9911796707
TMI Blog2012 (6) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... value fixed by the municipal authorities. (iii) nowhere in the assessment order, it was stated that only the municipal rateable value should be adopted to determine the gross maintainable rent of the property. (iv) The BMC has fixed the rateable value at Rs. 7,81,4701/- and CIT(A) at the least ought to have adopted this value for valuation property as per WT. Act." 2. The assessee is a company. The dispute in this appeal is regarding the valuation of a property owned by the assessee in Mumbai called Agra Building. It is not in dispute that the Assessee is the owner of building known as Agra House situated at M.G. Road, Mumbai. The assessee had show value for the purpose of Wealth Tax at Rs.99,862/-. In the Income Tax proceedings for the assessment year 2002-03 the income from Agra Building was determined by the AO in the following manner. 3. The building was purchased by the assessee in May 1973. Even at the time of purchase of the property by the assesse there was a tenant called Thomson & Taylor Ltd. (T&T Ltd.), who has been granted a lease of premises admeasuring 5041 sq.ft from the year 1930. The lease was renewed from time to time. The last renewal was as on 15/1/ 1973 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding and BOB and the other tenants would lose their occupancy rights. 6. In the income tax return filed for A.Y 2002-03 the assessee offered a sum of Rs. 10,969/- as income from the property Agra House under the head "Income from House Property", which was computed as under:- Rs. Rs. * Rent from Juhu Property Morvi Resort & Farms Pvt. Ltd. 44,280.00 Maneck Mahal co.Op soc. Ltd. 60,000.00 1,04,280.00 * Rent from Agra Building- B.P.Ghardha & co. 1,99,703.00 Farida sikandar Shah 63,044.00 Munnus Fashion Pvt. Ltd. 1,22,539.00 SSBM Trust 4,72,054.00 Nadirshaw Printers 2,17,063.00 Midas Consultants 50,242.00 S.K.M.K. Shah & Others 84,993.00 Thomson & taylor Ltd. 39,27,311.00 51,36,949.00 Less: Municipal Taxes 51,76,260.00 :Lease Rent for Juhu Property 54,000.00 TOTAL 10,969.00 7. The AO during the course of assessment noted that the assessee has in its return of income shown a total income of Rs.54,000/- for the Juhu Property and municipal tax of Rs.51,76,260/- for the Agra Buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted as to why and in what capacity has BOB paid the property taxes, which are an obligation on the assessee. The AO thus allowed only the following amounts towards municipal taxes, which were actually paid by the assessee during the previous year. Rs. Paid on 06/07/01 , vide receipt No. 166465 44,750.00 Paid on 10/07/01, vide receipt No.166882 44,750.00 Paid on 29/04/01, vide receipt No. 14113 40,000.00 Paid on 09/01/02, vide receipt No. 14999 40,000.00 Total : 1,69,500.00 9. The AO therefore, computed the assessee's income from house property as under:- A. Juhu Property Income. Rs. Rs. Total rent received from the property during the year. 1,04,280.00 Less: Municipal Taxes Paid 27,000.00 77,280.00 Less: Deduction u/s. 24(1)(i)@ ¼ 19,320.00 57,960.00 B. Agra Building Property Income: Total rent received from the property during the year. 52,41,228.00 Less : Municipal Taxes paid 1,69,500.00 50,71,728.00 Less : Deduction u/s. 24(1)(i)@ ¼ 12,67,932.00 38,03,796.00 Total House Property Income 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Higher of A = Actual rent received/receivable viz., 2823.18 x12 or = Rs.33,878.16 B = Proportionate share of municipal ratable value relatable Legal tenants Rs.30,321 Higher being A as above Rs. 33,878.00 Less: 30% for repairs Rs. 10,163.00 Net Annual value Rs.23,715.00 12. The assessee further submitted that while computing the income from house property, the assessee has wrongly computed the annual value by including the BMC taxes pertaining to the Agra Building amounting to Rs.51,13,641/-. It claimed a deduction of a sum of Rs.51,76,260/- being the municipal taxes payable/paid and arrived at the net loss of Rs.39,311 from the Agra Building. The assessee claimed that only the rental income actually received by the assessee from its tenants was to be considered for computing the annual value for arriving at the quantum of income chargeable under the head 'income from house property'. The assessee submitted that the increased municipal taxes cannot be assessable as the annual value and consequently, as the assessee's income under section 23(1) of the Act. The assessee relied on the decision of the Calcutta High Court in the case of CIT vs. Gillanders Arbuthnot & Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the ratable Municipal valuation of the property. He thus held that Rs. 30,321/- which is the proportionate ratable value assignable to lawful tenants under the assessee should be taken as annual value of the property. The CIT(A) also held that the taxes paid by the tenants to the Municipal Corporation cannot be considered as rent received by the assessee and in this regard relied on the decision of the Hon'ble Calcutta High Court in the case of Gillanders Arbuthnot & Co. Ltd. (supra). The CIT(A) accordingly directed the AO to accept the annual value for the purpose of determining income from house property at a sum of Rs.23,715/-. 14. In the appeal by the assessee before CIT(A) in the Wealth Tax proceedings for A.Y 2002-03, which is assessment with which we are concerned in the present appeal, the assessee brought to the notice of the CIT(A) the decision of CIT(A) in Income Tax proceedings for A.Y 2002-03. The CIT(A) held as follows: "3.9 I have considered the order of the AO and the submissions of Counsel. In my opinion the AC was totally not justified in adopting the figure of R,136194W- as cross maintainable rent. The AC has adopted this value based on the Income Tax Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the rival submissions. On the facts available on record it is clear that the ratable value fixed by the BMC in respect of the property Agra Building is a sum of Rs. 7,81,470/-. Under section 3 of the Act the charge to Wealth Tax is in respect of the net wealth on the corresponding valuation date of every individual, HUF and Company. Section 2(m) defines "net wealth" to mean amount by which the aggregate value computed in accordance with the provisions of the Act of all the assets wherever located belonging to the assessee on the valuation date is excess of the aggregate value of all debts owed by the assessee on the valuation date which have been incurred in relation to the said asset. It is thus clear that the charge is on the ownership of the assets belonging to an assessee. Under Income Tax Act 1961 the charge to tax under the head income from house property is based on the actual rent received or the sum for which the property might reasonably be accepted to let from year to year whichever is lower. Rule-3, Schedule III to the Act lays down that value of any immovable property being building or land appurtenant thereto shall be the amount arrived at by multip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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