LATE MRS. KAPILADEVI M. ZAVERI BY A/P MR. GHANSHYAM M. ZAVERI, MUMBAI V. ITO 17(3)(2), MUMBAI

ITA 8752/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8944 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAYUR SHAH SHRI MANISH KANAJIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. : 8752/MUM/2011 ASSESSMENT YEAR : 2007-08 LATE MRS. KAPILADEVI M. ZAVERI BY A/P MR. GHANSHYAM M. ZAVERI, 16/17, LAKHANI TOWERS, 1 ST BABULNATH CROSS LANE, CHOWPATI, MUMBAI-400 007 PAN NO: AAAPZ 1794 J VS. ITO 17(3)(2), PIRAMAL CHAMBERS, 5 TH FLOOR, LALBAUG, PAREL, MUMBAI-400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAYUR SHAH RESPONDENT BY : SHRI MANISH KANAJIA DATE OF HEARING : 30.08.2012 DATE OF PRONOUNCEMENT : 12.09.2012 ORDER PER RAJENDRA SINGH, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 22.11.2011 OF CIT(A)-19, MUMBAI FOR THE A.Y. 2007-0 8. 2. THE ONLY DISPUTE RAISED IS REGARDING THE DETERMI NATION OF INCOME FROM HOUSE PROPERTY SITUATED AT PANCHARATNA, MUMBAI . THE A.O. NOTED THAT THE ASSESSEE WAS HAVING OFFICE PREMISES OF 92 SQ. FT. AT PANCHARATNA BUILDING, OPERA HOUSE, MUMBAI FROM WHICH NO INCOME WAS DECLARED. THE ASSESSEE SUBMITTED THAT THE SAID PROPERTY HAD BEEN LET OUT TO M/S. URA STAR ON ANNUAL RENT OF `. 9,000/-. THE ASSESSEE, HOWEVER, DID NOT SUBMIT ITA NO : 8752/MUM/2011 LATE MRS. KAPILADEVI M. ZAVERI 2 THE DETAILS NOR ANY SUCH RENTAL INCOME WAS REFLECTE D IN THE COMPUTATION OF TOTAL INCOME. THE ASSESSEE ALSO COULD NOT PRODU CE ANY EVIDENCE IN SUPPORT OF THE PLEA THAT THE ASSESSEE WAS HAVING ON LY 50% OF THE SHARES IN THE PROPERTY. THE A.O., THEREFORE, CONCLUDED TH AT THE PROPERTY WAS SOLELY OWNED BY THE ASSESSEE. THE A.O. FURTHER OBS ERVED THAT PANCHARATNA BUILDING WAS A HUB OF DIAMOND MERCHANTS SITUATED IN THE HEART OF THE CITY I.E. OPERA HOUSE. THE A.O., THER EFORE, ESTIMATED THE FAIR RENTAL VALUE AT `. 25,000/- PER MONTH AFTER TAKING INTO ACCOUNT THE LOCATION, THE AREA COVERED AND COMMERCIAL IMPORTANC E OF THE PROPERTY. THUS THE INCOME FROM THE PROPERTY WAS COMPUTED AT `. 2,10,000/- AFTER ALLOWING THE DEDUCTION @ 30% U/S. 24(A). 2.1 THE ASSESSEE DISPUTED THE DECISION OF THE A.O. AND SUBMITTED BEFORE THE CIT(A) THAT THE PROPERTY HAD BEEN PURCHA SED BY THE ASSESSEE AND SHRI ASHOK M. ZAVERI FOR `. 2,20,800/- VIDE AGREEMENT DATED 19.12.1998. IT WAS ALSO POINTED OUT THAT SHRI ASHO K M. ZAVERI HAD DECLARED HIS 50% SHARE AS HIS INVESTMENT. IT WAS F URTHER SUBMITTED THAT THE MUNICIPAL RATEABLE VALUE OF THE PROPERTY WAS ON LY `. 836/- PER MONTH WHICH GAVE ANNUAL VALUE OF ABOUT `. 10,000/-. THE SHARE OF THE ASSESSEE, THEREFORE, WAS ONLY `. 5,000/-. SINCE THE ACTUAL RENT RECEIVED OF `. 9,000/- WAS MORE THAN THE RATEABLE VALUE, THERE WAS NO CAUS E FOR ANY ADDITION. THE CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSERVED BY HIM THAT SHRI ASHOK M. ZAVERI HAD NOT D ECLARED ANY INCOME FROM THE PROPERTY AND, THEREFORE, THE CIT(A) DID NO T ACCEPT THE CLAIM OF THE ASSESSEE THAT HE WAS NOT THE SOLE OWNER OF THE PROPERTY. AS REGARDS THE ANNUAL VALUE, THE CIT(A) OBSERVED THAT THE MARK ET RATE FOR COMMERCIAL BUILDING WAS `. 