BOHEA PROPERTIES P.LTD, MUMBAI V. ITO 6(1)(4), MUMBAI

ITA 7670/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2617 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 23-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2013
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP LD
• Assessee Lawyers: HARIDAS BHAT LD
• Keywords: Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, MUMBAI BEFORE : SHRI R.C. SHARMA , ACCOUNTANT MEMBER , AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 7670 / MUM/2013 A.Y 200 9 - 10 M/S. BOH EA PROPERTIES PVT. LTD VS. I NCOME T AX O FFICER PAN: A AACB2435R 6(1)(4) , MUMBAI ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT : SHRI HARIDAS BHAT , LD.AR FOR THE RESPONDENT : SHRI NEIL PHILIP, LD. DR DATE OF HEARING: 1 3 - 07 - 2016 DATE OF PRONOUNCEMENT: 13 - 07 - 2016 ORDER PER SANDEEP GOSAIN, JM : TH E PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LEARNED CIT(A) 1 4 , MUMBAI DATED 24 - 10 - 2013 FOR A.Y 200 9 - 10 ON THE FOLLOWING GROUNDS: - (1) THAT THE ORDER DATED 24 - 10 - 2013 PASSED U/S 250 OF THE INCOME - TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 14, MUMBAI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LEARNED INCOME TAX OFFICER, MUMBAL IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY LOCATED AT BENREEZA APARTMENTS, WORLI SEA FACE, MUMBAI AT RS. 30,60,000/ - BY ADDING NOTIONAL INTEREST ON SECURITY DEPOSI T OF RS. 27,00,000/ - TO THE ANNUAL RECEIPT OF INCOME FROM PROPERTY BY INVOKING SECTION 23(1)(A) OF THE ACT. (2) THAT THE ORDER DATED 24 - 10 - 2013 PASSED U/S 250 OF THE INCOME - TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 14, MUMBAI IS AGAINS T LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ENHANCE THE INCOME OF THE APPELLANT COMPANY BY ARBITRARILY HOLDING THAT THE RENTAL INCOME OF THE PROPERTY LOCATED BENREEZA APARTMENTS, WORLI SEA FACE. MUM BAI SHOULD BE TAKEN AT RS. 46,78,200/ - FOR COMPUTING INCOME FROM HOUSE PROPERTY. ITA NO . 7670 /M UM/2013 - B - JM M/S. BOHEA PROPERTIES PVT. LTD 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN ELECTRONICALLY DECLARING TOTAL INCOME OF RS. 1,19,349/ - ON 29 - 09 - 2009, WHICH WAS PROCESSED U/S. 14 3(1) OF THE ACT. THE CASE WAS SCRUTINIZED BY ISSUANCE OF NOTICE U/S. 143(2)/142(1) OF THE ACT. THE AO FOUND THAT THE ASSESSEE HAS RECEIVED RENT OF RS.3,60,000/ - ALONG WITH INTEREST FREE REFUNDABLE RECEIPT OF RS.2,70,00,000/ - FROM THE LICENSEE, M/S. BHUSH AN STEEL LTD. THE AO WAS OF THE VIEW THAT ANNUAL VALUE OF THE PROPERTY, WHICH WAS LET OUT , CANNOT BE ANNUAL VALUE AS THE PRESENT PREMISES HAS BEEN INTENTIONALLY SHOWN TO HAVE ONLY RENT AT RS.3,60,000/ - BEING IN PRESTIGIOUS AREA LIKE WORLI AND APART FROM RENT @ RS.3 0 ,000/ - P.M THE ASSESSEE IS RECEIVING HUGE INTEREST FREE SECURITY DEPOSIT FOR LEASING OUT THE SAID PROPERTY ON RENT. THUS, RELYING ON THE JUDGMENT/ORDER DATED 30 - 05 - 2005, WHEREIN IT HAS BEEN HELD THAT ANNUAL VALUE HAS TO BE DETERMINED I N ACCORDANCE WITH THE PROVISIONS OF SECTION 23(1)(A) AND BY TAKING INTO ACCOUNT NOTIONAL AMOUNT OF INTEREST ON THE AMOUNT OF SECURITY DEPOSIT, HE ESTIMATED THE INCOME FROM HOUSE PROPERTY AS UNDER: - LEAVE AND LICENSE FEE RECEIVED RS. 3,60,000 ADD: I NTEREST ON SECURITY DEPOSIT RS. 27,00,00 (10% OF REFUNDABLE SECURITY DEPOSIT OF RS.2,70,00,000) ---------------- GROSS ANNUAL VALUE RS. 30,60,000 ---------------- 4. AGGRIEVED BY THE SAID ORDER OF THE AO THE ASSESSEE FILED APPEAL BEFORE LEARNED CIT(A) . LEARNED CIT(A) AFTER CONSIDERING THE VARIOUS SUBMISSIONS OF THE ASSESSEE AND BY RELYING ON THE VARIOUS CASE LAWS/ JUDGMENT S OF VARIOUS COURTS AND THE REMAND REPORT OF THE AO ENHANCED THE ASSESS MENT . ACCORDINGL Y, HE DIRECTED THE AO TO COMPUTE INCOME FROM HOUSE PROPERTY AS PER PROVISIONS OF LAW. 5. AGGRIEVED BY THE ORDER OF LEARNED CIT(A) NOW THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. AT THE VERY OUTSET LEARNED AR APPEARING ON BEHALF OF THE ASSESSE E REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE CIT(A). HE ALSO ARGUED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN ITA NO. 5754/MUM/2014 FOR THE A.Y 2010 - 11, WHEREIN THE TRIBUNAL ON IDENTICAL ISSUE HAS RESTORED THE CASE TO THE FILE OF AO TO DETERMINE THE ALV IN ACCORDANCE WITH THE PROVISIONS CONTAINED ITA NO . 7670 /M UM/2013 - B - JM M/S. BOHEA PROPERTIES PVT. LTD 3 THEREIN FOR FIXATION OF STANDARD RENT AS AMENDED UP - TO - DA T E TO CITY OF MUMBAI BY GIVING THE ASSESSEE ADEQUATE AND FAIR OPPORTUNITY. 7. ON THE OTHER HAND, THE LD.DR APPEARING ON BEHALF OF THE REVENUE HAS RELIED ON THE ORDERS OF THE AO AND CIT(A). 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IN HAND IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE IN ASSESSEES OWN CASE (SUPRA), WHEREIN THE TRIBUNAL VIDE ITS ORDER 07 - 04 - 2016 HAS DISPOSED OF THE CASE BY OBSERVING AS UNDER: - 10. WE HAVE OBSERVED THAT CIT(A) WHILE APPRECIATING THE FACT OF THE CASE OBSERVED THAT FOR CALCULATING THE ALV, THE MUNICIPAL VALUATION OF THE PROPERTY OR FAIR RENT OF THE PROPERTY WHICHEVER IS HIGHER IS GENERALLY TAKEN AS GROSS ALV. HOWEVER, WHILE CALCULATING THE ALV, THE CIT(A) CALCULATED THE SAME ON THE BASIS OF AMOUNT RECEIVED AND CALCULATED THE INTEREST ON THE SECU RITY DEPOSIT AND CALCULATED THE GROSS ALV. THE ASSESSEE HAS LET OUT THE PROPERTY ON THE BASIS OF LEASE AGREEMENT AND FURTHER EXECUTED MEMO OF UNDERSTANDING BY VIRTUE OF WHICH THE RENT IS INCREASED FROM TIME TO TIME. INTERESTINGLY, NEITHER THE COPY OF LEASE AGREEMENT NOR THE MEMO OF UNDERSTANDING BY VIRTUE OF WHICH THE LEASE WAS RENEWED FROM TIME TO TIME IS PLACED ON RECORD. SINCE THE PROVISIONS OF MAHARASHTRA RENT CONTROL ACT, 1999 ARE APPLICABLE IN THE CITY OF MUMBAI WHEREIN THE PROVISIONS FOR FIXATION OF STANDARD RATE IS PROVIDED AS PER SECTION 14 OF THE ACT, SO WE DEEM IT APPROPRIATE TO RESTORE THE CASE TO THE FILE OF AO TO DETERMINE THE ALV IN ACCORDANCE WITH THE PROVISIONS CONTAINED THEREIN FOR FIXATION OF STANDARD RENT AS AMENDED UP - TO - DATE TO CITY OF MUM B AI. THE AO SHALL PROVIDE ADEQUATE AND FAIR OPPORTUNITY TO THE ASSESSEE AND PASS THE ORDER IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FILE THE COPY OF LEASE AGREEMENT AND THE MEMO OF UNDERSTANDING IN RESPECT OF LEAVE AND LICENCE IN THE REL EVANT AY IN RESPECT OF PROPERTY. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. SINCE THE POINT IN CONTROVERSY IN THE YEAR UNDER CONSIDERATION IS IDENTICAL WITH THAT OF A.Y 2010 - 11, THEREFORE, I N VIEW OF THE ABOVE, WE REMIT THE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH THE PROVISIONS CONTAINED THEREIN FOR FIXATION OF STANDARD RENT AS AMENDED AND APPLICABLE FOR MUMBAI CITY. THE AO SHALL PROVIDE ADEQUATE ITA NO . 7670 /M UM/2013 - B - JM M/S. BOHEA PROPERTIES PVT. LTD 4 AND FAIR OPPORTUNITY TO THE ASS ESSEE AND PASS A FRESH ORDER IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FILE REQUISITE EVIDENCE, IF ANY, IN RESPECT OF PROPERTY, WHICH WAS LET OUT BY IT. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE AS STA TED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13 - 07 - 2016 1 . THE APPELLANT: M/S. BOHEA PROPERTIES PVT. LTD 608 REGENT CHAMBERS, NARIMAN POINT, MUMBAI - 400021. 2 THE RESPONDENT - INCOME TAX OFFICER, 6(1)(2), MUMBAI. 3 / TH E CIT, 4.THE CIT(A) 5 . DR, MUMBAI BENCH 6 . GUARD FILE . TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP/SPS SD/ - R .C. SHARMA ACCOUNTANT MEMBER SD/ - SANDEEP GO SAIN JUDICIAL MEMBER DATE 13 - 07 - 2016 COPY OF THE ORDER FORWARDED TO: - ITA NO . 7670 /M UM/2013 - B - JM M/S. BOHEA PROPERTIES PVT. LTD 5 NO. PARTICULARS DATE INITIALS PERSON CONCER NED 1 DICTATION GIVEN ON /PREPARE AS PER INS. 1 3 /7 PP SPS 2 DRAFT PLACED BEFORE AUTHOR 1 4 /7 & 18/7 PP SPS 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER PP SPS 5 APPROVED DRAFT COMES TO THE SR.PS 20 /7 PP SPS 6 KEPT FOR PRO NOUNCEMENT ON 13/7 PP SPS 7 FILE SENT TO THE BENCH CLERK 21/7 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER