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Income Tax Appellate Tribunal, “A” Bench, Mumbai
per an approved plan cannot be forced upon the assessee. Furthermore, subsequently the assessee had to incur over Ks.50 lacs for alteration of the flat which resulted in the bifurcation of the flat into three parts. This oxygenates the assessee's claim that the premises required alteration in order to properly let out Hence, the plea by the Id. Counsel of the assessee cannot be said to be spurious, vexatious, mere bluster or Saif Ali Khan Pataudi frivolous. Hence, in this connection, in our considered opinion, the assessee deserves vacancy allowance u/s. 23(l)(c). This section reads as under-Annual value how determined. '' . (1) For the purposes of section 22, the annual value of any property shall be deemed to be- (a) The sum for which the property might reasonably be expected to let from year to year; or
b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or © where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable :
From the above provision of law, it can be construed that in case the property or part thereof was vacant during the period, the proportion deduction should be allowed from the sum on which the property might reasonably be let out from year to year. We find that it is the plea of the assessee that due to inherent defects, the flat could not be let out. Hence, the flat remained vacant. Hence, the assessee has claimed benefit of section 23(1 )(c) which duly permits deduction in this regard. "
Further and without prejudice, the appellant submitted that even if ALV is estimated, since the flat was vacant for the whole period of ownership, vacancy allowance u/s 23(l)(c) should be allowed and hence even on this count no addition of ALV is justifiable .
Further the appellant also relied on the decision of Bombay High Court in the case of Tip Top Typography 368 1TR 330 where it was held that ALV of flat should be restricted to municipal rateable value. This view was also followed by the Bombay Tribunal in the following cases.
1) Owasi Hussain 2) Pankaj Wadhwa 3} Europa Chemicals Pvt. Ltd.
During the course of appellate proceedings, the appellant without prejudice to the above further submitted that the ALV of this flat should be restricted to the municipal
6 Amit Balkrishna Jalan. rateable value only. In this regard copy of the BMC Certificate was enclosed in the paper book. In view of the above, AO is directed to restrict the ALV in respect of Yashodeep flat to the municipal rateable value.
From the above, it is amply clear that the order of Ld.CIT(A) is without any application of mind. There is no discussion whatsoever as to where the act mandates that if a flat is inhabitable and in a ruinous condition notional rent should be computed thereon and imposed upon the assessee. The ITAT decisions referred by the assessee despite being noted has been ignored by the CIT(A). For all the above reasoning including the lack of application of mind by the CIT(A) and the scant regard to the judicial discipline the order of Ld.CIT(A) is set aside and the notional rent addition in this regard is directed to be deleted.
Another issue in AY 2015-16 relates to the confirming by the CIT(A), the annual letting value of the flats at 6% of the flats that is Rs.283905/- a place of ALV to restricted to municipal ratable value.
We note that the solitary plea of the assessee in this regard is that the notional rent should be restricted to the municipal ratable value. The AO has levied 8% of the cost as notional rent and CIT(A) has restricted the same to 6%. This, the Ld.CIT(A) did despite noting the Hon’ble Bombay High Court decision in the case of Tiptop topography and following which in case of another flat, he had directed that municipal ratable value should be adopted.
Considering the above, issue and going through the order of Ld.CIT(A) referred, we fail to understand as to why the Ld.CIT(A) has chosen again to exhibit his scant regard to the judicial discipline and not follow the Hon’ble Bombay High Court decision in the case of Tiptop topography. In the said decision Hon’ble Bombay High Court has expounded that municipal ratable value in an accepted norm for 7 Amit Balkrishna Jalan.
considering the rental value unless the AO shows by some material that the rent offered by the assessee is a manipulated figure. We are again anguished and wonder why the Ld.CIT(A) chose to ignore the Hon’ble Bombay High Court decision. Be as it may, we direct that following the precedent from Hon’ble Bombay High Court as above the rental value should be limited to the municipal ratable value in this regard. We direct accordingly.
In the result, appeals by the assessee stand partly allowed as above.
Pronounced in the open court on 12.07.2021