DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(4), MUMBAI V. SATYAPAL JAIKUMAR JAIN, MUMBAI

ITA 6884/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7330 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: 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.6884/M/2017 ASSESSMENT YEAR: 2013-14 DCIT, CENTRAL CIRCLE-6(4), R. NO.1925, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 VS. SHRI SATYAPAL JAIKUMAR JAIN, SHRI VIRENDRA JAIN, 82, MAKER CHAMBER III, NARIMAN POINT, MUMBAI 400 021 PAN: AABPJ 1888Q (APPELLANT) (RE SPONDENT) ITA NO.444/M/2018 ASSESSMENT YEAR: 2013-14 SHRI SATYAPAL J JAIN, 82, MAKER CHAMBERS III, NARIMAN POINT, MUMBAI 400 021 PAN: AABPJ 1888Q VS. DCIT, CENTRAL CIRCLE-6(4), AIR INDIA BUILDING, 19 TH FLOOR, MUMBAI - 400021 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ANUJ KISNADWALA, A.R. REVENUE BY : SHRI CHAUDHARY ARUNKUMAR 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 ABOVE TITLED CROSS APPEALS HAVE BEEN PREFERRE D AGAINST THE ORDER DATED 17.09.2017 RELEVANT TO ASSESSMENT YEARS 2013- 14 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HER EINAFTER REFERRED TO AS THE CIT(A)]. ITA NO.6884/M/2017 & ITA NO.444/M/2018 SHRI SATYAPAL JAIKUMAR JAIN 2 ITA NO.6884/M/2017 (REVENUES APPEAL A.Y. 2013-14) 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: '(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE RATABLE VALUE OF THE PROP ERTIES AS DETERMINED BY THE MUNICIPAL AUTHORITIES IS THE YARDSTICK WHILE FAILIN G TO CONSIDER THAT SECTION 23(L)(A) MANDATES THAT THE ANNUAL VALUE IS DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT BE EXPECTED TO BE LET FROM YEAR TO YEAR.? (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ,THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSESSING OFFIC ER HAD MADE LOCAL ENQUIRIES TO DETERMINE THE SUM FOR WHICH THE PROPERTIES COULD BE EXPECTED TO BE LET FOR THE YEAR AS PER SECTION 23(L)(A)OF THE IT ACT,1961? (III) ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACTS AS BROUGHT ON RECORD BY THE ASSE SSING OFFICER REGARDING THE ESTIMATED RENT FOR THE PROPERTIES FOR THE PURPOSES OF COMPUTING INCOME U/S 23(L)(A) OF THE I T ACT,1961?' THE APPELLANT PRAYS THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) ON THE ABOVE GROUND BE SET ASIDE AND THAT THE AC/DC BE RES TORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GR OUND, WHICH MAY BE NECESSARY. 3. THE ONLY COMMON ISSUE RAISED IN ALL THE THREE GR OUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) HOLDING T HAT ALV OF THE PROPERTY AS DETERMINED BY MUNICIPAL AUTHORITY IS TH E YARDSTICK FOR DETERMINING ANNUAL VALUE FOR THE PURPOSE OF ASS ESSING THE INCOME FROM HOUSE PROPERTY AS AGAINST THE ALV COMPU TED BY THE AO AT A SUM AT WHICH THE PROPERTY IS EXPECTED TO LE T OUT FROM YEAR TO YEAR. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS DER IVED INCOME FROM HOUSE PROPERTY 49,37,147/- AND OTHER SOURCES R S. 82,583/-. DURING THE YEAR, THE ASSESSEE FILED THE RETURN OF INCOME ON 29.07.2013 DECLARING INCOME OF RS.48,94,7 30/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESS EE. DURING ITA NO.6884/M/2017 & ITA NO.444/M/2018 SHRI SATYAPAL JAIKUMAR JAIN 3 THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT THE ASSESSEE HAS CALCULATED THE ALV ON THE BASIS OF MUN ICIPAL RATEABLE VALUE. IN PARA 3.6 OF THE ASSESSMENT ORDER , THE AO OBSERVED THAT IN A.Y. 2009-10 THE INSPECTOR CONDUCT ED A FIELD ENQUIRY AND FILED DETAILED REPORT DATED 23.12.2010 ON THE BASIS OF WHICH THE RENTAL OF RS.42 PER SQ. FT. WAS DETERM INED BY THE AO. ALSO THE INSPECTOR CONDUCTED FIELD ENQUIRY AND FILED REPORT DATED 13.3.2015 AS PER WHICH THE RENTAL RATE WAS DE TERMINED BY THE AO AT RS. 45 PER SQUARE FT. THE AO PROPOSED THE SAME BASIS TO BE TAKEN IN THE A.Y. 2013-14 SUBJECT TO NORMAL I NCREASE OF 10% IN THE RENTAL VALUE. THE LD. A.R. OF THE ASSES SEE OBJECTED TO THE INCREASE @ 10% IN THE RENTAL VALUE ON THE GROUN D THAT THIS IS JUST AN ESTIMATION OF RENT AND INCREASE MAY NOT BE POSSIBLE IN EVERY YEAR. HOWEVER, WITHOUT PREJUDICE, ADMITTED T HAT THE AMOUNT ADOPTED IN A.Y. 2012-13 MAY BE ADOPTED IN A. Y. 2013- 14. THE AO ALSO REFERRED TO THE RENTAL RATES AS PE R VARIOUS WEBSITES IN THE NEARBY AREAS FOR THE FINANCIAL YEAR 2012-13 AND CALCULATED THE AVERAGE RATE @ RS.52 DURING THE FINA NCIAL YEAR 2013-14. THE AO ON THE BASIS OF AVERAGE RATE BY VARIOUS WEBSITES AND INSPECTORS REPORT CALCULATED THE ALV FOR A.Y. 2013-14 AT RS.49 PER SQ. FT. THEREBY DETERMINING T HE PREVAILING MARKET RENT AT RS.1,83,01,836/- AS ALV IN RESPECT O F CENTRAL GARDEN COMPLEX FLAT. SIMILARLY THE ALV IN RESPECT OF GREEN FIELD FLATS WAS CALCULATED BY MAKING ENQUIRES IN THE SAME SOCIETY. THE SOCIETY PRODUCED A LEAVE AND LICENSE AGREEMENT AS PER WHICH THE RENT OF SIMILAR FLAT WAS RS. 17,000/- WIT H INTEREST FREE DEPOSIT OF RS. 50,000/- IN AY 2011-12. THE AO BY TA KING AVERAGE ANNUAL INCREASE AT 10% CALCULATED RENT AT R S.14047/- PER MONTH IN AY 2009-10 FOR EACH FLAT AND FOR FOU R FLATS AT RS. ITA NO.6884/M/2017 & ITA NO.444/M/2018 SHRI SATYAPAL JAIKUMAR JAIN 4 6,74,256/- WHILE BY FRAMING ASSESSMENT UNDER SECTIO N 143(3) DATED 20.03.2015. IN AY 2012-13 THE ALV WAS CALCULAT ED AT RS. 741,682/-. THE LD. A.R. OF THE ASSESSEE OBJECTED TO THE INCREASE @ 10% IN THE RENTAL VALUE ON THE GROUND THAT THIS I S JUST AN ESTIMATION OF RENT AND INCREASE MAY NOT BE POSSIBLE IN EVERY YEAR. HOWEVER, WITHOUT PREJUDICE ADMITTED THAT THE AMOUNT ADOPTED IN A.Y. 2012-13 MAY BE ADOPTED IN A.Y. 2013 -14.THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE THE AO CALCULATED THE ALV AT RS. 7,41,682/-.FINALLY THE CAL CULATED THE ADDITION UNDER THE HEAD HOUSE PROPERTY AT RS. 1,76, 48,471/-. 5. IN THE APPELLATE PROCEEDINGS, LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO TAKE ALV AT RS.11,03,300/- AS AGAINST RS.1,90,43,518/-. 6. NOW THE REVENUE IS IN APPEAL BEFORE US AGAINST T HE ORDER OF LD. CIT(A) REDUCING THE ALV FROM RS.1,90,43,518/- BY AO AND THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE ALV AT RS.11,03,300/- AS COMPUTED BY THE LD. CIT(A). 7. THE LD. A.R., AT THE OUTSET, SUBMITTED BEFORE TH E BENCH THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE VARIOUS DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNA L IN ASSESSEES OWN CASE IN AY 2006-07 TO 2012-13 AND AL SO THE JURISDICTIONAL HIGH COURT IN THE CASE OF FAMILY MEM BERS HAVING SAME FACTS. THE LD. A.R. SUBMITTED THAT WHERE THE PROPERTY IS NOT OCCUPIED OR RENTED OUT, IN THAT CASE THE ALV HAS TO BE DETERMINED ON THE BASIS OF RATABLE VALUE BY THE MUN ICIPAL ITA NO.6884/M/2017 & ITA NO.444/M/2018 SHRI SATYAPAL JAIKUMAR JAIN 5 AUTHORITIES AND NOT AT THE MARKET RENT. THE LD. A. R. RELIED ON A COUPLE OF BOMBAY HIGH COURT DECISIONS AS UNDER: 1. PCIT V. LAXMI JAIN IN INCOME TAX APPEAL NO. 1285 OF 2015 BOMBAY HC) 2. PCIT V. HARSH JAIN IN ITA NO. 1438 OF 2016(BOM BAY HC) THE LD. A.R. THEREFORE PRAYED BEFORE THE BENCH THA T THE APPEAL OF THE ASSESSEE MAY BE ALLOWED AND THAT OF T HE REVENUE MAY BE DISMISSED IN VIEW OF THE RATIO LAID DOWN BY THE CO- ORDINATE BENCHES OF THE TRIBUNAL IN ASSESSEES OWN CASE AND JURISDICTIONAL HIGH COURT AS STATED EARLIER. 8. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AO BY SUBMITTING THAT THE ALV OF THE VACANT FLATS WHICH WERE NOT LET OUT DURING THE YEAR HAVE TO BE CALCULATED ON THE B ASIS OF MARKET RENT AS DETERMINED BY THE AO ON THE BASIS OF THE CO MPARABLE RENT IN THE MARKET AFTER MAKING ENQUIRY DURING TH E COURSE OF ASSESSMENT. THE LD. D.R. THEREFORE RELIED HEAVILY ON THE ORDER OF AO. 9. AFTER TAKING INTO ACCOUNT, THE FACTS OF THE CASE AND THE RATIO LAID DOWN BY THE DECISIONS AS DISCUSSED HEREINABOVE , WE ARE OF THE VIEW THAT THE ALV OF THE VACANT FLATS HAVE TO BE DETERMINED ON THE BASIS OF MUNICIPAL RATABLE VALUE FOR THE PUR POSE OF ASSESSING THE INCOME UNDER THE HEAD HOUSE PROPERTY WHICH HAS BEEN HELD BY THE COORDINATE BENCHES IN ASSESSEE S OWN CASE IN THE EARLIER YEARS AND ALSO BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT V. LAXMI JAIN & PCIT V. HARSH JAI N (SUPRA). ACCORDINGLY, WE ARE INCLINED TO ALLOW THE APPEAL FI LED BY THE ASSESSEE AND DISMISS THE APPEAL OF THE REVENUE. ITA NO.6884/M/2017 & ITA NO.444/M/2018 SHRI SATYAPAL JAIKUMAR JAIN 6 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THAT OF THE ASSESSEE IS 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.