20,000/- PER SQ. FT. IN THE AREA WHICH GAVE THE VALUE OF THE PROPERTY CONSISTING OF 92 SQ. FT. AT `. 19.8 LAKHS. THEREAFTER THE CIT(A) ESTIMATED THE RETURN ON INVESTMENT @ 15% P.A. WHICH GAVE THE FAIR RENTAL VALUE OF AROUND `. 3 LAKHS P.A. WHICH WAS THE VALUE ESTIMATED ITA NO : 8752/MUM/2011 LATE MRS. KAPILADEVI M. ZAVERI 3 BY THE A.O. THE CIT(A), THEREFORE, CONFIRMED THE E STIMATION MADE BY THE A.O. AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL B EFORE THE TRIBUNAL. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE CIT(A) THAT THE ASSESSEE WAS HAVING ONLY 50% OF THE SHARE IN THE PROPERTY WHICH WAS SUPPORTED BY THE PU RCHASE AGREEMENT. IT WAS ALSO SUBMITTED THAT THE PROPERTY WAS COVERED BY THE RENT CONTROL ACT AND, THEREFORE, THE FAIR RENTAL VALUE COULD NOT EXCEED THE STANDARD RENT DETERMINED UNDER THE RENT CONTROL ACT. THE LE ARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING THE ASSESSMENT OF INCOME F ROM THE PROPERTY CONSISTING OF 92 SQ. FT. AT PANCHARATNA BUILDING. THE PROPERTY IS IN A COMMERCIAL BUILDING LOCATED AT OPERA HOUSE IN THE H EART OF THE CITY. THE A.O. HAD ESTIMATED THE FAIR RENTAL VALUE OF THE PRO PERTY AT `. 25,00,000/- PER MONTH. THE CIT(A) HAS CONFIRMED THE ORDER OF T HE A.O. ON THE GROUND THAT COMMERCIAL RATE FOR VALUE OF THE PROPERTY WAS `. 22,000/- SQ. FT. WHICH GAVE THE MARKET VALUE OF THE PROPERTY AT `. 19.8 LAKHS AND TAKING THE ANNUAL RATE OF RETURN OF 15% THERE WAS JUSTIFIC ATION FOR THE ANNUAL FAIR RENT AT `. 3,00,000/-. THE ASSESSEE HAS, HOWEVER, RAISED A PL EA BEFORE US THAT THE PROPERTY WAS COVERED BY THE RENT CONTRO L ACT AND, THEREFORE, IN SUCH A CASE THE FAIR RENTAL VALUE CANNOT EXCEED THE STANDARD RENT DETERMINED / DETERMINABLE UNDER THE RENT CONTROL AC T. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE LOWER AUTHORITIES NOR AN Y SUCH PLEA HAS BEEN RAISED BY THE ASSESSEE BEFORE THEM. THIS IS HOWEVE R A RELEVANT POINT HAVING HEARING ON THE COMPUTATION OF ANNUAL VALUE B ECAUSE IT IS A SETTLED LEGAL POSITION AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF SHEILA KAUSHISH (MRS.) VS CIT (131 ITR 435) THAT IN CASE T HE PROPERTY IS COVERED BY THE RENT CONTROL ACT, THE FAIR RENT FOR WHICH TH E PROPERTY MAY BE ITA NO : 8752/MUM/2011 LATE MRS. KAPILADEVI M. ZAVERI 4 EXPECTED TO LET FROM YEAR TO YEAR CANNOT EXCEED THE STANDARD RENT DETERMINED OR DETERMINABLE UNDER THE RENT CONTROL A CT. THIS ASPECT IS, THEREFORE, REQUIRED TO BE EXAMINED AT THE LEVEL OF THE A.O. THE CLAIM OF JOINT OWNERSHIP OF THE PROPERTY IS ALSO REQUIRED TO BE EXAMINED AS THE AGREEMENT HAD BEEN FILED ONLY BEFORE THE CIT(A) AND WAS NOT BEFORE THE A.O. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE THE MATTER BACK TO THE A.O. FOR PASSING AFRESH ORDER AF TER NECESSARY EXAMINATION IN THE LIGHT OF THE OBSERVATIONS MADE A BOVE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 12 TH DAY OF SEPTEMBER, 2012. SD/- SD/- - (AMIT SHUKLA) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 12.09.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI