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Income Tax Appellate Tribunal, “A”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-3, Pune dated 12.04.2018 against the order under section 143(3) of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’) dated 03.03.2016.
Brief facts of the case are that the assessee is an individual and file the return of income on 28-09-2013 declaring total income at Rs.2,27,86,637/-. The case was selected for scrutiny under CASS. During the course of assessment proceedings, the Assessing Officer observed that the assessee has shown 4 properties. Out of the 4 properties shown, the assessee showed the flat in Patil Heritage as self occupied and the remaining 3 house properties viz., Laxmikrupa
A.Y. 2013-14 Milind D. KolteVs.ACIT, Circle-2, Pune Apartment, Nanavati Happy Home and National Society, were shown as vacant. The assessee adopted the Municipal values for the purpose of determination of Annual let out value. The Assessing Officer adopted the Fair Market Value as the Municipal values were far less than the Fair Market Value. The Assessing Officer asked the assessee to submit the Fair Market Value in respect of the 3 house properties. In response, the assessee submitted the values of the three properties at Rs.60,000/-; Rs.60,000/- and Rs.7,20,000/- respectively and arrived at taxable income at (-) Rs.1155,764/-. Eventually, the AO determined the total income of the assessee at Rs.2,33,83,725/- as against the returned income of the assessee at Rs.2,27,86,640/-.
Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld.CIT(A). Assessee has filed written submission where it was contended before the ld.CIT(A) that the assessee had not let out the 3 properties in question. For arriving at the deemed let out value, the AO, instead of adopting the Municipal Value, taken into consideration the Fair Market Values. In support of his claim, the assessee relied on various decisions of the Tribunal and CBDT’s circulars as reproduced in Para 5.2 of the ld.CIT(A)’s order. However, the ld.CIT(A) jettisoned the contentions put forth by the assessee stating that the assessee himself gave the Fair Rental Values and therefore the AO did no mistake in applying the said
A.Y. 2013-14 Milind D. KolteVs.ACIT, Circle-2, Pune values. Eventually, the relevant grounds raised on this issue were dismissed by the ld.CIT(A).
Against the said order of ld.CIT(A), the assessee approached the Tribunal.
We have heard both the sides and gone through the orders of the authorities below. The ld.CIT(A) has erred in dismissing the appeal on the ground that the Assessee has himself provided the Fair Market Value of the properties to the AO, where as the facts which emanate from the Assessment order are that the Assessing Officer asked the assessee to submit the Fair market Value and in response to that the assessee submitted the same. It does not mean that the assessee had admitted the Fair Market Value. Therefore, ld.CIT(A) has erred in not deciding the question on merit. Assessee has always contended that Annual lettable Value of the impugned properties shall be on the basis of Municipal valuation.
The ITAT Mumbai Bench following Hon’ble Jurisdictional High Court has held in the case of Dimple Enterprises vs DCIT in ITA 5269 (MUM) OF 2019 as under : Quote “ Now the question is of the rental value. The assessing officer has not levied the deemed rent on municipal ratable value or any nearly similar instance. The reliability of municipal ratable value has been duly upheld in several decisions. The Assessing Officer cannot make any adhoc computation of deemed rent. Honourable Bombay High Court decision in the case of CIT v. Tip Top Typography [2014] 48 taxmann.com 191/[2015] 228 Taxman 244 (Mag.)/[2014] 368 ITR 330 duly supports this proposition.
A.Y. 2013-14 Milind D. KolteVs.ACIT, Circle-2, Pune Thus assessing officer has made an ad hoc estimate of 8.5% of investment on the plea that assessee has not been able to provide the municipal ratable value. This is not sustainable on the touchstone of Hon'ble Bombay High Court decision in the case of Tip Top Typography (supra). In our considered opinion nothing stops the assessing officer from obtaining the municipal ratable value from Departmental or government machinery. Hence we direct the assessing officer to compute the valuation of deemed rent in accordance with our observation as above and take into account the Hon'ble Jurisdictional High Court decision as above.” Unquote.
Respectfully following the above decision of ITAT Mumbai Bench the AO is directed to decide the Annual Lettable Value of the impugned properties based on municipal rateable value. Accordingly, the appeal is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 5th July, 2022.