EVEREST KANTO INVESTMENT & FINANCE LTD,MUMBAI vs. DCIT 8(1), MUMBAI

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ITA 717/MUM/2011Status: DisposedITAT Mumbai04 December 2017AY 2007-084 pages
AI SummaryRemanded

What did the Tribunal hold?

The High Court directed that the annual value must be determined independently for each assessment year, considering rent received and municipal rateable value. This exercise was not done, and factual materials were lacking.

What were the facts?

The assessee challenged the CIT(A)'s direction to determine fair rental value based on AY 2004-05 instead of the declared rental value. An earlier ITAT decision in favor of the assessee was set aside by the High Court.

What were the issues?

Whether the annual value of a property should be determined independently for each assessment year based on actual rent and municipal rateable value, and if factual materials are required for this determination.

Which sections of the Income-tax Act were involved?

Section 23

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA, AM & SHRI RAM LAL NEGI, JM

For Appellant: Shri Pankaj Toprani, Shri M. C. Omi Ninshan
For Respondent: Shri M. C. Omi Ninshan

सुनवाई क� तार�ख / : 04.12.2017 Date of Hearing घोषणा क� तार�ख / : 04.12.2017 Date of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the Order by the Commissioner of Income Tax (Appeals)-39, Mumbai (‘CIT(A)’ for short) dated 26.10.2010 and pertains to the assessment year (A.Y.) 2007-08.

2.

The grounds of appeal read as under:

(A.Y. 2007-08) M/s. Everest Kanto Investment & Finance Ltd. vs. Asst. CIT 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case in directing the Assessing Officer to arrive at the fair rental value based on the value for assessment year 2004-05 as against rental value declared by the assessee.

3.

In this case, this matter was earlier decided by the Tribunal vide order dated 13.09.2013 in favour of the assessee by the following order: 3. At the outset, it has been pointed out that an identical issue raised in the grounds of appeal has been decided by the ITAT in favour of the assessee in the assessee’s own case in to 1722/Mum/2009 for the A.Ys. 2001-02 to 2006-07 and in ITA No. 1747/Mum/2009 for the A.Y. 2005-06. The relevant findngs of the Tribunal are extracted hereunder:

“In our opinion, the issue involved in the present case thus is squarely covered by the decision of co-ordinate bench of this Tribunal in the case of Reclamation Realty India P. Ltd. (supra) which in turn has relied on and followed by the judgments of Hon’ble Apex Court and Hon'ble jurisdictional High Court on a similar issue and respectfully following the said judicial pronouncements, we reverse the impugned order of the ld. CIT(A) on this issue and direct the A.O. to adopt the rent actually received by the assessee during A.Y. 2003-04 to 2006-07 as annual value of the property being more than the Municipal Retable Value. The additions made by the A.O. and confirmed by the Ld. CIT(A) on this issue are accordingly deleted allowing ground no. 2 of the assessee’s appeals for A.Y.2003-04 to 2006-07.

In the absence of any contradictory facts brought on record by the Revenue, we, following the aforementioned order of the ITAT, decide the ground accordingly in favour of the assessee in the same line as aforementioned.

4.

Against the above order, the Revenue has preferred an appeal before the Hon'ble jurisdictional High Court. The Hon’ble High Court vide order dated 17.11.2016 had held as under: The impugned order of the Tribunal dated 13th September, 2016 allowed 4. the Respondent-Assessee’s appeal by relying upon its decision rendered in respect of the same Respondent-Assessee for the assessment years 2001-02 to (A.Y. 2007-08) M/s. Everest Kanto Investment & Finance Ltd. vs. Asst. CIT 2006-07 to determine the fair rent. The impugned order has directed the Assessing Officer to adopt rent actually received by the Respondent-Assessee during the assessment year 2003-04 as the annual value of the property as it is much more than the Municipal Rateable Value. The exercise of determining the annual value has to be done independently for each assessment year taking into account the rent which is received and the Municipal Rateable Value in the subject assessment year. This examination has not been done by the Tribunal in the impugned order.

5. Therefore, the question as framed for our consideration is answered in the negative i.e. in favour of the Appellant-Revenue and against the Respondent-Assessee. consequently, the impugned order dated 13th September, 2016 of the Tribunal is hereby set aside and the Appeal is restored to the file of the Tribunal for fresh disposal in accordance with law.

5.

Pursuant to the above direction of the Hon’ble High Court, this appeal has been heard by us. Upon careful consideration, we note that the Hon’ble High Court has expounded that the exercise of determining the annual value has to be done independently for each year taking into account the rent which is received and the municipal rateable value in the subject assessment year. In the present case, this exercise has not been done. Furthermore, for making this exercise relevant, factual materials are also not on record. Hence, we remit this issue to the file of the Assessing Officer. The Assessing Officer shall examine the issue afresh taking into account the Hon'ble jurisdictional High Court direction as above with reference to the factual details. Needleless to add, the assessee should be granted adequate opportunity of being heard. Both the counsel fairly agreed to the proposition.

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