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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
PER C.N. PRASAD, JM: These two appeals by the Revenue are preferred against the very same order of the Ld. CIT(A)-41, Mumbai dated 09.1.2012 pertaining to assessment years 2008-09 & 2009-10. As common issue is involved in both these appeals, they were heard together and disposed of by this common order for the sake of convenience.
In both these appeals, the Revenue has challenged the order of the Ld. CIT(A) in determining the ALV of the property as fixed by the Municipal authorities.
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The Ld. Counsel for the assessee at the very outset submits that the issue in both these appeals has been decided in favour of the assessee for assessment years 2006-07 and 2007-08 by the Co- ordinate Bench of this Tribunal in assessee’s own case in ITA Nos. 2719 & 2718/M/2013 dated 26.11.2015. 4. However, the Ld. Departmental Representative, referring to para-8 of the Tribunal’s order submits that the findings of the Tribunal that “in the assessment order the AO has not referred to any material that annual rental value shown by the assessee is not correct” are not applicable to the assessment year under appeal. According to the Ld. DR, since the Assessing Officer pointed out certain materials in the assessment order i.e. the summons issued u/s. 131 of the I.T. Act to the society and the Inspector’s enquiry report dt. 23.12.2010, which goes to show that the ALV is much more than the value fixed by Municipal authorities, the Tribunal order for the earlier years cannot be relied upon.
The Ld. Counsel for the assessee submits that the Inspector’s report, which the DR is referring to has been considered by this Tribunal in the case of assessee’s wife Smt. Laxmi Jain, in ITA No. 2118/M/2012 dated 26.11.2014 for assessment year 2009-10, where the properties are situated in the same complex and held that the ALV as determined by the Municipal Authorities should be considered. He submits that the Assessing Officer is relying on the very same Inspector’s report dated 23.12.2010 in the assessee’s case also and determined the ALV.
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We have perused the orders furnished before us in the case of the assessee and his wife and find that there is no material difference in the orders passed in earlier years and this year. No new material has come on record to suggest that the ALV of the vacant flats should not be fixed at some other value other than the Municipal value. There is no change in fact therefore, the contention of the Ld. DR that during this year there are materials to show that the ALV is more than the Municipal valuation may not be correct. We find from the Co-ordinate Bench order dated 26.11.2015 in ITA Nos. 2719/M/2013 and 2718/M/13 in assesee’s own case that this issue has been decided in assessee’s favour holding as under:
“Apart from the aforesaid contention, he submitted that on merits also, the issue of ALV of vacant flats u/s 23(1)(a) in the same very complex stands covered in favour of the assessee by series of decisions of the Tribunal in the Group/family concerns of the assessee, wherein the Hon’ble Tribunal upheld that the ALV on the vacant flat can be determined at a municipal ratable value. Not only that, now the determination of ALV as per the Municipal ratable value has been principally upheld by the Hon’ble juri ictional High Court in the case of Tip Top Typography, reported in [2014] 368 ITR 330. On the other hand, Ld. DR on both the issues i.e. legal as well as on merits, strongly relied upon the order of the CIT(A).
We have carefully considered the rival submissions and also perused the relevant finding in the order and also the various Tribunal orders as referred and relied upon by the Ld. Counsel. The assessee had shown Flat Nos. B-4/64, D-4/65, D-4/66 & B- 4/67 at Green Field Complex, Heaven View, 4th Floor, Jogeshwari- Satypal Jain ITA No.2718/Mum/2013 4 Vikroli Link Road, Andheri (East), Mumbai - 400 093 as ‘vacant’ and has offered the annual rental value of the flats as per the Municipal ratable value. The AO rejected the assessee’s contention without assigning any reason and sought for information from the society of Green Field Complex. In response,
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the society in its reply, furnished a copy of leave and license agreement of a flat in the same complex showing a monthly rent of Rs. 17,000/- for the financial year 2010-11. The AO after reducing/indexing the average annual rent fees of 10% and applying the same for AY 2006-07, he worked out monthly rent of Rs. 10,550/- for each flat and determined the deemed ALV at Rs. 5,06,400/- in terms of section 23(1)(a). This action of the AO has been confirmed by the Ld. CIT(A).
From the perusal of the assessment order, we find that nowhere AO has referred to any material that annual rental value shown by the assessee is not correct. ALV as per Municipal ratable value is an accepted method of valuation at least in cases of vacant premises. As pointed out by ld. counsel Tribunal in series of decisions in Group cases the Tribunal on similar facts and for similar complex has held that, where the flat has been lying vacant then the ALV u/s 23(1)(a) can be valued at Municipal ratable value. The lists of such cases are as under:-
Sr. Name of Relation AY ITA No Date of Particulars Whether Remark No. Assessee with ITAT Order of Property Vacant Assessee Mumbai or not 1 Harsh Jain Nephew 2009-10 2710 of 17.7.15 Central Vacant Hon’ble ITAT held that 2013 Garden amount to be taxed Complex u/s23(1)(a) of the Act would be municipal ratable value 2 Anand Jain Brother 2009-10 2709/13 17.4.15 Central Vacant Hon’ble ITAT held that Garden amount to be taxed Complex u/s23(1)(a) of the Act would be municipal ratable value 3 Laxmi Jain Wife 2009-10 2118/12 26.11.1 Central Vacant Hon’ble ITAT held that 4 Garden amount to be taxed Complex u/s23(1)(a) of the Act would be municipal ratable value 4 Rametidevi Mother 2005-06 3268/11 25.4.12 Vacant Hon’ble ITAT held that Jain 2006-07 3269/11 amount to be taxed u/s23(1)(a) of the Act would be municipal ratable value
Not only in the aforesaid cases, but now Hon’ble juri ictional High Court in the case of Tip Top Typography, reported in [2014] 368 ITR 330 has upheld that Municipal ratable value can be adopted for determining the ALV u/s 23(1)(a). The Hon’ble High Court held that for disturbing the ALV or rent shown by the assessee, the AO must have cogent and satisfactory material
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in his possession indicating that the parties have concealed the real position. He must not make a guess work or act on conjectures and surmises. There must be definite and positive material to indicate that the parties have suppressed the prevailing rate and then only the enquiries can be made, for ascertaining the market rate. The Hon’ble High Court has also held that, if the standard rent is fixed by the Rent Controller or Municipal Ratable value is available then same is to be accepted as an ALV. Here, it is not a case that assessee has rented out the property and the rent received or receivable is less but the flat has been lying vacant, thus, it cannot be held that municipal ratable value cannot be the basis for determination of deemed ALV. Accordingly, respectfully following the decisions of the Tribunal and also the principle laid down by the Hon’ble juri ictional High Court, we decide this issue in favour of the assessee and accordingly, ground no. 2 & 3 are treated as allowed.”
Similarly in the asesee’s wife’s case this Tribunal by order dated 26.11.2014 in ITA No. 2118/M/2012 for assessment year 2009-10 held as under:
“Briefly stated relevant facts of the case are that the assessee is an individual and filed the return showing the house property income on account of couple of properties ie., (i) Gala No.311 and (ii) Central Garden Complex. In the return of income, for the purpose of computation of ALV of the properties, assessee relied on the rateable values of these properties. AO completed the assessment u/s 143(3) of the and rejected the computation of ALV of the said properties and held that a percentage of investment in the properties should reflect correct ALV. Accordingly, he quantified the ALVs and the cumulative ALV of the properties was taken at Rs. 1,65,51,632/- (Galas ALV is Rs. 3,94,508/- and Rs.1,61,57,124/- is the ALV of other properties). Otherwise, assessee’s computation in this regard worked out at Rs.94,181/- ie., Galas rateable value is Rs.5,880/- and other properties is Rs.88,301/-. AO relied on the Inspector’s report of comparable cases in this regard. Aggrieved with the same, assessee is in appeal before the first appellate authority.
During the proceedings before the first appellate authority, CIT (A) rejected the AO’s method of computation of ALV of the 6 ITA. 2119 & 2120M/2012
said two properties and upheld the assessee’s rateable value. For this, CIT(A) relied on various decisions including the judgment of the juri ictional High Court in the case of Smitaben N Ambani vs. CWT, 323 ITR 104 wherein it was held that rateable value of the properties determined by the Municipal Authorities shall be the yard stick. Aggrieved with the decision of the CIT (A), Revenue is in appeal before the Tribunal by raising the above mentioned grounds.
During the proceedings before us, Ld DR relied on various decisions to state that the ALV as determined by the Municipal Authorities is only one of the factors and same can be ignored if it does not reflect the true ALV. Ld DR relied on the order of the AO.
On the other hand, Ld Counsel for the asssessee heavily relied on the order of the CIT(A) and reiterated the submissions made before the lower authorities.
We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On hearing both the 3 parties and on perusal of the orders of the Revenue Authorities, we find that the CIT (A) has rightly relied on the binding judgment of the Hon’ble juri ictional High Court in the case of Smitaben N Ambani (supra). There are many other decisions from the juri ictional High Court in the similar lines, the copies of which are placed in the paper book of the asssessee. The Revenue has not demonstrated that the facts of the assessee’s case are covered by the decisions cited in ground no.1 of the present appeal. Considering the binding nature of the juri ictional High Court judgment in the case of Smitaben N Ambani (supra), we are of the opinion that the finding of the CIT (A) is an Order and it does not call for any interference on this issue. In any case, the percentage of investment in the impugned properties is no basis for arriving at the ALV of the properties. Accordingly, the grounds raised by the Revenue are dismissed.
Respectfully following the said decisions of the Co-ordinate Bench, we decide this issue in favour of the assessee and reject the ground of the Revenue.
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In the result, both the appeals filed by the Revenue are dismissed. Order pronounced in the open court at the time of hearing on 20th January, 2016. (RAJESH KUMAR) (C.N. PRASAD ) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 20th January, 2016 व."न.स./ Rj , Sr. PS
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- 4. आयकर आयु"त / CIT
"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त //// उप/सहायक पंजीकार (Dy./Asstt.