Vikas Keshav Garud, Nashik V. Income-tax Officer,

ITA 747/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2463 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.747/PN/2014 ASSESSMENT YEAR : 2009-10 SHRI VIKAS KESHAV GARUD, ABHISHIKTA, VISE MALA, OFF. COLLEGE ROAD, NASHIK 422 005. PAN : ADFPG7593Q . APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(2), NASHIK. . RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SMT. INDIRA ADAKIL / DATE OF HEARING : 22.03.2016 / DATE OF PRONOUNCEMENT: 31.03.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS AGA INST THE ORDER OF CIT(A)-I, NASHIK DATED 14.02.2014 RELATING TO ASSES SMENT YEAR 2009-10 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. THE LEARNED CIT (APPEAL)-I, NASHIK HAS ERRED IN NOT INTERPRETING PROPERLY THE PROVISIONS OF SECTION 23(1)(C) OF THE INCOME TA X ACT, 1961 IN ASCERTAINING THE ANNUAL LETTING VALUE OF THE PROPERTIES AT (I) PRATHAMESH PLAZA, NASHIK AND (II) DANDE TOWERS, NASHIK ROAD. 2. THE LEARNED CIT (APPEAL)-I, NASHIK HAS ERRED IN NOT CONSIDERING THE ANNUAL LETTING VALUE AS PER MUNICIPAL AUTHORITIES (STANDAR D RENT) IN THE SITUATION OF THE PROPERTY BEING VACANT. 2 ITA NO.747/PN/2014 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL OF THE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THE APPEAL. 3. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE. THE LD. DEPARTMENTAL REPRESE NTATIVE, MRS. INDIRA ADAKIL APPEARED ON BEHALF OF THE RESPONDENT/REVENUE. IN T HE ABSENCE OF ANY APPEARANCE BY THE ASSESSEE IN PERSON OR THROUGH AUT HORIZED REPRESENTATIVE INSPITE OF SERVICE OF NOTICE, WE ARE CONSTRAINT TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING THE RESPONDENT/REVENUE ON MERITS IN TERMS OF RULE 24 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE S, 1963. 4. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE IS AG GRIEVED BY THE ORDER OF THE CIT(A) IN INTER-ALIA NOT INTERPRETING THE PROVISIONS OF SECTION 23(1)(C) OF THE ACT IN PERSPECTIVE FOR ASCERTAINING THE ANNUAL LETTING VALUE (ALV) OF THE PROPERTIES. 5. THE RELEVANT FACTS CONCERNING GROUND NO. 1 ARE T HAT THE ASSESSEE IS AN INDIVIDUAL AND INTER-ALIA OWNS AND POSSESSES COMMERCIAL PROPERTIES AT PRATHAMESH PLAZA, NASHIK AND DANDE TOWERS, NASHIK. BOTH THE AFORESAID PROPERTIES HAVE REMAINED VACANT THROUGHOUT THE YEAR . THE ASSESSING OFFICER DETERMINED THE ALV OF PROPERTY AT PRATHAMESH PLAZA AT RS.96,000/- PER ANNUM AS AGAINST NIL CLAIMED BY THE ASSESSEE. THE ASSE SSEE QUESTIONED THE BASIS FOR ADOPTING AD-HOC RENTAL VALUE OF THE PROPERTY AT RS. 96,000/- PER ANNUM WHEN VALUE AS PER MUNICIPAL AUTHORITIES STANDS AT RS.16, 610/- P.A.. IN THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SEEMS TO HAVE A GREED FOR ALV TO BE ESTIMATED AT RS.40,000/- PER ANNUM. THE CIT(A) ACC ORDINGLY SUBSTITUTED GROSS ANNUAL RENTAL VALUE AT RS.40,000/- AS PER CONCESSIO N GRANTED BY THE ASSESSEE. SINCE THE ALV HAS BEEN SUBSTITUTED BY THE SAID AMOU NT AGREED BY THE ASSESSEE AND IN THE ABSENCE OF RELEVANT FACTS CONCERNING THE ALV IN PREVIOUS AND SUBSEQUENT YEARS, WE ABSTAIN FROM INTERFERING WITH THE CONCLUSION OF THE CIT(A) ARRIVED ON THE BASIS OF CONCESSION FROM ASSE SSEE IN THIS EX-PARTE ORDER. 3 ITA NO.747/PN/2014 6. AS REGARDS ANOTHER PROPERTY AT DANDE TOWERS, THE CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER IN ADOPTING THE GROSS A LV AT RS.1,51,200/- HAVING REGARD TO THE ALV OF RS.12,600/- PER MONTH WHICH WA S THE ACTUAL RENT RECEIVED BY THE ASSESSEE IN RESPECT OF THIS PROPERTY IN THE FINANCIAL YEAR 2006-07 FROM THE THEN TENANT. FOR ARRIVING AT THIS CONCLUSION, THE CIT(A) RELIED UPON THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT I N THE CASE OF VIVEK JAIN VS. ACIT, (2011) 337 ITR 74 (AP). 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW AND MATERIAL PLACED ON RECORD. WE OBSERVE THAT THE ASS ESSING OFFICER HAS DENIED THE APPLICATION OF SECTION 23(1)(C) OF THE ACT FOR DETERMINATION OF ALV ON THE GROUND THAT CLAUSE (C) DOES NOT APPLY TO A SITUATIO N WHERE THE PROPERTY HAS EITHER NOT BEEN LET OUT AT ALL DURING THE PREVIOUS YEAR OR EVEN IF LET OUT, WAS NOT VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR. AS PER THE ASSESSING OFFICER, WORDS WHERE THE PROPERTY IS LET CANNOT B E READ AS WHERE THE PROPERTY IS INTENDED TO BE LET. FOR THIS PROPOSIT ION, THE ASSESSING OFFICER HAS HEAVILY RELIED UPON THE DECISION OF THE HONBLE AND HRA PRADESH HIGH COURT IN THE CASE OF VIVEK JAIN (SUPRA). THE ASSESSEE ARDENT LY CONTESTED THE ACTION OF THE AO BEFORE CIT(A) AND CLAIMED THAT IN VIEW OF S. 23(1)(C), THE ANNUAL LETTING VALUE (ALV) OUGHT TO HAVE BEEN DETERMINED A T NIL HAVING REGARD TO THE FACT THE PROPERTY COULD NOT BE LET OUT AND REMAINED VACANT FOR THE WHOLE YEAR. IN SUPPORT OF THIS PROPOSITION, DECISIONS OF THE TR IBUNAL IN THE CASE OF PREMSUDHA EXPORTS (P) LTD. & PRESMSHREE GEMS (P) LT D. VS. ACIT, 110 ITD 158 (MUM-TRIB.) AND SHAKUNTALA DEVI VS. DDIT IN ITA NO.1524/BANG/2010 ORDER DATED 20.12.2011 WERE RELIED UPON BEFORE CIT( A). WE NOTICE FROM THE ORDER OF THE CIT(A) THAT THE PROPERTY WAS ACTUALLY LET OUT IN THE FINANCIAL YEAR 2006-07 TO M/S IDBI HOME FINANCE LTD. AT AN ACTUAL RENTAL VALUE OF RS.12,600/- PER MONTH I.E. RS.1,51,200/- PER ANNUM. DURING THE YEAR RELEVANT TO ASSESSMENT YEAR 2009-10 IN APPEAL, THE ASSESSEE COULD NOT LET OUT THE PROPERTY AND THUS REMAINED VACANT THROUGHOUT THE YE AR. THEREFORE, THE SURROUNDING CIRCUMSTANCES WOULD SUGGEST THAT THE PR OPERTY WAS ALWAYS AVAILABLE TO BE LET OUT, HOWEVER, COULD NOT BE ACTU ALLY LET OUT IN REALITY. THE 4 ITA NO.747/PN/2014 INTENTION TO LET OUT THE PROPERTY IS THUS LOUD AND CLEAR IN THE CIRCUMSTANCES WHICH DID NOT HOWEVER FRUCTIFY. 8. THE ALV OF PROPERTY REMAINING VACANT FOR THE WHO LE YEAR HAS TO BE COMPUTED WITH REFERENCE TO SECTION 23(1)(C) OF THE ACT. THIS SUB-SECTION DEALS WITH A SITUATION WHERE THE PROPERTY REMAINS VACANT FOR THE WHOLE YEAR. SECTION 23(1)(C) OF THE ACT AS RELEVANT IN THE CONTEXT IS S ET OUT FOR READY REFERENCE AS UNDER :- [ ANNUAL VALUE HOW DETERMINED. 23. (1) FOR THE PURPOSES OF SECTION 22, THE ANNUAL VAL UE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) XXXXX (B) XXXXX (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE : PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORITY IN RE SPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PREVIOUS YEAR IN W HICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD O F ACCOUNTING REGULARLY EMPLOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THAT PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. [ UNDERLINE IS OURS ] 9. SECTION 23(1)(C) BY ITS LITERAL WORDING INCLUDE A SITUATION WHERE A PROPERTY WHICH WAS VACANT DURING THE WHOLE YEAR BY SAYING THAT WHEN A PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR PART OF THE PREVIOUS YEAR ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IS LESS THAN SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE . IT GOES WITHOUT SAYING THAT A SITUATION CANNOT CO-EXIST WHEREIN THE PROPERTY IS LET DURING THE PREVIOUS YEAR AND IS ALSO SIMULTANEOUSLY VACANT FOR THE WHOLE YEA R. THE WORD LET AND VACANT ARE MUTUALLY EXCLUSIVE. TO APPRECIATE IT F URTHER, THE UNDERLYING PRINCIPLE OF THIS PROVISION HAS TO BE VIEWED WITH R EGARD TO THE INTENTION TOGETHER WITH EFFORTS PUT BY ASSESSEE IN LETTING OU T THE PROPERTY, ETC. AND THEN GROSS ANNUAL VALUE IS REQUIRED TO BE DETERMINED. I F THE ASSESSEE INTENDED TO LET THE PROPERTY AND TOOK APPROPRIATE EFFORTS IN LETTIN G THE PROPERTY BUT ULTIMATELY FAILED TO LET THE SAME, THE ACTUAL RENT RECEIVED FR OM IT WILL HAVE TO BE 5 ITA NO.747/PN/2014 CONSIDERED AS ZERO BEING LESS THAN THE SUM REFERR ED IN SECTION 23(1)(A) OF THE ACT. THE REVENUE HAS NOT BROUGHT ANYTHING ON RECOR D IN REBUTTAL TO SAY THAT THE PROPERTY HAS NOT REMAINED VACANT FOR THE WHOLE YEAR OR WAS SELF OCCUPIED IN SOME MANNER. AS NOTED ABOVE, THE FACT THAT THE ASSE SSEE HAD ON THE PREVIOUS OCCASION IN THE PRECEDING YEAR RENTED THE PROPERTY REMAINS UN-TRAVERSED. WE ARE NOT INCLINED TO AGREE WITH THE INTERPRETATION S UGGESTED BY THE REVENUE THAT PROPERTY SHOULD BE ACTUALLY LET OUT IN RELEVANT TO PREVIOUS YEAR. THIS INTERPRETATION DOES NOT APPEAR CONSISTENT WITH THE PHRASEOLOGY MANDATED IN S. 23(1)(C) WHICH INCLUDES A SITUATION WHERE THE PROPE RTY CAN REMAIN VACANT DURING THE WHOLE OF THE RELEVANT PREVIOUS YEAR. HE NCE, BOTH SITUATIONS NAMELY PROPERTY IS LET AND REMAINED VACANT FOR THE WHOLE YEAR CANNOT CO-EXIST DURING THE FINANCIAL YEAR. WE ALSO NOTE FROM A READING OF ANOTHER PROVISION I.E. SUB- SECTION (3) OF SECTION 23 OF THE ACT, WHERE THE LEG ISLATURES IN THEIR WISDOM HAVE USED THE WORD HOUSE IS ACTUALLY LET. THIS A LSO SHOWS THAT THE EXPRESSION PROPERTY IS LET CANNOT MEAN ACTUAL LETTING OUT OF THE PROPERTY BECAUSE HAD IT BEEN SO, THERE WAS BE NO NEED TO USE THE WORD ACTU ALLY IN SUB-SECTION (3) OF SECTION 23 OF THE ACT. APPLYING THE PURPOSIVE INTE RPRETATION, THE EXPRESSION PROPERTY IS LET HAS TO BE READ IN CONTRAST TO PR OPERTY IS SELF OCCUPIED TO ARRIVE AT ITS TRUE PURPORT. WE SIMULTANEOUSLY NOTE ON FACTS THAT THE PROPERTY HAS BEEN ACTUALLY LET OUT IN THE FINANCIAL YEAR 2006-07 AS NOTED ABOVE. IT CANNOT BE RECKONED TO BE IN THE CONTROL OF THE ASSESSEE TO LE T OUT THE PROPERTY THROUGHOUT NECESSARILY. THE DECISION OF HONBLE ANDHRA PRADES H HIGH COURT IN THE CASE OF VIVEK JAIN (SUPRA) RELIED UPON BY THE REVENUE CA NNOT BE READ IN A MANNER THAT IF THE PROPERTY REMAINS VACANT THROUGHOUT THE YEAR, SECTION 23(1)(C) DO NOT APPLY AT ALL MORE SO WHEN THE PROPERTY WAS LET OUT IN PROCEEDING OR SUBSEQUENT YEAR. THEREFORE, IN THE TOTALITY OF THE CIRCUMSTANC ES AND HAVING REGARD TO THE PROVISIONS OF THE ACT, WE ARE OF THE VIEW THAT THE ALV OF THE PROPERTY AT DANDE TOWERS WHICH REMAINED VACANT FOR THE WHOLE YE AR HAS TO BE ASSIGNED NIL VALUE IN TERMS OF SECTION 23(1)(C) OF THE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) STANDS MODIFIED TO THIS EXTENT. GROUND NO.1 IS THUS PARTLY ALLOWED. 6 ITA NO.747/PN/2014 10. GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS R ENDERED INFRUCTUOUS IN VIEW OF OUR FINDING GIVEN IN GROUND NO. 1 SUPRA. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MARCH, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 31 ST MARCH, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE