ASST CIT 16(3),MUMBAI vs. RAVIJIBHAI L KAKADIA, MUMBAI

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ITA 334/MUM/2014Status: DisposedITAT Mumbai28 October 2015AY 2010-114 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 upheld the CIT(A)'s decision, stating that the Assessing Officer could have at best adopted the Municipal Ratable Value. The income from house property is the higher of rent received, Municipal Ratable Value, or standard rent.

What were the facts?

The Revenue appealed against the CIT(A)'s order which allowed the assessee to claim Municipal Ratable Value for deemed let out properties. The Assessing Officer had computed notional rent based on the total investment in these properties.

What were the issues?

Whether the assessee is eligible for Municipal Ratable Value for deemed let out properties, and if the Assessing Officer correctly computed notional rent based on investment.

Which sections of the Income-tax Act were involved?

Section 23(1),Section 24(a)

AI-generated summary — verify with the full judgment below

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

Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL & SHRI RAJESH KUMAR.

Hearing: 07.10.2015Pronounced: 28.10.2015

अपीलाथ� क� ओर से /By Appellant : Shri Vivek Anand Ojha, D.R. ��यथ� क� ओर से/By Respondent : None सुनवाई क� तार�ख/Date of Hearing : 07.10.2015 घोषणा क� तार�ख/Date of Pronouncement : 28.10.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M:

This appeal has been filed by Revenue against the order of Commissioner of Income-Tax (Appeals)-27, Mumbai, dated 31.10.2013 for A.Y. 2010-11 on following grounds:

A.Y. 10-11 [ACIT vs. Shri Ravjibhai L. Kakadia] Page 2

“1. Whether on the facts and circumstances of case and in law, the Ld. CIT(A) was correct in holding the assessee was eligible for Municipal Ratable Value even though the assessee has NOT offered the notional income on deemed let out property of the total investment made to acquire such residential and commercial properties? 2. Whether on the facts and circumstances of case and in law, the Ld. CIT(A) was correct in holding the assessee was eligible for Municipal Ratable Value even though the assessee has NEVER offered the notional income on deemed let out property and Assessing Officer computed notional rent @ 8.50% of the total investment made to acquire such residential and commercial properties in order to bring the same under the head income from House Property and allowed mandatory deduction u/s 24(a) to meet the both the ends of justice?”

2.

Assessee is dealing in shares and derivatives and has derived income from house property and income from other sources. The return of income for the year under appeal was filed on 07.10.2010 declaring total income at Rs.78,19,640/-. Assessment u/s.143(3) was completed by Assessing Officer on determining total income at Rs.80,76,900/-. Assessing Officer observed that assessee was having 11 flats and shops at different locations and total investments made was shown at Rs.2,02,94,506/-. Assessee had offered Rs.12,50,000/- as house property income. One flat at Delad Olpad, Surat was in ready possession and total investment value in this property was Rs.13,24,929/- but no income was offered on the same. The notional income for deemed let out properties was computed @ 8.50% of total investment of this property. Thus, A.Y. 10-11 [ACIT vs. Shri Ravjibhai L. Kakadia] Page 3 notional income determined was Rs.78,333/- [Rs.13,24,929 X 8.50% - 30% u/s.24(a)] and added the total income under the head ‘Income From House Properties’.

3.

Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to assessee. Same has been opposed on behalf of Revenue, inter alia stating that CIT(A) was not correct in holding that assessee was eligible for Municipal Ratable Value, even though the assessee has not offered the notional income on deemed let out property of total investment made to acquire such residential and commercial properties. Accordingly, order of CIT(A) be set aside and that of Assessing Officer be restored. None appeared on behalf of assessee, so, matter is being decided ex parte on the basis of arguments of Learned Departmental Representative and material on record.

4.

After going through arguments of Learned Departmental Representative and material available on record, we find that stand of assessee has been that Assessing Officer could have at best adopted the Municipal Ratable Value as deemed value of property in question. It has been held in various cases that what is to be brought to tax as income from house property u/s.23(1) is higher of rent actually received or Municipal Ratable Value or the standard rent as per Rent Control Act. In view of above, CIT(A) held that value, which could be adopted A.Y. 10-11 [ACIT vs. Shri Ravjibhai L. Kakadia] Page 4 by Assessing Officer as Municipal Ratable Value even while bringing to tax deemed annual letting value in respect of vacant properties. Accordingly, Assessing Officer was rightly directed to verify the Municipal Ratable Value in respect of above properties and modify his order. This view is fortified by the decision of Hon’ble Supreme Court in case of Sheila Kaushish vs. CIT [1981] 131 ITR 435 (SC). In view of this, order of CIT(A) needs no interference from our side. We uphold the same.

5.

As a result, appeal filed by Revenue is dismissed.

Pronounced in the open Court on this the 28th day of October, 2015.

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