ANAND J. JAIN,MUMBAI vs. DCIT CC 6(4), MUMBAI

The material facts are that an assessment was framed u/s 143(3) on 27/12/2017 for the year under consideration wherein the income was determined at Rs.199.31 Lacs after certain adjustments as against returned income of Rs.156.73 Lacs filed by the assessee on 30/08/2015. It so transpired that the assessee owned 19 flats at Central Garden Complex (Tower No.5) out of which 7 flats were lying vacant during the year whereas remaining flats were let out. The assessee offered aggregate income against the vacant flats at Rs.1.26 Lacs on the basis of municipal rateable value. However, Ld. AO, applying the provisions of Shri Anand J. Jain Assessment Year :2015-16 Sec. 23(1)(a) opined that the annual value shall be deemed to be the sum for which the property might reasonably be expected to let out from year to year. Therefore, the municipal value was not to be taken as fair ALV of the property. Applying the average rate per square meter at which other 12 flats were let out by the assessee, Ld. AO worked out ALV of these 7 flats as Rs.64.57 Lacs. After reducing municipal taxes & statutory deduction of 30%, the net ALV came to be Rs.43.83 Lacs. Since the assessee had already offered ALV of Rs.1.26 Lacs, the differential amount of Rs.42.57 Lacs was further added to the income of the assessee.

Before Ld. CIT(A), the assessee inter-alia relied upon favorable decision of Hon’ble Bombay High Court in CIT V/s Tip Top Typography (48 Taxmann.com 191) and also drew attention to the favorable orders of the Tribunal in assessee’s own case for AYs 2009-10 & 2010-11 wherein Ld. AO was directed to adopt the municipal rateable value as the ALV of the vacant flats held by the assessee. Similar view was stated to be taken by predecessor CIT(A) for AYs 2012-13 to 2014-15. However, Ld. CIT(A) distinguished the facts of this year by noticing that out of 19 flats held by the assessee, 12 flats were actually let out and 7 flats remained vacant during the year. The assessee offered actual rent received in respect of 12 flats which were let out whereas it adopted municipal rateable value with respect to remaining 7 flats. In the earlier years, Ld. AO did not make any proper inquiry to estimate the rental income but since in this year 12 flats were actually let out, the same would give a clear indication of the rate at which the property might reasonably be expected to be let out. Therefore, the estimation so made

Upon careful consideration, we find the issue of determination of ALV was subject matter of cross-appeals for AYs 2013-14 & 2014-15 before this Tribunal in assessee’s own case vide ITA Nos.Nos.6836/Mum/2017 & others, order dated 27/02/2019 wherein the bench took note of earlier decision of Tribunal in AY 2012-13, ITA No.3887 & 3665/Mum/2017. In the decision for AY 2012-13, the co- ordinate bench after considering the relevant provisions of Act and also by following the decision of Hon’ble Bombay High Court in M/s TIP Top Typography (2014) 368 ITR 330 and also in Moni Kumar Subba (2011) 333 ITR 38, upheld the determination of ALV on the basis of Municipal Rateable Value. The bench while adjudicating appeals for AYs 2013-14 & 2014-15 further observed that: -

We further noticed that the Hon’ble Bombay High Court in Income Tax Appeal No.1285 of 2015 in the case of Laxmi Jain has considered the issue of determination at ALV of house property on the basis of municipal rateable value and by following its earlier decision in the case of Smt. Smitaben N. Ambani, dismissed the appeal filed by the Revenue. Further, the Hon’ble juri ictional High Court in the case of Pr. CIT vs Shri Harish Jain (Income Tax Appeal No.1438 of 2016) an associate of the assessee has considered identical question of law in the light of provisions of section 22 and 23 of the Act and by following its earlier decision in the case of Smt. Smitaben N. Ambani (Supra) held as under. The relevant portion of the order in the case of Shri Harish Jain (supra) is reproduced hereunder:- 6 We, however, notice that the Tribunal has taken note of the contents of the email and found that, the same do not show any evidence of cash payment and in fact, reference to the dates when such payments were allegedly made, would take the case of the assessee out of the current Assessment Year. The Tribunal further noted that the loose documents/papers were not found from the possession of the assessee, nor the same were singed by the assessee. 7 We, therefore, find that the entire issue is based on appreciation of facts on record. The Tribunal has assessed the evidence to come to the conclusion that, there was no evidence in possession of the Assessing Officer to make additions. Significantly, the Tribunal noticed several inconsistencies in the contents of the email and found that the loose documents/papers were not found from the possession of the assessee, nor they were signed by the Shri Anand J. Jain Assessment Year :2015-16 assessee and finally the purchaser of the land, was not examined by the Assessing Officer. We do not find any question of law arising. 8 Question (b) relates to the additions made by the Assessing Officer by reversing the rateable value of the property owned by the assessee which was vacant. While complying the taxability of deemed rental income in terms of Sections 22 and 23 of the Act, the Assessing Officer discarded the rateable value fixed by the Municipal Corporation for assessing the tax on such properties and substituted the same with market rate as prevailing in the area, as estimated by him after collecting data with respect to the same. The Tribunal, however, deleted addition on the ground that in case of vacant property, the tax on rental income in terms of Section 23 of the Act can be calculated only on the basis of rateable value assessed by the Municipal Corporation. 9 We find that this view of the Tribunal is supported by decision of this Court by order dated 16th April, 2018 passed in Income Tax Appeal No.1285 of 2015. The Court while dismissing the Revenue's appeal, relied on the decision of this Court in case of Smt. Smitaben N. Ambani v/s. Commissioner of Wealth Tax reported in 323 ITR 104. In such decision, this Court was considering a similar question in context of valuing the self-occupied property, for the purpose of wealth tax of the assessee. The provisions for assessing the value of the property were similar to those applicable in case of assessee's annual rateable value in terms of Section 23 of the Act. This question is, therefore, not entertained.”

In this view of matter and consistent with view taken by the Co-ordinate Bench in assessee’s own case for the AY 2012-13, which was in turn followed the decision of the Hon’ble juri ictional High Court in assessee’s own case, we are of the view that there is no error in the finding of the Ld. CIT(A) in determining the ALV of house property on the basis of municipal rateable value. Hence, we are inclined to upheld the finding of the Ld. CIT(A) and dismissed the appeal filed by the Revenue. It is quite evident that the consistent view of the Tribunal in all the earlier years is that municipal rateable value was to be taken as Annual Rental Value. Nothing is on record to demonstrate that the any of the aforesaid adjudication has subsequently been reversed in any manner. Therefore, the distinction of facts as made by Ld. CIT(A) was not to be accepted.

Resultantly, the appeal stands partly allowed in terms of our above order. Order pronounced in open court on 18th January, 2021. (Amarjit Singh) (Manoj Kumar Aggarwal) "ाियक सद" / Judicial Member लेखा सद" / Accountant Member मुंबई Mumbai; िदनांक Dated : 18/01/2021 Sr.PS, Jaisy Varghese