DCIT CIR 18(2), MUMBAI v. SANGEETA PODDAR, MUMBAI

ITA 7106/MUM/2008 | 2001-2002
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 710619914 RSA 2008
Assessee PAN AACPP2350G
Bench Mumbai
Appeal Number ITA 7106/MUM/2008
Duration Of Justice 1 year(s) 5 month(s) 6 day(s)
Appellant DCIT CIR 18(2), MUMBAI
Respondent SANGEETA PODDAR, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 21-05-2010
Date Of Final Hearing 14-05-2010
Next Hearing Date 14-05-2010
Assessment Year 2001-2002
Appeal Filed On 15-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI VIJAY PAL RAO JM ITA NO.6134/MUM/2008 : ASST.YEAR 2001-2002 SMT.SANGEETA PODDAR TRADE WORLD B-WING 3 RD FLOOR KAMLA CITY S.B.MARG LOWER PAREL MUMBAI 400 013. PA NO.AACPP2350G. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 18(2) MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.7106/MUM/2008 : ASST.YEAR 2001-2002 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 18(2) MUMBAI. VS. SMT.SANGEETA PODDAR TRADE WORLD B-WING 3 RD FLOOR KAMLA CITY S.B.MARG LOWER PAREL MUMBAI 400 013. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.R.DAS ASSESSEE BY : SHRI SANJIV M.SHAH O R D E R PER R.S.SYAL AM : THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 9.9.2008 IN RELATION TO THE ASSESSMENT YEAR 2001-20 02. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN HER AP PEAL IS AGAINST THE REDUCTION IN THE ESTIMATE OF RENT MADE BY THE ASSESSING OFFI CER FROM RS.60 PER SQ.FT. PER MONTH TO RS.40 PER SQ.FT. PER MONTH OF THE PREMISES RENTED BY THE ASSESSEE AS AGAINST THE ACTUAL AGREED RENT RECEIVED AT RS.20 PE R SQ.FT. PER MONTH. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICE R REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S.148. THE ASSESSEE HAD SHOWN HOUS E PROPERTY INCOME AT RS.2 20 500 FOR PREMISES AT UNIT NO.6 5 TH FLOOR IN BUILDING KNOWN AS TRADE WORLD IN KAMLA MILLS COMPOUND. ON THE PERUSAL OF T HE COPY OF RENT AGREEMENT DATED FEBRUARY 2002 THE ASSESSING OFFICER OBSERVED THAT THE SAME WAS LEASED TO ITA NOS.6134 & 7106/MUM/2008 SMT.SANGEETA PODDAR. 2 SMT. SUNITA VINODKUMAR PODDAR A RELATIVE AT RS.24 500 PER MONTH GIVING RATE OF RS.20 PER SQ.FT. PER MONTH. IT WAS NOTICED BY THE A.O. THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2004-2005 THE MAR KET RATE OF RENT ON ACCOUNT OF LEAVE AND LICENSE AGREEMENT WITH M/S.STAR INDIA LIM ITED IN THE SAME PREMISES IN THAT PREMISES WAS FOUND TO BE MUCH HIGHER AT RATE O F RS.68 PER SQ.FT. PER MONTH. CONSIDERING THESE FACTS HE APPLIED THE RATE OF RS .60 PER SQ.FT. PER MONTH IN RESPECT OF THE YEAR UNDER CONSIDERATION AND MADE ADDITION F OR RS.4 41 000. IN THE FIRST APPEAL THE LEARNED CIT(A) REDUCED THE ESTIMATED RA TE OF RENT FROM RS.60 PER SQ.FT. PER MONTH TO RS.40 PER SQ.FT. PER MONTH AGAINST WH ICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. THE REVENUE THOUGH IN APPEAL HA S NOT ASSAILED THIS FINDING OF THE LD. CIT(A). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSING OFFICER REOPE NED THE ASSESSMENT FOR THIS YEAR ON THE BASIS OF THE VIEW TAKEN BY HIM IN ASSESSMENT YEAR 2004-2005 DETERMINING THE RENT AT A HIGHER FIGURE. THE LEARNED A.R. HAS P LACED ON RECORD A COPY OF THE ORDER PASSED BY THE LEARNED CIT(A) FOR THE SAID ASS ESSMENT YEAR 2004-2005 BY WHICH THE ADDITION MADE BY THE A.O. ON THIS ACCOUNT WAS DELETED ON THE STRENGTH OF THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS. AKSHAY TEXTILE TRADING AGENCIES PRIVATE LIMITED [(2 008) 304 ITR 401 (BOM.)] . THE LEARNED COUNSEL FOR THE ASSESSEE MADE A STATEME NT AT THE BAR THAT THE SAID ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2004-2005 D ATED 16 TH JANUARY 2009 HAS BEEN ACCEPTED BY THE REVENUE AND NO FURTHER APPEAL HAS BEEN FILED. IN THE BACKDROP OF THESE FACTS IT BECOMES CLEAR THAT THE VERY BA SIS ON WHICH THE ADDITION CAME TO BE MADE IN THE INSTANT YEAR DOES NOT SURVIVE ANY MORE IN VIEW OF THE ORDER PASSED BY THE LEARNED CIT(A) FOR ASSESSMENT YEAR 2004-2005 DELETING THE SAID ADDITION WHICH HAS NOT BEEN APPEALED AGAINST BY THE REVENUE AS PER THE LD. AR. ITA NOS.6134 & 7106/MUM/2008 SMT.SANGEETA PODDAR. 3 4. IT IS SEEN THAT THE ASSESSEE RECEIVED RENT AT THE RATE OF RS.20 PER SQ.FT. PER MONTH BY VIRTUE OF AN AGREEMENT WITH SMT.SUNITA V.P ODDAR. THE ASSESSING OFFICER HAS NOT FOUND SUCH AGREEMENT TO BE A COLOURABLE DEV ICE OR AN ATTEMPT TO REDUCE THE TAX IN ANY MANNER. THE JURISDICTIONAL HIGH COURT IN THE CASE OF AKSHAY TEXTILE TRADING AGENCIES PRIVATE LIMITED (SUPRA) HAS HELD THAT THE ANNUAL VALUE OF THE PROPERTY LET OUT BY THE ASSESSEE IS TO BE DETERMINE D ON THE BASIS OF THE RENT RECEIVED OR RECEIVABLE FROM THE TENANTS IRRESPECTIVE OF THE FACT WHETHER THE TENANTS HAVE RECEIVED HIGHER RENT BY SUBLETTING THE PROPERTY. AC CORDING TO SECTION 23(1)(B) THE ANNUAL VALUE OF THE PROPERTY FOR THE PURPOSE OF SEC TION 22 SHALL BE DEEMED TO BE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER WHE RE THE PROPERTY IS LET OUT. BUT WHERE SUCH RENT ACTUALLY RECEIVED IS LESS THAN THE AMOUNT FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO Y EAR THEN SUCH HIGHER RENT SHALL BE DEEMED TO BE THE ANNUAL VALUE OF THE PROPERTY. I T IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE STANDARD RENT IN THIS CASE IS MORE THAN RS.20 PER SQ.FT. PER MONTH. HE HAS RELIED ON AN INSTANCE OF LETTING OUT OF THE PROPERTY WHICH WAS GIVEN ON RENT IN A SUBSEQUENT YEAR TO M/S. STAR INDIA LIMITED FOR A PERIOD OF 1 YEAR AND 9 MONTHS. HOW THE RENT RECEIVED IN A SUBSEQUENT YEAR AND THAT TOO WHERE THE SIZE OF PROPERTY AND THE TENURE OF TENANCY IS DIFFERENT CAN BE CO NSIDERED AS REASONABLE IS ANYBODYS GUESS. IT IS A CASE IN WHICH THE PROPER TY WAS ACTUALLY LET OUT AT THE RATE OF RS.20 PER SQ.FT. PER MONTH AND THE ASSESSING OFF ICER HAS NOT FOUND SUCH RENTAL AGREEMENT TO BE SHAM OR BOGUS. IN SUCH A SITUATION AND FOLLOWING THE RATIO OF THE JUDGMENT IN THE CASE OF AKSHAY TEXTILE TRADING AGENCIES PRIVATE LIMITED (SU PRA) WE HOLD THAT THE ACTUAL RENT RECEIVED BE CONSIDERED AS THE ANNUAL VALUE OF THE PROPERTY. CONSEQUENTLY THE IMPUGNED ORDER ON THIS ISSUE IS OVERTURNED AND IT IS DIRECTED THAT THE ACTUAL RENT AT THE RATE OF RS.20 PER SQ.FT. PER MONTH BE CONSIDERED AS ANNUAL VALUE INSTEAD OF RS.40 PER SQ.FT. PER MON TH AS ACCEPTED BY THE LEARNED CIT(A). ITA NOS.6134 & 7106/MUM/2008 SMT.SANGEETA PODDAR. 4 5. THE REVENUE IN ITS APPEAL IS AGGRIEVED AGAINST T HE DELETION OF ADDITION MADE BY THE LEARNED CIT(A) AMOUNTING TO RS.3 50 49 233. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE INCURRED A LOSS OF RS. 3 63 50 323 ON THE SALE OF UNITS OF J.M.BALANCE FUND WHICH WERE PURCHASED BY THE ASSESS EE ON 9.2.2001 FOR RS.11 82 60 000 AND THESE UNITS WERE SOLD JUST AFT ER TWO DAYS RESULTING INTO SHORT TERM CAPITAL LOSS OF RS.3.63 CRORE. THE A.O. ALSO N OTED THAT THE ASSESSEE HAD RECEIVED DIVIDEND INCOME OF RS.3 50 49 233 WHICH WA S CLAIMED AS EXEMPT U/S.10(33) OF THE ACT. THE A.O. HELD THE SAME TO BE A CASE OF DIVIDEND STRIPPING AND THUS DISALLOWED THE SHORT TERM CAPITAL LOSS. IN THE SAME MANNER HE ALSO DISALLOWED SHORT TERM CAPITAL LOSS IN THE NAME OF T WO MINORS OF THE ASSESSEE TO THE TUNE OF RS.77 56 436. THE LEARNED CIT(A) ACCEPTED T HE ASSESSEES CLAIM AND ALLOWED RELIEF OF RS.4.41 CRORE BY RELYING ON THE O RDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN WALLFORT SHARE & STOCK BROKERS LTD. VS. ITO AS REPORTED IN 96 ITD 1. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE LEARNED CIT(A) HAS RELIED O N THE SPECIAL BENCH ORDER IN THE CASE OF WALLFORT SHARE & STOCK BROKERS LTD. (SUPRA) WHICH HAS SINCE BEEN APPROVED BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. WALLFORT SHARE & STOCK BROKERS LTD. [(2009) 310 ITR 421 (BOM .)] . THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2001-2002. AN AMENDMENT HAS BEEN CARRIED OUT TO SECTION 94(7) WITH EFFECT FROM 1.4.2001 AS PER WHICH ANY SA LE OR PURCHASE WITHIN THE PERIOD OF THREE MONTHS PRIOR AND AFTER THE RECORD DATE RES ULTING INTO EXEMPT DIVIDEND INCOME THEN THE LOSS ON ACCOUNT OF SALE OR PURCHAS E OF SECURITIES AND UNIT TO THE EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF DIVI DEND OR INCOME RECEIVED OR RECEIVABLE ON SUCH SECURITIES OR UNIT SHALL BE IGN ORED FOR THE PURPOSE OF COMPUTING INCOME CHARGEABLE TO TAX. THIS AMENDMENT HAS BEEN C ARRIED OUT BY WAY OF INSERTION OF FINANCE ACT 2001 WITH EFFECT FROM 1.4.2002 MEAN ING THEREBY THAT IT SHALL BE APPLICABLE FROM ASSESSMENT YEAR 2002-2003 ONWARDS. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF WALLFORT SHARE & STOCK BROKERS LTD. (SUPRA) HAS HELD ITA NOS.6134 & 7106/MUM/2008 SMT.SANGEETA PODDAR. 5 THAT THE INSERTION OF SECTION 94(7) IS ONLY PROSPEC TIVE. IN VIEW OF THE FOREGOING DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT TH E LEARNED CIT(A) WAS JUSTIFIED IN DELETING THIS ADDITION. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 21 ST DAY OF MAY 2010. SD/- SD/- ( VIJAY PAL RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 21 ST MAY 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-XVIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.