Income Tax Appellate Tribunal - Mumbai
Anand J. Jain, Mumbai vs Dcit Cc 6(4), Mumbai on 27 February, 2019
आयकर अपील य अ धकरण, मंब ु ई यायपीठ, 'ए',मंब ु ई।
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES "A", MUMBAI Before Shri MAHAVIR SINGH, Judicial Member, and Shri G. MANJUNATHA, Accountant Member ITA No.6836/Mum/2017 Assessment Year: 2013-14 DCIT, Anand Jaikumar Jain, CC-6(4), 82, Maker Chamber III R. No.1925, 19th Floor, बनाम/ Nariman Point, AIR India Building, Vs. Mumbai-400021 Nariman Point, Mumbai-400021 (राज व /Revenue) ( नधा रती /Assessee) P.A. No.AABPJ1890J ITA No.442/Mum/2018 Assessment Year: 2013-14 Anand Jaikumar Jain DCIT, 82, Maker Chamber III CC-6(4), Nariman Point, बनाम/ R. No.1925, 19th Floor, Mumbai-400021 Vs. AIR India Building, Nariman Point, Mumbai-400021 (नधा रती /Assessee) (राज व /Revenue) P.A. No.AABPJ1890J ITA No.428/Mum/2018 Assessment Year: 2014-15 DCIT, Anand Jaikumar Jain, CC-6(4), 82, Maker Chamber III R. No.1925, 19th Floor, बनाम/ Nariman Point, AIR India Building, Vs. Mumbai-400021 Nariman Point, Mumbai-400021 (राज व /Revenue) ( नधा रती /Assessee) P.A. No.AABPJ1890J 2 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain ITA No.550/Mum/2018 Assessment Year: 2014-15 Anand Jaikumar Jain, DCIT, 82, Maker Chamber III CC-6(4), Nariman Point, बनाम/ R. No.1925, 19th Floor, Mumbai-400021 Vs. AIR India Building, Nariman Point, Mumbai-400021 (नधा रती /Assessee) (राज व /Revenue) P.A. No.AABPJ1890J ITA No.6838/Mum/2017 Assessment Year: 2013-14 DCIT, Smt. Laxmi Satyapal Jain, CC-6(4), 82, Maker Chamber III, R. No.1925, 19th Floor, बनाम/ Nariman Point, AIR India Building, Vs. Mumbai-400021 Nariman Point, Mumbai-400021 (राज व /Revenue) ( नधा रती /Assessee) P.A. No.AABPJ1890J ITA No.443/Mum/2018 Assessment Year: 2013-14 Smt. Laxmi Satyapal Jain, DCIT, 82, Maker Chamber III, CC-6(4), Nariman Point, बनाम/ R. No.1925, 19th Floor, Mumbai-400021 Vs. AIR India Building, Nariman Point, Mumbai-400021 (नधा रती /Assessee) (राज व /Revenue) P.A. No.AABPJ1889J ITA No.435/Mum/2018 Assessment Year: 2014-15 DCIT, Smt. Laxmi Satyapal Jain, CC-6(4), 82, Maker Chamber III, R. No.1925, 19th Floor, बनाम/ Nariman Point, AIR India Building, Vs. Mumbai-400021 Nariman Point, Mumbai-400021 (राज व /Revenue) ( नधा रती /Assessee) P.A. No.AABPJ1890J 3 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain ITA No.540/Mum/2018 Assessment Year: 2014-15 Smt. Laxmi Satyapal Jain, DCIT, 82, Maker Chamber III, CC-6(4), Nariman Point, बनाम/ R. No.1925, 19th Floor, Mumbai-400021 Vs. AIR India Building, Nariman Point, Mumbai-400021 ( नधा रती /Assessee) (राज व /Revenue) P.A. No.AABPJ1889J राज व क ओर से / Revenue by Shri Satishchandra Rajore नधा रती क ओर से / Assessee by Shri Vijay Mehta ु वाई क तार ख / Date of Hearing :
सन 18/01/2019
27/02/2019
आदे श क तार ख /Date of Order:
आदे श / O R D E R
Per Bench:-
These cross appeals filed by two different assessees as well as the Revenue are directed against, separate but identical orders of the Ld. CIT(A)-54, Mumbai, dated 15/09/2017, 16/10/2017, 19/09/2017 and 17/10/2017 respectively for Assessment Years 2013-14 and 2014-15. Since, facts are identical and issues are common in these appeals, therefore, for the sake of convenience, these appeals were heard altogether and are disposed by a consolidated order.
2. The Revenue as well as the assessee has taken same and common grounds of appeal for above AYs. The solitary issue came up for consideration from both appeals is towards determination of Annual Letting Value (in short "ALV") of house property. Therefore, for the sake of brevity, the grounds of appeal taken by the Revenue 4 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain as well as the assessee For AY 2013-14 in ITA No.6836/Mum2017 and in ITA No.442/Mum/2018 are reproduced below:-
Grounds of ITA No.6836/Mum/2017 i. "On the facts and in the circumstances of the case and in Law, Ld. CIT(A) erred in holding that the ratable value of the properties as determined by the Municipal Authorities is the yardstick while failing to consider that Section 23(1)(a) mandates that the annual value is deemed to be the sum for which the property might be expected to be let from year to year.?
ii. "On the facts and in the circumstances of the case and in Law , Ld. CIT(A) erred in ignoring the fact that the Assessing Officer had made local enquiries to determine the sum for which the properties could be expected to be let for the year as per Section 23(1)(a) of the I T Act, 1961?"
iii. "On the facts and in the circumstances of the case and in Law, Ld. CIT(A) erred in ignoring the facts as brought on record by the Assessing Officer regarding the estimated rent for the properties for the purposes of computing income u/s 23(1)(a) of the I T Act,1961?"
Grounds of ITA No.6836/Mum/2017
1. In the facts and circumstances of the case and in law, the learned CIT(A). erred in confirming the Annual Letting Value (ALV) of the premises owned by the appellant at Central Garden Complex Chunabhatti, Mumbai at Rs. 14,58,124/- instead of Rs.10,52,034/- offered by the appellant based on the municipal rateable value of the said premises.
The learned CIT(A) failed to appreciate that the aforesaid premises were vacant throughout the previous year and accordingly the Appellant had rightly adopted the municipal rateable value for the purpose of determining income under the head "Income from House Property"
2. The order passed by the learned CIT(A) is illegal, bad in law, ultra vires and contrary to the provisions of law and facts and is passed without application of mind and in violation of the principles of the natural justice."
3. At the outset, the Ld. AR for the assessee submitted that the issue involved in all these appeals is squarely covered in favour of the assessee by the decision of the ITAT, Mumbai, "A" Bench in assessee's own case for Assessment year 2012-13, where under identical set of facts, the Tribunal has dismissed the appeal filed by the Revenue 5 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain challenging the finding of the Ld. CIT(A), deleting the additions made by the AO towards ALV of house property, on the basis of market rate ignoring ALV determined by the assessee on the basis of Municipal Rateable Value. The Ld. AR, further submitted that the Tribunal has allowed the appeal filed by the assessee challenging the findings of the Ld. CIT(A) in making ad-hoc estimation towards ALV by increasing 5% over the previous year ALV determined on the basis of Municipal Rateable Value. The Ld. AR further submitted that the Hon'ble jurisdictional High Court of Bombay in one of the assesee's case in Income Tax Appeal No.1285 of 2015 has upheld the findings of the Tribunal in determining the ALV of the house property on the basis of Municipal Rateable Value. Therefore, from the above findings of the Tribunal as well as the High Court, the issue is settled now and hence there is no reason for the AO to determine ALV of house property on the basis of market rate and also the Ld. CIT(A) enhancing ad-hoc percentage on the previous year ALV.
4. The Ld. DR, on the other hand, submitted that the AO has determined the ALV of the house property on the basis of field report obtained from Inspector of Income Tax as per which the prevailing market rate of rent is higher than the ALV determined by the assessee. Therefore, the Ld. CIT(A), was erred in deleting the addition made by the AO towards re-computation of ALV from house property. The Ld. DR further submitted that the Hon'ble jurisdictional High Court of Bombay in the case of CIT vs M/s TIP Top Typography (48 taxmann.com 191), observed that the AO is not bound by the Municipal Rateable Value but free to determine the ALV of the house property on the basis of 6 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain prevailing market rent. In this case, the AO has determined the ALV on the basis of prevailing market rate by conducting enquiries which is in accordance with ratio laid down by the Hon'ble Bombay High Court in the case of CIT vs Tip Top (Supra). Therefore, the Ld. CIT(A) erred in not considering the ratio of the Hon'ble jurisdictional High Court while deleting the additions made towards re-computation of ALV of house property. The Ld. DR further submitted that in so far as, enhancement of ALV on ad-hoc basis by applying certain percentage is not disputed by the assessee for AY 2012-13. Further, the said question was not before the Hon'ble Bombay High Court in Income Tax Appeal No.1285 of 2015, therefore, it is incorrect to say that the issue involved in the present appeals is squarely covered in favour of the assessee. Hence, the addition made by the AO towards the re-computation of ALV and enhancement made by the CIT(A) towards ALV should be upheld.
5. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. We find that the issue of determination at ALV of house property on the basis of Municipal Rateable Value is a subject matter of deliberation by the Co-ordinate Bench of the ITAT, Mumai "A" Bench in assessee's own case for AY 2012-13 in ITA No.3887/Mum/2017 and also in ITA No.3665/Mum/2017, where the Co-ordinate Bench, after considering the relevant provisions of the Act as also by following the decision of the Hon'ble Bombay High Court in the case of CIT vs M/s TIP Top Typography (2014) 368 ITR 330and also the decision of the Hon'ble High Court in the case of Moni Kumar Subba (2011) 333 ITR 38, upheld 7 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain the findings of the Ld. CIT(A) in determining the ALV of the house property on the basis of Municipal Rateable Value and also rejected claim the assessee in respect of enhancement made towards ALV on ad-hoc basis by applying certain percentage. The relevant observations of the Tribunal are as under:-
3. At the outset, the learned Counsel for the assessee stated that the Tribunal in assessee's own case in ITA Nos. 2707, 2708 & 2709/Mum/2013 for AY 2006-07 to 2009-10 vide order dated 17.04.2015 has already considered the issue and directed the AO to adopt the ALV computed as per Municipal rateable value as deemed income from house property. The Tribunal vide Paras No. 11, 12 and 13 held as under: -
"11. Ground Nos.2, 3 & 4 are relating to the estimation of Annual Letting Value (ALV) of the vacant flats at Central Garden Complex. The assessee has claimed that the value of the same be taken as Rs.Nil. Whereas the Ld. CIT(A) has confirmed the action of the AO in assessing the ALV of the said flats at Rs.15483852/- and thereafter assessment of the income under the head "Income from house property" at Rs.10838696/-. The assessee being the owner of 20 vacant flats as detailed in the assessment order had offered annual letting value of flats as per Municipal Rateable value at Rs.8,473/-. The AO, however, determined the same as per his estimation of the market value at Rs.15483852/-. The Ld. CIT(A) confirmed the finding of the AO.
12. The Ld. A.R. of the assessee has contended that it was not a case where the flats were actually let out and therefore there was not any suspicion, doubt or dispute as to the rate of rent which might have been actually received by the assessee. He has contended that in this case, the flats were admittedly vacant and therefore the deemed ALV was rightly offered as per the municipal rateable value. He has relied upon the decision of the coordinate bench of the Tribunal in the case of Shri Anil Kashiprasad Murarka vs. ACIT" ITA No.5514/M/2012 decided on 17.12.2014. We have gone through the said decision. The relevant finding of the Tribunal has been given in para 5 of the said order, which for the sake of convenience is reproduced as under:
"We have considered rival contentions and found that the issue is covered by the decision of the Hon'ble Bombay High Court in the case of Smt. Smitaben N. Ambani Vs. CWT, reported in (2010) 323 ITR 104 (Born), wherein it was held that the basis on which a self-occupied property is valued under rule 1BB of the Wealth-tax Rules and municipal ratable value is arrived at under the municipal law is the same i.e. "a reasonable amount of rent that can be expected by the owner from a hypothetical tenant". That while arriving at such reasonable amount of rent that can be expected by the owner from a hypothetical tenant, the amount of statutory deduction, if any, permissible under the local municipal law must be added to the ratable 8 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain value. Thus, the Hon'ble High Court held that while applying the provisions of rule 1BB for valuing the self-occupied property, municipal rateable value with addition of statutory deductions, if any, may be adopted instead of standard rent, for arriving at the gross maintainable rent. Respectfully following the order of jurisdictional High Court, matter is restored back to the file of AO with a direction to recompute the ALV in terms of above decision of Hon'ble Bombay High Court."
13. The case of the assessee is squarely covered by the above decision of the Tribunal and respectfully following the same, it is accordingly directed that the"
4. The learned Counsel for the assessee stated that the issue is squarely covered by the decision of Hon'ble Bombay High Court in the case of CIT vs. Tip Top Typography (2014) 368 ITR 330(Bom), wherein the decision of Hon'ble Delhi High Court in the case of CIT vs. Moni Kumar Subba (2011) 333 ITR 38 (Del) was considered and we find that Hon'ble Bombay High Court in Tip Top Typography (supra) held as under: -
"48. We are not in agreement with Shri Chhotaray that the municipal rateable value cannot be accepted as a bona fide rental value of the property and it must be discarded straightway in all cases. There cannot be a blanket rejection of the same. If that is taken to be a safe guide, then, to discard it there must be cogent and reliable material. 49. We are of the opinion that market rate in the locality is an approved method for determining the fair rental value but it is only when the Assessing Officer is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality. We are of the view that municipal rateable value may not be binding on the Assessing Officer but that is only in cases of afore- referred nature. It is definitely a safe guide"
5. The learned Sr. Departmental Representative could not controvert the above fact and could not brought out to our notice any adverse judgment. Respectfully following assessee's own case in in ITA Nos. 2707, 2708 & 2709/Mum/2013 for AY 2006-07 to 2009-10, and taking a consistent view and allow the appeal of assessee and dismiss the Revenue's appeal.
6. We further noticed that the Hon'ble Bombay High Court in Income Tax Appeal No.1285 of 2015 in the case of Laxmi Jain has considered the issue of determination at ALV of house property on the basis of municipal rateable value and by following its earlier decision in the case of Smt. Smitaben N. Ambani, dismissed the appeal filed by the Revenue. Further, the Hon'ble jurisdictional High Court in the case of Pr. CIT vs Shri Harish Jain (Income Tax Appeal No.1438 of 2016) an associate of the assessee has 9 Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain considered identical question of law in the light of provisions of section 22 and 23 of the Act and by following its earlier decision in the case of Smt. Smitaben N. Ambani (Supra) held as under.The relevant portion of the order in the case of Shri Harish Jain (supra) is reproduced hereunder:-
6 We, however, notice that the Tribunal has taken note of the contents of the email and found that, the same do not show any evidence of cash payment and in fact, reference to the dates when such payments were allegedly made, would take the case of the assessee out of the current Assessment Year. The Tribunal further noted that the loose documents/papers were not found from the possession of the assessee, nor the same were singed by the assessee.
7 We, therefore, find that the entire issue is based on appreciation of facts on record. The Tribunal has assessed the evidence to come to the conclusion that, there was no evidence in possession of the Assessing Officer to make additions. Significantly, the Tribunal noticed several inconsistencies in the contents of the email and found that the loose documents/papers were not found from the possession of the assessee, nor they were signed by the assessee and finally the purchaser of the land, was not examined by the Assessing Officer. We do not find any question of law arising.
8 Question (b) relates to the additions made by the Assessing Officer by reversing the rateable value of the property owned by the assessee which was vacant. While complying the taxability of deemed rental income in terms of Sections 22 and 23 of the Act, the Assessing Officer discarded the rateable value fixed by the Municipal Corporation for assessing the tax on such properties and substituted the same with market rate as prevailing in the area, as estimated by him after collecting data with respect to the same.
The Tribunal, however, deleted addition on the ground that in case of vacant property, the tax on rental income in terms of Section 23 of the Act can be calculated only on the basis of rateable value assessed by the Municipal Corporation.
9 We find that this view of the Tribunal is supported by decision of this Court by order dated 16th April, 2018 passed in Income Tax Appeal No.1285 of 2015. The Court while dismissing the Revenue's appeal, relied on the decision of this Court in case of Smt. Smitaben N. Ambani v/s. Commissioner of Wealth Tax reported in 323 ITR 104. In such decision, this Court was considering a similar question in context of valuing the self occupied property, for the purpose of wealth tax of the assessee. The provisions for assessing the value of the property were similar to those applicable in case of assessee's annual rateable value in terms of Section 23 of the Act. This question is, therefore, not entertained." 10
Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain
7. In this view of matter and consistent with view taken by the Co-ordinate Bench in assessee's own case for the AY 2012-13, which was in tern followed the decision of the Hon'ble jurisdictional High Court in assessee's own case, we are of the view that there is no error in the finding of the Ld. CIT(A) in determining the ALV of house property on the basis of municipal rateable value. Hence, we are inclined to upheld the finding of the Ld. CIT(A) and dismissed the appeal filed by the Revenue.
8. In so far as, appeal filed by the assessee challenging the findings of the Ld. CIT(A) in enhancing the ALV on ad-hoc basis, we find that Co-ordinate Bench has considered similar issue for AY 2012-13 and held that there is no reason for the AO to make ad-hoc enhancement towards ALV determined on the basis of municipal rateable value and hence, we are of the considered view that there is no reason for the lower authorities to enhance ALV on ad-hoc basis. Accordingly, we direct the AO to delete additions made towards ALV of house property on ad-hoc basis, consequently, the appeal filed by the assessee is allowed.
9. In the result, appeal filed by the Revenue against both assessees for the AY 2013-14 and 2014-15 are dismissed and appeals filed by the different assessees for AY 2013-14 and 2014-15 are allowed.
Order pronounced in the open Court on 27/02/2019.
Sd/- Sd/-
(Mahavir Singh) (G. Manjunatha)
या!यक सद"य /JUDICIAL MEMBER लेखा सद"य / ACCOUNTANT MEMBER
मब
ुं ई Mumbai; दनांक Dated : 27/02/2019
f{x~{tÜ? P.S //. न.स.
11
Anand Jaikumar Jain & Smt. Laxmi Satyapal Jain आदे श क $!त&ल'प अ(े'षत/Copy of the Order forwarded to :
1. अपीलाथ" / The Appellant (Respective assessee)
2. #$यथ" / The Respondent.
3. आयकर आय' ु त(अपील) / The CIT, Mumbai.
4. आयकर आय' ु त / CIT(A)- , Mumbai,
5. )वभागीय # त न,ध, आयकर अपील य अ,धकरण, मब ुं ई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मब ुं ई / ITAT, Mumbai