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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 17/12/2013 of the ld. First Appellate Authority, Mumbai. The first ground raised in this appeal pertains to holding that municipal taxes and maintenance charges, amounting to Rs.30,807/- is not deductible while determining the income from house property.
The crux of argument advanced by Shri R.K. Bothra, ld. counsel for the assessee, is that the impugned issue is covered by the decision of the Tribunal in the case of Mrs. Amarjit Kaur Kohli(mother of the assessee) vs ITO (ITA No.588/Mum/2010) order dated 28/05/2010. This factual matrix was consented to be correct by Shri Pramod Nikhalje, ld. DR. However, the ld. DR contended that assessee did not file the leave and license agreement and further the receipts of payment of municipal taxes was also not produced.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is an individual declared nil income in his return filed on 29/09/2009. The ld. Assessing Officer disallowed society charges amounting to Rs.30,807/- on the plea that no leave and license agreement was submitted by the assessee. The assessee vide letter dated 04/11/2011, explained that true letting value can be determined only when the society charges are reduced. The assessee also placed reliance upon the decision in Sharmila Tagore, 93 TTJ 484 (Bom.), Sunil Agrawal 8 ITR (Trib.) 304, Bombay Oil Industries (ITA No.55/Mum/2000), order dated 15/11/2000. However, the ld. Assessing Officer disallowed the claim of the assessee. The factum of payment of taxes/maintenance charges is not in dispute. It is also noted from para 2 of the assessment order itself that the assessee furnished the necessary details as called for and after due verification, the same were kept on record. In the same breath, the ld. Assessing Officer and also the ld. DR, asserts that necessary details were not furnished. This assertion is contradicted by the finding contained in para -2 of the assessment order itself. Keeping in view, the totality of facts and the circumstances, we are of the view that income from house property is required to be computed on the basis of actual/bona-fide rental value of letting out of the property. The municipal taxes and maintenance charges, which the assessee has undisputedly paid, has to be reduced from the rental income. Thereby, to ascertain the actual value such charges has to be excluded from the rent. Our view find support from the decision in the case of mother of the assessee, Mrs. Amarjit Kaur Kohli vs ITO, order dated 28/05/2010 and another decision in the case of Neelam Cable Manufacturing Company (63 ITD 1)(Del.) and another decision of the Mumbai Bench of the Tribunal in Bombay Oil Industries (ITA No.550/M/2000) order dated 15/11/2000, in Sherrif Construction (2009 TIOL 126). The ratio laid down in CIT vs Dalhousie Properties Ltd. 116 ITR 289 (Cal.) affirmed in (1984) 149 ITR 708 (SC) holding that liability in respect of municipal of taxes which an owner has to discharge is eligible for deduction. Identical ratio was laid down in Hyderabad Cooperative Central Trading Society Ltd. vs CIT 173 ITR 690 (AP), CIT vs L. K. Chatiyar 132 ITR 416 (Mad.), CIT vs Shankarnarayana Hotels Pvt. Ltd. 198 ITR 373 (Karn.), CIT vs Smt. Prabhabati D. Mehta 240 ITR 447, 445 (Bom.) and followed in CIT vs S. Chordia (245 ITR 290, 292)(Mad.). This ground of the assessee is, therefore, allowed.
Next ground, raised by the assessee pertains to directing the Assessing Officer to disallow interest amounting to Rs.5,22,592/-, paid for housing loan, without following the procedure laid down in section 251(2) of the Income Tax Act, 1961 (hereinafter the Act), denying opportunity to the assessee of being heard. The ld. counsel for the assessee explained that no notice u/s 251(2) was issued to the assessee by placing reliance upon the decision of the Tribunal in the case of Anusuya Suren Mirchandani vs ACIT (ITA No.3159/Mum/2012) order dated 31/11/2013, Dr. Yogiraj Sharma vs ACIT (2015) 118 DTR (Ind.)(Trib.) 20, order dated 17/11/2014. On the other hand, ld. DR, defended the conclusion arrived at in the impugned order.
3.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the ld. Commissioner of Income Tax (Appeals) made observation that in computation of total income, there is apparent mistake interest paid has been claimed at Rs.5,22,592/-, which is not allowable as per the provisions of section 24 of the Act, therefore, the ld. Assessing Officer was directed to disallow the same, while giving effect to the appellate order. Before this Tribunal, the contention of the assessee is that without issuance of notice u/s 251(2) of the Act, no such decision can be said to be justified. Broadly, we are in agreement with the contention of the ld. counsel for the assessee, because, as per section 251, which deals with power of the Ld. First Appellate Authority, sub-section (2) says that the Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund, unless the appellant has had a reasonable opportunity of showing cause against such enhancements or reduction. It is also noted that in the impugned order, even there is no whisper to the effect that any show-cause notice was issued to the assessee. Even, from Form No.35, no such ground was raised. The Ld. Commissioner of Income Tax (Appeals) has committed jurisdictional error while coming to a particular conclusion. The Ld. Commissioner of Income Tax (Appeals) neither called a remand report from the Assessing Officer nor asked the assessee to substantiate the issue, if, he was not satisfied with the assessment so framed. Even otherwise, no person should be condemned unheard unless and until opportunity is provided to him. The ratio laid down in Anusuya Suren Mirchandani vs ACIT (ITA No.3159/Mum/ 2012) order dated 13/11/2013 supports the case of the assessee. Identical ratio was laid down in Dr. Yogiraj Sharma vs ACIT (2015) 118 DTR (Ind.)(Trib.) 20, order dated 17/11/2014. Following the aforesaid decisions, this ground of the assessee is allowed.
Finally, the appeal of the assessee is allowed.
This Order was pronounced in the open court on 03/02/2016.