TIP TOP TYPOGRAPHY, MUMBAI V. ITO WD 12(3)(4), MUMBAI

ITA 7044/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92502 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: R MURLIDHAR
• Keywords: Question of law
• Section: 143(3)

Judgement Text

TIP TOP TYPOGRAPHY ITA NO. 7044 / M UM /20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JU DICIAL MEMBER ITA ITA NO. : 7044 /MUM/20 1 3 (ASSESSMENT YEAR: 2010 - 11 ) TIP TOP TYPOGRAPHY , C/O. RELIANCE CAPITAL LTD., 570, RECTIFIER HOUSE, 1 ST FLOOR, NAIGAUM CROSS NEXT TO ROYAL IND. ESTATE, WADALA(W), MUMBAI - 400 0 31 .: PAN: AACFT 2182 Q VS I NCOME TAX OFFICER - 12 ( 3 ) (4) , AAYAKAR BHAVAN, M K ROAD, CHURCHGATE, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R MURLIDHAR RESPONDENT BY : SMT N V NADKARNI /DATE OF HEARING : 30 - 0 4 - 201 5 / DATE OF PRONOUNCEMENT : 08 - 05 - 201 5 ORDER , : PER AMIT SHUKLA , JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 1 8 .0 9 .2013 PASSED BY CIT(A) 23 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE AY 2010 - 11 . 2. THE ASSESSEE IS MAINLY AGGRIEVED BY DETERMINATION OF ANNUAL LETTING VALUE OF THE PROPERTY U/S 23(1)(A) BASED ON CERTAIN COMPARABLE INSTANCES INSTEAD OF MUNICIPAL RATEABLE VALUE OF THE PROPERTY. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN SET AT REST IN THE CASE OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT IN ORDER DATED 8 TH AUGUST, 2014 IN INCOME - TAX APPEAL NO . 1213 OF 2011. N OT ONLY THAT, IN AY 2008 - 09 THE TRIBUNAL HAD ALSO DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE INDEPENDENTLY . TIP TOP TYPOGRAPHY ITA NO. 7044 / M UM /20 1 3 2 4. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 5. AFTER CONSIDERING THE MATERIAL ON RECORD IT IS SEEN T HAT T HE ASSESSEE HAS BEEN SHOWING INCOME FROM HOUSE PROPERTY AND CAPITAL GAIN. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAD SHOWN R ETURN OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHEREIN THE ASSESSEE HAD SHOWN RENTAL INCOME OF RS. 5,14,722/ - AND AFTER CLAIMING DEDUCTION ON ACCOUNT OF MUNICIPAL TAXES PAID OF RS. 5,21,258/ - , NET LOSS OF RS. 6,536/ - WAS SHOWN. IN THE EARLIER YEARS, THE ASSESSEE HAD RENTED THE PROPERTY TO M/S RELIANCE INDUSTRIES FOR THE PERIOD OF 33 MONTH W.E.F. 0 2. 0 4.2005 . A S PER THE SAID AGREEMENT , A SUM OF RS. 30,000/ - PER MONTH WAS PAYABLE TO THE ASSESSEE BY THE LICENSEE, TOWARDS LICENSE FEES TO USE THE AFORESAID PREMISES, WHICH WAS INCLUSIVE OF WATER AND CAR PARKING CHARGES. BESIDES THIS, LICENSEE HAD ALSO PAID A SUM OF RS. 5. 25 CRORES TO THE ASSESSEE AS INTEREST FREE SECURITY DEPOSIT, WHICH WAS TO BE REPAID BY THE ASSESSEE TO THE LICENSEE ON TERMINATION OF THE SAID L EAVE & L ICENSE A GREEMENT. HOWEVER DURING THE YEAR, THE SAID PROPERTY WAS NOT LET OUT I.E. IT WAS VACANT. THE A O HAS NOTED THAT IN THE EARLIER YEARS , THE ALV OF SUCH PROPERTY U/S 23(1)(A) WAS SUBSTANTIALLY HIGHER AND THE ASSESSEE IS SHOWING THE NOMINAL RENT AFTER TAKING SUBSTANTIAL INTEREST FREE SECURITY DEPOSIT. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THIS ISSU E OF DETERMINATION OF ALV HAD ARISEN FOR THE FIRST TIME IN AY 2005 - 06 , WHEREIN THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE , IN VIEW OF THE DIRECTIONS GIVEN BY THE TRIBUNAL TO THE AO TO ASSESS THE RATEABLE VALUE ENVISAGED BY THE MUNICIPALITY , ON THE AC TUAL RENT RECEIVED. THIS DECISION WAS FOLLOWED BY THE CIT(A) IN AY 2007 - 08 & 2008 - 09. IN THE ASSESSMENT YEAR 2009 - 10, THE AO HAD MADE THE ADDITION ON THE GROUND THAT THE D EPARTMENT S APPEAL HAS BEEN ADMITTED BY THE HONBLE HIGH COURT. THE AO AFTER RELYING ON THE ASSESSMENT ORDER FOR THE EARLIER ASSESSMENT YEARS, HELD THAT THE ALV IS TO BE DETERMINED AS PER THE EARLIER YEAR AND DETERMINED THE ANNUAL RENT TIP TOP TYPOGRAPHY ITA NO. 7044 / M UM /20 1 3 3 AT RS. 91,88,904/ - AS PER THE WORKING GIVEN AT PAGE 5 OF THE ASSESSMENT ORDER. HOWEVER, THE LD. CIT(A) TH OUGH ACCEPTED THIS FACT THAT IN THIS YEAR , ALSO THE PROPERTY HAS NOT BEEN LET OUT AND THE FACTS ARE IDENTICAL TO THE EARLIER ASSESSMENT YEARS HOWEVER HELD THAT IN THE AY 2009 - 10, THE CIT(A) HA S UPH E LD THE ACTION OF THE AO TO ASSESSEE THE ALV ON THE BASIS O F FAIR RENT OTHER COMPARABLE PROPERTIES. AFTER REFERRING TO CERTAIN TRIBUNAL DECISIONS, HE UPHELD THE ACTION OF THE AO. 6. AFTER CONSIDERING THE RELEVANT FINDING OF THE AO AND CIT(A) AND ALSO THE CONTENTION OF THE PARTIES, WE FIND THAT THE ISSUE INVOLVED IS IDENTICAL TO THE FINDINGS GIVEN IN THE EARLIER YEARS. THE ASSESSEE HAS COMPUTED THE ALV OF THE PROPERTY ON THE BASIS OF MUNICIPAL RATEABLE VALUE WHILE AO HAS ADOPTED THE ALV AFTER CONSIDERING THE PREVALENT RENT IN THE AREA BASED ON THE RATE DETERMINED BY THE AO IN THE EARLIER YEAR. WE FIND THAT THE HONBLE HIGH COURT IN THE CASE OF THE ASSESSEE WERE CONCERNED WITH SIMILAR ISSUE, WHEREIN THE HONBLE COURT DECIDED ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: (I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TRIBUNAL WAS RIGHT IN HOLDING THAT THE FAIR RENTAL VALUE SPECIFIED IN SECTION 23(1)(A) IS THE MUNICIPAL VALUE OR ACTUAL RENT RECEIVED WHICHEVER IS HIGHER AND NOT THE ANNUAL LETTING VALUE ON THE BASIS OF COMPARABLE INSTANCES AS ADOPTED BY THE ASSESSING OFFICER, THOUGH THE PROPERTY UNDER CONSIDERATION WAS NOT COVERED BY THE RENT CONTROL ACT? (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TRIBUNAL WAS RIGHT IN REMITTING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFI CER WITH DIRECTION TO VERIFY THE RATEABLE VALUE FIXED BY THE MUNICIPAL AUTHORITIES AND IF THE SAME IS LESS THAN THE ACTUAL RENT RECEIVED, THEN THE ACTUAL RENT RECEIVED SHOULD BE TAXED. 7 . THE HONBLE HIGH COURT AFTER DISCUSSING THE VARIOUS PROVISIO NS, JUDICIAL DECISIONS AND ARGUMENTS OF THE PARTIES, CONCLUDED THAT MUNICIPAL RATEABLE VALUE THOUGH NOT BINDING ON AO, HOWEVER IS A N APPROVED METHOD FOR DETERMINING FAIR RENTAL VALUE AND IT IS ONLY WHEN AO IS CONVINCED THAT THE CASE BEFORE HIM SUSPICIOUS A ND DETERMINATION IS DOUBTFUL, HE CAN RESORT TO ENQUIRE ABOUT THE PREVAILING RATE IN THE LOCALITY AND REJECT THE MUNICIPAL RATEABLE VALUE. MERELY BECAUSE THE RENT HAS NOT BEEN FIXED UNDER TIP TOP TYPOGRAPHY ITA NO. 7044 / M UM /20 1 3 4 RENT CONTROL ACT , DOES NOT MEAN THAT ANY OTHER DETERMINATION AND CONT RARY THERETO CAN BE MADE BY THE AO. SINCE THE MATTER HAS BEEN CONCLUDED BY THE HONBLE HIGH COURT , THE SAME PRINCIPLE SHOULD BE FOLLOWED. ACCORDINGLY, WE DIRECT THE AO TO ARRIVE AT ALV IN TERMS OF THE DIRECTION AND PRINCIPLE LAID DOWN BY THE HONBLE HIGH C OURT. 8 . ACCORDINGLY, THE ASSESSEES APPEAL IS TREATED AS ALLOWED IN THE MANNER INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY , 2015. SD/ - SD/ - ( ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, DATE: 8 TH MAY , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 23 , MUMBAI. 4 ) THE CIT - 12 , MUMBAI/CIT - 12 , MUMBAI . 5 ) , , / THE D.R. F BENCH, MUMBA I. 6 ) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS