TMI Blog2009 (3) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income without appreciating the fact that till assessment year 2001-02 the assessee was showing Work in Progress , therefore, lease rent income was treated as business income by the Department. ( b )On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that till assessment year 2001-02, the department has accepted the fact that till assessment year 2001-02, the lease rent income was treated as business income and, therefore, the question of determining Annual Letting Value as per provisions of section 23(1)( a ) of the Income-tax Act, 1961 does not arise. ( c )On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating the facts that the Hon ble ITAT directed to treat the rent income as income from house property as against the department s action of treating lease rent as business income for and up to ( sic ) assessment year 2001-02. Therefore, the Annual Letting Value for the year under dispute was worked out by taking into account notional benefits out of interest free deposit. ( d )On the facts and in the circumstances of the case and in law, the learned CIT(A) erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encing from 29-9-1997, vide agreement dated 29-9-1997. This period is further extended and it is shown as let out to the same party for assessment year 2004-05. The rent charged is of Rs. 70,000 per month i.e., Rs. 8,40,000 per annum since assessment year 1998-99 and there is no change in the said rent amount till the assessment year 2004-05. 3.1 From 1994 to assessment year 2001-02, the assessee declared rent received under the head income from house property whereas the department disputed the same with the view that income is assessable under the head Income from business and profession and assessed accordingly under the head Income from business and profession . The assessee challenged this view of the department in assessment year 1997-98. The ITAT in 1997-98 vide ITA No. 124/M/2001 order dated 15-10-2004 held that income is assessable under the head Income from house property . In assessment year 2002-03, the Assessing Officer first time taken a view while assessing income from house property that interest free deposit with the assessee is required to consider for computing annual value of the property. He, accordingly, calculated amount being 10 per cent of dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer also enquired municipal ratable value from Municipal Corporation of Greater Mumbai. The Assessor and Collector, H-West Ward, Municipal Corporation of Greater Mumbai vide his letter dated 29-12-2004 replied as under : "The Municipal Ratable value of the Trambak House for financial year 2001-02 was Rs. 3,13,125 NPA (NR)." On the basis of above material collected by the Assessing Officer, he was of the view that the municipal ratable value is not taken into consideration as there is no effect of the quantum of interest free deposit was given. The Assessing Officer found that the rates quoted by Mr. A.G. Kataria are reasonable and fair. The Assessing Officer, accordingly, calculated annual letting value under section 23(1)( a ) as under : "In view of the foregoing paras, the annual value is determined as under : ( i )Rent received or receivable of Rs. 8,40,000 plus 10 per cent of interest free deposit of Rs. 10 crores. This works out to Rs. 1,08,40,000. The rate of 10 per cent being notional benefit or usufructus is taken on the basis of Bank s highest rate of interest on fixed deposits for longest period. Reasonable rent in the same area as discussed in Para 9, Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessment year 2002-03 to other subsequent years i.e., assessment years 2003-04 to 2005-06. For assessment years 1998-99 and 1999-2000 the CIT(A) held that notices under section 148 dated 21-3-2005 and 17-3-2005 were issued beyond four years where there is no failure on the part of the assessee. He accordingly quashed both the assessment orders for assessment years 1998-99 and 1999-2000. In assessment years 2000-01 and 2001-02, the CIT(A) followed his order for assessment year 2002-03 and held that since matter on merit has been decided in favour of the assessee, therefore, there is no reason agitates on the ground of rejecting of the assessment under section 148. Appeals are allowed in favour of the assessee. 4. The revenue is in appeals against the orders of CIT(A). The assessee filed C.O. for assessment year 2000-01 challenging that reopening of assessment is beyond 4 years. 5. We have heard the learned representatives of the parties and perused the record as well as gone through the decisions cited and referred by the Assessing Officer and CIT(A) in their orders. First we take up the appeals related to the years of reopened assessments. The reopened assessments ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile assessing the said income under the head Income from house property , raised a dispute about the quantum which received by the assessee in the form of rent. Such approach of the department is not appreciable. Because once an issue is settled by the superior Court, it should be taken as final unless that decision is reversed. When in assessment year 1997-98 the department changed the assessable head from Income from house property to Income from business at that time itself the department must have