2016 (8) TMI 1302 - AT - Income Tax

Method of computation of ALV - Held that - CIT (A) has rightly relied on the binding judgment of the Hon ble jurisdictional High Court Smitaben N Ambani vs. CWT 2009 (1) TMI 430 - BOMBAY HIGH COURT wherein it was held that rateable value of the properties determined by the Municipal Authorities shall be the yard stick. 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.

Summary

Issues:
1. Appeal against addition to municipal rateable value
2. Challenge to the determination of annual letting value based on municipal rateable value
3. Dispute regarding the application of rateable value by municipal authorities for determining ALV
4. Interpretation of section 23(1)(a) of the Income Tax Act

Analysis:

Issue 1: Appeal against addition to municipal rateable value
The assessee and the Revenue were in cross-appeal against the order of the First Appellate Authority. The assessee contested the addition to the municipal rateable value, while the Revenue challenged the order of the Commissioner of Income Tax (Appeal) regarding the yardstick for determining the ALV. The Tribunal referred to similar cases and held that the municipal rateable value should be considered for ALV calculation, dismissing the Revenue's appeal.

Issue 2: Challenge to the determination of annual letting value
In the case of the Revenue's appeal, it contested the valuation based on the yardstick set by the High Court, arguing that other decisions should be considered. However, the Tribunal, based on previous rulings and the principle of judicial discipline, upheld the reliance on the High Court's decision and dismissed the Revenue's appeal.

Issue 3: Dispute over rateable value for ALV determination
The dispute centered around whether the rateable value determined by municipal authorities should be the sole yardstick for calculating ALV. The Tribunal, considering various precedents and the principle of consistency, affirmed the reliance on municipal rateable value for ALV determination, dismissing the Revenue's challenge.

Issue 4: Interpretation of section 23(1)(a) of the Income Tax Act
The Assessing Officer rejected the rateable value adopted by the assessee, citing section 23(1)(a) of the Act. However, the Tribunal, following previous decisions and the principle of consistency, directed the Assessing Officer to adhere to the Tribunal's orders, ultimately allowing the assessee's appeal and dismissing the Revenue's appeal.

In conclusion, the Tribunal's judgment emphasized the significance of judicial discipline, consistency in decision-making, and the binding nature of High Court rulings in determining the ALV based on municipal rateable value. The appeals were decided in favor of the assessee, highlighting the importance of adhering to established legal principles and precedents in tax matters.