MADHU ANAND GUPTA, MUMBAI V. A.C.I.T.-10(3), MUMBAI

ITA 7250/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1538 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed owner of house property

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.7250/MUM/2011 ASSESSMENT YEAR: 2008-09 SMT. MADHU ANAND GUPTA, C/O- AKKAD MEHTA & CO. CHARTERED ACCOUNTANTS, 2, VATIKA, 14, BAPTISTA ROAD, VILE PARLE, WEST, MUMBAI-400056 / VS. ACIT-10(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( ! /ASSESSEE) ( ' / REVENUE) PAN. NO. AACPG1554D ! / ASSESSEE BY SHRI GOVIND JAVERI ' / REVENUE BY SHRI SUMAN KUMAR-DR # '$ % ! & / DATE OF HEARING : 20/12/2016 % ! & / DATE OF ORDER: 20/12/2016 ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 29/08/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED BY THE ASSESSEE PERTAINS TO CONFIRMING PENALTY OF RS.4,38,474/- IMPOSED U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) FOR CLAIMING WRONG FULL DEDUCTION UNDER THE HEAD INCOME FROM HO USE PROPERTY. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI GOVIND JAVERI, CLAIMED THAT THE IMPUGNED ISSUE D IS SQUARELY COVERED, ON IDENTICAL FACTS, IN THE CASE O F HUSBAND OF THE ASSESSEE. THE LD. COUNSEL ALSO FURNISHED THE CO PY OF THE ORDER DATED 04/08/2016 IN THE CASE OF ANAND M. GUPT A VS INCOME TAX OFFICER (ITA NO.7251/MUM/2011) FOR ASSES SMENT YEAR 2008-09. THIS CLAIM OF THE ASSESSEE WAS NOT CONTROVERTED BY THE LD. DR, SHRI SUMAN KUMAR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RE LEVANT PORTION FROM THE AFORESAID ORDER DATED 04/08/2016 I N THE CASE OF SHRI ANAND M. GUPTA (HUSBAND OF THE ASSESSE E) FOR READY REFERENCE AND ANALYSIS:- THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST IMPUGNED ORDER DATED 29.08.2011, PASSED BY LD. CIT( APPEALS)-22, MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS UNDER SECTION ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 3 271(1)(C) FOR THE ASSESSMENT YEAR 2008-09. IN THE G ROUNDS OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING CONCEALMENT PENALTY OF RS.7,22,320/- BEI NG THE PENALTY @ 100% HOLDING THAT THE EXPLANATIONOF THE A PPELLANT IS NOT BONA FIDE AND THE AO HAS RIGHTLY IMPOSED PEN ALTY UNDER SECTION 271(1)(C) FOR CONCEALING AND FURNISHING INA CCURATE PARTICULARS OF INCOME BY CLAIMING WRONGFUL DEDUCTIO N OF RS.21,25,096/-. CONFIRMING THE LEVY OF PENALTY WITH OUT PROPERLY APPRECIATING THE FACTS AND THE REASONS FOR THE CLAIM UNDER SECTION 24 OF THE I. TAX ACT AND THE DETAILED SUBMISSIONS FILED BY THE APPELLANT EXPLAINING THAT THERE IS NO CONCEALMENT NOR FILING OF INACCURATE PARTICULARS OF INCOME BY C LAIMING WRONGFUL DEDUCTION OF RS.21,25,096/-. CONFIRMING TH E LEVY OF PENALTY WITHOUT PROPERLY APPRECIATING THE FACTS AND THE REASONS FOR THE CLAIM UNDER SECTION 24 OF THE I. TA X ACT AND THE DETAILED SUBMISSIONS FILED BY THE APPELLANT EXPLAIN ING THAT THERE IS NO CONCEALMENT NOR FILING OF INACCURATE PA RTICULARS IS BAD IN LAW AND THE SAME NEEDS TO BE CANCELLED. 