SURESH SHIVLAL BHASIN,MUMBAI vs. ASST CIT 25(1), MUMBAI

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ITA 6584/MUM/2017Status: DisposedITAT Mumbai09 April 2019AY 2013-145 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that in previous years, the AO had adopted the municipal ratable value to determine fair market value for notional rent. Following the Bombay High Court's decision in CIT vs. Tip Top Typography, the Tribunal directed the AO to ascertain the municipal ratable value for the current year and assess the notional rent accordingly.

What were the facts?

The Assessing Officer (AO) estimated the gross annual value of the assessee's second residential property at ₹3,70,920, significantly higher than the ₹266 offered by the assessee. The CIT(A) confirmed the AO's action. The assessee argued that in a previous year, the AO had used a much lower notional value for the same property.

What were the issues?

Whether the AO correctly estimated the gross annual value of a self-occupied property by using market rent per square foot without considering municipal ratable value or prior year's assessment methods.

Which sections of the Income-tax Act were involved?

Section 23(1)(a)

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

For Appellant: Shri Mukesh B Advani, AR

AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:

This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-37, Mumbai [in short CIT(A)], Appeal No. CIT(A)-37/IT-701/ACIT 25(1)/2015-16 vide order dated ITAs No. 6584/Mum/2017 21.08.2017. The Assessment was framed by the Asst. Commissioner of income Tax, Circle-25(1) (in short ‘ACIT/ AO’) for the A.Y. 2013-14 vide order dated 15.01.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2.

The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in estimating the gross annual value of second residential house property at ₹ 3,70,920/- as against offered by assessee at ₹ 266/- only. For this assessee has raised the following ground: - “The learned Commissioner of Income Tax (Appeals)-37 has erred in confirming the addition made by the learned Assessing Officer of Rs.2,58,404/- u/s 23(1)(a) of the Income Tax Act 1961, while estimating the Gross Annual Value of the second residential house property at fair market value of Rs. 3,70,920/- which is also self-occupied by the Assessee.

In the preceding previous year, relevant to the Assessment Year 2009-10 the learned Assessing Officer while passing the Assessment order u/s 143(3) estimated the Gross Annual Value of the same property at fair market value of Rs. 12,000/- & addition was made of Rs. 7,426/- after allowing deduction of Municipal Taxes Paid of Rs. 1,392/- & standard deduction u/s 24(a) of the Income Tax Act, 1961. Hence, there is no reason as to why the Gross Annual ITAs No. 6584/Mum/2017 Value of the same property should now be estimated at Rs. 3,70,920/-.

In light of the above said facts & circumstances of the case, the addition of Rs. 2,58,404/- confirmed by the learned Commissioner of Income Tax (Appeals)-37 is out to be reduced to Rs. 7,426/- as estimated by the learned Assessing Officer in Assessment Year 2009-10 while passing the Assessment order under section 143(3) of the Income Tax Act, 1961.”

3.

During the course of assessment proceedings, the AO noted that the assessee owned three house properties during the FY 2012-13 relevant to AY 2013-14. The AO noted that the first flat is at Green Acres, where the assessee is staying with his family and there is no dispute about it. The second house property is the Flat at Lake Superior, which is under construction and there is no dispute about it. Third house property, which is flat No. 25, Shree Mahant Krupa CHS Ltd, Manish Nagar, Andheri (West), Mumbai against which the assessee has not shown any deemed let out income. The AO required the assessee to explain as to why the notional income from one house property i.e. Flat No. 25, Andheri (West), Mumbai should not be computed in term of section 23(1)(a) of the Act. The assessee furnish reply vide letter dated 14.11.2014 and offered notional income of ₹ 266 only. The AO noted from the field enquiry done through inspector and property dealer and noted that fair market value of rent in the area is between ₹ 50 to 60 per sq. feet. Accordingly, he computed the fair market value at ₹ 3,70,920/- and after allowing deduction made addition at ₹ 2,58,670/- as under: - ITAs No. 6584/Mum/2017

(3) Flat No. 25, Shree Mahant Krupa ₹ 3,70,920/- CHS Ltd., Manish Nagar, Andheri (West), Mumbai-400 053 ₹ 30,910 x12= 3,70,920 ₹ 30,910/- per month (562 sq.ft x 55 per sq. ft) Less: Municipal Taxes paid: 1,392/- 3,69,528/- Less: Deductions under section 24(a) 1,10,858/- 2,58,670 Total house property income 2,58,670 Aggrieved, assessee preferred the appeal before CIT(A).

4.

The CIT(A) simply confirmed the action of the Assessing Officer. Aggrieved, assessee came in second appeal before Tribunal.

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