BALAJI SINGH TEEKA,MUMBAI vs. ITO (IT) 2(1), MUMBAI

The present appeal filed by the assessee is directed against the order passed by the CIT(A)-55, Mumbai, dated 30.03.2015, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short „Act‟), 28.03.2013 for A.Y 2010-11. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal:

Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) during the course of the appellate proceedings observed that the A.O had adopted the annual value of the properties, on the basis of the values as were determined by his predecessor while framing the assessment in the case of the assessee for A.Y 2006-07. The CIT(A) noticed that the determination of the annual value of the properties owned by the assessee was also assailed by the assessee before his predecessor in AY‟s 2006-07 to 2009-10. It was noticed by the CIT(A) that in all of the aforementioned years, the appeals were partly allowed. The CIT(A) being of the view that as the facts involved in the case of the assessee for the year under consideration remained the same, thus finding no reason to deviate from the decision taken by his predecessor, directed the A.O to recompute the house property income of the assessee for the year under consideration, viz. A.Y 2010-11 also in terms of the adjudication by the CIT(A) in the assessee‟s own case for P a g e | Mr. Balaji Singh Teeka Vs. Income Tax Officer (IT)-2(1) A.Y‟s 2006-07 to 2009-10. The CIT(A) further directed the A.O to make necessary inquiries and investigations as were suggested by the CIT(A) while disposing off the aforementioned appeals of the assessee, for determining the house property income in terms of such directions and also as per the various provisions of Income Tax Act. On the basis of his aforesaid deliberations the CIT(A) partly allowed the appeal of the assessee.

The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short „A.R‟) at the very outset of the hearing of the appeal submitted that the issue as regards determining the annual value of the properties under consideration was squarely covered by the consolidate order of the Tribunal in the assessee‟s own case for A.Y 2003-04 to 2009-10, viz. Mr. Balaji Singh Teeka Vs. ITO, Mumbai (ITA No. 5477 to 5483/Mum/2013; dated 31.07.2015). It was submitted by the ld. A.R that the Tribunal after deliberating at length on the issue under consideration, was persuaded to subscribe to the claim of the assessee that the actual rent charged by him and offered for tax in the return of income was substantially higher than the Municipal Rateable Value (MRV) of the properties under consideration. It was submitted by the ld. A.R that the Tribunal while disposing off the aforesaid appeals had taken support of an order of a coordinate bench of the Tribunal, viz. Karia Can Company Ltd. dated 30.01.2015, wherein it was observed that unless the A.O brings on record any cogent material to suggest deflation of rental income by the assessee, the MRV can be taken as a guide for the purpose of computing ALV for determining the income under the head “Income from house property”. It was observed by the Tribunal that the revenue had failed to place on record any cogent evidence and material which would suggest that the rental income offered by the assessee was deflated on account of any extraneous consideration. The ld. A.R further averred that the Tribunal after deliberating on the facts involved in the aforesaid appeals, had observed that there was no material brought on record by the revenue to establish any deflation of rent, and even the MRV was less than the rental income of Rs.20 P a g e | Mr. Balaji Singh Teeka Vs. Income Tax Officer (IT)-2(1) per sq ft per month which was offered by the assessee. The ld. A.R submitted that the Tribunal finding no reason for enhancing the rental income declared by the assessee, as well as taking cognizance of the comparable cases, had held the income declared by the assessee to be reasonable. The ld. A.R submitted that in the backdrop of the aforesaid facts, the Tribunal while disposing off the aforesaid appeals of the assessee, had concluded that in the absence of any material which would suggest that the rental income declared by the assessee in his return of income was not as per the market rate, which would justify any further addition, had allowed the appeal of the assessee. Per contra, the ld. Departmental Representative (for short „D.R‟) relied on the orders of the lower authorities.

We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We may herein observe, that the only issue involved in the appeal before us pertains to the sustainability of the annual lettable value of the property adopted by the A.O while framing the assessment. We find that as observed by us hereinabove, the facts involved in the present case before us, remains the same as were there in the case of the assessee for AY 2003-04 to AY. 2009-10. So much so, a perusal of the order passed by the A.O under Sec. 143(3) reveals that he had dislodged the annual lettable value shown by the assessee, by adopting the annual value as was determined by his predecessor while framing the assessment in the case of the assessee for A.Y 2006-07, which thereafter was followed in A.Y‟s 2007-08 to 2009-10. We have perused the consolidate order passed by the Tribunal in the case of the assessee for AY‟s 2003-04 to 2009-10, viz. Mr. Balaji Singh Teeka Vs. ITO, Mumbai, to 5483/Mum/2013; dated 31.07.2015. We find that the Tribunal while disposing off the aforementioned appeals of the assessee by way of a consolidate order, had accepted the annual lettable value shown by the assessee in his return of income and had set aside the enhancement of the same so done by the A.O, by observing as under: “6. We have carefully considered the rival submission. In the present case the primary submission of the assessee is that the rental income offered by him in the return of income is quite justified. One of P a g e | Mr. Balaji Singh Teeka Vs. Income Tax Officer (IT)-2(1) the points raised by the assessee was that the Municipal Ratable Value (MRV) of the properties are much lower than the actual rent charged by the assessee or the rental income declared in the return of income. In this context, the appellant has furnished copies of MRV in the Paper Book at, pages 75 to 85. A perusal of the said MRV certificates shows that they correspond to the period ranging from the assessment year 200607 to assessment 2009-10. It is also emerging from the said document that the ratable value for the different, units is ranging from Rs.4 to Rs.6 per sq. ft. per month. It is undeniable that the assessee has rental income which is quite higher than the MRV. It is on this basis the assessee has canvassed that the rental income offered by him is justified. It is a settled proposition that the actual rent received by the assessee constitutes a reliable evidence to ascertain the property's capacity to earn rent in the open market. The declaration of rent declared by the assessee is normally to be accepted by the A.O unless contrary evidence is brought on record to suggest any deflation of rental income for extraneous consideration. In the present case, the factual position clearly establishes that the rental declared by the assessee for the various year under consideration as substantially higher than MRV. At the same time it, is also quite evident that the comparable instance relied upon by the assessee before CIT(A) also suggests that the rental income declared by the assessee is in close proximity. 6.1 In somewhat similar situation, the Mumbai Bench of the Tribunal in the case of Karia Can Company Ltd., in etc., order dated 30/01/2015 observed that unless the A.O brings out a cogent evidence to suggest the deflation of rental income by the assessee the MRV can be taken as a guide for the purposes of computing ALV for determining the income under the income from house property. In the present case we do not find any cogent evidence and material which has been brought out by the Revenue which would suggest that the rental incomes as offered by the assessee are deflated on account of any extraneous consideration. In fact in the present ease, the assessee has pointed that except for A.Y 2003-04 it has offered the rental income at Rs.20 per sq. ft. per month for the years wherein it had charged actual rent of Rs. 1 per sq. ft. per month for AN 2006-07 onwards in respect of Sai Commercial Building and from assessment year 2008-09 onwards, in respect of the Sai Commercial Annexe assessee has started charging rent which is more than Rs.20 per sq. ft. per month. Factually speaking, there is no material brought on record by the Revenue to establish any deflation of rent and even MRV is much lesser than Rs.20 per sq. f t. per month. In this view of the matter, we find no reasons for enhancing the rental income declared by the assessee and even based on the comparable case cited by the assessee, the income declared by the assessee appears to be reasonable. 6.2 In view of the aforesaid discussion, in our view the CIT(A) erred in estimating the rental income @ Rs.40 per sq. ft. per month as against the rental income declared, which was reasonable by considering the corresponding MRV as well as the comparable evidence brought out by the assessee. Notably in so far as the rental declared by the assessee is concerned, there is no material to say that such rental income declared in the return of income was not the market rate so as to justify any further addition. Thus, in so far as AY 2006-07 is concerned the appeal is allowed as above.”