DCIT - 8(3), MUMBAI v. SHRI RAMESH DUNGARMAL TAINWALA, MUMBAI

ITA 2665/MUM/2013 | 2006-2007
Pronouncement Date: 19-11-2014 | Result: Dismissed

Appeal Details

RSA Number 266519914 RSA 2013
Assessee PAN AAAPT9296K
Bench Mumbai
Appeal Number ITA 2665/MUM/2013
Duration Of Justice 1 year(s) 7 month(s) 14 day(s)
Appellant DCIT - 8(3), MUMBAI
Respondent SHRI RAMESH DUNGARMAL TAINWALA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 19-11-2014
Date Of Final Hearing 03-11-2014
Next Hearing Date 03-11-2014
Assessment Year 2006-2007
Appeal Filed On 05-04-2013
Judgment Text
D IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI B R BASKARAN ACCOUNTANT MEMBER AND SHRI VIVEK VARMA JUDICIAL MEMBER ITA NO. : 2664/MUM/2013 (ASSESSMENT YEAR: 2005-06) ITA NO. : 2665/MUM/2013 (ASSESSMENT YEAR: 2006-07) ITA NO. : 2666/MUM/2013 (ASSESSMENT YEAR: 2007-08) ITA NO. : 2667/MUM/2013 (ASSESSMENT YEAR: 2008-09) ITA NO. : 2668/MUM/2013 (ASSESSMENT YEAR: 2009-10) DY COMMISSIONER OF INCOME TAX - 8(3) ROOM NO. 217 AAYAKAR BHAVAN M K MARG MUMBAI -400 020 VS SHRI RAMESH DUNGARMAL TAINWALA M/S RAMESH D TAINWALA 401-B ELEGANT BUSINESS PARK OFF. ANDHERI KURLA ROAD ANDHERI (E) MUMBAI -400 059 .: PAN: AAAPT 9296 K (APPELLANT-CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI AJAY R SINGH RESPONDENT BY : SHRI JITENDRA KUMAR !'#$% /DATE OF HEARING : 03-11-2014 &'( #$%/ DATE OF PRONOUNCEMENT : 19-11-2014 * + * + * + * + O R D E R -'' -'' -'' -'' '. '. '. '. . . . . . .. . PER VIVEK VARMA J.M. : INSTANT FIVE APPEALS ARE FILED BY THE DEPARTMENT AG AINST THE COMMON ORDER OF CIT(A)-18 MUMBAI DATED 02.01.2013 . SINCE ONLY ONE ISSUE HAS BEEN IMPUGNED IN ALL THE FIVE APPEALS WE FOR THE SAKE OF CONVENIENCE AND BREVITY ARE DISPOSING OFF ALL THE F IVE APPEALS THROUGH THE COMMON AND CONSOLIDATED ORDER. SHRI RAMESH DUNGARMAL TAINWALA ITAS 2664 TO 2668/MUM/2013 2 2. SINCE THE GROUNDS OF APPEAL ARE ALSO COMMON IN A LL THE FIVE APPEALS WE ARE PROCEEDING WITH THE APPEAL AS THE L EAD CASE AND REPRODUCING THE GOA AS TAKEN IN ITA NO. 2664/MUM/2 013 FOR ASSESSMENT YEAR 2005-06 WHICH ARE AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN NOT UPHOLDING THE ADDITION IN TOTO ON ACCOUNT OF LEASE RENT FROM TTIC PL WITHOUT APPRECIATING THE FOLLOWING FACTS: (I) THE ASSESSEE HAD LEASED ITS PROPERTY TO THE SIS TER CONCERN TTICPL ON 01-04-2002 FOR A MONTHLY RENT OF RS.2 500 WHEREAS EVEN BEFORE THE SAID AGREEMENT ITICPL HAD ENTERED INTO A SUB-LEASE AGREEMENT WITH ANOTHER SISTER CONCERN SSAPL ON 29-03-2002 FOR A MONTHLY RENT OF RS.1 50 000 AND THEREFORE THESE WER E ARRANGED TRANSACTIONS BETWEEN THREE GROUP ENTITIES; (II) BY SUCH ARRANGEMENT WHEREAS THE ASSESSEE HAD SHOWN NOMINAL LEASE RENTAL INCOME SSAPL HAD CLAIMED DEDUCTION OF HIGHER LEASE RENT PAID TO TTIC PL AND TTICPL HAD ACCUMULATED LOSS AND THUS ALL THE 3 ENTITIES OF THE GROUP WERE BENEFITTED BY THIS ARRANGEMENT.; (III) THE ASSESSEE FAILED TO PROVE THE COMMERCIAL EXPEDIENCY OF AND JUSTIFY CHARGING OF LEASE RENT OF RS.2 500 PER MONTH FOR 5 YEARS WHEREAS THE SAID PROPERTY WAS EVIDENTLY CAPABLE OF FETCHING MUCH HIG HER RETURNS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) ERRED IN NOT UPHOLDING THE ADD I T ION MADE BY THE ASSESSING OFFICER AND INSTEAD DIRECTING THE AO TO CARRY OUT LOCAL ENQUIRIES TO ASCERTAIN COMPARA BLE CASES IGNORING THE ASSESSEE'S OWN CASE WHEREIN THE SAME PROPERTY FOR THE SAME PERIOD HAD FETCHED A SUBSTANTIALLY HIGHER RENT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) ERRED IN RELYING ON THE DECIS ION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . AKSHAY TEXTILES TRADING & AGENCIES (P) LTD. 214 CTR 316 (BOM) WHEREIN THE HON'BLE BOMBAY HIGH COURT HA D DECIDED IN FAVOUR OF THE ASSESSEE ON THE GROUND THA T THERE WAS NO ISSUE OF COLOURABLE DEVICE OR SHAM CONTRACT IN THAT CASE WHICH IS CONTRARY TO THE ASS ESSEE'S CASE. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ITO/AC/DCIT BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW AROUND WHICH MAY BE NECESSARY. SHRI RAMESH DUNGARMAL TAINWALA ITAS 2664 TO 2668/MUM/2013 3 3. THE FACTS ARE THAT THE ASSESSEE OWNS A PROPERTY ON THE GROUND FLOOR OF ARADHANA HAPPY HOME SOCIETY VILLE PARLE WHICH HAS BEEN LEASED TO M/S TAINWALA TRADING & INVESTMENT COMPANY LTD. (TTICPL) ON THE YEARLY RENT OF RS. 30 000/- WHICH COMES TO RS. 2500 PER MONTH. TTICPL HAS LEASED THIS PROPERTY TO M/S SAMSO NITE SOUTH ASIA PACIFIC LTD (SSAPL) ON A MONTHLY RENT OF RS. 1 50 0 00/- AGGREGATING TO RS. 18 00 000/- PER YEAR. THE AO TAKING NOTE OF THE UNDISPUTED FACTS BACKED BY VALID AND CURRENT AGREEMENTS HELD THAT T HE MARKET RATE OF RENT IN THAT AREA WAS AS BEING RECEIVED BY TTICPL. HE THEREFORE RECOMPUTED THE INCOME FROM HOUSE PROPERTY TAKING T HE ALV AT RS. 18 00 000/- IN PLACE OF RS. 30 000/- AS TAKEN BY THE ASSESSEE. 4. ON THESE FACTS THE ADDITION WAS MADE AND THE AO COMPUTED THE INCOME FROM HOUSE PROPERTY AT RS. 12 57 501/-. 5. AGAINST THIS ORDER THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND SUBMITTED THE ENTIRE FACTS B EFORE THE CIT(A) WHO CALLED FOR REMAND REPORT WHICH WAS SUBMITTED B Y THE AO ON 15.02.2012. 6. IN THE REMAND PROCEEDINGS THE AO DIRECTED ITI T O ASCERTAIN THE BASE RATES EXISTING IN THE VICINITY. THE ITI ASCERT AINED FROM THE LOCAL ESTATE AGENT THAT THE FAIR RENT OF THE PROPERTY WAS AROUND RS. 50 000/- TO RS. 60 000/- IN FINANCIAL YEAR 2007-08. THE CIT( A) AFTER CONSIDERING THE SUBMISSIONS OBSERVED THE ISSUE OF SUB-LETTING THE PROPERTY BY M/S. TTICP L TO M/S. SSAPL IS SQUARELY COVERED BY THE DECISION OF HON'BL E BOMBAY HIGH COURT IN THE CASE OF CIT VS. AKSHAY TEXT ILES TRADING AND AGENCIES PVT. LTD. 304 ITR 401 RELIED ON BY THE APPELLANT. IN VIEW OF ALL THESE FACTS & CIRCUMSTANC ES IT IS HELD THAT THE CASE OF THE APPELLANT IS COVERED BY THE DECISION OF HON'BLE MUMBAI TRIBUNAL AND BOMBAY HIGH COURT IN THE CASES CITED ABOVE AND SECONDLY THE AO HAS MADE ENQUI RY TO DETERMINE THE FAIR-MARKET VALUE THROUGH HIS INSPECT OR AND AS SHRI RAMESH DUNGARMAL TAINWALA ITAS 2664 TO 2668/MUM/2013 4 PER THE INSPECTOR'S REPORT THE FAIR MARKET VALUE CO MES TO RS. 50 000/- TO RS. 60 000/- FOR F.Y. 2007-08 BUT IN TH E PRESENT CASE THE ASSESSMENT YEARS INVOLVED FOR AY 2005-06 TO 2009-10. THEREFORE THE AVERAGE OF RS. 50 000/- TO RS. 60 000/- I.E. RS. 55 000/- IS ADOPTED AGAINST THE D ECLARED VALUE OF RS. 30 000/- BY THE APPELLANT. THUS THE AO IS DIR ECTED TO RE- COMPUTE THE INCOME OF HOUSE PROPERTY BY ADOPTING TH E VALUE AT RS. 55 000/- AGAINST RS. 30 000/- DECLARED BY THE ASSESS EE AND FURTHER ADDITION MADE ON THIS ACCOUNT IS DELETED. H ENCE THE GROUND OF APPEAL IS PARTLY ALLOWED. 7. ACCORDINGLY THE CIT(A) THUS HELD THAT THE ALV BE TAKEN AT RS. 55 000/- AND DELETED THE ADDITION AS MADE BY THE AO . 8. AGAINST THIS ORDER OF THE CIT(A) THE DEPARTMEN T IS IN APPEAL BEFORE THE ITAT. 9. BEFORE US THE DR RELIED ON THE DECISION OF THE AO. 10. ON THE OTHER HAND THE AR SUBMITTED THAT THE CI T(A) RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS ASKHAY TEXTILES TRADING AND AGENCIES PVT. LTD. REP ORTED IN 304 ITR 401. THE AR FURTHER POINTED OUT THAT IN THE CASE OF CIT VS TIP TOP TYPOGRAPHY & OTHERS REPORTED IN 107 DTR 282 (BOM) IT HAS BEEN HELD SEC. 23 STATES THAT FOR THE PURPOSE OF S. 22 THE ANNUAL VALUE OF PROPERTY SHALL BE DEEMED TO BE UNDER CL. (A) THE S UM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR OR UNDER CL. (B) WHEN THE PROPERTY OR ANY PART OF THE PROPERTIES ARE LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF TH E SUM WHICH IS REFERRED TO IN CL. (A). THEN THE AMOUNT SO RECE IVED OR RECEIVABLE WOULD BE DEEMED TO BE THE ANNUAL VALUE F OR THE PURPOSES OF S. 22. 11. THE AR SUBMITTED THAT ON THE BASIS OF THE TWO D ECISIONS OF THE HONBLE BOMBAY HIGH COURT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A). 12. AFTER HEARING BOTH THE PARTIES THE FACTS ARE U NDISPUTED. THE ONLY DISPUTABLE ISSUE IS ADOPTION OF FRV. THE ANSWE R TO THIS ISSUE IS SHRI RAMESH DUNGARMAL TAINWALA ITAS 2664 TO 2668/MUM/2013 5 GIVEN IN THE PROVISION ITSELF WHEREIN SECTION 23 H AS CLEARLY STATED AS PER CLAUSE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR OR CL. (B) . . 13. IN SUCH A SITUATION WE ARE NOT IN AGREEMENT WIT H THE SUBMISSIONS MADE BY THE DR/AO TO ADOPT THE FRV AT R S. 1 50 000/- AS A CONSEQUENCE THE VALUE DIRECTED TO BE TAKEN AT RS. 55 000/- IS QUITE REASONABLE (THOUGH EVEN THIS VALUE WOULD NOT BE AS PER FRV FIXED BY MUNICIPAL VALUATION AUTHORITIES. SINCE THE ASSES SEE IS NOT IN APPEAL) WE THEREFORE SUSTAIN THE ORDER OF THE CI T(A). 14. GROUND AS RAISED BY THE DEPARTMENT ARE THEREFOR E REJECTED. 15. SINCE ALL THE FIVE APPEALS AS FILED BY THE DEP ARTMENT HAVE COMMON ISSUE BEING AGITATED IN THE GOA (WITH DIFFE RENT FIGURES) WE HOLD THAT LIKEWISE APPEALS AS FILED FOR ASSESSMEN T YEARS 2006-07 2007-08 2008-09 AND 2009-10 ARE REJECTED. 16. AS A RESULT ALL THE APPEALS AS FILED BY THE D EPARTMENT FOR ASSESSMENT YEARS 2005-06 2006-07 2007-08 2008-09 AND 2009-10 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER 2014. SD/- SD/- (B R BASKARAN) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE: 19 TH NOVEMBER 2014 $/ COPY TO:- 1) / THE APPLICANT. 2) / THE RESPONDENT. 3) THE CIT (A)-18 MUMBAI. SHRI RAMESH DUNGARMAL TAINWALA ITAS 2664 TO 2668/MUM/2013 6 4) / 8 MUMBAI / THE CIT- 8 MUMBAI. 5) -'01$! D THE D.R. D BENCH MUMBAI. 6) 12.3 COPY TO GUARD FILE. *+! / BY ORDER / / TRUE COPY / / [ 4/56 DY. / ASSTT. 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