ARAVA SUBBA RAO,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

The appeal filed by the assessee is directed against order of

the Commissioner of Income-tax (Appeals)-4, Chennai in ITA

No.1144/13-14, dt 27.07.2015 for the assessment year 2011-2012

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passed u/s.143(3) and 250 of the Income Tax Act, 1961 (herein

after referred to as ‘the Act’)

Commissioner of Income Tax (Appeals) erred in confirming the

findings of the Assessing Officer on self occupied house property

assessed u/s.23(1) of the Act treated as deemed let out on estimated

annual value.

and employee of M/s. Blue Dart Aviation Ltd, and filed Return of

income admitting total income of �64,64,739/- on 30.07.2011 and

was processed u/s.143(1)(a) of the Act on 29.08.2012 Under scrutiny

norms the case was selected and notice u/s.143(2) of the Act was

issued and further notice u/s.142(1) and summons u/s.131 of the Act

dated 26.12.2013 was served on the assessee. In compliance, the ld.

Authorised Representative of the assessee appeared from time to time

and produced documentary evidences and furnished details. The

Assessing Officer found assessee owns two residential properties a flat

in East Andheri, Mumbai and flat at Velacherry, Chennai. The

Chennai property is self occupied and claimed ‘Nil’ Annual value,

wereas for the Mumbai flat the assessee has not offered annual value

ITA No.2064/Mds/2015 :- 3 -:

and claimed under self occupation due to employment during the

relevant assessment year. The ld. Assessing Officer considering the

provisions of Sec. 24 of the Act, the assessee is a owner of more than

one property under his occupation and value of other house has to be

determined u/s.23(1) of the Act and estimated annual value of flat at

Mumbai �3,00,000/- per annum and allowed deduction u/s.24(a) of

the Act; and assessed total income including other disallowances

�67,47,676/-. Aggrieved by the order of Assessing Officer, the

assessee filed an appeal before the Commissioner of Income Tax

(Appeals).

Representative of the assessee explained the property situated in

Mumbai cannot be treated as deemed let out and estimating rent is

bad in law. The assessee Resides at Velacherry flat in Chennai with

family members and visits frequently to office Headquarters i.e. M/s.

Blue Dart Aviation Ltd, Mumbai and occupy the flat for official

residential purpose. The ld. Counsel further argued that the adoption

of ‘’Nil’’ annual value u/s.23(2) of the Act is allowed for own residence

and relied on the various judicial decisions were the stay of family

members in a house is considered as stay of the assessee himself and

assessee due to office works occupy the Bombay flat as official

ITA No.2064/Mds/2015 :- 4 -:

residence. The ld. Commissioner of Income Tax (Appeals) considered

the submissions and findings of the Assessing Officer and has dealt

the provisions of Sec.22 to 27 of the Income Tax Act and find the

legislative intent ‘’provides the computation of annual value at ‘Nil’ for

one self occupied house property and were assessee owns more than

one residential house the assessee is allowed concessional tax

treatment u/s.23(2) of the Act and other self occupied house

property assessed u/s.23(1) for the purpose of normal annual letting

value and concurred with findings of the Assessing Officer and

dismissed the appeal. Aggrieved by the order of Commissioner of

Income Tax (Appeals), the assessee assailed an appeal before

Tribunal.

submissions of assessment and appellate proceedings and supported

the case with judicial decisions and Tribunal decisions. The assessee is

having more than one residential house and used the flat at Mumbai

as official residence purpose. The courts have considered the stay of

family members is to be treated as assessee himself. The flat is

situated at East Andheri (outskirts of Andheri) Mumbai were the

assessee stays frequently because of his headquarters work and also

submitted written submissions to consider under self occupation. But

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the ld. Assessing Officer treated the flat as deemed let out and

estimated annual value of �3,00,000/- per annum, which is very much

on higher side as Actual let out value will not yield rent more than

�5,000/- per month and supported the arguments with Apex Court

and High Court decisions and CBDT circular and pleaded to teat

Annual value of both as ‘Nil’ and delete the addition.

orders of the lower authorities and opposed to the grounds of the

assessee.

record. The contentions of the ld. Authorised Representative that the

assessee due to employment has to shuttle to Mumbai which is the

headquarters of M/s. Blue Dart Aviation Ltd wereas Velacherry flat at

Chennai is occupied by family members and claimed as self occupied

and the flat at Eat Andheri Mumbai occupied only during his official

visit. The question arises the assessee has not filed number of days

stay details and circumstances of travel to Mumbai in previous year.

The provisions of law specifies in case a person having more than

one self occupied property, one house is treated as self occupied and

annual value considered ‘Nil’ and other self occupied house property is

ITA No.2064/Mds/2015 :- 6 -:

assessed u/s.23(1) of the Act on deeming annual let out value. The ld.

Authorised Representative contested the issue relying on the judicial

decisions but the preamble of legislative intent is to allow annual value

‘Nil’ for self occupied property and the provisions of Sec. 23(2) of the

Act provides as under:-

‘’(2) Where the property consists of a house or part of a house which— (a) is in the occupation of the owner for the purposes of his own residence; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil.

(3) The provisions of sub-section (2) shall not apply if— (a) the house or part of the house is actually let during the whole or any part of the previous year; or (b) any other benefit therefrom is derived by the owner. (4) Where the property referred to in sub-section (2) consists of more than one house— (a) the provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf; (b) the annual value of the house or houses, other than the house in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses had been let.]’’

On perusal of the assessment order, the Assessing Officer has

estimated the Annual let out value at �3,00,000/- per annum without

any evidence or any comparables of the same area and the flat is

situated at East Andheri in outskirts of Andheri and as per the

assessee submissions the rental income shall not exceed �5,000/- per

ITA No.2064/Mds/2015 :- 7 -:

month and using the property for his official residence at Mumbai. The Assessing Officer has estimated the annual value of �3,00,000/- without considering the actual rent receivable, fair market value of the property and municipal valuation as per the provisions in respect of residential flat at East Andheri and completed the assessment. Considering the apparent facts and provisions of law, we set aside the order of Commissioner of Income Tax (Appeals) and remit the entire issue to the file of the Assessing Officer for calculation of annual value of the flat as per law and assessee should be provided with adequate opportunity of hearing before passing the order.

Order pronounced on Friday, the 1st day of April, 2016 at Chennai.

Sd/- Sd/- (ए. मोहन अलंकामणी) (जी. पवन कुमार) (A. MOHAN ALANKAMONY) (G. PAVAN KUMAR) �या�यक सद�य /JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated: 1st April, 2016. KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF