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TMI Blog2018 (1) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the order of the ld. Commissioner of Income Tax (Appeals) and restore the order of the Assessing Officer. - Decided in favour of revenue - I.T.A. No. 3350/Mum/2017 - - - Dated:- 1-1-2018 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER For The Appellant : Ms. N. Hemalatha For The Respondent : Shri Nitesh Joshi And Shri Saroj V. Maniar ORDER Per Shamim Yahya, A. M.: This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) dated 27.01.2017 and pertains to the assessment year 2012-13. 2. The grounds of appeal read as under: 1. Whether on the facts and circumstances of the case and in law, the Ld.CIT (A) has erred in rejecting the AO's determination of ALV in respect of the assessee's property at Cuffe parade, Mumbai at ₹ 51,00,000/-, invoking the provisions of section 23(1)(a) as against the ALV declared by the assessee u/s 23 (1) (b) of the I.T. Act 1961. 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT (A) has erred in relying on the decision in the case of ITO vs. Surge Enterprises Ltd. ITA No.5238/M/06, A.Y. 2003-04 while deleting the addition to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28/06/09 to 27/4/11 22 months 223-A Maker Tower A CHS Cuffe Parade 2100 sq.ft. 1,52,000 11/8/09 to 30/4/12 33 months 93-A Maker Tower A CHS Cuffe Parade 2100 sq.ft. 4,25,000 15/6/09 to 14/6/11 24 months 103 Maker Tower F CHS Cuffe Parade 550 sq.ft. 250 per sq.ft. = 1,37.500 1/10/11 to 30/9/14 36 months Oftice Earnest House, Nariman Point - 239 per sq.ft. = 5,01,900 8/9/11 onwards 3 years From the above chart, the assessing officer observed that assessee had opted to receive very low rent of ₹ 45,361/- per month. Therefore, a show cause was issued to the assessee to explain as to why the Gross Annual Value of the property let out during the year should not be adopted at ₹ 51 lakhs (4,25,000 x 12) being rent received in respect of propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood the provisions of section 23. Clauses (a), (b) and (c) of section 23(1) are deeming provisions specifying that for the purposes of charging tax on income from house property u/s. 22, the sums mentioned in the aforesaid subsections shall be deemed to be the annual value of any property. What amount has to be considered as deemed annual value under clause (a) of section 23(1) has been decided by several courts including jurisdictional courts. Consistently and uniformly various courts have held that municipal rateable value has to be considered as deemed annual value for the purpose of clause (a) of section 23(1). This is amply clear from a plethora of decisions including decision of Hon'ble Mumbai ITAT in ITO vs Surge Enterprises Ltd. ITA No.1593/MUM/2010 (A.Y. 2006- 07) wherein it was held: For the reasons given above, we held that the annual value (also referred to as municipal valuation/ rateable value) adopted by the municipal authorities in respect of the property at ₹ 27, 50, 835 should be the determining factor for applying the provisions of Sec. 23(1 )(a) of the Act Since the rent received by the Assessee was more than the sum for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT vs. Tip Top Typography (in ITA No.1213 of 2011 and others dated 08.06.2014) has expounded as under: As regards municipal valuation: (i) We are not in agreement with the department that the municipal rateable value cannot be accepted as a bonafide rental value of the property and it must be discarded straightway in all cases. There cannot be a blanket rejection of the same. If that is taken to be a safe guide, then, to discard it there must be cogent and reliable material; (ii) The market rate in the locality is an approved method for determining the fair rental value but it is only when the AO is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality. The municipal rateable value may not be binding on the AO but that is only in cases of afore referred nature. It is definitely a safe guide; (iii) In the event the security deposit collected and refundable interest free and the monthly compensation shows a total mismatch or does not reflect the prevailing rate or the attempt is to deflate or inflate the rent by such methods, then, as he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court has expounded that though there cannot be a blanket rejection of the municipal valuation but the Assessing Officer can deviate from the same if he has cogent and reliable material. In the present case, I find that the premises under consideration is in posh locality in Cuffe Parade, Mumbai. The Assessing Officer has made due enquiry and gathered cogent and reliable material regarding the applicable rent in such property in same building and same wing. The Assessing Officer has found that identical property is fetching monthly rent of ₹ 4,25,000/-. In such circumstances, the rateable value determined by the Assessing Officer is based upon cogent and reliable material. Hence, departure from the municipal valuation adopted by the assessee is duly justified and is in accordance with Hon'ble jurisdictional High Court guidelines as above. Accordingly, I set aside the order of the ld. Commissioner of Income Tax (Appeals) and restore the order of the Assessing Officer. Since, the decision is based on Hon'ble jurisdictional High Court s decision, the same prevail over the tribunal decision relied upon by the ld. Commissioner of Income Tax (Appeals). 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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