2. THE BRIEF FACTS QUA THE LEVY OF PENALTY ARE THAT , THE ASSESSEE IN THE RETURN OF INCOME HAS CLAIMED LOSS OF RS.21,25,096/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS BOOK ED A FLAT IN THE BUILDING KNOWN AS EVITA AT HIRANANDANI GARDEN IN POWAI FOR AN AGGREGATE CONSIDERATION OF RS.3,47,51,258/-, VID E SALE AGREEMENT DATED 08.11.2004. FOR THE PURCHASE OF THE SAID PROP ERTY, THE ASSESSEE TAKEN LOAN FROM HDFC BANK ON WHICH INTEREST OF RS.2 1,40,286/- WAS PAID DURING THE PREVIOUS YEAR. THE CONSTRUCTION OF THE SAID BUILDING WAS COMPLETED IN FINANCIAL YEAR 2006-07 AND THE BUI LDER HAS RECEIVED OCCUPATION CERTIFICATE FROM BMC AS ON 15.0 6.2007. IN TURN BUILDER HAS ALSO OFFERED THE POSSESSION TO THE ASSE SSEE, VIDE LETTER DATED 21.06.2007, REQUIRING THE ASSESSEE TO PAY THE MAINTENANCE CHARGES AND ACCORDINGLY, FINAL PAYMENT WAS MADE BY THE ASSESSEE ON 02.08.2007. THUS, THE ENTIRE PAYMENT WAS MADE AS WELL AS THE POSSESSION WAS ALSO RECEIVED BY THE ASSESSEE DURING THE RELEVANT FINANCIAL YEAR 2007-08. HOWEVER, THE ASSESSEE HAD M ADE A REQUEST TO THE BUILDER TO DELAY THE POSSESSION, DUE REASONS LI KE, ASSESSEE WANTED ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 4 TO CUSTOMIZE THE FLAT BY UNDERTAKING CIVIL WORK AND WOOD WORK TO SUIT HIS PERSONAL NEEDS AND ALSO TO FINISH IT IN A HABIT ABLE CONDITION SO AS TO OCCUPY AND USE THE FLAT FOR THE PURPOSE OF RESID ENCE. THE ACTUAL POSSESSION OF FLAT WAS DEFERRED AND WAS FINALLY TAK EN ON 13.04.2009. IN THE RETURN OF INCOME, THE ASSESSEE SHOWED THE AN NUAL LETTING VALUE (ALV) OF THE PROPERTY ON MUNICIPAL VALUATION RATE W HICH WAS RS.1,31,500/- FROM THE SAID ALV, MUNICIPAL TAXES OF RS.1,09,800/- WAS REDUCED AND DEDUCTION UNDER SECTION 24(A) @ 30% WAS CLAIMED. THAT APART, ASSESSEE ALSO CLAIMED DEDUCTION OF INTE REST ON BORROWED CAPITAL AMOUNTING TO RS.21,40,286/-. ACCORDINGLY, L OSS OF RS.21,25,096/- WAS COMPUTED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE WORKING OF THE COMPUTATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY WAS ACCORDINGLY, DECLARED IN T HE FOLLOWING MANNER:- MUNICIPAL VALUATION 131500 GROSS ANNUAL VALUE 131500 LESS:MUNICIPAL TAX PAID 109800 NET ANNUAL VALUE 21700 LESS DEDUCTION U/S 24-REPAIRS 6510 6510 NET INCOME FROM HOUSE PROPERTY BEFORE INTEREST 15190 PROPORTIONATE INCOME FROM HOUSE PROPERTY 15190 LESS: DEDUCTION U/S 24-SHARE OF INTEREST ON BORROWED CAPITAL 2140286 2140286 NET INCOME FROM HOUSE PROPERTY -2125096 3. HOWEVER, IN THE COURSE OF THE ASSESSMENT PROCEED INGS, THE LD. ASSESSING OFFICER HELD THAT THE FAIR RENTAL VALUE O F THE FLAT WAS IN THE RANGE OF RS.100/- PER. SQ. FT. IN THE FINANCIAL YEAR 2007-08 AND REQUIRED THE ASSESSEE AS TO WHY