objected that if the income is assessable under the head Income from house property , the income shown by the assessee under that head was not the correct income. It is not permissible to the department to examine same issue in peace mail by saying that at the time of first round of litigation they have examined only the relevant head of income under which the income is assessable, when the head under which income assessable has been finalized by the Court, now they want to examine amount of the income which is assessable under the head of income as directed by the Tribunal. Considering present circumstances of multiple costly litigation in the country, The Gujarat High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year." 5.5 In the case of CIT v. Goodlas Nerolac Paints Ltd. [1991] 188 ITR 1 (Bom.), the jurisdictional High Court held as under : "this, however, does not mean that subsequent Bench of the Tribunal should come to a conclusion totally contradictory to the conclusion reached by the earlier Bench of the Tribunal in the same case for an earlier year on a similar set of facts. Such a thing may not be in the larger public interest as it is likely to shake the confidence of the public in the system." 5.6 In the case of Sayaji Iron Engg. Co v. CIT [2002] 253 ITR 749 , the Gujarat High Court held as under : "in relation to the aforesaid approach of the CIT(A) and the Tribunal we cannot do better than reiterate what Madras High Court has stated in the case of CIT v. L.G. Ramamurthi [1977] 110 ITR 453 (Mad.): No Tribunal of fact has any right or jurisdiction to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt observed that without a just cause revenue cannot file the appeal in one case while deciding not to file appeal in another case. This position was also noted in CIT v. Shivsagar Estate [2002] 257 ITR 59 (SC). The decision in Kaumudini Narayan Dalal s case ( supra ) was explained in Hemalatha Gargya v. CIT [2003] 9 SCC 510 at para 14. It has been stated in the said case that the fact that different High Courts have taken different views and some of the High Courts are in favour of the revenue constituted "just cause" for the revenue to prefer an appeal. The Apex Court took the view that having not assailed the correctness of the order in one case, it would normally not be permissible to do so in another case on the logic that the revenue cannot pick and choose. There is also another aspect which is the certainty in law. 5.10 From above judicial pronouncements, we find that judicial proprietary demands that on identical set of facts of the case the decision of earlier year or the decision which has already been finalized by the superior court is to follow. On application of above principle to the facts of the cases under consideration, we noted that it is an admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz., the contractors method, the rent method, etc. However, that exercise is undertaken to decide the fair rent of the property. In that connection, the actual rent received also provides a piece of evidence to decide the fair rent of the property. However, under the Income-tax Act, the scheme is slightly different. Section 23(1)( b ) provides that where the actual rent is more than the fair rent, the actual rent would be the annual value of the property. In the circumstances, the value of the notional advantage, like notional interest in this case, will not form part of the actual rent received as contemplated by section 23(1)( b ) of the Act. At the cost of repetition it may be mentioned that under section 23(1)( a ), the Assessing Officer has to decide the fair rent of the property. While deciding the fair rent, various factors could be taken into account. In such cases various methods like the contractors method could be taken into account. If on comparison of the fair rent with the actual rent received, the Assessing Officer finds that the actual rent received is more than the fair rent determinable as above, then the actual rent shall constitute the annual value under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rent Act, 1947. The Assessing Officer concluded that the annual value of the property under section 23(1)( b ) was the sum total of the rent actually received by the assessee as lessor plus notional interest for the interest-free deposit made by the lessee. The Assessing Officer calculated the notional interest at the rate of 21.5 per cent per annum, i.e., at the rate at which the assessee borrowed funds. The jurisdictional High Court held that when actual rent received by assessee was more than the fair rent of the house property section 23(1)( b ) is invoked, notional interest on deposit could not be taken into account for determining annual value. Since the action of the Assessing Officer contrary to the judgment of jurisdictional High Court, therefore, same is liable to quash. 5.13 Apart from above discussion, even if it is presumed that the Assessing Officer has invoked section 23(1)( a ), then, according to the requirement of that section 23(1)( a ), onus is on the Assessing Officer to establish that the sum for which the property might reasonably be expected to let from year to year because the admitted facts of the case are that the assessee received actual rent. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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