAMANI, DIRECTOR OF THE COMPANY OCCUPIES THE R EFERRED FLAT IS ANNEXED HEREWITH. V. VARIOUS INVOICES AND AMC AND SERVICE RECEIPTS EV IDENCING THE STAY OF MR. CHANDROO KEWALRAMANI IN THE FLAT ARE AL SO ANNEXED HEREWITH. HOWEVER, THE A.O. DID NOT AGREE WITH THE ASSESSEES CONTENTION AND MADE ADDITION U/S 23(1) AMOUNTING TO RS. 10,00,808/ -. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED THE AC TION OF THE A.O., AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEF ORE THE ITAT. ITA NO. 67/MUM/2019 M/S RECORD INVESTMENT & LEASING P LTD. VS ITO 4 3. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM THE RECORD THAT THE ASSESSEE COMPANY WAS OWNING A FLAT. ONLY L ETTING VALUE OF THE SAME WAS TAXED BY THE A.O. U/S 23(1) OF THE ACT . AS PER SECTION 23(4), WHERE THE PROPERTY CONSISTS OF A HOUSE WHICH IS IN THE OCCUPATION OF THE OWNER FOR PURPOSES OF HIS OWN RES IDENCE, THE ANNUAL VALUE OF SUCH HOUSE SHALL BE TAKEN TO BE NIL, SINCE THE PROVISION APPLIES TO COMPANIES AS WELL SINCE THE APPLICABILIT Y OF SECTION 23 IS TO AN ASSESSEE AND NOT TO AN INDIVIDUAL. THE A.O. HAD DECLINED THE ASSESSEES CLAIM ON THE PLEA THAT THE ASSESSEE COMP ANY HAS NOT CARRIED OUT ANY BUSINESS AND THAT THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH IS BEING DISALLOWED AND THAT USE BY THE DIRECTOR IS AN AFTERTHOUGHT. THEREAFTER THE A.O. WRONGLY APPLIE D THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S TI P TOP TYPOGRAPHY AND OBTAINED THE ANNUAL VALUE FROM MUNIC IPALITY AND THUS, DETERMINED THE SAME AT RS. 14,730/- PER MONTH . IN SUPPORT OF THE CONTENTION THAT THE FLAT WAS GIVEN TO THE DIREC TOR FOR RESIDENCE AS WELL AS FOR CARRYING ON BUSINESS THEREIN, THE LD. A R ALSO POINTED OUT THAT THE INSPECTOR OF THE DEPARTMENT ALSO VISITED T HE BUILDING WHEREIN IT WAS FOUND THAT THE FLAT IS USED FOR HIS RESIDENC E. IT WAS ALSO CONTENDED THAT THE ASSESSEE HAS CALLED FOR THE REPO RT OF THE INSPECTOR, ITA NO. 67/MUM/2019 M/S RECORD INVESTMENT & LEASING P LTD. VS ITO 5 HOWEVER, THE SAME WAS NOT SUPPLIED TO THE ASSESSEE NOR IT FINDS MENTIONED IN THE A.OS ORDER. 4. THIS IS EVIDENT FROM THE FACT THAT THE A.O. HAS IN SPITE OF ALL THE IRREFUTABLE EVIDENCE FURNISHED TO SHOW THAT THE NON RESIDENT DIRECTOR DOES NOT HAVE A PLACE OF RESIDENCE IN INDIA AND THA T HE STAYS IN THE COMPANY PREMISES, WHENEVER HE VISITS INDIA AND THE FACT THAT HE HAS PAID FOR THE ELECTRICITY AND SOCIETY MAINTENANCE ET C. AND FURTHER THE CONFIRMATION FROM THE SOCIETY OF HIS STAY IN THE PR EMISES WHICH WAS VERIFIED BY THE INSPECTOR SECRETLY, INITIALLY ISSUE A SHOW CAUSE TO MAKE AN ADDITION OF RS. 2,01,26,880/-. 5. THE A.O., ON ONE HAND, STATED THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM THAT THE PROPERTY IS SELF OCCUPIED SINCE I T IS A BUSINESS ASSET AND HAS ON THE OTHER HAND CONTRADICTED HIS OWN STAN D TO HOLD THAT THE ASSESSEE IS LIABLE TO BE ASSESSED ON THE BASIS OF N OTIONAL INCOME BASED ON THE MUNICIPAL RATEABLE VALUE. 6. FROM THE RECORD, I FOUND THAT THE FLAT IS A BUSI NESS ASSET USED PARTLY FOR BUSINESS AND PARTLY FOR THE RESIDENCE OF BOTH THE SHAREHOLDER DIRECTORS. SINCE THE FLAT WAS A BUSINES S ASSET AND GIVEN TO THE DIRECTOR OF THE COMPANY FOR HIS RESIDENCE, THE SAME CANNOT BE BROUGHT TO TAX U/S 23 OF THE ACT IN TERMS OF FOLLOW ING THE VARIOUS JUDICIAL PRONOUNCEMENTS. ITA NO. 67/MUM/2019 M/S RECORD INVESTMENT & LEASING P LTD. VS ITO 6 (I) DCIT VS PRABHUKRIPA OVERSEAS LTD. ITA NO. 1092 & 1093/KOL/2011 (II) CIT VS VAZIR SULTAN TOBACCO CO. LTD. 173 ITR 2 90 (AP) (III) CIT VS NEW INDIA MARITIME AGENCIES P LTD. 207 ITR 392 (MAD). 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, I DO NOT FIND ANY MERIT IN THE ACTION OF THE A.O. FOR TAXING THE FLAT OWNED BY THE ASSESSEE COMPANY U/S 23(1) OF THE ACT. HENCE, I DIR ECT TO DELETE THE SAME. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 21/01/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//