KALYANJI M. CHHEDA, MUMBAI v. ITO WD 12(3)(3), MUMBAI

ITA 1215/MUM/2009 | 2005-2006
Pronouncement Date: 22-12-2010 | Result: Allowed

Appeal Details

RSA Number 121519914 RSA 2009
Bench Mumbai
Appeal Number ITA 1215/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 29 day(s)
Appellant KALYANJI M. CHHEDA, MUMBAI
Respondent ITO WD 12(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 22-12-2010
Assessment Year 2005-2006
Appeal Filed On 23-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SINGH (AM) ITA NO.1215/MUM/2009 ASSESSMENT YEAR : 2005-06 SHRI KALYANJI M. CHHEDA C/O. M/S. SATYAM COLLECTION 115 CHHEDA SADAN J.T. ROAD MUMBAI. ..( APPELLANT ) P.A. NO. (AAFPC 9911 P) VS. INCOME TAX OFFICER WARD 12(3)(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI M.P. MAKHIJA RESPONDENT BY : SHRI S UNEET KUMAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 16.12.2008 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE A N INDIVIDUAL DERIVES INCOME FROM PROPERTY SHARE IN PAR TNERSHIP FIRMS AND INTEREST INCOME FILED RETURN OF INCOME DECLARING T OTAL INCOME OF RS.4 48 880/-. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS OBSERVED BY THE ASSESSING OFFICER THAT IN THE COMPUTATION OF INCOME FROM HOUSE PROPERTY THE ASSESSEE HAS CLAIMED 2/3 RD BMC REPAIRS OF RS.7 81 676/- IN ADDITION TO THE STANDARD DEDUCTION OF 30% FOR REPAIRS. ITA NO.1215/M/10 A.Y:05-06 2 THE ASSESSEE WAS ASKED TO SHOW AS TO WHY 2/3 RD EXPENSES CLAIMED ON ACCOUNT OF BMC REPAIRS SHOULD NOT BE DISALLOWED. IN RESP ONSE IT WAS SUBMITTED BY THE ASSESSEE THAT RS.7 81 676/- CLAIMED AS DED UCTION AGAINST GROSS RENT OF RS.22 94 837/- REPRESENTS THE AMOU NT COLLECTED FROM THE TENANTS AS REPAIR CESS AND PAID TO THE BMC WHI CH IS THE TAX LEVIED AND THEREFORE DEDUCTIBLE WHILE DETERMINING THE ANNUAL VALUE OF THE PROPERTY AS PER PROVISO TO SEC.23(1). FURTHER IT WAS CLARIFIED THAT THIS AMOUNT HAS NOTHING TO DO WITH THE STANDARD D EDUCTION OF 30% CLAIMED BY THE ASSESSEE AS PER PROVISIONS OF SEC.24(A) OF THE INCOME TAX ACT 1961(THE ACT). IN SUPPORT THE ASSESSEE HA S ALSO ENCLOSED STATEMENT SHOWING THE AMOUNT OF RENT RECEIVABLE THE PROPERTY TAX AND REPAIR CESS COLLECTED LICENCE FEES SERVI CE AND MAINTENANCE CHARGES AND ALSO WATER CHARGES TOTALLING TO RS.22 95 837/-. HOWEVER THE ASSESSING OFFICER DID NOT A CCEPT THE ASSESSEE'S EXPLANATION. HE WAS OF THE VIEW THAT DEDUCTION OF TAXES LEVIED BY THE LOCAL AUTHORITY IN RESPECT OF THE PROPER TY IS PROVIDED U/S.23 OF THE ACT WHILE DETERMINING THE ANNUAL VALUE OF THE PROPERTY. FURTHER DEDUCTION FOR A SUM EQUAL TO 30% OF THE ALV I S ALSO PROVIDED U/S. 24(A) OF THE ACT. HOWEVER NO SUCH DEDUCTION FOR B MC REPAIRS IS PROVIDED U/S.23 OR 24 OF THE ACT AND HENCE HE DISALLOWE D THE CLAIM FOR DEDUCTION OF BMC REPAIRS AND DETERMINED THE ASSESSEE'S 2 /3 RD SHARE OF INCOME FROM HOUSE PROPERTY AT RS.8 12 203/-. THE ASSE SSING OFFICER AFTER ADDING OTHER INCOME COMPLETED THE ASSESSMENT AT AN INCOME OF RS.8 13 670/- VIDE ORDER DATED 3.12.2007 PASSED U/S.143 (3) OF THE ACT. ON APPEAL THE LD. CIT(A) WHILE AGREEING WITH THE VIEWS OF THE ASSESSING OFFICER CONFIRMED THE DISALLOWANCE MADE BY THE A SSESSING OFFICER. ITA NO.1215/M/10 A.Y:05-06 3 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF DISALLOWANCE OF BMC REPAIR CESS. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE ASSESSING OFFICER AND THE LD. CIT(A) FURTHER SUBMITS THAT THE T AX LEVIED BY THE BMC ON ACCOUNT OF REPAIR CESS AND PROPERTY TAX ARE ALLOW ABLE U/S.23 WHILE COMPUTING THE ANNUAL VALUE UNDER THE PROVISO O F SEC.23 OF THE ACT AND IN SUPPORT HE ALSO REFERS TO PHOTOCOPY OF RECEIPT S OF PAYMENT OF TAXES PAID TO BMC APPEARING AT PAGE 6-9 OF THE ASSE SSEE'S PAPER BOOK. HE FURTHER SUBMITS THAT A DEDUCTION OF A SUM EQU AL TO 30% OF THE ANNUAL VALUE IS ALLOWABLE U/S.24(A) OF THE ACT AN D THE SAID AMOUNT HAS NOTHING TO DO WITH THE DEDUCTION OF TAXES LEVIED BY LOCAL AUTHORITIY. HE FURTHER SUBMITS THAT IN THE CASE OF OTHER CO-OWNER SHR I LAKHAMSHI M. CHHEDA THE TRIBUNAL IN ITA NO.1216/MUM/2009 FOR ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 16.11.2009 HAS ALLOWED THE SIMILAR CLAIM. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDE R OF THE TRIBUNAL. 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A) . 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS CLAIMED BMC REPAIR CESS AND PR OPERTY TAX PAID TO BMC UNDER THE PROVISO TO SEC.23(1) OF THE ACT WHEREIN IT HAS BEEN PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL A UTHORITY IN RESPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE O F THE PREVIOUS ITA NO.1215/M/10 A.Y:05-06 4 YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCU RRED BY THE OWNER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYE D BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THA T PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. IN THE CASE BE FORE US THERE IS NO DISPUTE THAT THE TOTAL TAXES AMOUNTING TO RS.7 8 1 676/- WERE PAID DURING THE YEAR UNDER CONSIDERATION. HOWEVER IT WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT NO DEDUCTION FOR SUCH BMC REPAIRS IS PROVIDED U/S.23 OR 24 OF THE ACT. IN OUR VI EW THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IS CONTRARY TO THE SAID PROVISO TO SEC.23(1) OF T HE ACT. IN THE CASE OF THE CO-OWNER THE TRIBUNAL (SUPRA) ON THE SIMILA R FACTS AND CIRCUMSTANCES OF THE CASE HAS ALLOWED THE SIMILAR CLAIM UNDER THE PROVISO TO SEC.23(1) OF THE ACT. IN THE ABSENCE OF ANY D ISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE ARE OF T HE VIEW THAT THE DISALLOWANCE OF BMC TAXES MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IS NOT SUSTAINABLE IN LAW AN D ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE SAME AND TH EN WORK OUT THE ASSESSEE'S 2/3 RD SHARE OF INCOME FROM HOUSE PROPERTY. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 7. IN THE RESULT ASSESSEE'S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.12.2010. SD/- SD/- (RAJENDRA SINGH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 22.12.2010. JV. ITA NO.1215/M/10 A.Y:05-06 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.