KRISHNA BHAGWAN KOTAK, MUMBAI V. DCIT CEN CIR 6(4), MUMBAI

ITA 7227/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8037 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 08-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: NITANT GORADIS
• Keywords: Deemed owner of house property
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI PAWAN SINGH, JM ./ I.T.A. NO S . 7227 TO 7233 /MUM/2016 ( / ASSESSMENT YEAR S : 2006 - 07 TO 2012 - 13 ) KRISHNA BHAGWAN KOTAK 16, BANK STREET, MUMBAI - 400 001 / VS. DY. CIT, CENTRAL CIRCLE - 6(4), (ERSTWHILE KNOWN AS ASST. CIT, CENTRAL CIRCLE - 39, MUMBAI) ./ ./ PAN/GIR NO. AADPK 6366 L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NITANT GORADIS / RESPONDENT BY : SMT. VIDISHA KALRA / DATE OF HEARING : 05.10.2017 / DATE OF PRONOUNCEMENT : 11.12 .2017 / O R D E R P ER SHAMIM YAHYA , A. M.: TH ESE ARE APPEALS BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FROM THE ASSESSMENT YEARS 2006 - 07 TO 2012 - 13. THE COMMON ISSUE RAISED IN THE APPEAL READS AS UNDER: 1. THE LD. CIT(A) E RRED IN CONFIRMING ACTION OF THE ASSESSING OFFICER IN TREATING PROPERTY FLAT NO. 18 AT KALPANA, 96, NETAJI SUBHASH ROAD, MARINE DRIVE, MUMBAI AS DEEMED LET OUT AND DETERMINING ON AN ADHOC BASIS NOTIONAL RENTAL INCOME AND THEREBY CONFIRMING AN ADDITION MA DE BY THE ASSESSING OFFICER . 2. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, THE APPELLANT SUBMITS THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT THE NOTIONAL RENT CONSIDERED BY THE 2 ITA NO S . 7227 TO 7233/M/2016 (A.YS. 2006 - 07 TO 2012 - 13) KRISHNA BHAGWAN KOTAK VS. DY. CIT ASSESSING OFFICER IS ON THE HIGHER SIDE AND HE SHOULD HAVE CONSIDERED THE MU NICIPAL RATEABLE VALUE OF SUCH PROPERTIES. 2. IN THESE CASES, FOLLOWING ADDITIONS WAS MADE BY THE ASSESSING OFFICER TOWARDS RENTAL VALUE: ITA NO. ASSESSMENT YEAR AMOUNT 7227/MUM/2016 2006 - 07 RS.1,94,916/ - 7228/MUM/2016 2007 - 08 RS.1,94,916/ - 7229/MUM/2 016 2008 - 09 RS.2,14,063/ - 7230/MUM/2016 2009 - 10 RS.2,14,063/ - 7231/MUM/2016 2010 - 11 RS.2,37,996/ - 7232/MUM/2016 2011 - 12 RS.2,37,996/ - 7233/MUM/2016 2012 - 13 RS.2,61,930/ - 3. IN THESE CASES, PURSUANT TO SEARCH ACTION IN THE CASE OF J. M. BAXI GROUP, IT WAS NOTED THAT THE ASSESSEE WAS IN POSSESSION OF HOUSE PROPERTY, THE RENT OF WHICH HAD NOT BEEN OFFERED FOR TAXATION AS UNDER: 1/3 RD UNDIVIDED SHARE IN FLAT NO.18 AT KALPANA, 96, NETAJI SUBHASH ROAD, MUMBAI 4. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE HAD NOT OFFERED ANY DEEMED RENT FROM THE SAID PROPERTY. IN RESPONSE, THE ASSESSEE STATED THAT HE WAS THE OWNER OF THE FLAT NO. 2, KALPA NA CO - OP. SOCIETY, SAME BUILDING. IT WAS STATED THAT THE SAID FLAT NO.2 AND 1/3 RD SHARE IN FLAT NO. 18 SHOULD BE T AKEN AS ONE UNIT , BEING SELF OCCUPIED PROPERTY OF THE ASSESSEE AND, HENCE, NO DEEMED RENT FOR FLAT NO. 18 SHOULD BE CONSIDERED. WITHOUT PREJUDICE, THE ASSESSEE STATED THAT RATABLE VALUE OF THE AREA SHOULD BE CONSIDERED AS RS.4 1/ - PER SQ. FT. T HE ASSESSING OFFICER REJECTED THE ASSESSEES 3 ITA NO S . 7227 TO 7233/M/2016 (A.YS. 2006 - 07 TO 2012 - 13) KRISHNA BHAGWAN KOTAK VS. DY. CIT CONTENTION THAT THE FLAT NO. 2 AND FLAT NO. 18 BOTH SHOULD BE TAKEN AS COMBINED SELF OCCUPIED PROPERTY. HE PROCEEDED TO COMPUTE THE DEEMED RENTAL VALUE AS UNDER: SR. NO. DESCRIPTION OF THE PROPERTY WITH SHARE SQ. FT. PERTAIN ED TO THE ASSESSEE RATE LETTABLE VALUE PER MONTH (RS.) ANNUAL LETTABLE VALUE (RS.) 1 1/3 RD UNDIVIDEND SHARE IN FLAT NO. 18 AT KALPANA, 96, NETAJI SUBHASH ROAD, MUMBAI 569.85 41 23363.85 280366 5. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER. 7. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RE CORDS. WE FIND THAT THE SAID FLAT NO. 2 AND FLAT NO. 18 ARE SEPARATE FLATS AND THE AUTHORITIES ARE RIGHT IN HOLDING THAT IT CANNOT BE TREATED AS ONE SELF OCCUPIED UNIT. IN THIS REGARD, WE MAY GAINFULLY REFER TO THE LD. COMMISSIONER OF INCOME TAX (APPEALS) S OBSERVATION: 7.4.3 IN THE PRESENT CASE, NO EVIDENCE HAS BEEN LED BY THE APPELLANT THAT THE RESIDENTIAL HOUSES UNDER CONSIDERATIONS AT KALPANA, NETAJI SUBHAS ROAD HAVE BEEN COMBINED TO MAKE ONE RESIDENTIAL HOUSE, I.E., THERE WERE NO SEPARATE KITCHES AND S EPARATE ENTRANCES/PASSAGE. IN ABSENCE OF SUCH FACTUAL FINDING THAT ALL THE PROPERTIES AT KALPANA, NETAJI SUBHASH ROAD WERE MERGED IN ONE RESIDENTIAL HOUSE WITH NO SEPARATE KITCHEN AND NO SEPARATE ENTRANCE/PASSAGE THE APPELLANTS CLAIM IS DEVOID OF MERITS A ND HENCE CANNOT BE ACCEPTED. FURTHER, THE LD. A.O. HAS TREATED THE FLAT NO. 2 AT KALPANAN, 96, NETAJI SUBHASH ROAD, MUMBAI, AS SOP AND HENCE THE APPELLANTS CLAIM TO CONSIDER THE 1/3 RD UNDIVIDED SHARE IN FLAT NO. 18 AT CIRCUMSTANCES OF THE CASE, NO FAULT C AN BE FOUND WITH THE ACTION OF LD. A.O. IN TAXING DEEMED RENT IN RESPECT OF 1/3 RD UNDIVIDEND SHARE IN FLAT NO. 1 AT KALPANA, NETAJI SUBHASH ROAD. 4 ITA NO S . 7227 TO 7233/M/2016 (A.YS. 2006 - 07 TO 2012 - 13) KRISHNA BHAGWAN KOTAK VS. DY. CIT 9. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN HOLDING THAT THE DEEMED/RENTAL ANNUAL RATABLE VALUE OF THIS P ROPERTY WAS LIABLE TO BE OFFERED FOR TAXATION. NOW WE COME TO THE COMPUTATION OF DEEMED/NOTIONAL RENT. IN THIS REGARD, WE NOTE THAT THE ASSESSING OFFICER HAS COMPUTED THE LET T ABLE VALUE ON THE BASIS OF RATE WHICH THE ASSESSEE HIMSELF HAD INTIMATED. HOWEVER , NOW THE ASSESSEE IN GROUNDS OF APPEAL HAS URGED THAT THE NOTIONAL RENT CONSIDERED BY THE ASSESSEE IS ON HIGHER SIDE AND HE SHOULD HAVE CONSIDERED THE MUNICIPAL RATABLE VALUE. IN THIS REGARD, WE NOTE THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPHY (IN I TA NO.1213 OF 2011 AND OTHERS DATED 08.06.2014) HAS EXPOUNDED THAT THERE CANNOT BE A BLANKET REJECTION OF MUNICIPAL RATEABLE VALUE. HOWEVER, THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT UPON COGENT AND MATERIAL MAT TER THE ASSESSING OFFICER CAN DEVIATE FROM THE SAME. IN THIS CASE, WE NOTE THAT THE ASSESSEE HAS HIMSELF INFORM ED THE ASSESSING OFFICER ABOUT THE LETTABLE VALUE, WHICH THE A .O. HAS ADOPTED. HENCE, THERE WAS COGENT AND MATERIAL MATTER FOR THE A.O. TO MAKE T HE COMPUTATION. AS SUCH WE DO NOT FIND ANY INFIRMITY IN THE COMP UTATION OF RENTAL VALUE DONE BY THE ASSESSING OFFICER IN THIS REGARD , A CCORDINGLY WE CONFIRM THE SAME. 1 0 . IN THE RESULT, THE SE APPEALS BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017 S D/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED :11.12.2017 . . ./ ROSHANI , SR. PS 5 ITA NO S . 7227 TO 7233/M/2016 (A.YS. 2006 - 07 TO 2012 - 13) KRISHNA BHAGWAN KOTAK VS. DY. CIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPOND ENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI