BALAJI SINGH TEEKA, MUMBAI v. ITO (IT) 2(1), MUMBAI

ITA 5477/MUM/2013 | 2003-2004
Pronouncement Date: 31-07-2015 | Result: Allowed

Appeal Details

RSA Number 547719914 RSA 2013
Assessee PAN AHNPB3075G
Bench Mumbai
Appeal Number ITA 5477/MUM/2013
Duration Of Justice 1 year(s) 11 month(s) 16 day(s)
Appellant BALAJI SINGH TEEKA, MUMBAI
Respondent ITO (IT) 2(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-07-2015
Date Of Final Hearing 04-06-2015
Next Hearing Date 04-06-2015
Assessment Year 2003-2004
Appeal Filed On 14-08-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ITA NO.5477/MUM/2013 A.Y. 2003-04 ITA NO.5478/MUM/2013 A.Y. 2004-05 ITA NO.5479/MUM/2013 A.Y. 2005-06 ITA NO.5480/MUM/2013 A.Y. 2006-07 ITA NO.5481/MUM/2013 A.Y. 2007-08 ITA NO.5482/MUM/2013 A.Y. 2008-09 ITA NO.5483/MUM/2013 A.Y. 2009-10 MR. BALAJI SINGH TEEKA 2 ND FLOOR SAI COMMERCIAL ANNEXE BKS DEVSHI MUMBAI 400088 / VS. INCOME TAX OFFICER (INTERNATIONAL TAXATION)-TDS-3 1 ST FLOOR SCINDIA HOUSE BALLARD PIER NM ROAD MUMBAI 400 038 ./ ./ PAN/GIR NO. : AAHNPB 3075G ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI NIKHIL S. PATHAK RESPONDENT BY SHRI YOGESH KAMATH ' #$ / DATE OF HEARING : 4/06/2015 ' #$ / DATE OF PRONOUNCEMENT : 31/07/2015 / O R D E R PER G.S.PANNU A.M: THE CAPTIONED APPEALS RELATE TO THE SAME ASSESSEE INVOLVING A COMMON ISSUE THEREFORE HAVING BEEN HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE CAPTIONED APPEALS RELATE TO ASSESSMENT YE ARS 2003-04 TO 2009-10 AND THE SOLITARY ISSUE INVOLVED IS WITH REGARD TO THE COMPUTATION OF INCOME ITA NO.5477/MUM/2013 ETC. MR. BALAJI SINGH TEEKA 2 ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERT Y. BEFORE WE PROCEED FURTHER WE MAY BRIEFLY GIVE THE BACKGROUND OF THE D ISPUTE. THE APPELLANT INDIVIDUAL IS A NON-RESIDENT INDIAN WHO HAS ACQUIR ED PROPERTIES IN AND AROUND MUMBAI. THE DISPUTE BEFORE US RELATES TO CE RTAIN COMMERCIAL PROPERTIES OWNED BY THE ASSESSEE IN SAI COMMERCIAL BUILDING AND SAI COMMERCIAL ANNEXE SITUATED AT GOVANDI ROAD CHEMB UR MUMBAI. AT PAGES 100 TO 106 OF THE PAPER BOOK ASSESSEE HAS GIVEN A L IST OF THE UNITS LEASED OUT IN TERMS OF WHICH IT TRANSPIRES THAT IN SO FAR AS A SSESSMENT YEAR 2003-04 TO 2005-06 ARE CONCERNED THE ASSESSEE CHARGED RENTAL O F RS.1 PER SQ.FT. PER MONTH FOR THE COMMERCIAL UNIT LOCATED IN SAI COMMERCIAL B UILDING AND SAI COMMERCIAL ANNEXE. SO HOWEVER IN THE RETURN OF IN COME FILED FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 THE INCOME UNDE R THE HEAD HOUSE PROPERTY WAS OFFERED BASED ON RENTAL OF RS.20 PER SQ.FT. PER MONTH IN RESPECT OF THE ABOVE PROPERTIES. SO FAR AS THE A.Y 2003-04 IS CONCERNED THE ASSESSEE OFFERED AN INCOME OF RS.1 PER SQ.FT. PER MONTH IN THE RETURN OF INCOME FILED. 2.1 IN SO FAR AS THE ASSESSMENT YEAR 2006-07 IS CON CERNED IN RESPECT OF THE UNITS LOCATED IN SAI COMMERCIAL BUILDING THE ASSES SEE CHARGED ACTUAL RENT OF RS.21.76 PER SQ.FT. PER MONTH AND THE ACTUAL RENT CHARGED WAS OFFERED FOR TAX IN THE RETURN OF INCOME. IN ASSESSMENT YEAR 2006-0 7 IN RESPECT OF THE UNITS IN SAI COMMERCIAL ANNEXE THE ASSESSEE CHARGED ACTUAL RENT @ RS.1 PER SQ.FT. PER MONTH WHEREAS IN THE RETURN OF INCOME THE INCOME WAS OFFERED @20 PER SQ.FT. PER MONTH. IN SO FAR AS ASSESSMENT YEAR 2007-08 IS CONCERNED THE FACT SITUATION IS SIMILAR TO THAT OF ASSESSMENT YEAR 200 6-07. 2.2 IN SO FAR AS ASSESSMENT YEARS 2008-09 AND 2009- 10 ARE CONCERNED THE RELEVANT DETAILS HAVE BEEN PLACED AT PAGES 105 AND 106 OF THE PAPER BOOK WHICH REVEALS THAT IN RESPECT OF UNITS LOCATED IN SAI COMMERCIAL BUILDING ASSESSEE CHARGED A RENT OF RS.21.76 PER SQ.FT. PER MONTH WHICH WAS OFFERED TO TAX IN THE RETURN OF INCOME. IN RESPECT OF THE UNI TS IN SAI COMMERCIAL ANNEXE ITA NO.5477/MUM/2013 ETC. MR. BALAJI SINGH TEEKA 3 ASSESSEE CHARGED RENTAL @ 24.23 PER SQ.FT. PER MON TH IN RESPECT OF 13 317 SFT OF AREA AND FOR THE BALANCE OF 600 SQ.FT. AREA IT CHARGED RENT OF RS.30 PER SQ.FT. PER MONTH. THE ACTUAL RENT CHARGED BY THE ASSESSEE WAS OFFERED IN THE RETURN OF INCOME ALSO. 3. IN THE ABOVE CONTEXT WE HAVE CONSIDERED THE RIVA L SUBMISSIONS. THE APPEAL FOR THE ASSESSMENT YEAR 2006-07 VIDE ITA NO. 5480/MUM/13 IS CONSIDERED AS LEAD CASE WHICH IS DIRECTED AGAINST ORDER OF CIT(A)-11 MUMBAI DATED 10.06.2013 IN RESPECT OF THE ORDER PASSED BY THE AO DATED 31/12/2008 U/S. 143(3) OF THE ACT. 3.1 IN THIS CONTEXT AS NOTED EARLIER IN RESPECT OF THE COMMERCIAL UNIT LOCATED IN SAI COMMERCIAL BUILDING THE ASSESSEE CHARGED AC TUAL RENT OF RS.21.76 PER SQ.FT. PER MONTH WHICH WAS OFFERED FOR TAX. WITH REGARD TO UNIT IN THE SAI COMMERCIAL ANNEXE THE ASSESSEE CHARGED AN AMOUNT O F RS.1 PER SQ.FT. PER MONTH WHEREAS IN THE RETURN OF INCOME THE INCOME W AS OFFERED ON THE BASIS OF RS.20 PER SQ.FT. PER MONTH. IN THE COURSE OF ASSES SMENT PROCEEDINGS THE AO CONCLUDED THAT THE RENTAL INCOME DECLARED BY THE AS SESSEE DID NOT CORRESPOND TO THE MARKET RENT AND A VERIFICATION EXERCISE WAS CARRIED OUT BY HIM THROUGH HIS INSPECTOR. BASED ON THE ENQUIRIES MADE BY THE INSPECTOR THE AO ADOPTED A RATE OF RS.75 PER SQ.FT. PER MONTH AS THE RENTAL IN COME ASSESSABLE FOR THE UNITS LOCATED IN BOTH THE BUILDINGS. IN APPEAL THE CIT(A ) HAS ALLOWED PARTIAL RELIEF IN AS MUCH AS FOR ASSESSMENT YEAR 2006-07 HE HAS ESTIM ATED THE RENTAL INCOME AT RS.40 PER SQ.FT. PER MONTH. BY TREATING THE RATE OF RS.40 PER SQ.FT. PER MONTH AS THE BASE RATE FOR THE EARLIER ASSESSMENT YEARS OF 2003-04 TO 2005-06 THE LD. CIT(A) HAS REDUCED THE ESTIMATED RENTAL INCOME BY RS.2 PER YEAR AND FOR THE SUBSEQUENT YEARS HE INCREASED BY RS./-2 PER YEA R. BEFORE US ASSESSEE IS IN APPEAL CONTENDING THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAD OFFERED THE RENTAL INCOME WHICH WAS MU CH HIGHER THAN THE MUNICIPAL RATABLE VALUE (MRV) OF THE PROPERTIES AN D THEREFORE NO ADDITION ITA NO.5477/MUM/2013 ETC. MR. BALAJI SINGH TEEKA 4 WAS WARRANTED OVER AND ABOVE THE RENTAL INCOME DEC LARED BY THE ASSESSEE. PERTINENTLY THE REVENUE HAS NOT PREFERRED ANY APPE ALS WITH RESPECT TO THE PART RELIEF ALLOWED BY THE CIT(A). 4. BEFORE US LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ADDITION SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIF IED. ACCORDING TO HIM THE PROPERTIES IN QUESTION HAVE BEEN LEASED OUT BY TH E ASSESSEE TO CERTAIN CONCERNS AND A TRUST WHICH ARE CLOSELY RELATED TO T HE ASSESSEE. IT IS ALSO POINTED OUT THAT NO SECURITY DEPOSITS OR OTHER DEPO SITS HAVE BEEN TAKEN BY THE ASSESSEE FROM THE ENTITIES TO WHOM THE PROPERTIES H AVE BEEN LEASED OUT. IN THIS CONTEXT OUR ATTENTION WAS DRAWN TO PAGES 153 TO 16 2 OF THE PAPER BOOK WHEREIN COPIES OF RESPECTIVE LEASE AGREEMENTS HAVE BEEN PLACED. 4.1 JUSTIFYING THE RENTAL DECLARED IN THE RETURN OF INCOME FOR A.Y 2006-07 LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THA T BEFORE CIT(A) ASSESSEE HAD SUBMITTED A COMPARABLE INSTANCE IN THE FORM OF A RE NTAL AGREEMENT BETWEEN OMPRAKASH & COMPANY AND INDIAGAMES LTD. WITH RESPEC T TO LEASING OF A UNIT IN THE SAME BUILDING I.E. SAI COMMERCIAL ANNEXE. I N THE SAID LEASE ARRANGEMENT THE RENTAL INCOME WAS FIXED AT RS.24 P ER SQ.FT. PER MONTH AND APART THEREFROM THE LANDLORD HAS ALSO TAKEN A DEPOSIT OF RS.20.00 LACS. A COPY OF THE SAID AGREEMENT HAS BEEN PLACED IN THE P APER BOOK AT PAGES 86 TO 99 AND IT WAS FURTHER POINTED OUT THAT A REMAND REP ORT WAS CALLED FOR BY LD. CIT(A). IN THE REMAND REPORT FURNISHED BY THE AO A COPY OF WHICH IS PLACED AT PAPER BOOK 116 TO 117 THE GENUINENESS OF THE SA ID ARRANGEMENT HAS NOT BEEN DOUBTED. THEREFORE AS PER LD. REPRESENTATI VE FOR THE ASSESSEE THE RENT STATED IN THE SAID COMPARABLE INSTANCE IS NEAR A BOUT THE RENT BEING CHARGED BY THE ASSESSEE AND OFFERED TO TAX IN THE RETURN OF INCOME. ITA NO.5477/MUM/2013 ETC. MR. BALAJI SINGH TEEKA 5 5. ON THE OTHER HAND LD. DR APPEARING FOR THE REVE NUE HAS DEFENDED THE ORDER OF CIT(A) BY POINTING OUT THAT THE RATE OF R S.40 PER SQ.FT. PER MONTH ESTIMATED BY CIT(A) WAS FAIR AND REASONABLE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO N. IN THE PRESENT CASE THE PRIMARY SUBMISSION OF THE ASSESSEE IS THAT THE RENTAL INCOME OFFERED BY HIM IN THE RETURN OF INCOME IS QUITE JUSTIFIED. ONE OF THE POINTS RAISED BY THE ASSESSEE WAS THAT THE MUNICIPAL RATABLE VALUE(MRV) OF THE PROPERTIES ARE MUCH LOWER THAN THE ACTUAL RENT CHARGED BY THE ASSE SSEE OR THE RENTAL INCOME DECLARED IN THE RETURN OF INCOME. IN THIS CONTEXT THE APPELLANT HAS FURNISHED COPIES OF MRV IN THE PAPER BOOK AT PAGES 75 TO 85. A PERUSAL OF THE SAID MRV CERTIFICATES SHOWS THAT THEY CORRESPOND TO THE PERI OD RANGING FROM THE ASSESSMENT YEAR 2006-07 TO ASSESSMENT 2009-10. IT IS ALSO EMERGING FROM THE SAID DOCUMENT THAT THE RATABLE VALUE FOR THE DIFFER ENT UNITS IS RANGING FROM RS.4 TO RS.6 PER SQ.FT.PER MONTH IT IS UNDENIABLE THAT THE ASSESSEE HAS RENTAL INCOMES WHICH IS QUITE HIGHER THAN THE MRV. IT IS ON THIS BASIS THE ASSESSEE HAS CANVASSED THAT THE RENTAL INCOME OFFERED BY HI M IS JUSTIFIED. IT IS A SETTLED PROPOSITION THAT THE ACTUAL RENT RECEIVED BY THE AS SESSEE CONSTITUTES A RELIABLE EVIDENCE TO ASCERTAIN THE PROPERTYS CAPACITY TO EA RN RENT IN THE OPEN MARKET. THE DECLARATION OF RENT DECLARED BY THE ASSESSEE IS NORMALLY TO BE ACCEPTED BY THE AO UNLESS CONTRARY EVIDENCE IS BROUGHT ON RECOR D TO SUGGEST ANY DEFLATION OF RENTAL INCOME FOR EXTRANEOUS CONSIDERATION. I N THE PRESENT CASE THE FACTUAL POSITION CLEARLY ESTABLISHES THAT THE RENTA L DECLARED BY THE ASSESSEE FOR THE VARIOUS YEAR UNDER CONSIDERATION AS SUBSTANTIA LLY HIGHER THAN MRV. AT THE SAME TIME IT IS ALSO QUITE EVIDENT THAT THE CO MPARABLE INSTANCE RELIED UPON BY THE ASSESSEE BEFORE CIT(A) ALSO SUGGESTS THAT TH E RENTAL INCOME DECLARED BY THE ASSESSEE IS IN CLOSE PROXIMITY. 6.1 IN SOMEWHAT SIMILAR SITUATION THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KARIA CAN COMPANY LTD. IN ITA NO.2733 /M/2008 ETC. ORDER ITA NO.5477/MUM/2013 ETC. MR. BALAJI SINGH TEEKA 6 DATED 30/01/2015 OBSERVED THAT UNLESS THE AO BRINGS OUT A COGENT EVIDENCE TO SUGGEST THE DEFLATION OF RENTAL INCOME BY THE AS SESSEE THE MRV CAN BE TAKEN AS A GUIDE FOR THE PURPOSES OF COMPUTING ALV FOR DE TERMINING THE INCOME UNDER THE INCOME FROM HOUSE PROPERTY. IN THE PR ESENT CASE WE DO NOT FIND ANY COGENT EVIDENCE AND MATERIAL WHICH HAS BEEN BRO UGHT OUT BY THE REVENUE WHICH WOULD SUGGEST THAT THE RENTAL INCOMES AS OFFERED BY THE ASSESSEE ARE DEFLATED ON ACCOUNT OF ANY EXTRANEOUS CONSIDERATIO N. IN FACT IN THE PRESENT CASE THE ASSESSEE HAS POINTED THAT EXCEPT FOR A. Y 2003-04 IT HAS OFFERED THE RENTAL INCOME AT RS.20 PER SFT. PER MONTH FOR THE YEARS WHEREIN IT HAD CHARGED ACTUAL RENT OF RS.1 PER SQ.FT. PER MONTH FOR A.Y 20 06-07 ONWARDS IN RESPECT OF SAI COMMERCIAL BUILDING AND AND FROM ASSESSMENT YEA R 2008-09 ONWARDS IN RESPECT OF THE SAI COMMERCIAL ANNEXE ASSESSEE HAS S TARTED CHARGING RENT WHICH IS MORE THAN RS.20 PER SQ.FT. PER MONTH. FAC TUALLY SPEAKING THERE IS NO MATERIAL BROUGHT ON RECORD BY THE REVENUE TO ESTABL ISH ANY DEFLATION OF RENT AND EVEN MRV IS MUCH LESSER THAN RS.20 PER SQ.FT. P ER MONTH. IN THIS VIEW OF THE MATTER WE FIND NO REASONS FOR ENHANCING THE RE NTAL INCOME DECLARED BY THE ASSESSEE AND EVEN BASED ON THE COMPARABLE CASE CITE D BY THE ASSESSEE THE INCOME DECLARED BY THE ASSESSEE APPEARS TO BE REASO NABLE. 6.2 IN VIEW OF THE AFORESAID DISCUSSION IN OUR VIE W THE CIT(A) ERRED IN ESTIMATING THE RENTAL INCOME @ RS.40 PER SQ.FT. PER MONTH AS AGAINST THE RENTAL INCOME DECLARED WHICH WAS REASONABLE BY CONSIDER ING THE CORRESPONDING MRV AS WELL AS THE COMPARABLE EVIDENCE BROUGHT OUT BY THE ASSESSEE. NOTABLY IN SO FAR AS THE RENTAL DECLARED BY THE AS SESSEE IS CONCERNED THERE IS NO MATERIAL TO SAY THAT SUCH RENTAL INCOME DECLARE D IN THE RETURN OF INCOMEWAS NOT THE MARKET RATE SO AS TO JUSTIFY ANY FURTHER ADDITION. THUS IN SO FAR AS A.Y 2006-07 IS CONCERNED THE APPEAL IS AL LOWED AS ABOVE. ITA NO.5477/MUM/2013 ETC. MR. BALAJI SINGH TEEKA 7 7. SINCE THE ISSUE IS SIMILAR IN THE BALANCE OF THE CAPTIONED APPEALS OUR DECISION IN THE APPEAL OF THE ASSESSEE FOR 2006-07( SUPRA) SHALL APPLY MUTANTIS- MUTANDIS IN OTHER CAPTIONED APPEALS ALSO. 8. RESULTANTLY ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/2015 ' *+ - 31/07/2015 ' SD/- SD/- ( / SANJAY GARG ) ( . . / G.S.PANNU ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * MUMBAI; DATED 31/07/2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 0# ( ) / THE CIT(A)- 4. 0# / CIT 5. 12 #34 $ 34 * / DR ITAT MUMBAI 6. 5 / GUARD FILE. / BY ORDER 1# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) * / ITAT MUMBAI . . ./ VM SR. PS