THE ITO 12(3)(2), MUMBAI v. M/S. RAMA ENTERPRISES, MUMBAI

ITA 6709/MUM/2007 | 1999-2000
Pronouncement Date: 20-01-2010 | Result: Dismissed

Appeal Details

RSA Number 670919914 RSA 2007
Assessee PAN AAAFR1740C
Bench Mumbai
Appeal Number ITA 6709/MUM/2007
Duration Of Justice 2 year(s) 2 month(s) 15 day(s)
Appellant THE ITO 12(3)(2), MUMBAI
Respondent M/S. RAMA ENTERPRISES, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 20-01-2010
Date Of Final Hearing 07-01-2010
Next Hearing Date 07-01-2010
Assessment Year 1999-2000
Appeal Filed On 05-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R V EASWAR SENIOR VICE PRESIDENT AND SHRI P M JAGTAP ACCOUNTANT MEMBER I T A NO: 6709/MUM/2007 (ASSESSMENT YEAR: 1999-2000) INCOME TAX OFFICER 12(3)(2) MUMBAI APPELLANT VS M/S RAMA ENTERPRISES MUMBAI RESPONDENT (PAN: AAAFR1740C) APPELLANT BY: SHRI PRADEEP HEDAOO RESPONDENT BY: SHRI JEHANGIR D MISTRI O R D E R R V EASWAR SENIOR VICE PRESIDENT: THIS APPEAL IS BY THE REVENUE AND IT RELATES TO TH E ASSESSMENT YEAR 1999- 2000. THE ASSESSEE IS A PARTNERSHIP FIRM. THIS AP PEAL ARISES OUT OF AN ORDER OF ASSESSMENT PASSED ON 18.12.2006 UNDER SECTION 143(3 ) READ WITH SECTION 254 OF THE INCOME TAX ACT. 2. THE APPEAL ARISES THIS WAY. THE ASSESSEE OWNS A PROPERTY AT 812 RAHEJA CHAMBERS NARIMAN POINT MUMBAI. WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) ORIGINALLY THE ASSESSING OFFICER FO UND THAT THE RENTAL INCOME OF RS.21 44 000/- SHOWN BY THE ASSESSEE FROM THE AFORE SAID PROPERTY WAS NOT IN ACCORDANCE WITH SECTION 23 OF THE ACT. ACCORDING T O THE ASSESSING OFFICER THE RENT WAS AROUND RS.150/- TO RS.175/- PER SQ. FT. PE R MONTH IN THE SAID AREA. HE THEREFORE ADOPTED RS.150/- PER SQ. FT. AS THE PROP ER RENTAL INCOME ASSESSABLE UNDER THE ACT. THIS CAME TO RS.95 40 000/- FOR 530 0 SQ. FT. AREA AND THE SAME WAS TAKEN FOR COMPUTATION PURPOSES BY APPLYING SECT ION 23(1)(A). THE ASSESSMENT ORDER WAS CHALLENGED BEFORE THE CIT(A) WHO ALLOWED THE 2 ASSESSEES CONTENTION AND DIRECTED THE ASSESSING OF FICER TO TAKE THE RENTAL INCOME AT RS.21 44 000/- AS DECLARED BY THE ASSESSE E. 3. THE REVENUE PREFERRED AN APPEAL BEFORE THE TRIBU NAL AGAINST THE AFORESAID ORDER OF THE CIT(A) IN ITA NO: 6258/MUM/2 002 AND THIS APPEAL WAS DISPOSED OFF BY THE TRIBUNAL BY ORDER DATED 31.01.2 006. BEFORE THE TRIBUNAL COUNTERING THE CONTENTIONS OF THE REVENUE THE ASSE SSEE RELIED ON THE ORDER OF THE TRIBUNAL DATED 21.02.2003 IN ITA NO: 3676/MUM/2 002 FOR THE ASSESSMENT YEAR 1998-99 AND CONTENDED THAT IN THIS ORDER THE T RIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO RECORD A FINDING AS TO WHETHER THE PROPERTY INCOME IS TO BE ASSESSED UNDER SECTION 23(1)(A) OR SECTION 23(1)(B) AND COMPLETE THE ASSESSMENT AFTER GIVING REASONABLE OPPORTUNITY TO T HE ASSESSEE OF BEING HEARD. THE ASSESSEE ALSO RELIED ON THE ASSESSMENT ORDER DA TED 07.03.2005 PASSED BY THE ASSESSING OFFICER IN RESPECT OF THE ASSESSMENT YEAR 1998-99 UNDER SECTION 143(3) READ WITH SECTION 254 AND POINTED OUT THAT A S PER THE DIRECTIONS OF THE TRIBUNAL THE ASSESSING OFFICER HAD COMPLETED THE AS SESSMENT AND IN THIS ASSESSMENT HE HAS CONCLUDED THAT THE PROPERTY INCOM E WAS TO BE COMPUTED UNDER SECTION 23(1)(B) OF THE ACT. TAKING NOTE OF THE EARLIER ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1998-99 AND THE DECISION OF THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE AFORESAID ORDER OF THE TRIBUNA L THE TRIBUNAL IN ITS ORDER DATED 31.01.2006 HELD THAT THE ASSESSING OFFICER SHOULD GIVE A FINDING AS TO WHETHER THE PROPERTY INCOME IS TO BE ASSESSED UNDER SECTION 23(1)(A) OR SECTION 23(1)(B) AND DETERMINE THE SAME IN ACCORDANCE WITH LAW AFTER CONFRONTING THE ASSESSEE WITH HIS PROPOSAL. 4. THE ASSESSING OFFICER WHILE COMPLYING WITH THE D IRECTION FOR THE ASSESSMENT YEAR 1999-2000 WHICH IS THE YEAR UNDER APPEAL HAS HELD THAT THE 3 ANNUAL LETTING VALUE OF THE PROPERTY FOR THE PORTIO N NOT LET OUT SHOULD BE TAKEN ON THE BASIS OF THE ALV FOR WHICH THE PROPERTY MAY BE REASONABLY EXPECTED TO BE LET FROM YEAR TO YEAR AS CONTEMPLATED BY SECTION 23(1)( A) OF THE ACT. HE NOTICED THAT THE PORTION LET OUT BY THE ASSESSEE WAS FETCHING A RENT OF RS.84/- PER SQ. FT. PER MONTH AND ACCORDINGLY APPLIED THE SAME RATE FOR THE PORTION NOT LET OUT AND DETERMINED THE ANNUAL LETTING VALUE AT RS.26 94 380 /-. IT MAY BE CLARIFIED THAT THE PORTION NOT LET OUT AMOUNTS TO 2673 SQ. FT. FO R WHICH THE ALV WAS TAKEN AT THE ABOVE RATE. IT MAY FURTHER BE CLARIFIED THAT IN AD DITION TO THE ALV OF RS.26 94 380/- THE ASSESSING OFFICER HAS TAKEN THE ALV OF RS.21 44 000/- AS DECLARED BY THE ASSESSEE UNDER SECTION 23(1)(B) AND THE AGGREGATE ALV WAS TAKEN AT RS.48 38 380/-. 5. THE ASSESSEE FILED AN APPEAL AGAINST THE AFORESA ID COMPUTATION TO THE CIT(A) AND CONTENDED THAT THE INCOME SHOULD HAVE BE EN COMPUTED UNDER SECTION 23(1)(B) AND ONLY THE RENT OF RS.21 44 000/ - RECEIVED BY THE ASSESSEE SHOULD HAVE BEEN ASSESSED AS PROPERTY INCOME. IT W AS POINTED OUT THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 HAS BEEN COMPLETED BY THE ASSESSING OFFICER ONLY IN THAT MANNER AFTER THE DIR ECTIONS OF THE TRIBUNAL. 6. THE CIT(A) NOTED THAT THE ENTIRE PREMISES CONSIS TED OF ONE COMMON OFFICE HAVING A TOTAL CARPET AREA OF 4797 SQ. FT. WHICH C ONSISTED OF LEASED OUT PORTION OF 2124 SQ. FT. UNOCCUPIED PORTION AT 1890 SQ. FT. AN D SELF-OCCUPIED PORTION OF 783 SQ. FT. HE ALSO FOUND THAT ONLY ONE ANNUAL VALUE W AS DETERMINED FOR THE ENTIRE PROPERTY BY THE MUNICIPAL CORPORATION. HE FURTHER NOTICED THAT UNDER SECTION 22 OF THE ACT NO ANNUAL VALUE IS TO BE ASSESSED AS PR OPERTY INCOME IN RESPECT OF THAT PART OF THE PROPERTY WHICH IS OCCUPIED BY THE ASSESSEE FOR THE PURPOSE OF ANY BUSINESS CARRIED ON BY HIM AND THEREFORE NO A NNUAL VALUE CAN BE COMPUTED 4 IN RESPECT OF 783 SQ. FT. OF THE PROPERTY IN RAHEJA CHAMBERS WHICH IS OCCUPIED BY THE ASSESSEE FOR ITS OWN BUSINESS. HE FURTHER REF ERRED TO SECTION 23(1)(C) OF THE ACT WHICH DEALS WITH ASSESSMENT OF ALV IN RESPECT OF A PROPERTY WHICH REMAINED VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND HELD THAT IN RESPECT OF THE VACANT PORTION OF 1890 SQ. FT. NO INCOME IS TO BE COMPUTED. ULTIMATELY HE HELD THAT THE ASSESSING OFFICER SHOULD HAVE FOLLOWE D THE DIRECTIONS OF THE TRIBUNAL PROPERLY AND FULLY AND FURTHER HELD THAT T HE ASSESSING OFFICER SHOULD HAVE TAXED ONLY THE ACTUAL RENTAL INCOME OF RS.21 4 4 000/- RECEIVED BY THE ASSESSEE UNDER SECTION 23(1)(B) WHICH WAS MORE THA N THE STANDARD RENT OR THE RATEABLE VALUE. IN THIS VIEW OF THE MATTER HE HELD THAT SECTION 23(1)(A) WAS NOT APPLICABLE TO THE PROPERTY AND DIRECTED THE ASSESSI NG OFFICER TO MODIFY THE ASSESSMENT ORDER ACCORDINGLY WHICH IN EFFECT MEANS THAT THE INCOME OF RS.26 94 380/- SHOULD BE DELETED. 7. IT IS AGAINST THE AFORESAID DECISION OF THE CIT( A) THAT THE REVENUE HAS PREFERRED THE PRESENT APPEAL. IT IS CONTENDED ON I TS BEHALF THAT THE ASSESSING OFFICER HAS PROPERLY COMPUTED THE ALV AT RS.26 94 3 80/- IN RESPECT OF 2673 SQ. FT. OF RAHEJA CHAMBERS BY APPLYING THE RATE OF RS.8 4/- PER SQ. FT. PER MONTH WHICH THE ASSESSEE IS RECEIVING IN RESPECT OF THE L EASED OUT PORTION. IT IS ALSO CONTENDED THAT THE CIT(A) HAS WRONGLY INVOKED SECTI ON 23(1)(C) OF THE ACT WHICH WAS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CO NSIDERATION AND WAS BROUGHT INTO THE ACT ONLY FROM THE ASSESSMENT YEAR 2002-200 3 BY THE FINANCE ACT 2001. IT IS THEREFORE CONTENDED THAT THE COMPUTATION OF T HE INCOME AS MADE IN THE ASSESSMENT ORDER SHOULD BE UPHELD. 8. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ORDERS OF THE TRIBUNAL PASSED IN THE ASSESSMENT YEARS 1998-99 AS ALSO IN THE 5 FIRST ROUND OF PROCEEDINGS FOR THE ASSESSMENT YEAR 1999-2000 WHICH IS NOW IN APPEAL HAVE BECOME FINAL AND IT IS NOT OPEN TO THE REVENUE TO RAISE ANY EXTRANEOUS DISPUTE AND IT WAS THE DUTY OF THE ASSES SING OFFICER TO COMPUTE THE INCOME FROM THE PROPERTY ONLY UNDER SECTION 23(1)(B ) AS HAS BEEN DONE BY HIM IN THE ASSESSMENT YEAR 1998-99 WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL FOR THAT YEAR. HE DREW OUR ATTENTION TO THE ASSESSMENT ORDER DATED 07.03.2005 PASSED UNDER SECTION 143(3) READ WITH SECTION 254 F OR THE ASSESSMENT YEAR 1998-99 IN WHICH THE ASSESSING OFFICER HAS APPLIED SECTION 23(1)(B). IT IS FURTHER CONTENDED BY HIM THAT THE LIMITED QUESTION BEFORE T HE ASSESSING OFFICER IS ONLY WHETHER THE INCOME FROM THE PROPERTY IS TO BE ASSES SED UNDER SECTION 23(1)(A) OR SECTION 23(1)(B) AFTER GIVING THE ASSESSEE REASONA BLE OPPORTUNITY OF BEING HEARD AND NO FRESH DISPUTE CAN BE RAISED WHILE GIVING EFF ECT TO THE ORDERS OF THE TRIBUNAL. HE THUS CONTENDED THAT THE ORDER OF THE CIT(A) SHOULD BE CONFIRMED. 9. WE HAVE CAREFULLY CONSIDERED THE FACTS AND THE R IVAL CONTENTIONS. AS POINTED OUT ON BEHALF OF THE ASSESSEE BOTH IN THE ASSESSMENT YEARS 1998-99 AND IN THE FIRST ROUND OF PROCEEDINGS FOR THE ASSES SMENT YEAR UNDER APPEAL THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO FIRS T GIVE A FINDING AS TO WHETHER THE PROPERTY INCOME IS TO BE ASSESSED UNDER SECTION 23(1)(A) OR SECTION 23(1)(B) AND TO DETERMINE THE SAME AS PER LAW AFTER GIVING OPPORTUNITY TO THE ASSESSEE. IN RESPECT OF THE ASSESSMENT YEAR 1998-99 THE ASSE SSING OFFICER WHILE GIVING EFFECT TO THE DIRECTIONS OF THE TRIBUNAL HAS RECORD ED A FINDING THAT THE ENTIRE COMPENSATION AND SERVICE CHARGES RECEIVED IN RESPEC T OF THE PROPERTY SHOULD BE TREATED AS PROPERTY INCOME UNDER SECTION 23(1)(B). IT HAS NOT BEEN SHOWN BEFORE US THAT THIS ORDER DATED 07.03.2005 HAS BEEN SET AS IDE OR REVISED OR MODIFIED IN ANY MANNER BY A PROCESS KNOWN TO LAW. IN THE FIRST ROUND OF PROCEEDINGS FOR THE 6 YEAR UNDER APPEAL ALSO SIMILAR DIRECTIONS WERE GIV EN BY THE TRIBUNAL TO THE ASSESSING OFFICER. IT WAS THEREFORE NOT PERMISSIBL E FOR HIM HAVING REGARD TO THE ASSESSMENT MADE FOR THE ASSESSMENT YEAR 1998-99 AFT ER THE TRIBUNALS ORDER FOR THAT YEAR TO TAKE A DIFFERENT STAND AND APPLY BOTH SECTIONS 23(1)(A) AND SECTION 23(1)(B) FOR THE PROPERTY AND COMPUTE THE ALV AT RS .48 38 380/-. THERE IS NO DISPUTE THAT THE ACTUAL RENT RECEIVED BY THE ASSESS EE FROM THE PROPERTY WAS ONLY RS.21 44 000/-. UNDER SECTION 23(1)(B) WHERE THE PROPERTY IS LET OUT AND THE RENT RECEIVED OR RECEIVABLE IS IN EXCESS OF THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR TH E AMOUNT ACTUALLY RECEIVED OR RECEIVABLE BY THE ASSESSEE HAS TO BE TAKEN AS THE A LV OF THE PROPERTY. THERE IS NO DISPUTE THAT THE ASSESSEE DID NOT RECEIVE ANYTHI NG MORE THAN RS.21 44 000/- FROM THE PROPERTY. THIS AMOUNT WAS THEREFORE RIGHT LY SHOWN BY THE ASSESSEE UNDER SECTION 23(1)(B). THIS IS IN CONFORMITY WITH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 07.03.2005 UNDER SECTIO N 143(3) READ WITH SECTION 254 FOR THE ASSESSMENT YEAR 1998-99. THIS IS WHAT THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO DO AND WE ARE UNABLE TO FIND A NY INFIRMITY IN HIS DECISION. IT IS HEREBY CONFIRMED AND THE APPEAL FILED BY THE DEP ARTMENT IS DISMISSED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED ON 20 TH JANUARY 2010. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI DATED 20 TH JANUARY 2009 SALDANHA 7 COPY TO: 1. M/S RAMA ENTERPRISES 812 RAHEJA CHAMBERS NARIMAN POINT MUMBAI 400 021 2. ITO 12(3)(2) 3. CIT-XII 4. CIT(A)-XII 5. DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI