LALIT KUMAR SETH, MUMBAI v. ITO 8(1)(3), MUMBAI

ITA 1445/MUM/2009 | 2004-2005
Pronouncement Date: 16-07-2010 | Result: Allowed

Appeal Details

RSA Number 144519914 RSA 2009
Bench Mumbai
Appeal Number ITA 1445/MUM/2009
Duration Of Justice 1 year(s) 4 month(s) 14 day(s)
Appellant LALIT KUMAR SETH, MUMBAI
Respondent ITO 8(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 16-07-2010
Assessment Year 2004-2005
Appeal Filed On 03-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI. BEFORE SHRI R.V.EASWAR PRESIDENT AND SHRI B.RAMAKO TAIAH AM I.T.A.NO.1445/MUM/2009 (ASSESSMENT YEAR: 2004-05) MR. LALIT KUMAR SETH 46 ADARSH INDL. ESTATE SAHAR ROAD ANDHERI(E) MUMBAI-400 099. PAN:AAMPS9926M VS. THE INCOME TAX OFFICER-8(1)(3) AAYAKAR BHAVAN M.K.ROAD MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. LALIT KHANNA RESPONDENT BY : MR.ABHIJIT PATANKAR O R D E R PER R.V.EASWAR PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2004-05 AND IS DIREC TED AGAINST THE ORDER PASSED BY THE CIT(A) ON 5.12.2008. THE ON LY GROUND TAKEN IS THAT THE CIT(A) ERRED IN CONFIRMING THE OR DER OF THE ASSESSING OFFICER WHO HAD ASSESSED THE INCOME IN RE SPECT OF FLAT NO.404 MANISH SEA CRAFT SHERLY RAJAN ROAD MUMBAI -400 050 AT RS.3 31 507/- INSTEAD OF RS.NIL AS RETURNED BY T HE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL. IN THE RETURN OF INC OME HE DECLARED RS.NIL INCOME FROM THE ABOVE FLAT . WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER INVOKED THE P ROVISIONS OF SECTION 23(1)(A) OF THE INCOME TAX ACT IN ORDER TO DETERMINE THE ANNUAL LETTING VALUE OF THE PROPERTY. HE ISSUED A S UMMON TO THE SECRETARY OF MANISH SEA CRAFT CO-OP. HOUSING SOCIET Y UNDER SECTION 131. THE SECRETARY WAS ASKED WHETHER ANY O F THE FLATS IN THE SOCIETY HAVE BEEN LEASED OUT AND IF SO THE AVERAGE RENT. THE SECRETARY WROTE BACK TO THE ASSESSING OFFICER S AYING THAT AVERAGE RENT IN THE PREMISES IS ABOUT RS.40 000/- P ER MONTH AND ALSO SUBMITTED A COPY OF THE LEASE AGREEMENT IN RESPECT OF ITA NO.1445/M/09 2 ONE OF THE FLATS LEASED OUT IN THE SOCIETY. ON THE BASIS OF THIS INFORMATION THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO SHOW CAUSE WHY THE RENT OF RS.40 000/- PER MONTH SH OULD NOT BE TAKEN AS THE BASIS FOR COMPUTING THE ANNUAL LETT ING VALUE OF THE ASSESSEES FLAT IN THE SAME SOCIETY. THE ASSES SEE FILED DETAILED OBJECTIONS WHICH ARE REPRODUCED IN THE ASS ESSMENT ORDER THE GIST OF WHICH IS THAT THE RENT RECEIVED BY ANOTHER FLAT IN THE PREMISES CANNOT FORM THE BASIS OF THE ANNUAL LETTING VALUE IN RESPECT OF THE ASSESSEES FLAT AND THAT TH E ANNUAL LETTING VALUE SHOULD BE BASED ON THE STANDARD RENT ARRIVED AT ON THE BASIS OF THE RENT CONTROL ACT WHICH IS APPLICABLE. SEVERAL AUTHORITIES WERE ALSO CITED BY THE ASSESSEE IN SUPP ORT OF HIS CLAIM STARTING FROM THE JUDGEMENT OF THE SUPREME CO URT IN DEWAN DAULAT RAI KAPOOR VS. NEW DELHI MUNICIPAL COM MITTEE (1980) 122 ITR 700 MRS. SHEILA KAUSHISH VS. CIT. (1981) 131 ITR 435 ETC. THE ASSESSING OFFICER WAS NOT CONVINC ED BY THE ASSESSEES CONTENTIONS. HE NOTED THAT IN THE ASSESS EES CASE THE FLAT WAS NOT LET OUT AND THE DEEMED INCOME HAS TO B E COMPUTED. HE FOUND THAT THE ASSESSEE HAD SUBMITTED A CALCULAT ION OF THE ANNUAL LETTING VALUE BASED ON THE RATEABLE VALUE AS ASSESSED BY MCGM UNDER WHICH THE ANNUAL LETTING VALUE WORKS OU T TO RS.5 821/- WHICH IS EVEN LESS THAN THE MUNICIPAL TA XES OF RS.6 418/-PAID BY THE ASSESSEE. HE HELD THAT THE GR OSS MAINTAINABLE RENT AS PER THE ASSESSMENT OF MCGM IS NOT A TRUE INDICATOR OF THE MARKET RENT WHICH WAS THE ONLY REL EVANT CONSIDERATION FOR THE PURPOSE OF CALCULATING THE AN NUAL LETTING VALUE UNDER SECTION 23(1)(A). WITHOUT PREJUDICE TO THE AFORESAID STAND THE ASSESSING OFFICER ALSO HELD THAT NO STAN DARD RENT OR FAIR RENT HAS BEEN FIXED BY THE COMPETENT COURT UND ER SECTION 11 OF THE BOMBAY RENT ACT AND NO ORDER HAS ALSO BEEN S HOWN TO HAVE BEEN PASSED BY THE COMPETENT RENT CONTROL AUTH ORITY FREEZING THE RENT OF THE PROPERTY. IN THIS VIEW OF THE MATTER BASING HIMSELF ON THE CERTIFICATE GIVEN BY THE SECR ETARY OF THE ITA NO.1445/M/09 3 HOUSING SOCIETY THE ASSESSING OFFICER DETERMINED T HE ANNUAL LETTING VALUE OF THE ASSESSEES FLAT AT RS.4 80 000 /- AND PROCEEDED TO COMPUTE THE NET INCOME FROM THE FLAT A T RS.3 31 507/- AFTER DEDUCTION OF MUNICIPAL TAXES AN D STATUTORY ALLOWANCES. 2. THE ASSESSEE APPEALED TO THE CIT(A) AND REITERA TED HIS CONTENTIONS AGAINST THE ASSESSMENT OF THE ANNUAL LE TTING VALUE IN RESPECT OF THE FLAT. BEFORE THE CIT(A) THE ASSES SEE WOULD APPEAR TO HAVE FILED A COPY OF THE LETTER OF THE AS SISTANT COLLECTOR WHICH SETS OUT THE PROCEDURE FOR CALCULATING THE RA TEABLE VALUE OF THE FLAT IN MANISH SEA CROFT CO-OP. HOUSING SOCI ETY. THE CIT(A) HELD THAT THE LETTER OF THE ASSISTANT COLLEC TOR WAS UNSIGNED AND ALSO HELD THAT THE ASSESSEE DID NOT SU BMIT THE SAME BEFORE THE ASSESSING OFFICER DESPITE REASONABL E OPPORTUNITY HAVING BEEN GIVEN TO HIM. HE THEREFORE HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE A NNUAL LETTING VALUE OF THE PROPERTY AT RS.4 80 000/- SUBJECT TO DEDUCTIONS FOR TAXES AND STATUTORY ALLOWANCES. THE ASSESSEES APPE AL WAS THUS DISMISSED. 3. THE ASSESSEE IS IN FURTHER APPEAL. IT IS NOT DIS PUTED THAT THE FLAT IS SELF-OCCUPIED AND THAT THE ANNUAL LETTI NG VALUE IS TO BE DETERMINED UNDER SECTION 23(1)(A). THE CONTENTIO N HOWEVER IS THAT THE INCOME-TAX AUTHORITIES WERE NOT JUSTIFIED IN REFUSING TO APPLY THE JUDGEMENTS OF THE SUPREME COURT CITED SUP RA TO THE QUESTION OF DETERMINING THE ANNUAL LETTING VALUE OF THE PROPERTY. RELIANCE IS ALSO PLACED ON THE LETTER ISSUED BY THE ASSISTANT ASSESSOR & COLLECTOR SETTING OUT THE PROCEDURE FOR DETERMINING THE RATEABLE VALUE OF A FLAT IN THE MANISH SEA CROF T CO-OP. HOUSING SOCIETY. IT WAS FURTHER ARGUED THAT THE CIT (A) WAS NOT JUSTIFIED IN REJECTING THE LETTER WITHOUT ANY BASIS . IT WAS SUBMITTED THAT THE ASSESSING OFFICER SHOULD BE DIRE CTED TO ITA NO.1445/M/09 4 EXAMINE THE APPLICABILITY OF THE RATEABLE VALUE ASS ESSED BY THE MCGM. 4. THE LEARNED D.R. ON THE OTHER HAND POINTED OUT THAT THE LETTER OF THE ASSISTANT COLLECTOR WAS AN UNSIGNED LETTER AND CANNOT HAVE ANY EVIDENTIARY VALUE. 5. WE HAVE CONSIDERED THE FACTS AND RIVAL CONTENTIO NS. THE FLAT IS SELF-OCCUPIED. THERE IS NO DISPUTE THAT THE ANNUAL LETTING VALUE OF THE FLAT HAS TO BE DETERMINED UNDER SECTIO N 23(1)(A) OF THE ACT. HOWEVER IN THE LIGHT OF THE JUDGEMENTS OF THE SUPREME COURT CITED SUPRA THE MARKET RENT OF THE FLAT CANN OT FORM THE BASIS OF THE ANNUAL LETTING VALUE. THE ANNUAL LETTI NG VALUE HAS TO BE DETERMINED ON THE BASIS OF THE STANDARD RENT OR FAIR RENT OF THE PROPERTY. THE RATEABLE VALUE ASSESSED BY THE MC GM CONSTITUTES GOOD EVIDENCE INDICATIVE OF STANDARD OR FAIR RENT FOR THE PROPERTY AND THIS POSITION HAS BEEN RECOGNIZED IN VARIOUS ORDERS PASSED BY THE MUMBAI BENCHES OF THE TRIBUNAL . THE CIT(A) IN OUR OPINION WAS NOT JUSTIFIED IN REJECTIN G THE LETTER OF THE ASSISTANT ASSESSOR & COLLECTOR OF BMC ON THE GROUND THAT IT WAS NOT SIGNED. THE LETTER FILED BEFORE THE CIT( A) WAS IN FACT A XEROX COPY OF THE ORIGINAL LETTER. A COPY THEREOF H AS BEEN FILED BEFORE US AT PAGES 84 & 85 OF THE PAPER BOOK AND I T SHOWS THAT IT CONTAINS THE SIGNATURE OF THE ASSISTANT ASSESSOR & COLLECTOR. THE LETTER THEREFORE MERITS CONSIDERATION PARTICULA RLY WHEN IT SETS OUT THE PROCEDURE FOR DETERMINING THE RATEABLE VALUE OF A FLAT IN THE BUILDING IN WHICH THE ASSESSEES FLAT I S LOCATED. WHILE THEREFORE UPHOLDING THE APPLICABILITY OF SECTION 23 (1)(A) WE SET ASIDE THE COMPUTATION OF THE ANNUAL LETTING VALUE O F THE PROPERTY AND RESTORE THE SAME TO THE FILE OF THE ASSESSING O FFICER WHO WILL EXAMINE THE LETTER ISSUED BY THE ASSISTANT ASSESSOR & COLLECTOR OF BMC AND DECIDE THE APPLICABILITY THEREOF TO THE ASSESSEES CASE AND TAKE A FRESH DECISION REGARDING THE DETERM INATION OF THE ANNUAL LETTING VALUE. NEEDLESS TO ADD THAT THE ASSESSEE SHALL ITA NO.1445/M/09 5 BE GIVEN DUE OPPORTUNITY TO PUT FORTH HIS CASE BEFO RE THE ASSESSING OFFICER BEFORE ANY DECISION IS TAKEN ON T HE ANNUAL LETTING VALUE. SUBJECT TO THIS REMARK THE APPEAL O F THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JULY 2010. SD/- ( B. RAMAKOTAIAH ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI DATED 16 TH JULY 2010. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-VIII MUMBAI. 4. THE CIT(A)-VIII MUMBAI 5. THE DR A BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR I.T.A.T MUMBAI