Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI M. BALAGANESH & SHRI PAVAN KUMAR GADALE
आदेश / O R D E R
PER PAVAN KUMAR GADALE, JM:
The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals) - 30, Mumbai, passed u/s. 143 (3) and 250 of the Income Tax Act, 1961.
The assessee has raised the following grounds of appeal:-
1. The Hon. CIT (A) erred in confirming the addition of Rs. 24,58,884/- made by the Ld.AO under the head income from house property by determining the annual letting value (ALV) in respect of commercial premises being Unit no. 37, 2nd floor, Raghuvanshi Mills Compound, Lower Parel, Mumbai not appreciating that the ALV of the said premises was NIL as per the provisions sec. 23 (1) (c) of the I.T. Act, 1961 and therefore the addition was not justified and was required to be deleted.
2. Without prejudice, the Hon. CIT (A) erred in not adjudicating the ground of appeal pertaining to quantum of annual letting value (ALV) determined by the ld. AO, by ignoring the municipal ratable value of the said premises which was Rs. 35,150/- per annum only and therefore the addition on account of annual letting value (ALV) of the said premises could not exceed the municipal ratable value thereof.”
3. The Brief facts of the case are that, the assessee is an individual and has income from house property and income from other sources and filed the return of income for the assessment year 2014-15 on 29.07.2014 with the total income of Rs.48,81,640/-.The return of income was processed u/s 143 (1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143 (2) and 142(1) of the Act are issued. In response to the notice, the Ld.AR of the assessee appeared from time to time and submitted the details. On perusal of the computation of income, the Assessing Officer (A.O.) found that the assessee in the financial year 2013-14 has not disclosed the rental income from one property at 2 floor Raghuvanshi mansion and issued show cause notice. The assessee has filed the submissions mentioning that the said property was vacant in the F.Y. 2013-14 due to renovation and repair work and therefore no rental income is received. But the explanations filed are not to the satisfaction of the A.O. and applied the provisions of section 23(1) of the Act and calculated deemed rental income. The A.O. based on the rental income disclosed by the assessee in the AY 2013-14 has allowed deduction of municipal taxes and worked out the Net Rental income of Rs. 35,12,691/- and further allowed deduction u/sec24 of the Act @ 30% of Net Rental income and made an addition of Rs. 24,58,884/- under the head income from house property and passed the order u/s 143(3) of the Act dated 01.11.2016.
Aggrieved by the order, the assessee has filed the appeal with the CIT (Appeals), where as the Ld.CIT (A) considered the grounds of appeal, submissions of the assessee, findings of the AO and observed that annual let out value calculated by the AO is upheld and dismissed the assessee’s appeal. Aggrieved by the order of the CIT (A), the assessee has filed the appeal with the Hon’ble Tribunal.
5. At the time of hearing, the Ld. AR of the assessee submitted that the Ld. CIT (A) has erred in confirming the action of the A.O. The Ld. AR referred to the observations of the Ld. CIT (A) at page 5 para 5.3.2 of the order and emphasized that the property was vacant and required repairs and hence could not be let out. Further the income tax department has not considered the Municipal Rateable Value (MRV) while calculating deemed let out value of the property.The Ld.AR supported his arguments with elaborate submissions on the facts and relied on the judicial decisions and written submissions and prayed for allowing the appeal. Contra, the Ld.DR supported the order of the Ld. CIT (A).
We have heard the rival submissions and perused the material on record. The sole matrix of the disputed issue is in respect calculation of deemed let out value of the vacant property and the applicability of provisions of section 23 (1) of the Act, were the vacant property is under renovation and repair works.. The Ld.AR submitted that the A.O. has wrongly determined the deemed let-out value of the vacant property u/sec 23 (1) (c) of the Act ignoring the factual aspects of renovation and repair works undertaken in the F.Y.2013-2014.The Ld.AR emphasized that the said property was under tenancy for 10 years and rental income was disclosed under income from house property in the earlier assessment years and filled the income tax returns. In the F.Y.2013-14 the property was vacated by the tenant and due to severe damages to property, the assessee has to undertake heavy repair works and in such circumstances the assessee could not find suitable tenant. The Ld.AR referred to the proposals received from the parties for lease of property with conditions at page 24 and 25 of the paper book .The Ld.AR demonstrated the rateable vale certificate from Municipal Corporation Mumbai (M.C.G.M) at page 26 to 34 of the paper book and argued that the assessing officer has totally ignored this certificate.The assessee’s intentions was always to let out the property but the fact remains that the assessee has to undertake the repair works which cannot be completed in a short period. The Ld. AR of the assessee referred to the submissions made before the A.O. at page 11 to 23 of the paper book. We on perusal of the assessment order, do not find any findings of the A.O. on the submissions and Rateable certificate issued the municipal corporation Mumbai. We are of the substantiate view that the major facts with respect to determination of annual let value are over looked .Hence to meet the ends of justice, We provide one more opportunity to the assessee to substantiate the case with the rateable value certificate and evidences before the Assessing officer. Accordingly, we set-aside the order of the CIT(A) and restore the disputed issue for limited purpose to the file of the assessing officer to adjudicate afresh. The A.O. should provide adequate opportunity of hearing to the assessee and the assessee should co-operate in submitting the information in the proceedings and allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 17.03.2021.