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

ITA 7268/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2717 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 30-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLKAR
• Assessee Lawyers: R MURALIDHAR
• Keywords: Question of law

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER / I .TA NO.7268/MUM/2012 ( / ASSESSMENT YEAR: 2009-10 TIP TOP TYPOGRAPHY, C/O RELIANCE CAPITAL LTD., 570, RECTIFIED HOUSE, 1 ST FLOOR, NAIGAUM CROSS, NEXT TO ROYAL IND. ESTATE, WADALA (W), MUMBAI-400 031 / VS. THE ITO, WARD 12(3)(4), AAYAKAR BHAVAN, MUMBAI-400 020 ./ ./ PAN/GIR NO. : AACFT 2182Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI R. MURALIDHAR / RESPONDENT BY: SHRI C.W. ANGOLKAR / DATE OF HEARING :30.10.2015 !' / DATE OF PRONOUNCEMENT : 06.11.2015 #$ / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-23, MUMBAI DATED 30.7.2012 PERTAININ G TO ASSESSMENT YEAR 2009-10. 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 23, MUMBAI [CIT(A)] ERRED IN UPHOLDING THE ACTION O F ITA. NO. 7268/M/2012 2 THE ASSESSING OFFICER IN COMPUTING THE ANNUAL LETTINGVALUE OF THE PROPERTY BASED ON THE FAIR RENT OF THE OTHER PROPERTIES. YOUR APPELLANT SUBMITS THAT THE ANNUAL LETTING VALU E OF THE PROPERTY OUGHT TO HAVE BEEN COMPUTED BASED ON T HE MUNICIPAL RATEABLE VALUE AND NOT BASED ON THE SO CALLED FAIR RENT OF THE OTHER PROPERTIES. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT FOR DETERMINING THE ANNUAL LETTING VALUE OF THE PROPERT Y KNOWN AS 'SHETH CHAMBER' U/S.23(1)(A), THE MUNICIPA L RATEABLE VALUE CANNOT BE ADOPTED. ` YOUR APPELLANT SUBMITS THAT THE ANNUAL LETTING VALUE OF THE PROPERTY OUGHT TO HAVE BEEN COMPUTED BASED ON MUNICIPAL RATEABLE VALUE. -3. THE LEARNED CIT(A) ERRED IN ARRIVING AT THE ANNU AL LETTING VALUE BASED ON THE SOCALLED COMPARABLE INST ANCES OF LETTING OUT OF PROPERTIES. YOUR APPELLANT SUBMITS THAT THE MUNICIPAL RATEABLE VALUE OF THE PROPERTY OUGHT TO BE TAKEN AS ANNUAL LETTING VALUE FOR THE PURPOSE OF SECTION 23(1)(A). 4. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SU BMITS THAT THE ANNUAL LETTING VALUE ADOPTED BY THE ASSESS ING OFFICER IS EXCESSIVE AND UNREASONABLE AND OUGHT TO BE REDUCED SUBSTANTIALLY. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE ISSUES INVOLVED IN THIS APPEAL ARE NO MORE RES INTEGRA AS THEY HAVE BEEN DECIDED BY THE HONBLE HIGH COURT OF BOMB AY IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06. THE LD. COUNSEL CONTINUED STATING THAT THE DECISI ON OF THE HONBLE HIGH COURT HAS BEEN FOLLOWED BY THE TRIBUNAL IN ITA NO. 7044/M/2013 ORDER DATED 8.5.2015 PERTAINING TO A.Y. 2010-11. ITA. NO. 7268/M/2012 3 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BR ING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE AN D FAIRLY CONCEDED TO THE SUBMISSIONS MADE BY THE LD. COUNSEL. 5. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. FACTS OF THE CASE ARE THAT DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT CARRY ON ANY BU SINESS. WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO FOUND THA T THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN AT RS. 1,59,361/- AGAI NST WHICH LOSS FROM HOUSE PROPERTY AT RS. 6,536/- IS SET OFF. THE AO FURTHER NOTICED THAT UNDER THE HEAD INCOME FROM HOUSE PROPERTY TH E ASSESSEE HAS SHOWN RENT OF RS. 5,14,722/- AND AFTER DEDUCTING M UNICIPAL TAXES NET LOSS WAS COMPUTED AT RS. 6,536/-. 6. ON FURTHER PROBE, THE AO FOUND THAT THE ALV OF T HE PROPERTY IN EARLIER YEARS WAS SUBSTANTIALLY HIGHER. WHEN THE A SSESSEE WAS CONFRONTED WITH THIS SITUATION, THE ASSESSEE REPLIE D THAT THE ANNUAL LET OUT VALUE HAS BEEN TAKEN AS PER THE MUNICIPAL RATEA BLE VALUE AND ACCORDINGLY CONTENDED THAT THE ALV SHOULD BE ON THE BASIS OF MUNICIPAL VALUATION. THE CONTENTION OF THE ASSESSE E DID NOT FIND ANY FAVOUR WITH THE AO. THE AO PROCEEDED BY COMPARING THE PREVALENT RENT IN THE AREA AND DRAWING SUPPORT FROM THE PREVA LENT RENT QUA COMPARABLE CASES, THE ANNUAL VALUE WAS DETERMINED A T RS. 91,88,904/- AND AFTER ALLOWING DEDUCTION FOR MUNICI PAL TAXES AND STATUTORY DEDUCTION @ 30% INCOME FROM HOUSE PROPERT Y WAS COMPUTED AT RS. 60,67,422/-. ITA. NO. 7268/M/2012 4 7. AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE TH E LD. CIT(A) BUT WITHOUT ANY SUCCESS. 8. AS MENTIONED ELSEWHERE, THE FACTS STATED HEREINA BOVE HAVE BEEN CONSIDERED BY THE HONBLE HIGH COURT OF BOMBAY IN ASSESSEES OWN CASE IN A.Y. 2005-06 IN INCOME TAX APPEAL NO. 1 213 OF 2011 ORDER DATED 14 TH AUGUST, 2014 WHEREIN THE HONBLE HIGH COURT AT PARA-48 & 49 OF ITS ORDER HAS OBSERVED AS UNDER: WE ARE NOT IN AGREEMENT WITH SHRI CHHOTRAY THAT THE MUNICIPAL RATABLE VALUE CANNOT BE ACCEPTED AS A BON AFIDE RENTAL VALUE OF THE PROPERTY AND IT MUST BE DISCARD ED STRAIGHTWAY IN ALL CASES. THERE CANNOT BE A BLANK ET REJECTION OF THE SAME. IF THAT IS TAKEN TO BE A SA FE GUIDE, THEN, TO DISCARD IT THERE MUST BE COGENT AND RELIAB LE MATERIAL. WE ARE OF THE OPINION THAT MARKET RATE IN THE LOCALITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WHEN THE AO IS CONVINCE D THAT THE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATION BY THE PARTIES IS DOUBTFUL THAT HE CAN RESORT TO ENQUIRE A BOUT THE PREVAILING RATE IN THE LOCALITY. WE ARE OF THE VIE W THAT MUNICIPAL RATEABLE VALUE MAY NOT BE BINDING ON THE ASSESSING OFFICER BUT THAT IS ONLY IN CASES OF AFOR E-REFERRED NATURE. IT IS DEFINITELY A SAFE GUIDE. 9. THE CO-ORDINATE BENCH IN ITA NO. 7044/M/2013 FO LLOWING THE ORDER OF THE HONBLE HIGH COURT HAS HELD AS UNDER: AFTER CONSIDERING THE RELEVANT FINDING OF THE AO A ND CIT(A) AND ALSO THE CONTENTION OF THE PARTIES, WE F IND THAT THE ISSUE INVOLVED IS IDENTICAL TO THE FINDINGS GIVEN I N THE EARLIER YEARS. THE ASSESSEE HAS COMPUTED THE ALV OF THE PRO PERTY ON THE BASIS OF MUNICIPAL RATEABLE VALUE WHILE AO HAS ADOP TED THE ALV AFTER CONSIDERING THE PREVALENT RENT IN THE AREA BA SED ON THE RATE ITA. NO. 7268/M/2012 5 DETERMINED BY THE AO IN THE EARLIER YEAR. WE FIND T HAT THE HONBLE HIGH COURT IN THE CASE OF THE ASSESSEE WERE CONCERNED WITH SIMILAR ISSUE, WHEREIN THE HONBLE COURT DECID ED ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: (I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, TRIBUNAL WAS RIGHT IN HOLDING THAT THE FAIR RENTAL VALUE SPECIFIED IN SECTION 23(1)(A) IS THE MUNICIPAL VALU E OR ACTUAL RENT RECEIVED WHICHEVER IS HIGHER AND NOT THE ANNUAL LET TING VALUE ON THE BASIS OF COMPARABLE INSTANCES AS ADOPTED BY THE ASSESSING OFFICER, THOUGH THE PROPERTY UNDER CONSIDERATION WA S 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 OFFICER WITH DIRECTION TO VERIFY T HE 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 VAR IOUS PROVISIONS, JUDICIAL DECISIONS AND ARGUMENTS OF THE PARTIES, CONCLUDED THAT MUNICIPAL RATEABLE VALUE THOUGH NOT BINDING ON AO, HOWEVER IS AN APPROVED METHOD FOR DETERMINING F AIR RENTAL VALUE AND IT IS ONLY WHEN AO IS CONVINCED THAT THE CASE BEFORE HIM SUSPICIOUS AND DETERMINATION IS DOUBTFUL, HE CA N RESORT TO ENQUIRE ABOUT THE PREVAILING RATE IN THE LOCALITY A ND REJECT THE MUNICIPAL RATEABLE VALUE. MERELY BECAUSE THE RENT H AS NOT BEEN FIXED UNDER TIP TOP TYPOGRAPHY ITA NO. 7044/MUM/201 3 4 RENT CONTROL ACT, DOES NOT MEAN THAT ANY OTHER DETERMINA TION AND CONTRARY THERETO CAN BE MADE BY THE AO. SINCE THE M ATTER HAS BEEN CONCLUDED BY THE HONBLE HIGH COURT, THE SAME PRINCIPLE SHOULD BE FOLLOWED. ACCORDINGLY, WE DIRECT THE AO T O ARRIVE AT ALV IN TERMS OF THE DIRECTION AND PRINCIPLE LAID DO WN BY THE HONBLE HIGH COURT. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND THE CO-ORDINATE BENCH, IN OUR CONSID ERED OPINION, THIS ISSUE HAS TO BE DECIDED IN THE LIGHT OF THE RA TIO LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY. WE, THEREFORE, RESTO RE THIS ISSUE TO ITA. NO. 7268/M/2012 6 THE FILE OF THE AO. THE AO IS DIRECTED TO DECIDE T HE ISSUE AFRESH IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE HIGH CO URT OF BOMBAY AND THE CO-ORDINATE BENCH IN EARLIER YEARS. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH NOVEMBER, 2015. SD/- SD/- ( SHAILENDRA KUMAR YADAV) (N.K. BILLAIYA ) %& # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER ' ( MUMBAI; )# DATED : 6 TH NOVEMBER, 2015 . & . ./ RJ , SR. PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,- &&./ , ./' , ' ( / DR, ITAT, MUMBAI 6. -01 2 / GUARD FILE. % / BY ORDER, + & //TRUE COPY// & / %' ( (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI