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2019 (8) TMI 614 - AT - Income TaxIncome from house property - ALV computed by the A.O @ 8% of the cost of the flat - assessee treating it as self occupied and exempt - property is covered under the Maharashtra Rent Control Act, 1999 - HELD THAT - We find that the factual matrix is squarely covered in assessee s favor by catena of judicial pronouncements wherein it has been held that municipal rateable value is a recognized basis for determination of ALV. The said proposition has duly been approved in CIT V/s Tip Top Typography 2014 (8) TMI 356 - BOMBAY HIGH COURT as well as in Smt. Smitaben N.Ambani V/s CWT 2009 (1) TMI 430 - BOMBAY HIGH COURT which has subsequently been followed by Hon ble Court in number of decisions. Therefore, no infirmity could be found in the impugned order, in this regard. The other decisions of this Tribunal also support the said proposition. Additionally, no fault could be found in the reasoning of Ld. first appellate authority in paragraph 5.1.1 that the property under co-ownership was encumbered property and could not be expected to be let out at fair market value. Also, no fallacy could be found in the logic that due to the indivisibility of living space of co-owned property, it could be said that 60% of the property was notionally occupied by the assessee and hence, was to be treated as self-occupied property of the assessee. - Decided against revenue.
Issues Involved:
1. Delay in filing of appeal for AY 2014-15. 2. Deletion of addition of ?19,24,415 being ALV computed by the AO for Flat No. 31B, Maker Tower. 3. Deletion of addition of ?74,65,561 being ALV computed by the AO for Flat No. 171B, Maker Tower. 4. Adoption of 8% of the cost of the flat for computing ALV by the AO. 5. Whether the CIT(A)'s order should be set aside and the AO's order restored. Detailed Analysis: 1. Delay in Filing of Appeal for AY 2014-15: The registry noted a 14-day delay in filing the appeal for AY 2014-15. However, the date of communication of the order was correctly noted as 06/08/2018, making the appeal timely. Therefore, the tribunal proceeded to adjudicate the appeal on merits. 2. Deletion of Addition of ?19,24,415 for Flat No. 31B, Maker Tower: The AO computed the notional rental value of Flat No. 31B, Maker Tower, at ?19,24,415, treating it as non-exempt since the assessee had already claimed another flat as self-occupied. The CIT(A) deleted this addition, relying on the precedent that if a property is not let out, its ALV cannot exceed the standard rent determined or determinable under the Rent Control Act. 3. Deletion of Addition of ?74,65,561 for Flat No. 171B, Maker Tower: The AO computed the notional rental value of Flat No. 171B, Maker Tower, at ?74,65,561, based on 8% of the property cost. The CIT(A) deleted this addition, following the decision in Pramila H. Sanghvi V/s ITO, where it was held that the ALV should be based on the Municipal Rateable Value if the property is covered under the Rent Control Act. 4. Adoption of 8% of the Cost of the Flat for Computing ALV by the AO: The AO adopted 8% of the cost of the flat for computing the ALV, which was contested by the assessee. The CIT(A) and Tribunal found that the Municipal Rateable Value should be considered as the fair rental value, supported by various judicial pronouncements and Hon'ble Bombay High Court decisions. The Tribunal upheld that the property under co-ownership was encumbered and could not be expected to be let out at fair market value, thus treating it as self-occupied. 5. Whether the CIT(A)'s Order Should be Set Aside and the AO's Order Restored: The Tribunal found no infirmity in the CIT(A)'s order, which was based on consistent judicial precedents and logical reasoning. The revenue's appeal was dismissed, and the CIT(A)'s order was upheld. Conclusion: Both appeals for AY 2013-14 and AY 2014-15 were dismissed, affirming the CIT(A)'s deletion of additions based on notional rental values computed by the AO. The Tribunal emphasized the use of Municipal Rateable Value for determining ALV and upheld the treatment of co-owned property as self-occupied.
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