SAME RATE SHOULD NO T BE TAKEN AS ALV. THE ASSESSEE, IN RESPONSEFURNISHED VARIOUS DOC UMENTARY EVIDENCES TO SHOW THAT ASSESSEE WAS NOT IN PHYSICAL POSSESSION OF THE FLAT AND THEREFORE, THERE IS NO QUESTION OF DET ERMINING THE ALV. THE ASSESSEE HAD DECLARED SUO MOTTO THE DEEMED LET OUT VALUE OUT OF ABUNDANT PRECAUTION AS PER MAHARASHTRA RENT CONTRO L ACT. THE LD. AO HELD THAT IN ABSENCE OF POSSESSION OF THE HO USE PROPERTY, NO ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 5 INCOME OR LOSS FROM THE SAID PROPERTY CAN BE COMPUT ED. ACCORDINGLY, HE DISALLOWED THE CLAIM OF LOSS OF RS. 2,25,096/-. 4. NOW, THE PENALTY HAS BEEN LEVIED ON SAID DISALLO WANCE OF LOSS FOR FURNISHING WRONG PARTICULARS AND ALSO CONCEALING TH E TAXABLE INCOME. IN RESPONSE TO THE SHOW CAUSE NOTICE IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAS REITERATED ITS CONTEN TION, HOWEVER LD. ASSESSING OFFICER HELD THAT THE ASSESSEE HAS COMPUT ED THE INCOME FROM HOUSE PROPERTY WITH SOLE INTENTION OF CLAIMING LOSS ON ACCOUNT OF INTEREST PAID ON BORROWED CAPITAL. ACCORDINGLY, HE LEVIED THE PENALTY OF RS.7,22,320/- AFTER DETAILED DISCUSSION AND REFERRING TO VARIOUS DECISIONS. SUCH A PENALTY HAS BEEN CONFIRME D BY LD. CIT(A) ALSO. 5. BEFORE US, LD. COUNSEL SHRI VIJAY MEHTA SUBMITTE D THAT THE WHOLE PREMISE OF THE LD. CIT(A) FOR CONFIRMING THE PENALT Y IS THAT, ASSESSEE HAS CLAIMED BEFORE THE AO THAT HE IS NOT L IABLE FOR TAX BECAUSE ASSESSEE HAD SPECIFICALLY STATED THAT, SINC E HE HAS NOT TAKEN THE POSSESSION OF THE FLAT FORMALLY BY THE BUILDER, THEREFORE, ALV HAS BEEN SHOWN BY WAY OF ABUNDANT PRECAUTION ON THE MUNICIPAL RATABLE VALUE. HOWEVER, HE SUBMITTED THAT SUCH AN O BSERVATION OF LD. CIT(A) IS NOT CORRECT AN IN SUPPORT, HE DREW OU R ATTENTION TO LETTERDATED 04.12.2010 FILED BEFORE THE AO DURING T HE COURSE OF THE ASSESSMENT PROCEEDINGS. IN THE SAID LETTER, THE ASS ESSEE HAS DULY EXPLAINED THE ENTIRE FACTS WHICH ARE AS UNDER:- THE ASSESSEE HAS ACQUIRED THE SUBJECT PROPERTY VIDE AGREEMENT FOR SALE DATED 8TH NOVEMBER, 2004, WHICH WAS DULY REGISTERED WITH THE SUB- REGISTRAR ON THE SAME DAY; THE AGGREGATE PURCHASE CONSIDERATION OF THE ADMEASU RING 4575 SQ. FT. IS RS.3,68,28,586/-; THE PURCHASE OF FLAT WAS FURNISHED BY HDFC BANK AND THE ASSESSEE HAD PAID INTEREST OF RS.21,40,286/- DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION POST COMPLETION OF CONSTRUCTION OF BU ILDING; THE CONSTRUCTION OF THE BUILDING WAS COMPLETED IN T HE YEAR 2006-07; ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 6 THE BUILDER RECEIVED THE BMC OCCUPATION CERTIFICATE ON 15TH JUNE, 2007; BUILDER OFFERED THE FINAL POSSESSION TO THE ASSESSE E VIDE THEIR LETTER DATED 21ST JUNE, 2007 REQUIRING THEM T O PAY THE MAINTENANCE CHARGES AND OTHER INCIDENTAL EXPENSES A ND AGREEING TO GIVE PHYSICAL POSSESSION OF THE FAT AFT ER 45 DAYS ON RECEIPT OF PAYMENT. THE ASSESSEE MADE FINAL PAYMENT ON AUGUST 2, 2007 TOWARDS MAINTENANCE CHARG ES INCLUDING BMC TAX FOR THE PERIOD JUNE 2007 TO MAY 2 009, MEMBERSHIP FEES AND SOCIETY FORMATION FEES; THE ASSESSEE RECEIVED REBATE OF RS.6,72,066/- AS PE R BI OF REBATE DATED 18TH JULY, 2007 BEARING NO.032/2007- 2006/245 AS THE ASSESSEE HAD REQUIRED THE BUILDER N OT TO PROVIDE CERTAIN FITTINGS IN BOTH ROOM, KITCHEN, TOI LET, ELECTRICAL FITTINGS AND OTHER UTILITIES AS PER STAN DARD SPECIFICATION AS THE ASSESSEE DESIRED TO CUSTOMIZE THE RELEVANT PORTION OF CIVIL WORK AND FIXTURES AND FIT TINGS TO SUIT HIS PERSONAL NEEDS; IN ESSENCE THOUGH THE FLAT WAS READY FOR PHYSICAL POSSESSION IT WAS NOT FULLY FINISHED IN A HABITABLE CONDITION TO OCCUPY AND USE FOR THE PURPOSE OF RESIDENCE WITH OUT COMPLETING THE UNFINISHED CIVIL WORK AND FIXTURES A ND FITTINGS FOR BATHROOMS, KITCHEN, TOILET AND OTHER U TILITIES, WHICH WERE REQUIRED TO BE REDONE POST POSSESSION. SINCE ASSESSEE WAS HAVING CONSTRAINT OF FINANCE AND NOT IN A HURRY TO OCCUPY THE FLAT IMMEDIATELY FOR HIS RESI DENTIAL USE OR FOR LETTING OUT, THE ACTUAL PHYSICAL POSSESS ION OF THE FLAT WAS DEFERRED AND TAKEN FROM THE BUILDER ON 13T H APRIL, 2009 AS PER THE CERTIFICATE ISSUED BY LAKE VIEW DEV ELOPERS DATED APRIL 13, 2009 AND CHECKLIST DATED 13TH APRIL 2009 CONFIRMING THAT CHANGES IN FLAT CARRIED OUT BY BUIL DER AS PER ASSESSEES SPECIFICATION AND HANDOVER OF KEYS; AS THE ASSESSEE MADE FULL PAYMENT AND MAINTENANCE CHARGES INCLUDING MUNICIPAL TAXES AND BECAME FULL O WNER OF THE PROPERTY WITH UNEQUIVOCAL RIGHT TO TAKE POSS ESSION AT HIS OWN DISCRETION IN RESPECT OF PROPERTY CONSTRUCT ED AS PER CONTRACT WITH THE BUILDER AND READILY AVAILABLE FOR THE PURPOSE OF FURNITURE FIT OUTS, HE OFFERED THE ANNUA L RATABLE VALUE AS PER BMC TAX COMPUTATION AS INCOME FROM DEE MED LET OUT HOUSE PROPERTY AS PER SEC. 23(1)(A) AS ASSE SSEE HAS ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 7 ANOTHER HOUSE PROPERTY IN COLABA, MUMBAI, OFFERED A S SELF OCCUPIED PROPERTY BY EXERCISING HIS OPTION U/S 23(4 ); AFTER THE PHYSICAL POSSESSION IN APRIL 2009 THE ASS ESSEE TOOK UP THE INTERIOR DECORATION AND BALANCE FINISHI NG WORK LIKE CIVIL WORK, ELECTRICAL WIRING, FURNISHING ETC. DURING JULY/DECEMBER 2009 AND THE FLAT BECAME FIT AND HABI TABLE FOR RESIDENTIAL USE AND CAPABLE FOR LETTING OUT EFF ECTIVELY FROM JANUARY, 2010. THE ASSESSEE HAS ACQUIRED FLAT NO.2051 IN HIS NAME AND SIMILARLY FLAT NO.2401 WAS ACQUIRED BY HIS WIFE MRS . MADHU GUPTA, ASSESSED WITH YOU UNDER PAN AAFPG 1617C TO BE USED AS A SINGLE RESIDENCE UNIT AKIN TO A PENT HOUSE COMBINING A LARGE AREA OF 9150 SQ.FT.. SUCH A LARGER AREA PREMISES HAS A VERY LIMITED RENTAL DEMAND IN T HE MARKET AND ITS FAIR RENTAL VALUE CANNOT BE BENCH MA RKED TO A SMALL SIZE FLAT. THEREAFTER THE ASSESSEE HAD REFERRED TO VARIOUS DEC ISIONS AS TO WHY MUNICIPAL VALUE SHOULD BE ADOPTED AND FINALLY SUMMA RIZED THE ENTIRE CONTENTION IN THE FOLLOWING MANNER: 1. EVEN THOUGH THE PHYSICAL POSSESSION OF THE SUBJE CT FLAT WAS NOT ACTUALLY RECEIVED BY THE ASSESSEE, THE ASSESSEE HAD SUO MOTO DECLARED DEEMED LET OUT VALUE AS MEASURE OF ABUNDAN T CAUTION AS BMC OCCUPATION CERTIFICATE WAS RECEIVED, MUNICIP AL TAXES DEMANDED BY THE BUILDERS FOR THE PERIOD UNDER CONSI DERATION WERE PAID AND THE ASSESSEE WAS RIGHTFUL OWNER OF TH E FLAT; 2. THE ACTUAL PHYSICAL POSSESSION OF THE FLAT IN HA BITABLE CONDITION WAS RECEIVED ONLY ON 13TH APRIL 2009 AS A MPLY EVIDENCED BY THE SUPPORTING DOCUMENTS. IN FACT AND IN LAW THE CONDITION OF THE PROPERTY WAS NOT CAPABLE OF BEING LET OUT NOR ASSESSEE COULD HAVE LET OUT AS THERE WAS NO PHYSICA L POSSESSION DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R UNDER CONSIDERATION; 3. THE PROPERTY UNDER CONSIDERATION IS SUBJECT TO M AHARASHTRA RENT CONTROL ACT AND ASSESSEE BEING AN INDIVIDUAL S ELF OCCUPANT TO WHOM THE PROVISIONS OF RENT CONTROL ACT WOULD AP PLY AND THEREFORE IN RESPECT OF PROPERTY AVAILABLE FOR SELF OCCUPATION, HE ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 8 CANNOT REASONABLY BE EXPECTED TO LET OUT THE SAME F ROM YEAR TO YEAR ON RENT HIGHER THAN STANDARD RENT; 4. THE OFFERING OF DEEMED LET OUT VALUE ON PRESUMPT ION OF OWNERSHIP RIGHT IS REBUTTABLE AS AN INADVERTENT MIS TAKE AND IT CANNOT BE CAPITALIZED FOR THE PURPOSE OF TAXATION N OTIONAL INCOME. IN VIEW OF ABOVE WE WOULD LIKE TO RESPECTFULLY SUBM IT THAT YOUR PROPOSAL FOR ADOPTING THE FAIR RENTAL VALUE IN RESP ECT OF FLAT IN EVITA OFFERED FOR TAX DEEMED LET OUT PROPERTY IS NO T JUSTIFIED AND NOT TENABLE IN LAW. WE THEREFORE REQUEST YOU TO KIN DLY ACCEPT THE ANNUAL VALUE BASED ON THE MUNICIPAL VALUATION A S NOTIONAL DEEMED RENTAL INCOME FOR THE PURPOSE OF ASSESSMENT OF INCOME FORM HOUSE PROPERTY. THUS, THE ASSESSEES ENTIRE CONTENTION AND EXPLANAT ION WAS BONA FIDE AND DULY SUPPORTED BY VARIOUS DECISIONS. IN AN Y CASE, HE SUBMITTED THAT, NOW IT IS A SETTLED LAW THAT CHARGE IS LEVIED ON THE OWNER OF THE HOUSE, IMMATERIAL OF THE FACT WHETHER THE OWNER IS IN POSSESSION OR ENJOYMENT OF THE PROPERTY. IN SUPPORT , HE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS UNION LAND END SOCIETY VS CIT REPORTED IN [1 972] 82 ITR 794. 6. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS MATE RIAL PLACED ON RECORD. FROM THE DISCUSSION AS MADE ABOVE, IT IS EV IDENT THAT THE ASSESSEE DID GOT THE POSSESSION FROM THE BUILDER AF TER THE COMPLETION OF BUILDING AND OCCUPATION CERTIFICATE O BTAINED FROM BOMBAY MUNICIPAL CORPORATION (BMC) AND HAD ALSO MAD E THE ENTIRE PAYMENT AS AGREED IN THE SALE AGREEMENT. IT IS ALSO AN ADMITTED FACT THAT, THE ASSESSEE IN THE RETURN OF I NCOME HAD TAKEN MUNICIPAL RATABLE FOR THE PURPOSE OF ALV UNDER SECT ION 23(1)(A). FROM SUCH COMPUTATION, THE ASSESSEE HAS CLAIMED THE INTEREST PAID ON THE BORROWED CAPITAL FOR THE SAID HOUSE PROPERTY . THE LD. AO ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 9 HAS DISALLOWED THE LOSS CLAIMED UNDER THE HEAD INC OME FROM HOUSE PROPERTY ON THE GROUND THAT, THE ASSESSEE HI MSELF HAS ADMITTED THAT, HE HAS NOT TAKEN THE ACTUAL POSSESSI ON IN THE RELEVANT FINANCIAL YEAR. SUCH CONTENTION OF THE LD. AO CANNOT BE UPHELD, BECAUSE IT CANNOT BE DENIED ON THE PRESENT FACTS THAT THE ASSESSEE WAS THE ACTUAL OWNER OF THE SAID PROPERTY DURING THE RELEVANT PREVIOUS YEAR AND ONCE THE ASSESSEE WAS TH E OWNER OF THE HOUSE PROPERTY, THEN CHARGE IS CREATED FOR THE DETE RMINATION OF INCOME FROM HOUSE PROPERTY BY WAY OF ALV. THE BASIS OF ASSESSING THE TAX AND INCOME FROM HOUSE PROPERTY IS THE OWNER SHIP OF THE PROPERTY AND NOT THE ACTUAL REALIZATION OF INCOME. THE OWNERSHIP BY ITSELF ATTRACTS THE CHARGE. THIS PROPOSITION HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS UNION BANK BUILDING SOCIETY (SUPRA). THE RELEVANT RATIO OF THE HONBLE HIGH COURT READS AS UNDER:- THE WORD OWNER IN SECTION 9 OF THE ACT MUST BE CONSTRUED IN ITS ORDINARY MEANING OF A LEGAL OWNER UNDER THE GENERAL LAW. THE LIABILITY TO INCOME-TAX ON PROPERTY DEPENDS ON THE FACT THAT THE ASSESSEE IS T HE OWNER OF THE PROPERTY. SECTION 9 DEALS WITH INCOME FROM PROPERTY AND THE INCOME FROM THAT SOURCE IS AN ARTIFICIALLY DEFINED INCOME. THE ASSESSEE IS MADE L IABLE TO PAY THE INCOMETAX ON THE VALUE OF THE PROPERTY COMPUTED IN THE MANNER PRESCRIBED. THAT LIABILITY D OES NOT DEPEND EITHER ON THE POWER OF THE OWNER TO EARN THE INCOME THEREFROM OR ON THE POWER OR CAPACITY OF A PERSON TO LET IT OUT OR HIS OWN POWER TO RECEIVE RE NT OR INCOME FROM BONA FIDE ANNUAL VALUE. THE WORD OWNER DOES NOT IMPLY A PERSON WHO HAS TH E CAPACITY TO EARN PROFIT FROM PROPERTY OR TO RENT IT OUT. BUT, UNLESS THERE IS SOME VESTIGE OF OWNERSHIP IN A PERSON HE CANNOT BE CALLED THE OWNER, WITHIN THE MEANING OF SECTION 9 OF THE ACT, HOWEVER WIDE THE CONNOTATION OF THAT WORD MIGHT BE. IN THIS VIEW THE PURCHASERS WERE NOT OWNERS WITHIN THE MEANING OF SECTION 9 AND THE ASSESSEE CONTINUED TO BE OWNER OF THE BUNGALOWS SOLD. ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 10 8. THE ASSESSEE WAS THUS UNDER THE LAW LIABLE TO DI SCLOSE THE ALV FROM THE SAID PROPERTY. IN FACT, THE ASSESSEE HAD S HOWN THE ALV ON THE MUNICIPAL RATABLE VALUE WHICH AGAIN IS ONE OF T HE ACCEPTED METHOD FOR SHOWING THE ALV IN TERMS OF VARIOUS DECI SIONS WHICH HAS BEEN RELIED UPON BEFORE THE AUTHORITIES BELOW. HENCE, IT CANNOT BE HELD THAT, INCOME FROM HOUSE PROPERTY WAS NOT AS SESSABLE IN THE CASE OF THE ASSESSEE IN THIS YEAR. ONCE THE INCOME FROM HOUSE PROPERTY IS ASSESSABLE, THEN AS A NATURAL COROLLARY DEDUCTION OF INTEREST PAID ON THE BORROWED FUNDS FOR THE PURPOSE OF HOUSE PROPERTY HAS TO BE ALLOWED IN TERMS OF SECTION 24(B ). ACCORDINGLY, THE CLAIM OF THE ASSESSEE WAS NOT ONLY BONA FIDE BU T ALSO WAS DULY SUPPORTED UNDER THE PROVISIONS OF LAW. THUS, WE HOL D THAT, NO PENALTY FOR DISALLOWANCE OF LOSS OF INCOME FROM HOU SE PROPERTY CAN BE MADE AND WE DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE STANDS ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . WE FIND THAT AT PAGE-7 OF THE AFORESAID ORDER, THER E IS A FINDING BY THE TRIBUNAL THAT THE ASSESSEE ACQUIRED FLAT NO.2051 IN HIS NAME AND SIMILARLY FLAT NO.2401 WAS ACQUIRED BY HIS WIFE (THE PRESENT ASSESSEE) TO BE USED AS A SINGLE RESIDENTIAL UNIT. IT IS ALSO NOTED THAT THE BENCH HAS ALREADY DISCUSSED THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS UNION LAND AND SOCIETY VS CIT (1972) 82 I TR 794 (BOM.). THE BASIS OF ASSESSING THE TAX AND INCOME F ROM HOUSE PROPERTY IS THE OWNERSHIP OF THE PROPERTY AND NOT T HE ACTUAL REALIZATION OF INCOME. THE OWNERSHIP BY ITSELF ATTR ACTS THE CHARGE. THIS PROPOSITION HAS BEEN UPHELD BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS UNION BANK BUILDING SOCIETY (SUPRA). THE ASSESSEE WAS THUS UNDER THE LAW LIABLE TO DISCLOSE THE ALV FROM THE SAID PROPERTY. IN FACT, T HE ASSESSEE ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 11 HAD SHOWN THE ALV ON THE MUNICIPAL RATABLE VALUE WH ICH AGAIN IS ONE OF THE ACCEPTED METHOD FOR SHOWING THE ALV IN TERMS OF VARIOUS DECISIONS WHICH HAS BEEN RELIED UP ON BEFORE THE AUTHORITIES BELOW. HENCE, IT CANNOT BE HELD THA T, INCOME FROM HOUSE PROPERTY WAS NOT ASSESSABLE IN THE CASE OF THE ASSESSEE IN THIS YEAR. ONCE THE INCOME FROM HOUSE P ROPERTY IS ASSESSABLE, THEN AS A NATURAL COROLLARY DEDUCTION O F INTEREST PAID ON THE BORROWED FUNDS FOR THE PURPOSE OF HOUSE PROPERTY HAS TO BE ALLOWED IN TERMS OF SECTION 24(B). ACCORD INGLY, THE CLAIM OF THE ASSESSEE WAS NOT ONLY BONA FIDE BUT AL SO WAS DULY SUPPORTED UNDER THE PROVISIONS OF LAW. THUS, WE HOL D THAT, NO PENALTY FOR DISALLOWANCE OF LOSS OF INCOME FROM HOU SE PROPERTY CAN BE MADE. EVEN OTHERWISE, THE CASE OF THE ASSES SEE IS FORTIFIED BY THE RATIO LAID DOWN BY HON'BLE APEX CO URT CIT VS RELIANCE PETRO PRODUCTS 322 ITR 158 (SC), THUS, BEI NG ON IDENTICAL FACTS/ISSUE, BY FOLLOWING THE AFORESAID O RDER OF THE TRIBUNAL, THAT TOO, IN THE CASE OF HUSBAND OF THE A SSESSEE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 20/12/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ' DATED : 20/12/2016 ITA NO.7250/MUM/2011 SMT. MADHU A GUPTA 12 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / # 0! ( )* ) / THE CIT, MUMBAI. 4. / / # 0! / CIT(A)- , MUMBAI 5. 2'3 -! , / )*& ) 4 , # $ / DR, ITAT, MUMBAI 6. 5 6$ / GUARD FILE. / BY ORDER, .2*! -! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI