PURNA J. SHETH, MUMBAI V. ITO WD 12(1)(1), MUMBAI

ITA 7036/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9089 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Cost of acquisition

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . !'# , $ %& BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO.7036/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2006-07 SMT. PURNA J. SHETH, C/O P. BOHRA & CO., 207, COMMERCE HOUSE, 140 N.M. ROAD, FORT, MUMBAI-400 023 / VS. THE ITO, WARD-12(1), MUMBAI &( $ ./ )* ./PAN/GIR NO. AAPPS 8442R ( (+ /APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI PRAKASH JHUNJHUNWALA ,-(+ / . / RESPONDENT BY SHRI RAKESH RANJAN / 01$ / DATE OF HEARING : 18.12.2012 23' / 01$ /DATE OF PRONOUNCEMENT :18.12.2012 %4 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-23 MUMBAI DT. 6.8.2010 PERT AINING TO A.Y. 2006- 07. 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT GRIEVANCE RAISED BY GROUND NO. 1 IS COVERED BY THE DECISION OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND GROUNDS NO. 2 & 3 ARE NOT PRESSED. ACCORDINGLY, GROUNDS NO. 2 & 3 ARE DISMISSED. ITA NO. 7036/MUM/2010 2 3. GROUND NO. 1 RELATES TO THE DECISION OF THE LD. CIT(A) WHO CONFIRMED THE ADDITION OF GROSS RENT INCOME OF RS. 7,96,308/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PURCHASED PROPERTY AT SUMER APARTM ENT CO. OP. HSG. SOC. LTD TO DERIVE RENT/LEASE INCOME FROM M/S. SHAM AN MOTORS PVT. LTD. THE ASSESSEE HAS SHOWN THE VALUE OF THE PROPERTY AT RS. 95,55,700/- IN THE BALANCE SHEET. THE PROPERTY WAS PURCHASED BY THE A SSESSEE ON 27.5.2005 FOR A CONSIDERATION OF RS. 1.81 CRORES JOINTLY WIT H HER HUSBAND SHRI JATIN M. SHETH. THE ASSESSEE BEING PART OWNER OF THE PRO PERTY, THE VALUE OF PROPERTY WAS SHOWN ACCORDINGLY. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE WHY INCOME F ROM HOUSE PROPERTY SHOULD NOT BE CALCULATED IN TERMS OF THE DECISION O F THE SUPREME COURT IN THE CASE OF DEEVAN DAULAT KAPUR VS NDMC 122 ITR 700 WHEREIN THE PERCENTAGE OF COST OF ACQUISITION AS NET INCOME REC EIVABLE FROM THE PROPERTY FOR THE YEAR CONSIDERING THE LOCATION OF T HE PROPERTY. THE AO FURTHER ASKED THE ASSESSEE WHY 10% OF THE VALUE OF INVESTMENT SHOULD NOT BE ADOPTED AS ALV OF THE PROPERTY. 3.1. IN RESPONSE TO WHICH, THE ASSESSEE FILED A DET AILED REPLY ON 24.12.2008 WHICH IS EXHIBITED AT PAGE-3 OF THE ASSE SSMENT ORDER. THE AO REJECTED THE SUBMISSION OF THE ASSESSEE AND DEPUTED WARD INSPECTOR TO VERIFY WHETHER THE OFFICE PREMISES WAS INDEED PUT T O USE BY THE ASSESSEE FOR HER OWN PURPOSE. THE INSPECTOR SHRI R.S. GODSE , WARD 12(1)(1) SUBMITTED HIS REPORT AS UNDER: AS DIRECTED BY YOU, I VISITED THE PLACE CAPTIONED ABOVE. THE ENTIRE PREMISES I.E. GALA NO. 1 &2 ARE OCCUPIED BY M/S. SHAMAN MOTORS PVT. LTD. ON ENQUIRY WITH MR. DINESH SHIVAS, WHO IS ACCOUNTING MANAGER OF THE SAID COMPANY, IT W AS REVEALED THAT MR. JATIN M. SHETH & MRS. PUMA J. SHE TA ARE THE DIRECTORS OF THE COMPANY. THE PREMISES IS IN POSSE SSION OF THE ITA NO. 7036/MUM/2010 3 SAID COMPANY SINCE LAST THREE YEARS. THE PREMISES IS USED AS SHOW ROOM-CUM-SALES OFFICE OF THE FORD CARS. 4. AFTER CONSIDERING THE REPORT OF THE WARD INSPEC TOR, THE AO WENT ON TO ASSESS THE ALV OF THE PROPERTY AND CALCULATED ANNUAL RATEABLE VALUE FOR A PERIOD OF 10 MONTHS FROM 1.6.2005 TO 31 .3.2006 AT RS. 7,96,308/- AND ADDED BACK TO A TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5. THE MATTER WAS CARRIED OVER BEFORE THE LD. CIT(A ) BUT WITHOUT ANY SUCCESS. AFTER CONSIDERING THE FACTS AND THE SUBMIS SIONS OF THE ASSESSEE, THE LD. CIT(A) HELD AT PARA 2.3 AS UNDER: I HAVE CAREFULLY CONSIDERED THE APPELLANTS SUBMI SSIONS AND THE ASSESSMENT ORDER. THE COPY OF LEASE & LICEN CE AGREEMENT FILED AND LET OF FORD INDIA PVT. LTD. DT. 26.8.2008 GRANTING APPROVAL FOR SHIFTING THE SHOWROOM PREMISE S ONLY INDICATE THAT A FORMAL ARRANGEMENT FOR USING THE PR EMISES OF SHOP NO. 1 & SHOP NO. 2 CAME INTO BEING COMMENCING FROM 1.9.2008. THIS DOES NOT RULE OUT THE FACT OF THE P REMISES BEING USED BY THE COMPANY PRIOR TO 1.9.2008 WITHOUT A FORMAL AGREEMENT, ESPECIALLY IN THE LIGHT OF THE FA CT THAT THE APPELLANT IS A DIRECTOR OF M/S. SHAMAN MOTORS PVT. LTD. THE WARD INSPECTORS REPORT CONFIRMS THAT THE PREMISES WERE IN THE POSSESSION OF THE SAID COMPANY FOR THE LAST THR EE YEARS. THUS, THE ADDITION MADE BY THE AO IS IN ORDER AND IS CONFIRMED. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT ON IDENTICAL FACTS IN THE CASE OF CO-OWNER AND THE HUS BAND OF THE ASSESSEE SHRI JATIN M. SHETH, THE TRIBUNAL IN ITA NO. 7037/M /2010 HAS DIRECTED THE AO TO EXAMINE THE CONTENTS OF THE LEASE AND LIC ENSE AGREEMENT CAREFULLY AND THEREAFTER DETERMINE THE ALV ACCORDIN G TO THE LEASE AND LICENCE AGREEMENT AND THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO. ITA NO. 7036/MUM/2010 4 THE LD. COUNSEL PLEADED THAT FACTS AND FIGURES BEIN G IDENTICAL, THE SAME DECISION MAY BE FOLLOWED. 7. PER CONTRA THE LD. DEPARTMENTAL REPRESENTATIVE R ELIED UPON THE ORDER OF THE LOWER AUTHORITY. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE L OWER AUTHORITIES. WE HAVE ALSO THE BENEFIT OF THE DECISION OF THE TRI BUNAL IN ITA NO. 7037/M/10 WHERE ONE OF US (AM) IS THE AUTHOR OF THE SAID DECISION. IN THAT CASE, THE TRIBUNAL HAS HELD AT PAGE-3 PARA-10 AS UNDER: WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE ENTIRE ASSESSMENT HAS BEEN MADE SO LELY ON THE BASIS OF THE REPORT OF THE WARD INSPECTOR. THE CIT[A] ON ONE HAND ADMITS THE EXISTENCE OF THE LEASE AND LICENSE AGREEMENT AN D THE LETTER GRANTING OF APPROVAL BY FORD INDIA PVT LTD., AND ON THE OTHER HAND DISAPPROVING THE CONTENTS OF THE AGREEMENT AND THE LETTER ON THE SURMISE THAT THE PROPERTY MUST HAVE BEEN USED BY SO MEONE OR THE OTHER IN THE INTERVENING PERIOD . ASSESSMENTS CANNO T BE FRAMED ON SURMISES AND CONJUCTURES. IT IS ALSO AN UNDISPUTED F ACT THAT THE REPORT OF THE WARD INSPECTOR WAS NEVER CONFRONTED TO THE A SSESSEE. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY THIS ISSUE IS RESTORED BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO EXAMINE THE CONTENTS OF THE LEASE & LICENSE AGREEMENT CAREFULLY FOR WHICH HE MAY MAKE NECESSARY ENQUIRIES FROM RESPECTIVE PARTIES. THE AO IS ALSO D IRECTED TO VERIFY THE CONTENTS OF THE LETTER ISSUED BY FORD INDIA PVT. LT D., BEFORE COMING TO ANY CONCLUSIONS. IF THE AO IS SATISFIED, THAN THE AL V SHALL BE DETERMINED ACCORDING TO THE LEASE AND LICENSE AGREE MENT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNA L, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO. THE AO IS DIRECT ED TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN ITA NO. 7037/M/10 WHICH IS RELIED UPON BY US. ITA NO. 7036/MUM/2010 5 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5 06 50 / 7 8/ 9:; 4 &<0 / )0 =' ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2012 %4 / 3' $ 7 >%6 18.12.2012 3 / ? SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT $ %& / ACCOUNTANT MEMBER MUMBAI; >% DATED 18.12.2012 . . ./ RJ , SR. PS %4 / ,0 @ '0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. A ( ) / THE CIT(A)- 4. A / CIT 5. B? ,0 , , / DR, ITAT, MUMBAI 6. ?C D / GUARD FILE. %4 / BY ORDER, - 0 ,0 //TRUE COPY// 9 / = ) DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI