DCIT 9(3)(2), MUMBAI vs. SARITA GARWARE, MUMBAI

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ITA 4410/MUM/2015Status: DisposedITAT Mumbai26 April 2017AY 2012-134 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the CIT(A)'s decision that the four flats constitute a single residential house, aligning with a previous ITAT order for an earlier assessment year. Therefore, the assessee's treatment of the property as self-occupied was upheld.

What were the facts?

The assessee treated four flats purchased in Prabhadevi as a single self-occupied residential unit. The Assessing Officer differed, treating three of the flats as deemed let-out properties and making an addition to income from house property.

What were the issues?

Whether four separate flats can be considered a single residential unit for the purpose of determining annual value of house property. The applicability of Section 54 was also initially raised but clarified to be related to Section 23(1)(a).

Which sections of the Income-tax Act were involved?

Section 23(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI

Before: SHRI G.S.PANNU & SHRI C.N.PRASAD

For Respondent: Shri Vijay Mehta
Hearing: 05/04/2017Pronounced: 26/04/2017

ORDER PER G.S.PANNU,A.M:

The captioned appeal filed by the Revenue pertaining to assessment year 2012-13 is directed against an order passed by CIT(A)-16, Mumbai dated 29/04/2015, which in turn, arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 25/09/2014.

2.

The Grounds of appeal raised by the Revenue read as under:-

i) "Whether on the facts, and in the circumstances of the case, the Ld. CIT(A) erred in allowing deduction u/s 54 when the assesse has actually purchased 4 different flats bearing distinctive numbers 901, 902, 1001 and 1002, and no evidence brought on record by assesse that there is a (AY. 2012-13) common passage, common kitchen to show that all 4 flats make one residential unit." ii) "The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary". iii) The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the DCIT 9(3)(2) be restored.

3.

At the outset, it was a common submission made by both the parties that the Ground of appeal has not been appropriately worded, inasmuch as, it refers to the issue of deduction under section 54 of the Act, whereas in actuality, the issue relates to the determination of Annual Value under section 23(1)(a) of the Act, with respect to the property stated in the Grounds of appeal.

4. In this background, we may now refer to the facts in relation to the controversy before us. The assessee individual was found to be owner of the following properties:-

(i) 1 Flat being No. L-1, Eden Hall, Dr. Annie Besant Road, Worli, Mumbai 400 018. (ii) 4 Flats being No.901, 902, 101 & 1002, Raheja Empress, Veer Savarkar Road, Prabhadevi, Mumbai 400 028.

In so far as, the property at item No.(i) is concerned, the annual value of the same was declared by the assessee as a ‘deemed let-out property’ at Rs.2,42,866/-, which was accepted by the Assessing Officer and there is no dispute on this count. With respect to the property at item No.(ii) above, the assessee treated the four flats as a single residential house and declared it as her self occupied property. On this aspect, the Assessing Officer has differed with the assessee and, this is the subject-matter of controversy before us.

(AY. 2012-13) The Assessing Officer noted the stand of the assessing authority in the preceding assessment year 2011-12, wherein assessee had received sale consideration on sale of a residential property, which was used for purchasing the aforesaid four flats at Prabhadevi, Mumbai and deduction under section 54 of the Act was claimed, treating the four flats as a single residential house. On the same analogy, in the instant assessment year, the Assessing Officer treated only one of the four flats at Prabhadevi as a self occupied property and the annual value of the balance three flats was determined considering them at deemed let-out premises. In this view of the matter, an addition of Rs.1,17,73,203/- was made under the head ‘income from house property’ on account of the annual letting value of the three flats in Prabhadevi.

5.

The CIT(A) has since deleted the addition and held that the four flats in Prabhadevi constitute a single residential house and upheld the plea of the assessee of treating it as self-occupied property. Notably, the decision of the CIT(A) was in consonance with the order of the CIT(A) for assessment year 2011-12, wherein the four flats purchased in Prabhadevi were construed as ‘a residential house’ and it was held that investment thereof was eligible for the deduction under section 54 of the Act . In this view of the matter, Revenue is in appeal before us.

6.

Before us, it was a common point between the parties that the order of the CIT(A) for assessment year 2011-12, which has been relied upon by the first appellate authority, has since been affirmed by the Tribunal vide dated 18/01/2017, therefore, the impugned stand of the CIT(A) deserves to be affirmed. It was also a common point between the parties that the order of the Tribunal dated 18/01/2017(supra) continues to (AY. 2012-13) hold the field and the same has not been altered by any higher authority. At the time of hearing, our attention was drawn to the detailed discussion made by the Tribunal in its order dated 18/01/2017(supra). We find that the Tribunal upheld the stand of the assessee that the four flats in Prabhadevi were to be regarded as single residential unit, considering the facts of the case. In view of the aforesaid precedent, we find no error on the part of the CIT(A) for having considered the four flats at Prabhadevi as a single residential house, for the purposes of assessment under the head ‘income from house property’. Thus, the order of the CIT(A) is hereby affirmed and Revenue fails in its appeal.

7.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 26/04/2017

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