Sh. Bhushan Kumar, Noida V. DCIT, New Delhi

ITA 789/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4186 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 08-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Salary income; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NO. 789/DEL/11 ASSTT. YEAR : 2007-08 SH. BHUSHAN KUMAR, W-83, GREATER KAILASH PART-II, NEW DELHI. VS. DCIT, CIRCLE 9(1), C.R. BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI A.K. MONGA, SR. DR ORDER PER RAJPAL YADAV : JM THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 5 TH JANUARY 2011 PASSED FOR ASSTT. YEAR 2007-08. THE G RIEVANCE OF THE ASSESSEE IS LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF ` 2,40,000/- IN THE ANNUAL LETTING VALUE OF THE HOUSE PROPERTY. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A DIRECTOR IN M/S. SUPER CASSETTES INDUSTRIES. HE HAS FILED HIS RETURN OF I NCOME ON 31 ST JULY, 2007 DECLARING AN INCOME OF ` 2,90,99,534/-. THE ASSESSEE HAS ONE HOUSE PROPERTY IN MONTANA BUILDING, MUMBAI WHICH IS NOT GIVEN ON R ENT. THE ASSESSEE HAS OFFERED AN AMOUNT OF ` 60,000/- AS RENT AND CLAIMED 30% OF DEDUCTION U/S 24 ON ACCOUNT OF REPAIR AND MAINTENANCE. THE AO HAS OB SERVED THAT SIMILAR FLAT ITA NO. 789/DEL/11 ASSTT. YEAR 2007-08 2 WAS OWNED BY ASSESSEES MOTHER SMT. SUDESH KUMARI AND SHE HAS SHOWN THE RENT FROM THE PROPERTY AT ` 1,20,000/-. THE AO HAS TAKEN THE ANNUAL LETTING VALUE OF THE PROPERTY AT ` 3,00,000/- . HE MADE AN ADDITION OF ` 2,40,000/-. 3. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 4. WITH THE ASSISTANCE OF LD. DR, WE HAVE GONE THRO UGH THE RECORD CAREFULLY. WE FIND THAT A SIMILAR ISSUE AROSE IN AS STT. YEAR 2006-07. THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO IN ITA NO. 3013/D/2009 VIDE ORDER DATED 29.12.2010. WHILE SETTING ASIDE TH E ISSUE, TRIBUNAL HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN T HE CASE OF JOHN TINSON AND CO. PVT. LTD. VS CIT REPORTED IN 298 ITR 407. ACCOR DING TO THE HONBLE DELHI HIGH COURT, IF AO WANTS TO DETERMINE THE AMOUNT FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET U/S 23(1), THEN HE HA S THE CALCULATE THE REASONABLE RENT, BY TAKING INTO CONSIDERATION ALL R ELEVANT MATERIAL I.E THE RENT AVAILABLE IN THE ADJOINING FLAT ETC. IF HE FAILS TO CARRY OUT THAT EXERCISE, THEN ISSUE WOULD BE REQUIRED TO BE REINVESTIGATED. HONB LE HIGH COURT HAS REMANDED THE MATTER TO THE AO IN THAT CASE. IN THE PRESENT CASE, AO HAS NOT ASSIGNED ANY REASON AS TO WHY HE IS ADOPTING ANNUAL LETTING VALUE AT ` 3 LAC. THE RELEVANT FINDING OF THE AO IN THIS REGARD READ AS UNDER :- 2. THE ASSESSEE IS DIRECTOR IN M/S. SUPER CASSETTES INDUSTRIES LTD. THE ASSESSEE DERIVES INCOME FROM SALARY, COMMISSION, HO USE PROPERTY, INCOME FROM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. THE ASS ESSEE HAS ONE HOUSE PROPERTY IN MONTANA BUILDING, MUMBAI WHICH IS NOT GIVEN ON RENT AND HENCE THE ASSESSEE HAS OFFERED AN AMOUNT OF RS. 60,000/- AS RENT AND CLAIM ED 30% DEDUCTION U/S 24 ON ACCOUNT OF REPAIRS & MAINTENANCE. IT IS SEEN THAT A SIMILAR FLAT IN THE SAME BUILDING IS OWNED BY ASSESSEES MOTHER SMT. SUDESH KUMARI AND S HE HAS SHOWN THE RENT FROM ITA NO. 789/DEL/11 ASSTT. YEAR 2007-08 3 PROPERTY AT RS. 1,20,000/-. HOWEVER, THE RENTAL VAL UE OF THE PROPERTY HAS BEEN TAKEN AT RS. 3,00,000/- AS THE REAL ESTATE SECTOR HAS SHO WN STEEP RISE IN THE VALUE OF PROPERTY AS WELL AS RENT. MOREOVER, DURING THE ASSE SSMENT YEAR 2006-07 THE RENTAL VALUE OF PROPERTY IN QUESTION WAS TAKEN AT RS. 2,40 ,000/-. THEREFORE, IN TERMS OF SECTION 23 (1)(A) THE ANNUAL VALUE OF THE PROPERTY SHOULD BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM Y EAR TO YEAR. THEREFORE, THE GROSS RENT FOR THIS PROPERTY IS TAKEN AT RS. 3,00,000/-. THIS VALUE IS ADOPTED IN ABSENCE OF ANY CONCRETE EVIDENCE FILED BY THE AUTHORIZED REPRE SENTATIVE THAT PROPERTY IS LYING VACANT. THE PROPERTY IS SITUATED IN MUMBAI AND ASSE SSEE IS HAVING ITS BRANCH OFFICES IN MUMBAI AND HENCE IT IS LIKELY THAT IT IS USED FO R ASSESSEE OR ITS COMPANIES. IN MUMBAI THE SOCIETIES CHARGE EXTRA SUM IN THE MAINTE NANCE, IF THE PREMISE IS VACANT AND THE AUTHORIZED REPRESENTATIVE FAILED TO FILE MA INTENANCE CHARGES BILLS ISSUED BY THE MONTANA SOCIETY WHERE THE PROPERTY IS SITUATED. 5. FROM THE PERUSAL OF THE ABOVE FINDING, IT IS NOT DISCERNABLE WHAT IS THE BASIS FOR TAKING ` 3 LACS AS ALV. THE AO HAS NOT MADE ANY REFERENCE T O ANY EVIDENCE. THEREFORE, DETERMINATION OF ALV AT ` 3 LAC IS NOT SUSTAINABLE. HE MADE A REFERENCE TO THE ASSTT. ORDER IN ASSTT. YEAR 2006-07. THAT ISSUE HAS ALREADY BEEN SET ASIDE FOR RE-COMPUTATION OF ALV IN ITA NO. 3013/D/2009. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE APPEAL O F ASSESSEE FOR STATISTICAL PURPOSE AND SET ASIDE THE ISSUE TO THE FILE OF AO F OR READJUDICATION. ORDER PRONOUNCED IN THE OPEN COURT ON 21.4.2011. SD/- SD/- [G.E.VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 21.4.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES