SHAILESH I SHAH, MUMBAI v. ITO 15(1)(4), MUMBAI

1 ITA NO. 8687/MUM/2010 (ASST YEAR 2006-07 ) IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC MUMBAI SMC MUMBAI SMC MUMBAI SMC BENCH BENCH BENCH BENCH MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI BEFORE SHRI R K PANDA BEFORE SHRI R K PANDA BEFORE SHRI R K PANDA BEFORE SHRI R K PANDA ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ITA NO. ITA NO. ITA NO. ITA NO. 8687/MUM/2010 8687/MUM/2010 8687/MUM/2010 8687/MUM/2010 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2006 2006 2006 2006- -- -07 0707 07 ) )) ) SHAILESH I SHAH BHAGWAN BHAWAN 2 ND FLOOR 99/103 TAMBE KANTA MUMBAI 400 003 VS THE INCOME TAX OFFICER WARD 15(1)(4) MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AWPPS 2322A AWPPS 2322A AWPPS 2322A AWPPS 2322A ASSESSEE BY SHRI DILIP J THAKKAR/RAJESH P SHAH REVENUE BY SHRI R K GUPTA/DR PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 28.9.2010 OF THE CIT(A)-26 MUMBAI RELATING TO ASSE SSMENT YEAR 2006-07. 2 THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER: ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT(A) ERRED IN CONSIDERING THE NOTIONAL VALUE OF F IRST FLAT AT RS. 3 LACS INSTEAD OF RS. 1 163/- U/S 23 OF THE I T ACT. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2006 THAT ITS OWNS TWO HOUSE PROPERTIES; ON E AT FLAT NO.45 AT SAGAR MAHAL 6 TH ROAD WALKSHWAR ROAD MUMBAI VALUE OF WHICH WAS S HOWN AT RS. 87 500/- AND ANOTHER FLAT NO.30 IN THE SAME BU ILDING THE VALUE OF WHICH WAS SHOWN AT RS. 77 73 129/-. THE ASSESSEE HAD CLAIME D INTEREST ON HOUSING LOAN OF 2 ITA NO. 8687/MUM/2010 (ASST YEAR 2006-07 ) RS.1 50 000/. THE ANNUAL RATEABLE VALUE OF THE FLAT NO.45 WAS SHOWN IN THE COMPUTATION OF INCOME AT RS. 1 163/- AND THE SAME W AS ADJUSTED AGAINST INTEREST ON HOUSING LOAN OF RS. 1 50 000/- AND THE BALANCE I NTEREST OF RS. 1 48 837/- WAS SET OFF AGAINST BUSINESS INCOME. THE ASSESSING OF FICER INFORMED THE ASSESSEE THAT SINCE BOTH THE HOUSE PROPERTIES ARE HELD BY TH E ASSESSEE AND IF ONE IS ACTUALLY NOT LET OUT THE SAME IS BOUND TO BE TREAT ED AS DEEMED LET OUT AND DEEMED LET OUT INCOME AT RENT MAINTAINABLE ACT IS P ROPOSED TO BE ADDED TO THE INCOME OF THE ASSESSEE. 2.2 IT WAS EXPLAINED BY THE ASSESSEE THAT BOTH THE FLATS ARE SELF OCCUPIED PROPERTIES; THEREFORE THERE IS NO JUSTIFICATION IN TREATING ONE FLAT AS DEEMED LET OUT AND THEREFORE NO ADDITION IS CALLED FOR. 3 HOWEVER THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM SINCE THE ASSESSEE WAS THE OWNER OF TWO HOUSE PROPERTIES HE CAN RETAIN ONE HOUSE AS SE LF OCCUPIED AND THE OTHER FLAT IS DEEMED TO BE LET OUT PROPERTY. HE ACCORDINGLY TREATED THE FLAT NO.45 AT SAGAR MAHAL 6 TH ROAD WALKSHWAR ROAD MUMBAI( BEING THE SMALL FLAT ) AS DEEMED LET OUT. CONSIDERING THE LOCATION OF THE PROPERTY AT A GOOD LOCATION HE ESTIMATED THE ALV RENT AT RS. 3 LACS. 4 IN APPEAL THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. WHILE DOING SO HE NOTED THAT ANNUAL RENTAL VALUE OF THE FLAT NO.45 COULD NEVER BE AS LOW AS RS. 1 163/- AS CLAIMED BY THE ASSESSEE SIN CE THE FLAT IS SITUATED AT WALKESHWAR MUMBAI WHICH IS NEARBY TO HYDERABAD ESTATE AND GOVERNORS AND CHIEF MINISTERS BUNGALOWS. ACCORDING TO THE CIT(A ) NO SUCH PROPERTY CAN BE LET OUT EVEN FOR LESS THAN RS. 50 000/- PER MONTH. SIN CE THE ASSESSING OFFICER HAS 3 ITA NO. 8687/MUM/2010 (ASST YEAR 2006-07 ) ADOPTED ONLY RS. 25 000/- PER MONTH THE SAME CANNOT BE PRESUMED TO BE UNREASONABLE OR BASELESS OR UNACCEPTABLE. 5 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL HR BEFORE US. 6 I HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY B OTH THE PARTIES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND CIT(A) AND VARIOUS DECISIONS CITED BEFORE ME BY THE LD COUNSEL FOR THE ASSESSEE TO THE PROPOS ITION THAT MUNICIPAL RATEABLE VALUE HAS TO BE ADOPTED FOR THE PURPOSE OF ALV. THE CO-ORDINATE BENCHES OF THE TRIBUNAL ARE TAKING THE CONSISTENT VIEW THAT IN CAS E OF SELF OCCUPIED PROPERTY MUNICIPAL RATEABLE VALUE HAS TO BE ADOPTED FOR THE PURPOSE OF ALV. I THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A SSESSING OFFICER TO CONSIDER THE MUNICIPAL RATEABLE VALUE AS ALV OF THE PROPERTY AS AGAINST RS. 3 LACS ESTIMATED BY HIM. I HOLD AND DIRECT ACCORDINGLY. THE GROU ND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 7 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 28 TH DAY OF FEB 2011. SD/- ( R K PANDA ) ( R K PANDA ) ( R K PANDA ) ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 28 TH FEB 2011 RAJ* 4 ITA NO. 8687/MUM/2010 (ASST YEAR 2006-07 ) COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI