SHILPA G. ZATAKIA, MUMBAI V. ITO WD 8(2)1, MUMBAI

ITA 8362/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101085 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 13-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARSHAD VENGURLEKAR
• Assessee Lawyers: RAKESH MILWANI
• Keywords: Opportunity of being heard; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ITA NO. 8362 /MUM/20 11 (ASSESSMENT YEAR: 200 8 - 09 ) SMT.SHILPA G.ZATAKIA, 46, SAKI VIHAR ROAD, ANDHERI EAST, MUMBAI - 400072. APPELLANT PAN:AADPZ3646A VS. INCOME - TAX OFFICER, WARD 8 ( 2 ) 1 , MUMBAI. RESPONDENT APPELLANT BY : SHRI RAKESH MILWANI. RESPONDENT BY: SHRI HARSHAD VENGURLEKAR (DR). DATE OF HEARING: 13 /08/2015 DATE OF PRONOUNCEMENT : : 16 / 0 9 /2015 O R D E R PER VIJAY PAL RAO, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17/10/2011 OF THE CIT(A) - 17, MUMBAI, FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL AS UNDER: 1. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ANNUAL VALUE OF THE RESIDENTIAL HOUSE AT OCTAVIS, ANDHERI EAST, MUMBAI, BE CONSIDERED AS 'NIL'. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 17, MUMBAI, (HEREINAFTER, FOR THE SAKE OF BREVITY, REFERRED TO AS 'THE ITA NO . 8362/MUM/2011 S MT.SHILPA G.ZATAKIA PAGE 2 CIT(A)'), ERRED IN FACTS AND IN LAW I N CONFIRMING THE NOTIONAL RENT OF RESIDENTIAL HOUSE AT OCTAVIS, ANDHERI EAST, MUMBAI, AT RS. 212574 AGAINST THE AMOUNT OF RS. 26400 CLAIMED BY THE APPELLANT AND THE EXCESS OF THE SAME AMOUNTING TO RS. 186174 OUGHT TO BE DELETED 3. CONSIDERING THE FACTS AN D CIRCUMSTANCES OF THE CASE, THE CIT(A), ERRED IN FACTS AND IN LAW IN CONFIRMING THE LEVY OF NOTIONAL INCOME ON THE RESIDENTIAL HOUSE CLAIMED BY THE APPELLANT AT RS. NIL IN VIEW OF PROVISIONS OF SECTION 23(2) OF THE INCOME TAX ACT, 1961. 4. CONSIDERING TH E FACTS AND CIRCUMSTANCES OF THE HE CIT(A), ERRED IN FACTS AND IN LAW IN CONFIRMING IN ALTERNATIVE TO GROUND NO. 2 ABOVE ERRED IN CONFIRMING THE NOTIONAL RENT OF RESIDENTIAL HOUSE AT TIGER VALLEY, KHANDALA, AT RS.239162 AGAINST RS.33684 OFFERED BY TH E APPELLANT BEFORE CIT(A) AND THE EXCESS OF RS. 205478 OUGHT TO BE DELETED. 5. THE APPELLANT CRAVES LEAVE TO ADD AND /OR ALTER AND /OR AMEND ANY GROUND(S) OF APPEAL. 2. THE ASSESSEE IS A DIRECTOR IN M/S .HUSH INDIA PVT. LTD. THE ASSESSEE DERIVES INCOM E FROM SALARY, HOUSE PROPERTY, BUSINESS AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS SHOWN INCOME OF RS.26,400/ - AS DEEMED RENT OF OCTO VIS FLAT SITUATED AT HIRANANDANI, POWAI. THE AO ASKED THE ASSESSEE TO EXPLAIN THE BASIS OF COMPUTATION OF THE DEEMED RENT OF RS.26,400/ - . IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE MUNICIPAL TAXES ARE @ RS.2 PER SQ.FT. AND THEREFORE, MUNICIPAL TAX FOR EACH YEAR FOR 2200 SQ.FT. WOULD BE RS.52,800/ - . SINCE T HE ASSESSEE IS A CO - SHARER OF PROPERTY AND HAVING 50% SHARE IN THE PROPERTY THEREFORE, THE ASSESSEE COMPUTED THE DEEMED RENT AT RS.26,400/ - . THUS, THE ASSESSEE HAS CONTENDED THAT THE COMPUTATION IS BASED ON ITA NO . 8362/MUM/2011 S MT.SHILPA G.ZATAKIA PAGE 3 MUNICIPAL RATEABLE VALUE. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. THE AO HAS APPLIED THE STANDARD RENT TO BE FIXED AT THE RATE OF 8.5% OF THE TOTAL INVESTMENT AS PER THE BOMBAY RENT CONTROL ACT. ACCORDINGLY, THE AO COMPUTED THE ANNUAL LETTING VALUE (ALV)OF THE O CTAVIS FLAT AT ANDHERI (E AST), MUMBAI AT RS.2,12,574/ - 3. SIMILARLY, THE AO NOTED THAT THE ASSESSEE IS A CO - OWNER OF A BUNGALOW SITUATED AT KHANDALA J OINTLY WITH HER HUSBAND SHRI GUNJAN S.ZATAKIA. THE AO COMPUTED THE ALV BY TAKING THE STANDARD RENT TO BE FIXED AT T HE RATE OF 8 .5% OF THE TOTAL INVESTMENT AS PER THE BOMBAY RENT CONTROL ACT. ACCORDINGLY, THE AO COMPUTED THE ALV OF THE BUNGALOW AT KHANDALA AT RS.2,39,162/ - . 4. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A). THE CIT(A) HAS DIS ALLOWED THE CLAIM OF THE ASSESSEE THAT ONE RESIDENTIAL HOUSE CAN BE CLAIMED AS EXEMPT IF IT OCCUPIED DURING THE WHOLE OF PREVIOUS YEAR BY THE OWNER OR DUE TO HIS EMPLOYMENT PUT IN ANOTHER PLACE HE IS UNABLE TO OCCUPY THE HOUSE. THE CIT(A) HAS NOTED THAT THE ASSESSEE HAS ALREADY CLA IMED ONE RESIDENTIAL HOUSE AT PO WAI AS EXEMPT UNDER SECTION 23(2) THEREFORE, THE HOUSE AT KHANDA LA WAS BEING BROUGHT TO TAX UNDER SECTION 23(1)(A). HOWEVER, THE CIT(A) HAS ALLOWED THE CLAIM OF DEDUCTION OF ENTIRE INTEREST PAYA BLE UNDER SECTION 24 OF THE IT ACT. ITA NO . 8362/MUM/2011 S MT.SHILPA G.ZATAKIA PAGE 4 GROUND NO.1 REGARDING TREATING THE ALV AS NIL BY THE ASSESSEE IN RES PECT OF THE HOUSE AT ANDHERI: 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF THE CO - OWNER HUSBAND OF THE ASSESSEE VIDE ORDER DATED 18/12/2014 IN ITA N O.8363/MUM/2011 WHEREIN THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE REGARDING SELF - OCCUPIED PROPERTY. 6. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT IN THE CASE OF THE HUSBAND OF THE ASSESSEE, THERE WAS NO OTHER HOUSE CLAIMED BY THE HUSBAND AS EXEMPT UNDER SECTION 23(1)(A) AS SELF - OCCUPIED BUT THE DISPUTE WAS REGARDING THE HOUSE WHICH WAS CLAIMED BY THE HUSBAND AS SELF - OCCUPIED WAS DENI ED BY THE AO WHEREAS IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS ALREADY CLAIMED THE SELF - OCCUPIED HOUSE AT HIRANANDANI, POWAI AND THEREFORE, THIS CANNOT BE ALLOWED TO THE ASSESSEE IN RESPECT OF ANOTHER HOUSE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIO NS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF THE ASSESSEE BEFORE US, THE AO HAS SPECIFICALLY GIVEN A FINDING THAT THE ASSESSEE HAS CONFIRMED THAT SHE WAS IN OCCUPATION OF RESIDENTIAL HOUSE AT C/702 EDEN IV, HIRANANDANI GARDENS , POWAI FOR THE PURPOSE OF HER RESIDENCE DURING THE PREVIOUS YEAR. EVEN THE ASSESSEE HAS ALREADY CLAIMED SELF - OCCUPIED EXEMPTION UNDER SECTION 23(2) THEREFORE, EVEN IN THE CASE OF THE HUSBAND, WHERE ITA NO . 8362/MUM/2011 S MT.SHILPA G.ZATAKIA PAGE 5 NO SUCH CLAIM OF SELF - OCCUPIED ANOTHER HOUSE WAS BROUGHT TO THE NOTICE OF THE TRIBUNAL, THE FINDING OF THE TRIBUNAL CANNOT BE APPLIED AS A PRECEDENT WHEN THE FACTS ARE ENTIRELY DIFFERENT. ACCORDINGLY WE DO NOT FIND ANY MERITS IN THE GROUND NO.1 WHICH IS AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN ITS APPEAL . THE SAME IS DISMISSED. GROUND NO.2 IS ALTERNATIVE GROUND REGARDING COMPUTATION OF ALV BY ADOPTING TH E STANDARD RENT OF THE PROPERTY: 8. WE HAVE HEARD THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AS WELL AS THE LEARNED DR AND CONSIDERED THE RE LEVANT MATERIAL ON RECORD. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE PROPERTY IN QUESTION DOES NOT FALL UNDER THE BOMBAY RENT CONTROL ACT AND THEREFORE, THE STANDARD RENT C ANNOT BE TAKEN INTO CONSIDERATION FOR T HE PURPOSE OF COMPUTATION OF ALV UNDER SECTION 23(1)(A). AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF THE HUSBAND OF THE ASSESSEE SHRI GUNJAN S.ZATAKIA IN ITA NO.8363/MUM/2011 DATED 08/12/2014 WHEREIN THE TRIBUNAL HAS REMANDED THE MATTER TO THE RECORD OF THE CIT(A) FOR GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD IN PARA. 10 AS UNDER: WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS CITED BY BOTH THE PAR TIES. GROUND NO.1 IS LEGAL GROUND AND IS RAISED FOR THE FIRST TIME BEFORE US. IN THE RETURN, ASSESSEE DEEMED THIS PROPERTY AS LET OUT ONE AND NOW, HE CLAIMS AS SELF OCCUPIED PROPERTY, WHOSE ALV IS NIL. THERE ARE NO FACTS ON FILE TO NOTE THAT THE PROPER TY IN QUESTION IS LET OUT OR NOT, IF THE SAME WAS LET OUT IN LATER YEARS, AT LEAST. THESE FACTS ARE RELEVANT TO APPLY THE CITATIONS RELIED ON BY THE ASSESSEE S ITA NO . 8362/MUM/2011 S MT.SHILPA G.ZATAKIA PAGE 6 COUNSEL BEFORE US. AS SUCH, THE CIT (A) AS EVIDENT FROM THE ABOVE EXTRACTED PARA 4.1 AND 4.2, HA S NOT ATTENDED TO THE OBJECTIONS RAISED BEFORE HIM. THEREFORE, WE ARE SURE THAT THE IMPUGNED ORDER ON THIS ISSUE UNDER CONSIDERATION CANNOT BE DESCRIBED AS A SPEAKING ORDER, WHICH IS THE REQUIREMENT OF ANY APPEALABLE ORDER. THEREFORE, IN OUR OPINION TH E GROUND NO.1 AND 2 NEED TO BE REMANDED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION AND FOR WANT OF SPEAKING ORDER AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 AND 2 ARE ALLOWED FOR STATISTICAL PUR POSES. TO MAINTAIN THE RULE OF CONSISTENCY, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE CIT(A) FOR FRESH ADJUDICATION. GROUND NOS.3 & 4 REGARDING NOTIONAL RENT COMPUTED BY THE AO IN RESPECT OF HOUSE AT TIGER VALLEY, KHANDALA : 9. WE HAVE HEARD THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AS WELL AS THE LEARNED DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. T HE AO AND THE CIT(A) HAVE TAKEN THE STANDARD RENT FOR THE PURPOSE OF COMPUTATION OF ALV WHEREAS THE LEARNED AUTH ORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE BOMBAY RENT CONTROL ACT IS NOT APPLICABLE TO THE PROPERTY IN QUESTION, THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ARE NOT SUSTAINABLE. WE FIND THAT ON THIS ISSUE RELATING TO THIS PROPERTY, THE TRIBUNAL IN THE CASE OF THE HUSBAND OF THE ASSESSEE VIDE ORDER DATED 18/12/2014 HAS REMITTED THE ISSUE TO THE RECORD OF THE CIT(A) VIDE PARA.12 AS UNDER: 12. BEFORE US, BOTH THE PARTIES MADE VARIOUS ARGUMENTS. THEY, HOWEVER, AGREED THAT ONLY ONE PROPERTY CAN BE ALLOWED AS 'SELF OCCUPIED PROPERTY'. LD AR RELIED ON THE OBJECTIONS RAISED AND MENTIONED IN PARA 6.1 OF THE IMPUGNED ORDER. BUT, WE FIN D THE SAID OBJECTIONS ARE NOT PROPERLY ATTENDED TO ITA NO . 8362/MUM/2011 S MT.SHILPA G.ZATAKIA PAGE 7 BY THE CIT(A). THEREFORE IN OUR OPINION, THE GROUND NO.3 NEEDS TO BE REMANDED TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE REMAND PROCEEDINGS, THE CIT (A) SHALL CONSIDER ALL THE PROPERTIES AND BRING ALL RELEVANT FACTS ON TO THE ORDER AND PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE CIT(A) FOR ADJUDICATING THE ISSUE OF COMPUTATION OF ALV AS PER THE PROVISIONS OF SEC.23(1)(A) AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE THAT THE BOMBAY RENT CONTROL A CT IS NOT APPLICABLE TO THE PROPERTY. 10. IN THE RESULT, THE ASSESSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER , 2015. SD/ - SD/ - (N.K.BILLAIYA) (VIJAY PAL RAO) ACCOUNANT MEMBER JUDICIAL MEMBER EKSRINIVASULU, SR.PS COPY TO: 1. A PPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, MUMBAI. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL MUMBAI