GUNJAN S. ZATAKIA, MUMBAI V. ITO WD 8(2)1, MUMBAI

ITA 8363/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84549 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 19-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BIRLA
• Assessee Lawyers: RAKESH MILWANI
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 8363/M/2011 ( / ASSESSMENT YEAR : 2008 - 20 09 ) GUNJAN S. ZATAKIA , 46, SAKI VIHAR ROAD, ANDHERI EAST, MUMBAI 400 072. / VS. ITO - WARD 8(2)1, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI 20. ./ PAN : AAAPZ 0474 D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAKESH MILWANI / RESPONDENT BY : SHRI PAVAN KUMAR BIRLA, CIT - DR / DATE OF HEARING : 08.12.2014 / DATE OF PRONOUNCEMENT : 18 .12.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 9.12.2011 IS AGAINST THE ORDER OF THE CIT (A) - 17, MUMBAI DATED 17.10.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, ANNUAL VALUE OF THE RESIDENTIAL HOUSE AT OCTAVIS, ANDHERI EAST, MUMBAI BE CONSIDERED AS NIL. 2. WITHOUT PREJUDICE TO GROUND NO.1 AS ABOVE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN FACTS AND IN LAW IN CONFIRM ING THE NOTIONAL RENT AS RESIDENTIAL HOUSE AT OCTAVIS, ANDHERI EAST, MUMBAI AT RS. 2,12,574/ - AGAINST THE AMOUNT OF RS. 26,400/ - CLAIMED BY THE APPELLANT AND THE EXCESS OF THE SAME AMOUNTING TO RS. 1,86,174/ - OUGHT TO BE DELETED. 3. CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE, CIT (A) ERRED IN FACTS AND IN LAW CONFIRMING THE NOTIONAL RENT OF RESIDENTIAL HOUSE OF TIGER VALLEY, KHANDALA AT RS. 2,39,162/ - AGAINST RS. 33,684/ - OFFERED BY THE APPELLANT BEFORE CIT (A) AND THE EXCESS OF RS. 2,05,478/ - OUGH T TO BE DELETED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THERE ARE TWO PROPERTIES HERE, WHICH ARE SUBJECT MATTER OF GROUNDS RAISED IN THE APPEAL. TH EY ARE (I) RESIDENTIAL HOUSE AT OCTAVIS, ANDHERI EAST, MUMBAI ACQUIRED ON 22.1.2008 AND (II) RESIDENTIAL HOUSE OF KHANDALA. WE SHALL DEAL WITH EACH OF THE GROUNDS AS UNDER. 2 4. GROUND NO.1 & 2 OF THE REVISED GROUNDS RELATES TO THE RESIDENTIAL HOUSE AT OCTAVIS, ANDHERI EAST. IN THE RETURN, THE ASSESSEE CLAIMED THAT THE ALV BEING DEEMED RENT BASED ON THE MUNICIPAL RATES , WORKS OUT TO RS. 52,800/ - AND HIS SHARE BEING 50% WORKS OUT TO RS. 26,400/ - . IN THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE PROPERTY IS NOT LET OUT AND THEREFORE, THERE IS NO QUESTION OF RECEIPT OF ACTUAL RENT. ASSESSIN G OFFICER PROCEEDED TO WORK OUT STANDARD RENT @ 8.5% OF THE COST OF THE ASSET I.E., RS. 130.48 LAKHS. PROPORTIONATELY, FOR PART PERIOD (22.1.2008 TO 31.3.2008) THE ALV WORKED OUT TO RS. 2,12,574/ - . ASSESSING OFFICER RELIED ON THE ITAT, MUMBAI B BENCH D ECISION IN THE CASE OF ITO VS. CHEM MECH PVT LTD (83 ITD 427). ASSESSING OFFICER MADE ADDITION OF RS. 1,86,174/ - (2,12,574 26,400). MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE MADE THE FOLLOWING OBJECTIONS (PARA 4.1 OF THE IMPUGNED ORDER IS RELEVANT) AND THE SAME READS AS UNDER: ATTACHED FIND HEREWITH A LETTER FROM CRESCENDO ASSOCIATES SATING THAT MUNICIPAL TAXES ARE 2/ - PER SQ.FT. HENCE, MUNICIPAL TAXES FOR FULL YEAR FOR 2200 SQUARE FOOT WOULD BE 52800. SINCE, THERE ARE TWO COOWNERS SHARE OF YOUR ASSESSEE BEING 50% IS RS. 26,400/ . MUNICIPAL TAX IS APPROXIMATELY 66.67% OF RATEABLE VALUE. HENCE FOR THE PERIOD OF 22.1.2008 TO 31.3.2008 (70 DAYS) RATEABLE VALUE WOULD B E 7594 AND ANNUAL VALUE WOULD BE RS. 8438 FROM WHICH PROPORTIONATE MUNICIPAL TAX OF RS. 5063 WOULD BE DEDUCTED LEAVING AN AMOUNT OF RS. 3375. HOWEVER, OUT OF ABUNDANT CAUTION ANNUAL VALUE HAS BEEN TAKEN EQUIVALENT TO MUNICIPAL TAXES. 