TMI Blog2018 (8) TMI 1632X X X X Extracts X X X X X X X X Extracts X X X X ..... AM AND SHRI SANDEEP GOSAIN, JM For The Appellant : Shri K. K. Lalkaka For The Respondent : Shri V. Vidhyadhar ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-4, Mumbai dated 12.07.2016 and pertains to the assessment year 2012-13. 2. The grounds of appeal read as under: 1. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in estimating the value of the property known as Hicon Property at ₹ 50,40,000/- per annum instead of ₹ 11,86,723/- being valuation carried out by approved Valuer M/s. Patwardhan Associates - (a) By ignoring the legal disability pointed out by the Executive Engineer, Building Proposal (WS) H Ward Municipal Corporation of Central Mumbai in their letter dated 9th February, 2012. (b) By refusing to believe that because of the defects in the property, the said property could not be let out and not applying the provisions of section 23(l)(c) regarding vacancy allowance. (c) By dismissing the letters as self serving without any evidence of two real estate agents R. R. Real Est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given no basis of showing ALV-of ₹ 4 lakhs that the Assessee could not discharge his onus of substantiating his estimation, that Hicon Society had given information that Maharashtra Rent Control Act was not applicable to the Society whereas, the Assessee has reduced Municipal Tax from estimated ALV, that no supporting evidences of estimation of income is submitted that the Assessee has not given working of standard rent fixed, he has only referred to the report of Approved Valuer. That the case laws relied upon are not applicable to the facts of the case. The Assessing Officer has proceeded to adopt Annual Ratable Value @ 7% of total investment and has therefore, calculated ALV of ₹ 81,08,802/-. After giving standard deduction, the Assessing Officer estimated Income from House Property of ₹ 56,76,162/- and has assessed accordingly. 6. Before the ld. Commissioner of Income Tax (Appeals), the assessee submitted copy of valuation report of Patwardhan Associates in respect of flat situated at Hicon Residency , copy of assessment order of assessment year 2011-12, copy of letter of one R. R. Real Estate, copy of Nisha Dusija and copy of notice of Maharashtra Regio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has estimated Annual Ratable Value @7% of Investment which is not based on any supporting evidence. It is a general estimation which cannot be sustained. The fair estimation should be based on some evidence or reasonable ground. This aspect of the issue under consideration shall be analysed and decided later on. Before that, it is necessary to deal with the various arguments and counter representation of the Ld. A.R. against the estimation of Annual Ratable Value. According to the Ld. A.R., the said property suffers from legal disability as Developer has carried out unauthorized construction to the extent of 40% beyond the 'Occupation Plan'. This argument is of no avail because property was constructed much earlier and only some minor unauthorized construction has been made by the Developer which was to be removed, hence, so far as construction of Flat under reference is concerned, the 'Occupation Certificate' was issued on 12.03:2009. As per the notice of Executive Engineer, Building Proposals (Western Suburbs), 'H1 Ward, Mumbai, there was an alteration and modification against the O.C.C Plan dated 12.03.2009, hence; same was to be corrected, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, there is no bar of renting out the property to tenant person. Therefore, from this angel also such argument becomes infractuous. During the course of hearing proceeding, the Ld. A.R. has submitted a copy of letter of R.R. Real Estate dated 15.03.2013 which is apparently a self-serving document. Similar is the fact in respect of letter of Nisha Dusija. These selfserving documents are of no avail because if there was unauthorized modification in original plan, same would have been removed in January, 2012 and property could have been given on rent and obviously there would have not been any further objection by MRTP. It appears that these 2 letters have been obtained only with a view to justify that efforts were made to let out the property but it could not materialized. Apparently, such strategy has been adopted just with a view to suit the judicial propositions over such issue. The baselessness of the letter of R.R. Real Estate and Nisha Dusija can be established by referring the evidence submitted by the Appellant, i.e. Report of Approved Valuer namely, M/s. Patwardhan Associates dated 22.09.2014 as this report contains the evidence that 1 Flat in the same Building has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential house of Hicon Residency . 3.8 In the light of above discussion, I reached to the conclusion that fair rental value of the property has to be calculated. However, estimation made by the Assessing Officer @7% of investment value of the property at ₹ 81,08,802/- is also approvable and similarly, the ratable value estimated by Approved Valuer in report dated 22.09.2014 is also not sustainable. Since there is an evidence admitted by the Appellant that one Flat has been rented out @Rs.1,75,000/- accordingly, the gross ratable value of the property could not be less than ₹ 50,40,000/- per annum. Since reliable and corroborative evidence is there, there is no reason, not to take such evidence for calculating ratable value of the residential Fiat No.1201 claimed to be on 2 floors. Thus, considering the facts circumstances of the case and legal propositions, the Annual Ratable Value of the property is found to be at ₹ 50,40,000/- per annum which is based on primary evidence, hence, the Assessing Officer is directed to take the ratable value of Hicon Residency at ₹ 50,40,000/- and allow the standard deduction u/s.24(a) and calculate the Income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 7) Proof of non occupancy charges levied w.e.f. 13.02.2018 when the flats were let out. Your appellant prays that since the above additional evidence is critical and goes to the root of the matter and is relevant for calculating the real income of the appellant, the same may be admitted. Reliance is placed on the decision of Madhya Pradesh High Court in Daljeet Kaur v. ITO 212 Taxation 46 and Principal Commissioner of Income-tax, Bathinda v. -Daljit Singh Sra Prop.M/s. Sra Construction Co. {ITA No,. 98 of 2017 dated 16.03.2017 10. Further, the ld. Counsel of the assessee prayed that in the facts and circumstances of the case it is apparent that there was reasonable cause due to which the flat could not be let out. However, to save the assessee from further litigation, the ld. Counsel of the assessee submitted that assessee was agreeable to offer as tax as sum of ₹ 11,83,723/- as computed by the assessee s valuer and prayed in the grounds of appeal. 11. Per Contra, the learned departmental representative relied upon the order's of the ld. Commissioner of Income Tax (Appeals). 12. Upon careful consideration we note that assessing the present case is the ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n: There were certain defects in the construction of the flat under the sanctioned plan, the removal of which was necessary. Letting out a house which is not constructed as per an approved plan cannot be forced upon the assessee. Furthermore, subsequently the assessee had to incur over ₹ 50 lacs for alteration of the flat which resulted in the bifurcation of the flat into three parts. This oxygenates the assessee's claim that the premises required alteration in order to properly let out. Hence, the plea by the ld. Counsel of the assessee cannot be said to be spurious, vexatious, mere bluster or Saif Ali Khan Pataudi frivolous. Hence, in this connection, in our considered opinion, the assessee deserves vacancy allowance u/s. 23(1)(c). This section reads as under: Annual value how determined. 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be- ( a ) the 57sum for which the property might reasonably be expected to let from year to ( b ) where the property or any part of the property is let57 and the actual rent57 received or receivable57 by the owner in respect thereof is in excess of the sum referred to in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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