Smt. Mayaben H. Kothari, RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITSSA 95/RJT/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9492 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 10-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI DR
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Deemed owner of house property
• Section: 153A; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. S RIVASTAVA AM IT(SS)NOS. 95 TO 101/RJT/2012 / ASSESSMENT YEARS : 2004-05 TO 2010-11 SMT. MAYABEN HARISHBHAI KOTHARI, NILI, 1/3-NALANDA SOCIETY, KALAWAD ROAD, NR. ICICI BANK, RAJKOT PAN: ADSPK 1497 Q ( / APPELLANT) THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, RAJKOT / RESPONDENT ! ' #$ / ASSESSEE BY SHRI R. D. LALCHANDANI, ADV. % ! ' #$ / REVENUE BY DR. JAYANT B. JHAVERI, DR # & ' ! ( / DATE OF HEARING 11.09.2013 ) ! ( / DATE OF PRONOUNCEMENT 30.09.2013 / ORDER .. , / T. K. SHARMA, J. M. : THESE SEVEN APPEALS FILED BY THE ASSESSEE ARE AGAINST A COMMON ORDER DATED 17.08 .2012 OF THE CIT(A)-IV, AHMEDABAD FOR THE ASSESSMENT YEARS 2004-05 TO 2010- 11. ALL THESE APPEALS WERE HEARD ON THE SAME DATE, ARGUED BY COMMON REPRE SENTATIVE; THEREFORE THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FO R THE SAKE OF CONVENIENCE. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE IS ENGAGED IN RUNNING A PLAY SCHOOL BY THE NAME MY OW N PLAY HOUSE. A SEARCH ACTION U/S 132 OF THE INCOME-TAX ACT WAS CARRIED OU T AT THE PREMISES OF THE ASSESSEE ON 15.09.2009. SUBSEQUENTLY, THE ASSESSIN G OFFICER FRAMED ASSESSMENT U/S 153(A)(A)/143(3) OF THE INCOME-TAX A CT FOR ALL THE AFORESAID ASSESSMENT YEARS ON 09.12.2011, WHEREIN HE OBSERVED THAT THE ASSESSEE OWNED TWO PROPERTIES, ONE AT MUMBAI AND ONE AT RAJKOT. SI NCE THE ASSESSEE IS RESIDING AT RAJKOT, THE PROPERTY SITUATED AT RAJKOT IS TREAT ED AS SELF-OCCUPIED. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E HAS NOT DISCLOSED INCOME FROM DEEMED LET OUT OF PROPERTY AT MUMBAI THROUGH O VERSIGHT. THE ASSESSING ITSS 95 TO 101-RJT-2012 SMT MAYABEN H KOTHARI 2 OFFICER ESTIMATED THE DEEMED RENT FOR PROPERTY VALU ED AT RS.16,85,605/- BY A FLAT 8% OF THE VALUE OF THE PROPERTY I.E. RS.1,34,850/-. THE ASSESSING OFFICER ACCORDINGLY WORKED OUT DEEMED RENT OF RS.1,34,850/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE IN EACH ASSESSMENT YEA RS. IN ALL SUCH DEEMED RENT, THE ASSESSING OFFICER FURTHER HELD THAT THE A SSESSEE HAS NOT ENTITLED TO DEDUCTION U/S 24(A) OF THE INCOME-TAX ACT, 1961. 3. ON APPEAL, IN THE IMPUGNED ORDER, LD CIT(A) UPHE LD THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE ALV (ANNUAL LET TING VALUE) 8% ON THE PURCHASE VALUE OF THE PROPERTY. THE LD CIT(A) FURTH ER HELD THAT ALV AS DETERMINED BY THE ASSESSING OFFICER CANNOT REMAIN S TATIC IN ALL THE ASSESSMENT YEARS, THEREFORE HE HELD THAT IT SHOULD BE INCREASE D AT LEAST 5% IN EACH SUCCEEDING ASSESSMENT YEARS STARTING FROM AY 2005-0 6. THE LD CIT(A) FURTHER OBSERVED IN PARAGRAPH 7.9 OF HIS APPELLATE ORDER TH AT THE ASSESSEE IS ENTITLED TO STATUTORY DEDUCTION U/S 24(A) OF THE INCOME-TAX ACT , I.E. @ 30% OF SUCH ALV, ONCE THE ALV IS DETERMINED IN RESPECT OF THE PROPER TY. FOR THE ABOVE PURPOSE, THE LD CIT(A) COMPUTED THE NET ANNUAL LETTING VALUE FOR EACH ASSESSMENT YEAR AS UNDER: AY ALV (RS.) DEDUCTION @ 30% U/S 24(A) OF THE ACT (RS.) NET ALV (RS.) (1) (2) (3) (4) 2004-05 1,34,850 40,455 94,395 2005-06 1,41,590 42,477 99,113 2006-07 1,48,670 44,601 1,04,069 2007-08 1,56,100 46,830 1,09,270 2008-09 1,63,910 49,173 1,14,737 2009-10 1,72,110 51,633 1,20,477 2010-11 1,80,720 54,216 1,26,504 4. AGGRIEVED WITH THE ORDER OF LD CIT(A), THE ASSES SEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS:- 1. THE COMMISSIONER OF INCOME TAX [APPEALS] ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN IGNORING THE MUN ICIPAL VALUATION AND JUSTIFIED IN ESTIMATING THE ALV OF THE SELF OCC UPIED PROPERTY AT RS.134850/-. 2. WITHOUT PREJUDICE TO GROUND NO.1, THE ESTIMATION @ RS.134850/- IS TOO HEAVY ARBITRARY AND NOT WARRANTED BY THE FACTS OF THE CASE. 3. WITHOUT PREJUDICE TO GROUND NO. 1 & 2, THE ADDIT ION DOES NOT ARISE ON ACCOUNT OF PAPERS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS AND HENCE IS NOT INCOME LIABLE TO BE TAXED U/S 153A OF THE ACT. ITSS 95 TO 101-RJT-2012 SMT MAYABEN H KOTHARI 3 5. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E SHRI R. D. LALCHANDANI, ADVOCATE APPEARED AND DID NOT PRESS THE GROUND NO.3 , THEREFORE THE GROUND NO.3 IS DISMISSED AS NOT PRESSED. ON MERIT, THE LD COUN SEL OF THE ASSESSEE SUBMITTED THAT ALV OF THE DEEMED RENT FOR PROPERTY AT MUMBAI ESTIMATED BY THE ASSESSING OFFICER IS ON THE HIGHER SIDE AS THE PROPERTY IN QU ESTION IS A FLAT OF 77.95 SQ. MTR. AND FOR THE PURPOSE OF HOUSE TAX, BRIHANMUMBAI MAHA NAGARPALIKA, MUMBAI ESTIMATED THE RENTAL VALUE AT RS.2206/- PER MONTH. ON THIS BASIS, THE ANNUAL RENTAL VALUE WORKS OUT TO BE RS. 26472/-. ON THIS B ASIS, THE LD COUNSEL OF THE ASSESSEE PLEADED THAT ANNUAL LETTING VALUE ESTIMATE D BY THE ASSESSING OFFICER IS ON THE HIGHER SIDE AND IT MAY BE REDUCED TO SAY RS.2500/- PER MONTH OR ALV AT RS. 30000/-. 6. ON THE OTHER HAND, DR. JAYANT B. JHAVERI, DR., A PPEARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER PASSED BY TH E LD CIT(A). HE POINTED OUT THAT IN A CITY LIKE MUMBAI EVEN A SMALL FLAT FE TCHES HANDSOME RENT AND THEREFORE THE VIEW TAKEN BY THE LD CIT(A) BE UPHELD . 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE FLAT IN QUESTION AT MUM BAI WAS PURCHASED ON 10.12.1997, ADMEASURING 77.95 SQ. MTS. THIS FLAT IS LOCATED AT FLORENTINE CO. OP. HSG. SOC. LTD., MAIN STREET, HIRA NANDANI GARDENS, POWAI, MUMBAI. THE MUNICIPAL CORPORATION IN THE YEAR 1997-98 FIXED THE RENT AT RS.2205.98 PER MONTH I.E. ANNUAL RENT OF RS.26472/-. IT IS THE CONTENTIO N OF THE ASSESSEE THAT THE RENT AS DETERMINED BY THE MUNICIPAL AUTHORITY SHOULD BE ADO PTED AS ANNUAL LETTING VALUE (ALV) OF THE FLAT IN QUESTION. IN THE IMPUGN ED ORDER, THE LD CIT(A) ADOPTED THE ALV AT RS.1,34,850/- IN THE YEAR 1994-95 AND TH E SAME IS ENHANCED BY 5% IN EACH SUCCEEDING ASSESSMENT YEARS. FROM THIS ALV, T HE LD CIT(A) HAS ALLOWED DEDUCTION @ 30% U/S 24(A) OF THE INCOME-TAX ACT, 19 61. ADMITTEDLY, NO COMPARABLE CASE IS CITED EITHER BY THE ASSESSING OF FICER OR BY THE LD CIT(A). KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE AND THE FACT THAT IN THE ASSESSMENT YEAR 1997-98 THE MUNICI PAL CORPORATION FIXED THE ALV AT RS.2205.98 PER MONTH, WE ARE OF THE VIEW THA T IT WILL MEET THE END OF ITSS 95 TO 101-RJT-2012 SMT MAYABEN H KOTHARI 4 JUSTICE IF ALV IN THE ASSESSMENT YEAR 1994-95 IS AD OPTED AT RS.60,000/- I.E. RS.5000/- PER MONTH. THIS ALV SHALL BE ENHANCED BY 5% IN EACH SUCCEEDING ASSESSMENT YEARS STARTING FROM AY 2005-06 AND THE A SSESSING OFFICER SHALL ALLOW THE BENEFIT OF STATUTORY DEDUCTION U/S 24(A) OF THE INCOME-TAX ACT, 1961. WE HOLD ACCORDINGLY AND DIRECT THE ASSESSING OFFICER T O RE-COMPUTE THE ALV AS INDICATED BY US HEREINABOVE. 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS UNDER APPEAL ARE TREATED AS PARTLY ALLOWED FO R STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- ( *.$. ,% D. K. SRIVASTAVA ) ( .$. -. / T. K. SHARMA) $( #/% / ACCOUNTANT MEMBER #/% /JUDICIAL MEMBER /$- 0/1/ ORDER DATE 30.09.2013. /RAJKOT *BT !'# $%'& / COPY OF ORDER FORWARDED TO:- 6. / APPELLANT- SMT. MAYABEN HARISHBHAI KOTHARI, NIL I, 1/3-NALANDA SOCIETY, KALAWAD ROAD, NR. ICICI BANK, RAJKOT 2. / RESPONDENT- THE ACIT, CENTRAL CIRCLE-1,RAJKOT 3. #141 & 5 / CONCERNED CIT-(CENTRAL)-II, AHMEDABAD 4. & 5 - / CIT (A)-IV, AHMEDABAD 5. 9:; , , / DR, ITAT, RAJKOT 6. ;* => / GUARD FILE. /$- #$ / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT