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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR
The aforesaid appeal of the Department is directed against the order dated 14th April 2014, passed by the learned Commissioner (Appeals)–40, Mumbai, for the assessment year 2011–12. The effective grounds raised by the Department are as under:–
“1. Whether on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) was justified in directing the Assessing Officer to adopt the annual value of the property as disclosed by the assessee against the annual value of ` 72,27,266 adopted by the Assessing Officer?
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2. Whether on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) was right in deleting the disallowances of expenses in the nature of professional tax, audit fees and ROC expenses amounting to ` 8,818 made by the Assessing Officer?
Insofar as ground no.1 is concerned, brief facts are, the assessee a company filed its return of income for the impugned assessment year on 29th September 2011, declaring nil income. In the course of assessment proceedings, the Assessing Officer noticed that the assessee has rented out two flat at Samudra Gaurav Apartment, Worli Seaface, Mumbai, and shown receipt of rent of ` 33,182. After verifying the details called for, the Assessing Officer noticed, originally the flats were rented out to a director of the company Shri B.R. Ruia for a monthly rent of ` 2,500 per flat. The two flats comprised of covered area of 5,142 sq.ft. with four covered garages for exclusive use of garden space. After the death of the director Shri B.R. Ruia. The rental rights of the flats were vested with Smt. Asha T. Ruia and Ms. Vidhi D. Ruia, by virtue of will of Late Shri B.R. Ruia. He noticed, during the impugned assessment year, these two flats were let out to the director, Smt. Asha T. Ruia, Ms. Vidhi D. Ruiya, at the original monthly rent of ` 2,500 for each flat. The Assessing Officer observed, looking at the size of flat and its location along with other facilities like car parking, garden, etc., the rent of ` 2,500 per month is for each flat is very low. He, therefore, called upon the assessee to explain why the 3 M/s. Ramgopal Ganpatrai & Sons P. Ltd.
rental income shown should not be enhanced. In response to query raised by the Assessing Officer, it was submitted by the assessee that in its own case, the Tribunal, for assessment year 2005–06 and 2006– 07, have decided the issue by holding that the property being a tenanted property as per the orders of the Court, the rent received being higher than the standard / municipal rent has to be accepted. The Assessing Officer, after considering the statements of the assessee, observed that against the order passed by the Tribunal for assessment year 2005–06, the Department has preferred appeal before the Hon'ble Jurisdictional High Court. He also observed, in assessment year 2006–07, the Tribunal has upheld the addition made by the Assessing Officer. Therefore, on the basis of rental income worked out by the Assessing Officer in the assessment year 2005–06 at ` 49,36,320 and ` 54,29,952, for the assessment year 2006–07 and 2007–08, the Assessing Officer, by making 10% increase to the annual letting value (ALV) of assessment year 2005–06, determined the ALV at ` 65,70,242 for the impugned assessment year and computed the income from house property accordingly. Being aggrieved of the addition made by the Assessing Officer, assessee preferred appeal before the learned Commissioner (Appeals).
The first appellate authority noticing that the Tribunal in the preceding assessment year up to assessment year 2010–11, has 4 M/s. Ramgopal Ganpatrai & Sons P. Ltd.
deleted the addition made by the Assessing Officer on similar ground followed the same and directed the Assessing Officer to adopt the annual value shown by the assessee. Being aggrieved of the decision of the learned Commissioner (Appeals), the Department is in appeal before us.
We have considered the submissions of the parties and perused the material available on record. At the outset, the learned counsels for the both the parties agreed before us that the issue in dispute is squarely covered in favour of the assessee by the orders of the Tribunal in assessee’s own case from assessment year 2004–05 to 2010–11. Copies of the orders passed by the Tribunal were also placed before the Bench. On a perusal of the material on record, it is evident that this is a recurring issue between the assessee and the Department right from the assessment year 2004–05. In the latest order for assessment year 2010–11 in and 3274/Mum./ 2013, dated 4th August 2014, the Tribunal, while dismissing the appeal of the Department, held as under:–
“4. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).He referred to the order of the ITAT Mumbai, delivered in assessee's own case for the AY 2007-08 and 2008-09 and decided the issue in favour of the assessee. Departmental Representative (DR)left the issue to the discretion of the bench. Authorised Representative(AR)stated that similar issue
5 M/s. Ramgopal Ganpatrai & Sons P. Ltd. was decided in favour of the assessee by the Tribunal in the AY.2005-06(ITA/696/M/2009-dated26.03.2010),AY.2006-07(ITA/01/ Mum/2010 dated 31.08. 2010) and AY.2007-08(ITA/5515/Mum/ 2010 dated 21.09.2011).We have heard the rival submission and perused the material before us. We find that Tribunal, in its order dated 26.03. 2010 (supra),in paragraph no. 6 to 9 has held as under: “In this case it is also on record that the property is a tenanted property and the tenant is a protected tenant as per the orders of the Court. Since the rent received by the assessee is more than the standard rent/municipal rateable value the A.O. has no option than to accept the rent received as per the existing judicial principle on this issue. In view of this we are not in agreement with the orders of the A.O. and CIT(A) and direct him to accept the rent offered by the assessee. In view of this ground No.1 is allowed. Ground No.2 pertains to the allowance of establishment and statutory expenses not allowed by the A.O. while redetermining the annual lettering value. It is seen from the record that the assessee has been calming these expenses as part of computation of house property income. As seen from the record A.O. in A.Y. 2004-05 has allowed the expenditure and also in earlier years. In view of this the A.O. is directed to allow the expenses as claimed, Ground is considered allowed. Similar facts exist in and here also the two properties owned by the assessee company are subjected to protected tenancy under the Maharashtra Rent Control Act, 1999 being devolved on Mr. T.B. Ruia and Mrs. Asha Ruia and Mrs. Vidhi D. Ruia after the death of M. T.B. Ruia. Here also the property was let out from 01.10.1987 and the Department has been accepting the same in all the earlier years. For the reasons discussed in ITA No. 697/Mum/2009 we direct the A.O. to accept the rent received under the provisions of section 23(1) and redetermine the house property income accordingly. A.O. also is directed to allow the establishment and statutory expenses which are being allowed in earlier years. Accordingly the grounds are considered allowed”. Respectfully, following the same, we decide the effective ground of appeal against the AO.
Facts being materially identical, respectfully following the order of the Tribunal referred to above, we uphold the order of the learned
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Commissioner (Appeals) by dismissing ground no.1, raised by the Department.
In ground no.2, the issue in dispute is in relation to allowance of assessee’s claim of expenditure amounting to ` 8,818.
Brief facts are, during the assessment proceedings, the Assessing Officer noticed that the assessee has claimed establishment expenditure aggregating to ` 8,818, comprising of professional audit fees, etc., against the use of property income. The Assessing Officer observed, after the amendment in section 24 of the Act, w.e.f. 1st April 2002, these expenditures are not allowable. Accordingly, he disallowed assessee’s claim. Being aggrieved, assessee challenged the disallowance before the learned Commissioner (Appeals).
The learned Commissioner (Appeals), noticing that similar deduction claimed in assessment year 2005–06, was allowed by the Tribunal, directed the Assessing Officer to allow assessee’s claim of deduction.
We have considered the submissions of the parties and perused the material available on record. Learned counsels appearing for both the parties agreed that this issue is squarely covered in favour of the assessee by the orders of the Tribunal right from the assessment year
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2004–05 onwards. On a perusal of the latest order of the Tribunal for the assessment year 2010–11, referred to herein above, we find that the Tribunal, following its own order for preceding assessment year allowed assessee’s claim of establishment expenditure. There being no difference in facts, respectfully following the consistent view of the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.2, raised by the Department.
In the result, Department’s appeal is dismissed. Order pronounced in the open Court on 06.05.2016