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TMI Blog2019 (8) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - I.T.A. No.1601/Mum/2017 And I.T.A. No.5565/Mum/2018 - - - Dated:- 9-8-2019 - Shri Mahavir Singh, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Anuj Kisnadwala - Ld.AR For the Revenue : Ms. Bharti Singh- Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) : - 1. Aforesaid appeals by revenue for Assessment Years [in short referred to as AY ] 2013-14 and 2014-15 contest the order of Ld. first appellate authority on certain common grounds of appeal and therefore, disposed of by way of this consolidated order for the sake of convenience and brevity. 2. The registry has noted a delay of 14 days in filing of appeal for AY 2014-15. However, perusal of Column 9 of Form 36 filed by the revenue would show that the date of communication of order appealed against has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record would reveal that the assessee being resident individual was assessed for year under consideration u/s 143(3) of the Income Tax Act,1961 on 29/02/2016 wherein the income of the assessee was determined at ₹ 539.29 Lakhs after certain additions as against returned income of ₹ 445.39 Lakhs filed by the assessee on 27/07/2013. As evident from grounds of appeal, the subject matter of present appeal is addition on account of notional rental value of (i) Flat No.31B, Maker Tower, Cuffe Parade, Mumbai (ii) Flat No.171B, Maker Tower, Cuffe Parade, Mumbai. 4.2 During assessment proceedings, it transpired that the assessee has one self-occupied property viz. Flat at 181B, Jolly Maker -1, Cuffe Parade, Mumbai, the annual value of which was taken as Nil as per the provisions of the act. The Annual Rental value of another Flat No. 171B, Maker Tower A B, C.S. No. 641, Cuffe Parade, Colaba, Mumbai was offered as ₹ 60,000/-. This property was acquired by the assessee on 26/04/2012 for a consideration of ₹ 14.54 Crores. However, disregarding the value offered by assessee, Ld. AO worked out notional rental value @8% of cost of the property for 11 month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arade, Mumbai 400005 (henceforth referred to as Property 1) and 31B, Maker Tower, Cuffe Parade, Mumbai 400005 (henceforth referred to as Property 2). He lives in Property 1 with family. He owns Property 2 along with his son, Shri Bharat Oberoi in a 60% - 40% ownership ratio. For the Property 1, the appellant declared it as self occupied and claimed exemption. For Property 2, he offered ₹ 8,010/ as annual lettable value (ALV) on basis of letter given by Maker Tower A B Co-operative Housing Society Ltd., Mumbai 400005. The AO did not accept this ALV. Based on his Inspector's report, the AO estimated the annual rental value at ₹ 56,94,5447- and made the addition of ₹ 34,16,7267-towards income from self-occupied property, being 60% of the estimated rent. 5.1.1 It is noted that the Property 2 which is co-owned by the appellant's son is already under self occupation by the son. The property is therefore encumbered and 60% of Property 2 cannot be expected to be rented out to at fair market price. This is a unique situation requiring judicious application of the provisions of the Act. In a sense, the remaining 60% of the Property 2 can be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of ALV of second house property at Ahmadabad which was self occupied by the assessee. Income from one SOP is exempt under the provisions of section 23 but the income from the second SOP is taxable and for this purpose ALV has to be determined under section 23(1)(a) as if the property was let out in view of the provisions of section 23(4)(b). Therefore, the revenue authorities are justified in taxing the second house property on the basis of fair rental value. However, the assessee has made a claim that the second SOP was covered under Rent Control Act. In case rent of the property is covered under Rent Control Act, ALV can not exceed the standard rent determined/determinate under the said Act in view of the judgment of Hon'ble Supreme Court in the case of Mrs. Sheila Kaushik (131ITR 435). This aspect has not been examined by the authorities below. We, therefore, set aside the order of CIT(A) and restore the matter back to the file of AO for passing a fresh order after necessary examination in the light of the observations made above and after providing an opportunity of hearing to the assessee. 5. In the result, appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Mumbai Tribunal in Anand Kumar Jain V/s ACIT [ITA Nos.3887,3665/Mum/2017 dated 07/12/2018] followed in ITA No.6836/Mum/2017 dated 27/02/2019 (iv) Mumbai Tribunal in Owais M. Husain V/s ITO [194 TTJ 102] (v) Mumbai Tribunal in Pankaj Wadhwa V/s ITO [IAT Nos. 5005,5007/Mum/2017 dated 30/11/2018] Our attention has also been drawn to the fact that revenue s appeal, in earlier years, have already been dismissed by the Tribunal, albeit on account of low tax effect. 7. Upon consideration of decisions cited by Ld. AR, 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 by Hon ble Bombay High Court in CIT V/s Tip Top Typography [368 ITR 330] as well as in Smt. Smitaben N.Ambani V/s CWT [323 ITR 104] 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 prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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