Income Tax Appellate Tribunal - Mumbai
Saleem Mohd. Nazir Shaikh, Mumbai vs Dcit Cen Cir 5(1), Mumbai on 25 September, 2018
आयकर अपील
य अ धकरण, मुंबई यायपीठ, ,मुंबई।
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES, 'SMC' MUMBAI
ी जो ग दर संह, या यक सद य एवं
ी राजेश कुमार, लेखा सद य, के सम
Before Shri Joginder Singh, Judicial Member, and
Shri Rajesh Kumar, Accountant Member
ITA No.495/Mum/2018
Assessment Year: 2014-15
Mohd. Saleem Mohd. Nazir DCIT,
Shaikh, बनाम/ Central Circle-5(1),
Flat No.1501, 15th Floor, Libra Mumbai
Tower, Hill Road, Bandra (W), Vs.
Mumbai-400050
( नधा!रती /Assessee) (राज व /Revenue)
PAN. No.AMBPS4606D
नधा!रती क ओर से / Assessee by None
राज व क ओर से / Revenue by Shri S.K. Bepari-DR
ु वाई क% तार&ख / Date of Hearing :
सन 06/09/2018
आदे श क% तार&ख /Date of Order: 25/09/2018
2 ITA No.495 / M u m / 2 0 1 8
Mohd. Saleem Mohd. Nazir Shaikh
आदे श / O R D E R
Per Joginder Singh, JM
The assessee is aggrieved by the impugned order dated 15/02/2017 of the Ld. First Appellate Authority, Mumbai. The ground raised pertains to upholding the addition on account of notional income of flat, which was vacant and calculated @8.5% of the cost price of the flat without considering the condition of the building/flat and the rent which could have been received and further the premises is subject to rent control legislation wherein maximum yield of residential property is 3.5 to 4%, ignoring the certificate of the secretary of the society in which the rental income has been mentioned between the range of Rs.30,000 to Rs. 50,000/-
2. During hearing none was present for the assessee inspite of issuance of Registered AD notice, which was returned unserved by the postal authorities. The assessee has not furnished the new address to the Registry of this Tribunal and as per Form No.36, the address provided by the assessee is the same on which the Registered AD notice was sent. Now we have no option but to proceed exparte, 3 ITA No.495 / M u m / 2 0 1 8 Mohd. Saleem Mohd. Nazir Shaikh qua the assessee and tend to dispose of this appeal on the basis of material available on record. The learned DR defended the addition made by the learned Assessing Officer and sustained by the learned CIT(A).
3. We have considered the submissions of learned DR and perused the material available on record. The facts in brief are that the learned Assessing Officer made the addition as deemed income from the house property. The learned Assessing Officer noted that the assessee owns more than one house property and no deemed income was offered and, therefore, the property in Capri Tower was self occupied and the value of Bandra Bridge property, appearing in the balance sheet at Rs. 2,49,19,440/- was treated as deemed to be let out. The learned Assessing Officer deemed the rent @ 8.5% of the cost. Admittedly, the building is old and the assessee in his contention claimed that the deemed rent is somewhere between Rs. 30,000/- to Rs. 50,000/- per month, based upon the letter of the secretary of the building housing society. The learned CIT(A) in para 7 of the impugned order has mentioned that for A.Y. 2012-13, identical issue arose. The relevant 4 ITA No.495 / M u m / 2 0 1 8 Mohd. Saleem Mohd. Nazir Shaikh portion from the appellate order has been reproduced, which is as under:
4.1.1 During the course of assessment it was seen from the balance sheet that the appellant had shown three- house properties, namely, at Capri Tower, flat at Belle Vue, Chimbai Road, (W) and flat at Bandra Breeze. The flat at Capri Tower considered as Self-occupied Property (SOP) of the appellant. It was noted that the appellant had not offered rental income from the flats at Bandra Breeze and Chimbai Road. Following the decision taken in earlier AYs.2009-l0 and 2010-11, 10% of the value of flat at Chimbai Road i.e. Rs.l0,00,867/- was treated as deemed Annual Letting Value (ALV) of the said property Since the flats at Bandra Breeze was sold on 06.09.2011 and was under possession of the appellant for five months, deemed rent was calculated accordingly. After allowing deduction @30% u/s.24, the deemed rent of Chimbai Road property was worked out at Rs 2,91,920/- and added to the total income of the appellant.
4.1.2 The A.O. also noticed that the appellant had purchased a flat at Bandra Breeze (65% share) valued at Rs.3,65,00,000/- on 05.10.2011. Following past history of the case, the A.O. worked out deemed rent of the flat at Bandra breeze at Rs 36,50,00,000/- being 10% of the cost. Since the flat was acquired during the year and was under possession for five months, deemed rent of the said flat was calculated at Rs 15,20,834/-. After allowing deduction @30% u/s. 24, the deemed rent of Bandra Breeze flat was worked out at Rs.10,64,584/- and added to the total income of the appellant.
4.2 In the course of appellate proceedings, it is submitted that the A,O. has estimated the deemed income from the said flats @10% of the cost which is very high as compared to the rate of return of immovable properties in Mumbai city. It is claimed that the average rate of return on residential properties in Mumbai is 4% to 5% and thus the estimation of 10% being very high may be reduced. Further, it is submitted that in A.Y.2010-11, the A.O. had estimated the value of the Chimbai Road property at Rs. 4,93,446/ - and, after giving deduction of 30% u/s. 24(a), 5 ITA No.495 / M u m / 2 0 1 8 Mohd. Saleem Mohd. Nazir Shaikh the deemed rent of the flat had been assessed at Rs.3,45,412/-. Therefore, it is submitted that the addition on account of deemed rent in respect of Chimbai Road flat made by the A.O, may be restricted to Rs.3,45,412/-. As regards Bandra Breeze property, it is submitted that the said flat was purchased by him on 05.10.2011 jointly with Mr.Mohsin Sattar Kherani having 65% therein. It is pointed out that the total value of the flat was Rs.3,65,00,000/- out of which the appellant's share being 65% would be Rs.2,37,25,000/- It is claimed that the appellant had not disclosed any income in respect of Bandra Breeze flat since the said fiat was vacant It is urged that the A.O. may be directed to re-compute the deemed rent of Bandra Breeze flat at a reasonable figure and considering his share at 65%.
4.3.1 I have considered the submissions of the appellant and perused the materials available on record. The point for adjudication is whether the A.O, was justified in assessing the deemed rent of the flats at Chimbai Road and Bandra Breeze owned by the appellant at Rs. 2,91,920 and Rs.10,64,584/- u/s.23(4) of the Act. In this connection, I find merit in the appellant's plea that the estimation of deemed rent by the A.O. @10% of the cost is on the higher side. It deserves to he noted that the determination of the ALV at 7% to 8.5% of the investment has been held to be a just and fair method of determining the ALV (125 ITR 134 (All), 58 TTJ (Ahd.) 27 and 87 TTJ (Mum) 183. It also deserves to be noted that the standard rent under the Bombay Rent Control Act is to be fixed at 8.5% on the total investment. ...."
3.1 In the light of the above position, the questions to be adjudicated by this Tribunal is whether the learned CIT(A) was justified in assessing the deemed rent of the flat at Rs.2,91,920/- determining the ALV at 7% to 8.5% of the investment against 10% of the cost determined by the learned Assessing Officer. The learned CIT(A) has followed 6 ITA No.495 / M u m / 2 0 1 8 Mohd. Saleem Mohd. Nazir Shaikh the decision for determining the ALV, Smt. Radha Devi Dalmiya vs. CIT 125 ITR 134 (Allahabad), Emtici Engineering Ltd. vs. ACIT 58 TTJ (Ahd.) 27 and Hiten Bagmal Parikh vs. Income Tax Officer 87 TTJ (Mum) 183. The learned CIT(A) further observed that the standard rent under the Rent Control Act is to be fixed @ 8.5% of the total investment. However, as claimed by the assessee and mentioned in the assessment order also the building where the flat of the assessee is situated is old one, therefore, lesser rent may be there, therefore, by taking a lenient view the determination of ALV may be adopted at 7% in place of 8.5% adopted by the learned CIT(A). Thus, the appeal of the assessee is partly allowed.
4. In the result, the appeal is partly allowed.
This order was pronounced in the open court in the presence of the ld. representatives from both sides at the conclusion of the hearing on 06/09/2018.
Sd/- Sd/-
(Rajesh Kumar) (Joginder Singh)
लेखा सद#य / ACCOUNTANT MEMBER या$यक सद#य /JUDICIAL MEMBER
मब
ुं ई Mumbai; (दनांक Dated : 25/09/2018
7 ITA No.495 / M u m / 2 0 1 8
Mohd. Saleem Mohd. Nazir Shaikh
f{x~{tÜ? P.S //. न.स.
आदे श क %$त'ल(प अ)े(षत/Copy of the Order forwarded to :
1. अपीलाथ- / The Appellant (Respective assessee)
2. ./यथ- / The Respondent.
3. आयकर आय1 ु त(अपील) / The CIT, Mumbai.
4. आयकर आय1 ु त / CIT(A)- , Mumbai,
5. 3वभागीय . 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