MILESTONE HOLDINGS & INFRASTRUCTURE P. LTD ( FORMERLY MILESTONE HOLDINGS LTD), MUMBAI v. ITO 8(2)(3), MUMBAI

ITA 2467/MUM/2010 | 2005-2006
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 246719914 RSA 2010
Assessee PAN AAACR7494L
Bench Mumbai
Appeal Number ITA 2467/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 29 day(s)
Appellant MILESTONE HOLDINGS & INFRASTRUCTURE P. LTD ( FORMERLY MILESTONE HOLDINGS LTD), MUMBAI
Respondent ITO 8(2)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 29-07-2011
Date Of Final Hearing 30-05-2011
Next Hearing Date 30-05-2011
Assessment Year 2005-2006
Appeal Filed On 30-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I MUMBAI BEFORE SHRI R. V. EASWAR HON'BLE PRESIDENT AND SHRI PRAMOD KUMAR A.M. I.T.A. NO.: 2467/MUM/2010 ASSESSMENT YEAR : 2005-06 M/S. MILESTONE HOLDINGS & INFRASTRUCTURE PVT. LTD. (FORMERLY MILESTONE HOLDINGS LTD) 512/513 MIDAS SAHAR PLAZA COMPLEX M.V. ROAD ANDHERI(W) MUMBAI-59 PAN NO: AAACR7494L THE INCOME-TAX OFFICER WARD-8 (2)(3) MUMBAI-400 020 (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI A. GOPALKRISHNAN RESPONDENT BY : SHRI S. K. SINGH DATE OF HEARING : 30.05.2011 DATE OF PRONOUNCEMENT: 29 -07-2011 ORDER PER PRAMOD KUMAR (AM) : BY WAY OF THIS APPEAL THE ASSESSEE HAS CHALLENGED CORRECTNESS OF LD. CIT(A)S ORDER DATED 10 TH NOVEMBER 2009 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2005-06 ON T HE FOLLOWING GROUNDS : 1. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD A O WITHOUT APPRECIATING THAT THE VARIOUS DECISIONS RELIED UPON BY THE LD AO ARE DISTINGUISHABLE ON FACTS. 2. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD CIT(A) OUGHT TO HAVE DELETED THE ACTION OF THE LD A O DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY BY ADDING INTEREST ON THE AMOUNT OF DEPOSIT IN TOTO. ITA NO: 2467/M/2010 M/S. MILESTONE HOLDINGS & INFRASTRUCTURE PVT. LTD. 2 3. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO TO THE EXTENT OF DETERMINING THE ANNUAL LETTING VALUE OF PROPERTY BY ADDING INTE REST @ 8% ON THE AMOUNT OF DEPOSIT. THE ACTION OF THE CIT(A) IS CONTRARY TO T HE FACTS AND LAW AND DESERVES TO BE DELETED. 2. AS ALL THESE GROUNDS OF APPEAL ARE INTERCONNECTE D WE WILL TAKE THEM UP TOGETHER. 3. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE L IKE THIS THE ASSESSEE IS OWNER OF PREMISES AT 5 TH FLOOR MIDAS SAHARA PLAZA COMPLEX ANDHERI (E) M UMBAI ADMEASURING 1800 SQ. FT. WHICH WAS GIVEN ON RENT TO MITSU LTD. FOR ANNUAL RENT OF RS.3 00 000. THE ASSESSEE HAD ALSO RECEIVED AN INTEREST FREE DEPOSIT OF RS.65 LAKHS FROM THE TENANT. ON THESE FACTS AND OBSERVING THAT INTEREST OF RS.25 000 P.M . FOR THE PREMISES IS TOO LOW THE ASSESSING OFFICER INVOKED SECTION 23(1)(A) OF THE ACT AND PRO CEEDED TO ADD 15% INTEREST ON THE DEPOSIT AMOUNT TO THE VALUE OF ANNUAL RENT RECEIVED BY THE ASSESSEE. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT MUCH SUCCESS. THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN PRINC IPLE BUT DIRECTED HIM TO COMPUTE INTEREST @ 8% AS AGAINST 15% ADOPTED IN THE ASSESSMENT PROCE EDINGS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATTER OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 5. WE FIND THAT THE ISSUE IS IN APPEAL BEFORE US I S SQUARELY COVERED BY A DECISION OF A CO-ORDINATE BENCH IN THE CASE OF TIVDHI INVESTMENT & TRADING CO. PVT. LTD. VS. ACIT (ITA NOS. 2808 & 2809/MUM/1996 ORDER DATED 13.04.2011) WHER EIN AFTER TAKING NOTE OF HON'BLE DELHI HIGH COURTS JUDGMENT IN THE CASE OF CIT VS. MONI KUMAR SUBBA (JUDGMENT DATED 30.03.2011) THE CO-ORDINATE BENCH HAS OBSERVED AS FOLLOWS :- 29. FROM THE DECISION OF THE HON.FULL BENCH OF THE HON.DELHI HIGH COURT I T IS CLEAR THAT FOR DETERMINATION OF THE FAIR RENT THE AO HAS TO TAKE INTO ACCOUNT VARIOUS FACTORS INCLUDING STANDARD RENT . I F THE S TANDARD RENT IS NOT FIXED THEN THE PROCEDURE PROVIDED UNDER THE RENT CONTROL ACT FOR F IXATION OF STANDARD RENT HAS TO BE TAKEN INTO CONSIDERATION. WE MAY MENTION THAT MUNICIPAL VALUE OR STANDARD RENT ITSELF IS NOT SOLE BINDING FACTORS ON THE AO B UT THESE ARE ONLY GUIDING FACTOR ITA NO: 2467/M/2010 M/S. MILESTONE HOLDINGS & INFRASTRUCTURE PVT. LTD. 3 FOR DETERMINING THE REASONABLE EXPECTED RENT TO BE FETCHED BY HE PROPERTY AS CONTEMPLATED U/S 23 (1)(A). I F IN THE GIVEN CASE THE AO FINDS THAT THE MUNICIPAL VALUE IS NOT BASED ON RELEVANT MATERIAL FOR DETERMI NING FAIR RENT IN THE MARKET AND THERE IS A SUFFICIENT MATERIAL ON RECORD FOR TA KING DIFFERENT VALUATION THEN THE AO CAN DETERMINE THE FAIR RENT BY INFLATING OR DEFL ECTING THE MUNICIPAL VALUE OR STANDARD RENT AS THE CASE MAY BE BY TAKING INTO ACC OUNT THE RELEVANT MATERIAL IN THIS REGARD. AS OBSERVED BY THE HON. DELHI HIGH COU RT IF THE RATABLE VALUE IS CORRECTLY DETERMINED UNDER THE MUNICIPAL LAW THE SA ME CAN BE TAKEN AS ANNUAL LETTING VALUE U/S 23(1) (A) OF THE ACT . HOWEVER T HE RATABLE VALUE IS NOT A BINDING ON THE AO I F THE AO CAN SHOW THAT THE RATABLE VALU E UNDER MUNICIPAL LAW DOES NOT REPRESENT THE CORRECT FAIR RENT . I F THE AO FI NDS THAT THE ACTUAL RENT RECEIVED IS LESS THAN THE FAIR MARKET RENT /MARKET RENT BECAUSE OF THE REASON THAT THE ASSESSEE HAS RECEIVED ABNORMALLY HIGH INTEREST FREE SECURITY DEPOSITS AND BECAUSE OF THAT REASON ACTUAL RENT RECEIVED IS LESS THAN THE RENT WHICH THE PROPERTY MIGHT FETCH HE CAN UNDERTAKE NECESSARY EXE RCISE IN THAT BEHALF . HOWEVER THE NOT IONAL INTEREST ON INTEREST FREE SE CURITY CANNOT BE TAKEN AS DETERMINATIVE FACTOR TO ARRIVE AT FAIR RENT . IF TH E AO FINDS THAT THE RATABLE VALUE UNDER THE MUNICIPAL LAW DOES NOT REPRESENT CORRECT FAIR RENT AND THEN HE MAY DETERMINE THE SAME ON THE BASIS OF MATERIAL /EVIDEN CE PLACED ON RECORD. THE HON. FULL BENCH OF THE DELHI HIGH COURT HAS OBSERVE D IN PARAGRAPHS 21 OF THE DECISION THAT TO DETERMINE THE REASONABLE/ FAIR REN T EXTRANEOUS CIRCUMSTANCES MAY INFLECT OR DEFLECT THE FAIR RENT WHICH CAN BE T AKEN INTO CONSIDERATION BY THE AO. SINCE THE REASONABLE RENT U/S 23(1)(A) HAS NOT BEEN DETERMINED. THE MUNICIPAL VALUE OR STANDARD RENT WAS ALSO NOT BEFOR E THE AO AS WELL AS CIT(A). AND IT IS ALSO NOT CLEAR FROM THE RECORD AS UNDER W HICH CLAUSE THE AO HAS MADE THIS ADDITION. ACCORDINGLY WE RESTORE THE ISSUE TO RECORD OF THE AO AND DIRECT THE AO TO DETERMINE THE SUM FOR WHICH THE PROPERTY MIGH TY REASONABLY EXPECTED TO LET FROM YEAR TO YEAR U/S 23(1) (A) AFTER CONSIDERI NG AL L RELEVANT FACTORS AS DISCUSSED ABOVE AND THEREAFTER COMPARED THE SAME WI TH THE ANNUAL RENT RECEIVED OR RECEIVABLE BY THE ASSESSEE U/S 23(1) (B) AND THE N DECIDE THE ISSUE AS PER LAW. 6. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF TH E CO-ORDINATE BENCH WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ADJ UDICATION DENOVO INTER ALIA IN THE LIGHT OF THE VIEWS SO EXPRESSED BY THE CO-ORDINATE BENCH. WH ILE DOING SO THE ASSESSING OFFICER WILL GIVE DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASS ESSEE AND DEAL WITH ALL SUCH PLEAS AS THE ASSESSEE MAY TAKE ON MERITS AND BY WAY OF A SPEAKIN G ORDER AND IN ACCORDANCE WITH THE LAW. THE MATTER ACCORDINGLY STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER IN THE ABOVE TERMS. ITA NO: 2467/M/2010 M/S. MILESTONE HOLDINGS & INFRASTRUCTURE PVT. LTD. 4 7. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY 2011. SD/- SD/- ( R. V. EASWAR ) ( PRAMOD KUM AR ) PRESIDENT ACCOUNTANT MEMBER MUMBAI DT: 29 TH JULY 2011 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. THE DR I - BENCH ITAT MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI PARIDA