Income Tax Appellate Tribunal - Mumbai
Ranbir Apar Maker , Mumbai vs Department Of Income Tax on 19 August, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "A"
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
I.T.A. No. 7339/Mum/2011
Assessment Year : 2008-09
The ACIT,CC-38, Shri Ranbir Apar
Room No.32(1), Maker,
Ground Floor, Aaykar Vs. Maker Tower "F" 1 s t
Bhavan, Floor, Cuffe Parade,
M.K.Road, Mumbai - 400 005.
Mumbai 400 020
PAN : AACPM 5066G
(Appellant) .. (Respondent)
I.T.A. No. 7340/Mum/2011
Assessment Year : 2008-09
The ACIT,CC-38, Shri Ambrish Ranbir
Room No.32(1), Maker,
Ground Floor, Aaykar Vs. Maker Tower "F" 1 s t
Bhavan, Floor, Cuffe Parade,
M.K.Road, Mumbai - 400 005.
Mumbai 400 020
PAN : AHJPM 5754F
(Appellant) .. (Respondent)
Appellant by Shri S.P. Walimbe
Respondent by : Shri Prakash Jotwani,
Date of Hearing : 27.7.2015
Date of Pronouncement : 19/08 /2015
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ORDER
PER G.S. PANNU, AM:
These two captioned respondent assessees are co-owners of a property and the only issue in the captioned appeals relate to determination of the Annual Value of the property for the purposes of assessment under the head ' income from house property'. Since a common issue is involved in both appeals, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
2. The appeal of the Revenue in the case of Amrish Ranbir Maker, (i.e.ITA No.7340/Mum/2011) is taken as the lead case. This appeal is directed against the impugned appellate order dated 10/08/2011 passed by CIT(A)-41, Mumbai pertaining to the assessment year 2008- 09, with reference to the assessment order dated 16/11/2010, passed in terms of section 143(3) of the Income Tax Act,1961 ( in short 'the Act').
3. Briefly put the relevant facts are that assessee is owning 3/4th share in Flat No.151/152 at Maker Tower 'L' , Cuffe Parade, Mumbai 400 005, which was rented out to one M/s. Robo India Finance Pvt. Ltd. for an yearly rent of Rs.1,80,000/-. On the basis of the actual rent received, assessee declared income from house property at Rs.94,500/- after claiming statutory deduction under section 24 of the Act. The Assessing Officer, however, noticed that in the case of one Mr. Puneet 3 I . T.A. No. 733 9 & 7 340/M um/2011 A s s e s s me n t Y e a r : 2 0 0 8 -0 9 R.Gupta, who was also assessed by him, Flat No.192B located in the same building as of the assessee, had rented out his to M/s. JM Morgan Stanley Pvt. Ltd., for an amount of Rs.3,00,000/- per month. The flat No.192B belonging to Mr. Puneet R. Gupta was admeasuring 1700 sq.fts., whereas Flat No.151/152 owned by the assessee was of 3060 sq.fts. By adopting the rentals earned by Mr. Puneet R. Gupta, the Assessing Officer concluded that the flat owned by the assessee ought to have fetched a rental of Rs.5,40,000/- per month, which according to him was the Annual Value of the property liable to be considered for assessment of assessee's income under the head "Income from house property". On the aforesaid , the Assessing Officer worked out the Annual Value of the property at Rs.45,36,000/-, after considering the statutory deduction under section 24 of the Act and since assessee's share in the property was 3/4th , the assessee's share was worked out at Rs.34,02,000/-. Since assessee had already declared an income of Rs.94,500/-, the balance of Rs.33,10,500/- was added to the returned income.
4. The assessee carried the matter in appeal before CIT(A) and pointed out that the Assessing Officer was wrong in making the impugned addition, in as much as the action of the Assessing Officer was in violation of the provisions of section 23(1) of the Act. The assessee pointed out that as per provisions of section 23(1) of the Act, for the purposes of determination of Annual Value, the sum for which the property might reasonably be expected to be let from year to year 4 I . T.A. No. 733 9 & 7 340/M um/2011 A s s e s s me n t Y e a r : 2 0 0 8 -0 9 or actual rent received, whichever is higher is to be considered. The assessee pointed out that the annual ratable value determined by the local Municipal Corporation was Rs.25,477/-, which was lower than the actual rent received and; therefore, the income declared by the assessee based on the Annual Value equivalent to the actual rent received was quite justified. The CIT(A) considered the submissions put forth by the assessee and by relying on the decision of the Tribunal,in the case of ITO vs. Sahar Developers, ITA No.3164/Mum/2009 dated 28/01/2011 and in the a case of ACIT vs. Shri Sandeep J. Shah, ITA No.1382/Mum/2008 dated 27/04/2011 and also the judgment of Hon'ble Bombay High Court in the case of Smt. Smitha Ben N. Ambani, 323 ITR 104(Bom), deleted the addition made by the Assessing Officer observing that the Annual Ratable Value of the property determined by the Municipal Corporation was lower than the actual rent received and; therefore, the income declared by the assessee under the head "Income from house' was quite justified. Against the deletion of addition by the CIT(A), Revenue is in appeal before us.
5. Before us the only point raised by the Revenue is based on the case of Mr. Puneet R. Gupta referred by the Assessing Officer, whereby it was pointed out that another flat in the same building was let out at Rs.3,00,000/- per month, which clearly demonstrated that the rental income declared by the assessee could not be construed as the rent onof which the property could be reasonably expected to be let out. In this manner, the order of CIT(A) was sought to be assailed.
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6. On the other hand, Ld. Representative for the assessee supported the order of CIT(A) by pointing out that the decisions of the Mumbai Bench of the Tribunal in the cases of Sahar Developers(supra) and Sandeep J. Sha(supra) relied upon by CIT(A) continue to hold the field. Apart therefrom, Ld. Representative for the assessee also referred to the decision of the Tribunal in the case one Shri Manish Ranbir Maker vide ITA No.7341/Mum/2011 & ITA No.4405/Mum/2012 for assessment years 2008-09 and 2009-10 order dated 30/8/2013 to point out that CIT(A) made no mistake in upholding the Annual Value of the property as returned by the assessee. Ld. Representative for the assessee pointed out that in the case Shri Manish Ranbir Maker (supra) also, the property was located in the same building as that of the assessee and in that case also the Assessing Officer had relied on the rent derived by Mr. Puneet R. Gupta. It was pointed out that the Tribunal considered the circumstances in which Mr. Puneet R. Gupta was earning rent of Rs.3.00 lacs per month and found that the same could not be considered as a rent for which the property can be reasonably expected to be let out from year to year for the purposes of section 23(1) of the Act.
7. In the above background, we have considered the rival submissions. The precedents which have been referred by CIT(A) and also the decision of the Tribunal in the case of Shri Manish Ranbir Maker (supra) clearly support the Annual Value of the property as 6 I . T.A. No. 733 9 & 7 340/M um/2011 A s s e s s me n t Y e a r : 2 0 0 8 -0 9 determined by the assessee in his return of income. Factually speaking, it is quite clear that the Municipal Ratable Value of the property is lower than the actual rent received by the assessee and in fact the actual rent received is almost seven times the Municipal Ratable Value. This aspect of the matter, in our view, signifies that the actual rent derived by the assessee is quite reasonable. It is also evident that in case of Shri. Manishi Ranbir Maker (supra) the issue before the Tribunal related to the determination of Annual Value of the property located in the same building as that of the assessee before us. In the case of Shri. Manishi Ranbir Maker (supra) the property was admeasuring an area of 1800 sq.fts. and the rent derived was Rs.90,000/- per annum, which compares quite favorably with the rental of Rs.1,80,000/- per annum being earned in the case of the instant property. The case of the Assessing Officer is based on a rent of Rs.3.00 lacs per month purported to be earned by Mr. Puneet R. Gupta from a flat located in the same building as that of the assessee. This very comparable relied upon by the Assessing Officer has considered by the Tribunal in the case of Shri Manish Ranbir Maker (supra) for the assessment year 2008-09, which is also the year under consideration before us. The Tribunal in its order dated 30/08/2013(supra) noted that in the case of Mr. Puneet R. Gupta, the property was let out by way of a leave and licence agreement on 11/5/2007 and prior to that the property was fetching a monthly rent of Rs.10,000/- only as per an agreement dated 25/2/2004. The Tribunal considered that such a rental arrangement could not be 7 I . T.A. No. 733 9 & 7 340/M um/2011 A s s e s s me n t Y e a r : 2 0 0 8 -0 9 compared with other rental arrangements which are being carried forward from the past years. In our considered opinion, the parity of reasoning which prevailed with the Tribunal in the case of Shri Manish Ranbir Maker (supra) to reject the reliance placed by the Assessing Officer on the rental arrangement in the case of Mr. Puneet R. Gupta is clearly applicable in the instant case also. Therefore, in our view, the CIT(A) has justifiably ignored the action of the Assessing Officer in relying on the rent earned by Mr. Puneet R. Gupta.
8. In view of the aforesaid discussion and having regard to the precedents cited, we find no reason to interfere with the conclusion drawn by CIT(A), which is hereby affirmed.
9. In the result, the appeal of the Revenue in the case of Shri Ambrish Ranbir Maker, in ITA No.7340/M/2011 is hereby dismissed.
10. Facts and circumstances in the case of Shri Ranbir Apar Maker in ITA No.7339/Mum/2011 stand on identical footing as in the case of Shri Ambrish Ranbir Maker (supra), therefore, our decision in the case of Shri Ambrish Ranbir Maker (supra) shall apply mutatis mutandis in the other appeal also.
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11. Resultantly, the captioned appeals of the Revenue are dismissed.
Order pronounced in the open court on 19th August, 2015.
Sd/- Sd/-
(SANJAY GARG) (G.S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai,Dated
[
VM
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A)- 21, Mumbai
4. CIT- 10, Mumbai
5. DR, ITAT, Mumbai A Bench
6. Guard file.
BY ORDER,
//True Copy//
(Dy./Asstt. Registrar)
ITAT, Mumbai
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Draft dictated on 14/8/2015 Sr PS
2 Draft placed before Author on Sr PS
17/08/2015
3 Draft proposed & Place before the 2nd JM/AM
member
4 Draft discussed/approved by 2nd Member JM/AM
5 Approved draft comes to the Sr PS Sr.PS
6 Kept for pronouncement on Sr PS
7 File sent to the Bench Clerk Sr PS
8 Date on which file goes to the Head Clerk
9 Date on which file goes to the AR
10 Date of dispatch Sr PS