TMI Blog2017 (11) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... en Complex, Chunabhatti, Mumbai. The said premises were not given on rent and accordingly the said premises were vacant throughout the previous year. While filing the Return of Income, the assessee had offered ₹ 3,86,376/- as Annual Rateable Value (ALV) as income under the head Income from House Property . The said ALV so offered was based on municipal rateable value determined by the Municipal Corporation in respect of the said premises. The Assessing Officer did not accept the ALV so offered by the assessee and he proceeded to re-compute the ALV based on the market value and accordingly he determined the ALV at ₹ 68,36,502/-. 4. Assessee approached to the CIT(A) and the CIT(A) after considering the various judicial pronouncements and also the decision of the Hon ble Bombay High court directed the AO to adopt ALV of the house property as per the rateable value fixed by the Municipal Authority at ₹ 4,63,651/-. However, the CIT(A) directed for enhancement of such Municipal Rateable Value by 5% which works out to ₹ 4,86,834/-. The precise observation of CIT(A) was as under:- 7.4.1 I have considered the submissions of the appellant and perused the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m various websites like magicbricks.com and 99acres.com, Finally the Ld. AO has submitted that the facts of the case of Tip Top Typography are completely different from appellant's case as in the said case the assessee had received security deposit and rental income was much lower and in the present case the assessee and not let out the flats and the same were lying vacant and it is on account of such vacancy that ALV has been determined. 7.4.3 From the above, it is evident that inspite of giving opportunities the Ld. AO has chosen not to carry out any further enquiries and has relied upon the enquiry conducted by the ITI earlier. The ITI in his said report dated 23.12.2010 has submitted as under. As directed I visited the premises af Central Garden Complex, City Survey No. 477B, Village Kurfa III, S.M. Road, Chunabhatti/ (East) Mumbai. ! enquired with the security person about the society's office and he told that there is no society formed here. These tower's flat is used as guest house. Then I enquired Mr. Sekhar P More (OM Sai Estate, Maitry Shopping Centre, V.N. Purov Marg, Sion Chunabhaffi East who is working as an estate consultants in the area ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the decision of the Hon'ble jurisdicticnal High Court in Smita N Ambani /supra) has upheld the municipal ratable value to be the annual lettable value of which the property is expected to be let. The said judgement was given in the context of Wealth Tax Act whereby it has been observed in that Rule J88 has the same expression i.e. the sum for which the property made be reasonably accepted to lei from year to year as is found in section 23(1) (a) of the Act is used. It is pertinent to note that in the recent judgement of Hon'ble jurisdictional High Court in CIT v/s Tip Top Typography, 368 ITR 330 which is rendered in context of section 23 of Income Tax Act, 196s, the Hon'ble jurisdictional High Court has held that market rate in the locality is an approved method for determining the fair rental value but it is only when the Assessing Officer is convinced that the case before him is suspicious, determination by the parties is doubtful then he can resort to enquiry about the prevailing rate in the locality. It is held by the Hon'ble jurisdictional High Court that municipal ratable value may not be binding on the assessing officer if the AO on the basis of mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of justice will be served if the matter is remanded to the file of the Assessing Officer for proper enquiry on this point. Accordingly the matter is restored to the file of AO with direction to conduct complete and proper verification/investigation to arrive at annual lettable value of the property owned by the assessee strictly in accordance with the mandate of sec 23(1)(a) of the Act, i.e the sum for which the property might reasonably be expected to let from year to year . Needless to say that the assessee be given fair and adequate opportunity to present their case. Accordingly, both the appeals are restored to the file of the Assessing Officer for de novo adjudication in the manner indicated above. 7.4.5 From the above it is observed that the Hon'ble Tribunal in AY 2009-10 has observed that the Hon'ble Bombay High Court in the case of Tip Top Typography has held that 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 and determination by the parties is doubtful then he can resort to enquiry about the prevailing rate in the locality. The Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ill's report, which was already before the Hon'ble Tribunal. 7.4.6 From perusal of said Ill's enquiry reports it is observed that the same is very general in nature and no specific instances of comparable fair rent has been brought on record. There is no reference of comparables like area of flats, year of acquisitions, locality of flats, availability of different amenities in society and public utilities service centers, viz. school, hospitals etc. Further, the Ld. AO has relied upon the data available on www.magicbricks.com and www.99acres.com but in her report the Ld. AO has submitted that no details are found in the rent enquiry folder regarding enquiry from various websites like magicbrick.com, 99acres.com etc. Further the appellant has submitted that the above referred websites issued disclaimer that they are not responsible for the information contained therein and the data available therein is based on asking prices of the properties and the same is not based on actual transactions. In view of facts discussed above, no reliance can be placed on the same. 7.4.7 In her report the Ld. AO has also submitted that the facts adjudicated by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of afore-referred nature. It is definitely a safe guide. From the above it is evident that the Hon'ble Bombay High Court has held that the municipal rateable value is a safe guide to determine ALV and ;o discard the same there must be cogent and reliable material. In the present case the Ld. AO has not pointed out any defect in the rateable value fixed by the Municipal Authorities and no cogent and reliable material has been brought on record by the Ld. AO to discard the same. The Hon'bie Bombay High Court has also held that the market rate in the locality is an approved method for determining AlV but it is only when the AO is convinced, that the case before him is suspicious and determination by the parties is doubtful then he can resort to enquire about the prevailing rate in locality. From the same it is evident that the Hon'ble Bombay High Court has held that the Id. AO can resort to enquiry when the determination by the parties is doubtful i.e the property is rented and the rent is affected by extraneous conditions like suppression in rent due to interest free security deposits, etc. 7,4.8 From perusal of above referred decision of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26.1 /.20J4 for assessment year 2009-10, where the properties are situated in the same complex and held that the ALV as determined by the Municipal Authorities should be considered. He submits that the Assessing Officer is relying on the very same Inspector's report dated 23.12.2010 in the assessee's case also and determined the ALV. 6. We have perused the orders furnished before us in the case of the assessee and his wife and find that there is no material difference in the orders passed in earlier years and this year. No new material has come on record to suggest that the ALV of the vacant flats should not be fixed at some other value other than the Municipal value. There is no change in fact therefore, the contention of the Ld. DR that during this year there are materials to show that the ALV is more than the Municipal valuation may not be correct. We find from the Co-ordinate Bench order dated 26.11.2015 in ITA Nos. 27I9/M/2013 and 2718/M/13 in assessee's own case that this issue has been decided in assessee's favour holding as under: Apart from the aforesaid contention, he submitted that on merits also, the issue of ALV of vacant flats u/s 23 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee AY ITA No. ITAT Mumbai Date of Order Particular s of Property Whether Vacant or Not Remarks 1 Harish Jain Nephew 2009-10 2710 of 2013 17.07.15 Central Garden Complex Vacant Hon ble ITAT held that amounts to be taxed u/s.23(1)(a) of the Act would be municipal ratable value 2 Anand Jain Brother 10 2709/13 17.04.15 Central Garden Complex Vacant Hon ble ITAT held that amounts to be taxed u/s.23(1)(a) of the Act would be municipal ratable value 3 Laxmi Jain Wife 10 2118/12 26.11.14 Central Garden Complex Vacant Hon ble ITAT held that amounts to be taxed u/s.23(1)(a) of the Act would be municipal ratable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcentage of investment in the properties should reflect correct ALV. Accordingly, ne quantified the ALVs and the cumulative ALV of the properties was taken at ₹ 65,51,632/- (Galas ALV is ₹ 3,94,508/- and ₹ 1,61,57,124/- is the ALV of other properties. Otherwise, assessee's computation in this regard worked out at ₹ 94,181/-., Galas rateable value is ₹ 5,880/- and other properties is ₹ 88,301/-. AO relied on the inspector's report of comparable cases in this regard. Aggrieved with the same, assessee is in appeal before the first appellate authority. During the proceedings before the first appellate authority, CIT (A) rejected the AO's method of computation of ALV of the said two properties and upheld the assessee's rateable value. For this, CIT(A) relied on various decisions including the judgment of the jurisdictional High Court in the case of Smitaben N Ambani vs. CWT, 323 ITR 104 wherein it was held that rateable value of the properties determined by the Municipal Authorities shall be the yard stick. Aggrieved with the decision of the CIT (A), Revenue is in appeal before the Tribunal by raising the above mentioned grounds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 in appellant's own case for AY 2009-10, wherein the Hon'ble Tribunal has set aside the issue of ALV to the file of the Ld. AO. In the said case of Jubilant Enterprises, the properties under considerations were let out and had also received huge deposits, and therein the Ld. C1T(A) had rejected similar report of Inspector on the ground that the same are general in nature and not specific; the said report did not contain the names and addresses of the property agents/dealers contacted by the Inspector for the purpose of ascertaining the prevailing market rate; there was no specific reference to any comparable property; the inspector had simply reported that he had contacted certain agents who are said to have been providing let out charges to various parties; the said report of the inspector was vague and only rates per square feet were mentioned, however no details of the specification or infrastructure etc. were mentioned to which those rates were applicable. Finally the Ld. CIT(A) in said case has held that the Inspector's report cannot be considered to be reliable and credible evidence and after placing reliance on the decision of the Hon'ble jurisdictional Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to discard the rateable value and respectfully following the above referred decisions of Hon'ble Tribunal, I am of the considered opinion that in ALV of the properties under consideration need to be determined on the basis of rateable value as per Municipal Authorities. 7.4.12 The records reveal that my Ld. Predecessor, vide his order dated 28.02.2014 in Appeal No. CIT{A)-41/DCCCX39/IT-415/2012-13 in appellant's own case for A.Y. 2010-11, after considering various decisions had directed the Ld. AO to adopt the municipal rateable value as ALV. The Ld. CIT(A) observed that the rateable value was fixed by the Municipal Authorities in the year 2006-07 and had further held that 5% annual increase thereof in subsequent years as reasonable and had then computed the reasonable rateable value for the financial year under consideration. My Ld. Predecessor has further held that rateable value so arrived in the relevant financial year should be enhanced by l/9ih of said value, and the resultant value will be the ALV of these properties for the relevant assessment year. Respectfully following the same it is held that the ALV of the flats/properties under considerations need to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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