NAVINNCHANDRA C. SHETH, MUMBAI V. DCIT CIR 15(3), MUMBAI

ITA 7920/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87946 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH, MUMBAI . . , , . . , ! BEFORE SHRI I.P. BANSAL, JM AND SHRI B.R. BASKAR AN, AM ./ I.T.A. NO.7920/MUM/2010 ./ I.T.A. NO.1071/MUM/2012 ( ' ' ' ' / ASSESSMENT YEARS :2006-07 & 2007-08 SHRI NAVINCHANDRA C. SHETH, 135, C.P. TANK ROAD, MUMBAI-400 004 THE DCIT, CIRCLE 15(3), MATRU MANDIR, MUMBAI # ./ $% ./PAN/GIR NO. : AAJPS 1253Q ( #& /APPELLANT ) .. ( '(#& / RESPONDENT ) #& ) / APPELLANT BY : ` SHRI NISHIT GANDHI '(#& * ) /RESPONDENT BY : SHRI VIVEK BATRA * +, / DATE OF HEARING :07.01.2015 -.' * +, / DATE OF PRONOUNCEMENT :07.01.2015 / / O R D E R PER I.P BANSAL, JM: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS OF THE LD. CIT(A) D T. 16 TH SEPTEMBER, 2010 AND 7 TH DECEMBER, 2011 FOR ASSESSMENT YEARS 2006-07 AND 2 007-08 RESPECTIVELY. 2. GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS READ AS UNDER: ASSESSMENT YEAR -2006-07 ITA NOS.7920 & 1071/M/2010 2 1.A) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS. 3,30,750/- MADE BY THE AO UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS DEEMED RENTAL INCOME. B) THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS IN THE LAW TH E SAID ADDITION OUGHT TO HAVE BEEN DELETED. C) WITHOUT PREJUDICE TO THE ABOVE: THE APPELLANT FURTHER SUBMITS THAT, IN ANY CASE, S UCH NOTIONAL INCOME OUGHT TO HAVE BEEN COMPUTED ON THE BASIS OF ANNUAL VALUE OF THE PROPERTY DETERMINED BY THE RELEVANT LOCAL AUTHORITY. ASSESSMENT YEAR 2007-08 1.A) THE LD. CIT(A) ERRED IN HOLDING THAT THE NOTIO NAL INCOME IN RESPECT OF VARIOUS RESIDENTIAL PROPERTIES OWNED BY THE APPELLANT (EXCLUDING ONE SUCH PROPERTY) IS CHAR GEABLE TO TAX. B) THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS IN THE LAW, T HE ANNUAL VALUE OF THE SAID PROPERTIES WHICH HAD NOT BEEN ACT UALLY LET OUT DURING THE RELEVANT PREVIOUS YEAR OUGHT TO BE T AKEN AT NIL. II. WITHOUT PREJUDICE TO THE ABOVE: A) THE LD. CIT(A) ERRED IN GIVING NO FINDING (AND THER EBY CONFIRMING) ON THE GROUND RELATING TO NET ADDITION OF RS. 75,600/- BEING NOTIONAL INCOME FROM A PROPERTY BEIN G A PART OF THE BUNGLOW SITUATED IN BRUGUPUR SOCIETY, BHARUCH USED BY THE FIRM IN WHICH THE APPELLANT IS A PARTNER. B) THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMS TANCES OF THE CASE, AS WELL AS IN THE LAW AND PARTICULARLY CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS, THE IN COME FROM THE SAID PROPERTY OUGHT TO HAVE BEEN CONSIDERE D AS EXEMPT U/S. 22. ITA NOS.7920 & 1071/M/2010 3 C) THE APPELLANT THEREFORE SUBMITS THAT THE SAID PORTI ON USED BY THE FIRM, FORMS PART OF THE PROPERTY FOR WHICH EXEMPTION U/S. 23(2) IS ALLOWED AND THEREFORE, THE ADDITION OUGHT TO HAVE BEEN DELETED. III.A) THE LD. CIT(A) ERRED IN GIVING NO FINDING (A ND THEREBY CONFIRMING) THE GROUND RELATING TO NET ADDI TION OF RS. 46,200/- BEING NOTIONAL INCOME ASSESSED IN RESP ECT OF PROPERTY BEING FLAT NO. 204, VRAJ APARTMENT, BHARUC H. B) THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRC UMSTANCES OF THE CASE, AS WELL AS IN THE LAW, THE ANNUAL VALU E OUGHT TO HAVE BEEN DETERMINED AT RS. 3,300/- AND CONSEQUENTL Y, THE NET ADDITION OUGHT TO HAVE BEEN RESTRICTED TO RS. 2 ,610/-. C) THE APPELLANT FURTHER SUBMITS THAT ALTERNATIVELY , ANNUAL VALUE OUGHT TO HAVE BEEN COMPUTED AT THE RATE OF 8% OF THE CAPITAL COST OF THE PROPERTY. 3. SINCE THE FACTS RELATING TO BOTH THE APPEALS ARE COMMON AND THE ISSUES RAISED ARE ALSO COMMON, THESE APPEALS ARE AR GUED TOGETHER BY PARTIES, THEREFORE FOR THE SAKE OF CONVENIENCE, BOT H THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER. 4. THE ASSESSEE IS AN INDIVIDUAL AND OWNER OF FOLLO WING 7 PROPERTIES, THE INCOME OF WHICH HAS BEEN ASSESSED UNDER THE HEA D INCOME FROM HOUSE PROPERTY. S. NO . DESCRIPTION OF PROPERTY LOCATION WHEN ACQUIRED OWNERSHIP STATUS APPROX. AREA (SQ.FT.) WHETHER LET OUT OF SELF OCCUPIED REMARKS 1. BLDG. N.C. SHETH & OTHERS 7,GAZDHAR PARK, CHIRA BAZAR MUMBAI-400002 PRIOR TO 1975 AOP-25% SHARES 1100 LET OUT 2. BUNGALOW IN BHRUGUPUR 61, BHGRUGUPUR SOCIETY, BHARUCH 392 002 JULY, 99 INHERITED ON DEMISE OF 900 OCCUPIED BY FAMILY ITA NOS.7920 & 1071/M/2010 4 FATHER THROUGH WILL BUSINESS 3. SOCIETY (RESIDENCE) BUNGALOW IN BHRUGUPUR 61, BHGRUGUPUR SOCIETY, BHARUCH 392 002 JULY, 99 INHERITED ON DEMISE OF FATHER THROUGH WILL 1400 SELF OCCUPIED 4. SOCIETY (RESIDENCE) C.N. SHETH & SONS FLAT 43, MODI BHUVAN, GAMDEVI, MUMBAI-400007 DEC. 85 CO-OWNERSHIP (12.5% SHARE) 1100 SELF OCCUPIED BY ALL CO- OWNERS 5. FLAT 44, MEGHDOOT APARTMENT, ASHRAM ROAD, AHMEDABAD 1999 INHERITED ON DEMISE OF FATHER THROUGH WILL 900 VACANT 6. FLAT 204, VRAJ APARTMENT, CAIKUNTH MEGA TOWNSHIP, OLD NH NO. 8, BHARUCH-393002 2001 PURCHASED FROM OWN INCOME 550 USED FOR NOBAL CAUSE 7. LAND & BLDG. N. NO.1, NEXT TO FRIENDS COLONY, OLD NH NO. 8, BHARUCH-392002 1973 BUILT FROM OWN FUNDS 900 SELF OCCUPIED 5. THE GROUNDS OF APPEAL ARE NOT SPECIFIC, HOWEVER WHILE EXPRESSING THE GRIEVANCE , LD. AR POINTED OUT THE FOLLOWING GR IEVANCES: I) ANNUAL LETTING VALUE (ALV)OF THE PROPERTIES MENTION ED AT S. NO. 2 & 6(FOR BOTH THE ASSESSMENT YEARS) II) IN RESPECT OF ASSESSMENT YEAR 2006-07 WITH REGARD T O PROPERTIES STATED AT S. NO. 4,5 & 7. 6. ON THESE GRIEVANCES, IT WAS SUBMITTED BY LD. AR THAT WITH REGARD TO PROPERTIES MENTIONED AT S. NO. 4,5 & 7, LD. CIT( A) IN RESPECT OF ASSESSMENT YEAR 2007-08 HAS ACCEPTED THE CLAIM OF T HE ASSESSEE IN PURSUANCE TO REMAND REPORT SUBMITTED BY THE AO IN W HICH AO HIMSELF HAS ACCEPTED THE VALUATION AND DEPARTMENT DID NOT P REFER APPEAL WITH ITA NOS.7920 & 1071/M/2010 5 REGARD TO THOSE ACCEPTANCE OF VALUATION. THUS, IT IS THE CASE OF THE LD. AR THAT THE ADDITION WITH REGARD TO PROPERTIES MENTION ED AT S. NO. 4,5&7, THE RELIEF SHOULD BE GRANTED IN LINE WITH RELIEF GRANT ED BY LD. CIT(A) IN RESPECT OF ASSESSMENT YEAR 2007-08. 6.1. SO FAR AS IT RELATES TO PROPERTY MENTIONED AT S. NO. 2 I.E. BUNGALOW AT 61, BHRUGUPUR SOCIETY, BHARUCH, THIS PROPERTY AD MITTEDLY IS BEING USED BY THE ASSESSEE FOR BUSINESS PURPOSE OF THE FIRM IN WHICH THE ASSESSEE IS A PARTNER AND, THEREFORE, NO ANNUAL LETTING VALUE COU LD BE ASSESSED AS HOUSE PROPERTY INCOME IN VIEW OF THE DECISION OF THE ITAT IN THE CASE OF DR. URMILA H. DESAI VS ITO ORDER DT. 13.4.2010 IN ITA N O. 1048/M/09 FOR ASSESSMENT YEAR 2005-06 (COPY PLACED ON RECORD.) 6.2. SO FAR AS PROPERTIES MENTIONED AT S. NO. 6, IT IS SUBMITTED BY LD. AR THAT AO HAS ADMITTED ADHOC RATE OF RS. 10 PER SQ . FT. PER MONTH WHICH IS CONFIRMED BY LD. CIT(A). IT WAS SUBMITTED THAT ADOPTION OF ADHOC RATE BY THE AO IS WITHOUT ANY BASIS AND IS ILLEGAL. IT W AS SUBMITTED THAT THE PROPERTY WITH BIGGER AREA SITUATED IN THE CITY AREA OF BHARUCH WHICH IS A PROPERTY MENTIONED AT S. NO. 7 IS ACCEPTED AT AN A NNUAL VALUE OF RS. 6,048/-. THEREFORE, ADOPTING ADHOC VALUATION, THAT TOO, AT RS. 46,200/- IS BAD AND ILLEGAL. THUS, IT WAS PLEADED BY LD. AR TH AT APPROPRIATE RELIEF SHOULD BE GRANTED TO THE ASSESSEE. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE RELIED UPON THE ORDER PASSED BY AO AND LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IN RESPECT OF ASSESSMENT YEAR 200 6-07, WITH REGARD TO ANNUAL LETTING VALUE OF PROPERTIES MENTIONED AT S. NO. 4,5 & 7, IT IS THE ITA NOS.7920 & 1071/M/2010 6 CONTENTION OF THE ASSESSEE THAT IN ASSESSMENT YEAR 2007-08, THE AO IN THE REMAND REPORT FILED BEFORE THE LD. CIT(A) HAS ACCEP TED THE MUNICIPAL VALUATION AND DEPARTMENT DID NOT FILE AN APPEAL AGA INST THE RELIEF GRANTED TO THE ASSESSEE IN ASSESSMENT YEAR 2006-07. THUS, IT IS THE CONTENTION OF THE LD. AR THAT APPROPRIATE RELIEF SHOULD BE GRANTE D TO THE ASSESSEE. COPY OF REMAND REPORT HAS ALSO BEEN FILED IN THE PAPER B OOK. LD. DR DID NOT CONTROVERT THIS SUBMISSION OF LD. AR THEREFORE ACCE PTING THE ARGUMENT OF LD. AR, WE DIRECT THE AO TO ASSESS THE ALV OF PROPE RTIES MENTIONED AT S. NO. 4,5 & 7 AS PER VALUATION ACCEPTED IN RESPECT OF ASSESSMENT YEAR 2007-08. 8.1. SO FAR AS IT RELATES TO ALV OF PROPERTY MENTIO NED AT S. NO. 2, THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF DR. URMILA H. DESAI (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO EXCLUDE THE ALV OF THE SAID PROPERTY FROM HOUSE PRO PERTY INCOME ASSESSED IN THE HANDS OF THE ASSESSEE. 8.2. WITH REGARD TO PROPERTY MENTIONED AT S. NO. 6, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. AR AS BOTH PROPE RTIES OF BHARUCH ARE SITUATED AT DIFFERENT PLACES AND NO MATERIAL HAS BR OUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE ALV OF THE SAID PROPERTY WAS IN ANY MANNER LESS THAN THE ALV ASSESSED BY THE REVENUE. THE COM PARISON, IF ANY, HAS TO BE MADE WITH SIMILAR PROPERTY AND NOT WITH THE P ROPERTY WHICH ARE DIFFERENTLY SITUATED. IN ABSENCE OF ANY SUCH MATER IAL BEING BROUGHT ON RECORD BY THE ASSESSEE, WE DECLINE TO INTERFERE AND SUCH CONTENTION OF THE ASSESSEE IS REJECTED. ITA NOS.7920 & 1071/M/2010 7 8.3. THE AO IS DIRECTED TO RECOMPUTE HOUSE PROPERTY INCOME OF THE ASSESSEE AS PER ABOVE DIRECTIONS AND THE APPEALS FI LED BY THE ASSESSEE ARE TREATED TO BE PARTLY ALLOWED IN THE MANNER AFORESAI D. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 7 TH JANUARY, 2015 / * .' 0 12 07.01.2015 . * 3 SD/- SD/- (B.R. BASKARAN) (I.P. BANSAL ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; 1 DATED 7 TH JANUARY, 2015 . . ./ RJ , SR. PS / / / / * ** * '+4 '+4 '+4 '+4 54'+ 54'+ 54'+ 54'+ / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '(#& / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 43 '+ , , / DR, ITAT, MUMBAI 6. 37 8 / GUARD FILE. / / / / / BY ORDER, (4+ '+ //TRUE COPY// 9 99 9 / : : : : $ $ $ $ (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI