2021 (3) TMI 156 - AT - Income Tax

Income from house property - Determination of rental income - whether the flat Nos. 16 17B situated in 5th floor flat No. 18 situated in 6th Floor could be considered as a single unit or separate unit? - HELD THAT - There is no dispute that assessee is having three properties namely 1/3rd share in flat No. 18 half share in flat No. 16 and full share in flat No. 17B. It is not in dispute that flat Nos. 16 18 are situated at 5th and 6th floor respectively - It is not in dispute that these flats are duplex flats having a common staircase attached to both the floors inside the said premises and therefore adjusted adjacent to each other. This is also evidenced from a certificate dated 06/11/2018 issued by Kalpak Cooperative Housing Society Ltd. It is not in dispute that flat No. 17B is adjacent to flat No. 16 on 5th floor and the society has considered flat No. 16 17B as one single unit. This fact is evidenced by certificate dated 25/05/2016 issued by Kalpak Co-operative Housing Society. From the above it could be seen that all the three flats i.e. Flat No. 16 17B and 18 are to be considered as one single unit and treated as self-occupied. This Tribunal in assessee s own case 2019 (7) TMI 1753 - ITAT MUMBAI had accepted the fact that properties of the three flats are to be considered as one single unit and treated as self-occupied property but since there was some additional evidence filed in that case the same was restored to the file of the ld. AO for verification and decided in accordance with law. This Tribunal had also considered the fact that merely because certain income had been offered voluntarily by the assessee in the returns filed for subsequent years that would not bind assessee for the year under consideration as there is no estoppel against the statute and the said change in stand in the peculiar facts and circumstance of the instant case cannot be termed as colourable device . For the year under consideration we find that there is no additional evidence filed by the assessee requiring any verification of the lower authorities. Respectfully following the decision of this Tribunal in assessee s own case and also in the case of assessee s mother-in-law referred to supra we direct the ld. AO to delete the addition on account of notional rental income in the hands of the assessee. Accordingly the ground Nos. 1-4 raised by the assessee are allowed.

Summary

Issues:
1. Determination of rental income for specific flat units.
2. Whether the interconnected flat units should be considered as a single unit or separate units.

Analysis:

Issue 1: Determination of Rental Income
The appeal concerned the assessment of rental income for three flat units owned by the assessee for the assessment year 2013-14. The assessee argued that the three flats should be considered as a single residential unit due to their interconnected nature and old construction, making it difficult to provide an annual lettable value. However, the assessing officer (AO) made a notional addition of rental income based on the individual shares owned by the assessee in the flats. The Commissioner of Income Tax (Appeals) upheld the AO's decision, considering the flats as separate units despite the assessee's claim. The CIT(A) also directed the AO to allow deductions for maintenance charges and municipal taxes if proof of payment was provided by the assessee.

Issue 2: Single Unit or Separate Units
The Tribunal analyzed the physical layout and ownership structure of the three flats to determine whether they should be treated as a single unit or separate units. It was noted that the flats were interconnected, with certificates from the housing society confirming the interconnected nature of the flats. Previous tribunal decisions in related cases involving the assessee's mother-in-law and the assessee herself supported the view that the three flats should be considered as a single unit and treated as self-occupied property. The Tribunal emphasized that the voluntary offering of income in subsequent years did not bind the assessee for the year under consideration. Based on the evidence and precedents, the Tribunal directed the AO to delete the addition of notional rental income in the assessee's hands.

Conclusion
The Tribunal allowed the appeal, directing the deletion of the addition on account of notional rental income. The alternative argument raised by the assessee was not considered necessary due to the deletion of the entire addition. Other grounds raised by the assessee were deemed general and did not require specific adjudication. The decision was pronounced on 17/02/2021.

This detailed analysis of the judgment covers the issues involved, the arguments presented, the decisions made by the authorities, and the final ruling by the Tribunal, providing a comprehensive understanding of the legal aspects and implications of the case.