6. CIT (A) CONSIDERE D THE ABOVE AND DISMISSED THE GROUND AGAINST THE ASSESSEE. PARA 4.2 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 4.2. THE SUBMISSION OF THE ASSESSEE IS FULLY CONSIDERED BUT NOT ACCEPTED. SECTION 22 OF THE IT ACT DEALS W ITH INCOME FROM HOUSE PROPERTY, WHICH IS TO BE COMPUTED WITH RESPECT TO THE ANNUAL LETTING VALUE (ALV) OF THE PROPERTY. THE MODE OF DETERMINING THE ALV IS SET OUT IN SECTION 23. THE ALV HAS TO BE DETERMINED ON THE BASIS (I) STANDARD RENT DETERMINED IN AC CORDANCE WITH RENT CONTROL ACT, (II) ANNUAL MUNICIPAL VALUE, IF AVAILABLE THAT ITSELF WOULD BE THE ANNUAL LETTING VALUE, THEN THE ACTUAL RENT IS TO BE TAKEN AS ANNUAL VALUE OF THE PROPERTY. 7. FROM THE ABOVE, IT IS EVIDENT THAT THE CIT (A) HAS NOT PASSED SPEAKING ORDER ATTENDING TO THE OBJECTIONS RAISED IN PARA 4.1 OF THE IMPUGNED ORDER. 8. BEFORE US, LD COUNSEL FOR THE ASSESSEE RAISED THE GROUND NO.1 AND MENTIONED THAT THE ALV OF THE RESIDENTIAL HOUSE AT OCTAVIS SHOULD BE CONSIDERED AS NIL. 3 WITHOUT PREJU DICE, ASSESSEE RAISED GROUND NO.2 , WHICH WAS ADJUDICATED BY THE CIT (A) VIDE PARA 4.1 AND 4.2 OF HIS ORDER, WHICH IN OUR VIEW DOES NOT FALL IN THE CATEGORY OF SPEAKING ORDER. IN THIS REGARD, BEFORE US, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDERS OF T HE TRIBUNAL IN THE CASE OF PREMSUDHA EXPORTS (P) LTD VS. ACIT [2008] 110 ITD 158 (MUM) AND M/S. SINDOORI TRADERS P. LTD VS. ITO VIDE ITA NO.4059 AND 4209/M/2008 FOR THE AY 2004 - 2005 FOR THE PROPOSITION THAT THE ALV OF VACANT HOUSES DURING THE YEAR IS NIL. HE RELIED ON THE PROVISIONS OF SECTION 24(1)(6) OF THE ACT IN HIS FAVOUR. 9. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND MENTIONED THAT THE GROUND NO.1 IS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND RELIED ON DECISIONS IN THE CASE OF PREMSUDHA EXPORTS (P) LTD (SUPRA) AND M/S. SINDOORI TRADERS P. LTD (SUPRA). THERE IS NEED FOR COMPARISON OF THE FACTS OF THESE CASES BEFORE ADJUDICATION BY THE TRIBUNAL. FURTHER, LD DR MENTIONED THAT THERE ARE NO RELEVANT FACTS O N FILE TO NOTE THAT THE IMPUGNED PROPERTY WAS LET IN LATER YEARS AT LEAST. HE ALSO ARGUED THAT THE PROPERTY WAS DEEMED AS LET OUT PROPERTY BY THE ASSESSEE IN THE RETURN OF INCOME AND HE CAN GO BACK NEW BY RAISING GROUND NO.1. 10. WE HAVE HEARD BOTH THE PA RTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS CITED BY BOTH THE PARTIES. 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 CL AIMS AS SELF OCCUPIED PROPERTY, WHOSE ALV IS NIL. THERE ARE NO FACTS ON FILE TO NOTE THAT THE PROPERTY 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 ASSES SEES COUNSEL BEFORE US. AS SUCH, THE CIT (A) AS EVIDENT FROM THE ABOVE EXTRACTED PARA 4.1 AND 4.2, HAS 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, THE 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 OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 AND 2 ARE ALLOWED FOR STATISTICAL PURPOSES. 4 11. GROUND NO.3 RELATES TO THE RESIDENTIAL HOUSE AT KHANDALA. ASSESSEE DID NOT OFFER ANY RENTAL INCOME OUT OF THIS PROPERTY. ASSESSING OFFICE R CALCULATED THE STANDARD RENT @ 8.5% OF THE COST OF THE PROPERTY I.E., 28,13,676/ - . THE DEEMED RENT IS WORKED OUT AT RS. 2,39,162/ - OUT OF KHANDALA BUNGALOW. IN THE FIRST APPELLATE PROCEEDINGS, AFTER HEARING THE ASSESSEER, CIT (A) HELD THAT THE ASSESSEE ALREADY CLAIMED EXEMPTION IN RESPECT OF ANOTHER PROPERTY AT POWAI. THERE, HE DISMISSED THE GROUND OF THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 12. BEFORE US, BOTH THE PARTIES MADE VARIOUS ARGUMENTS. THEY, HOWEVER, AGREED THAT O NLY 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 FIND THE SAID OBJECTIONS ARE NOT PROPERTY ATTENDED TO 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. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCE D IN THE OPEN COURT ON 18 TH DECEMBER, 2014. SD/ - SD/ - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 18 .12 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, 5 ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI