TMI Blog2020 (12) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... Property- ALV determination - estimation of ALV on the basis of notional interest - CIT(A) agreeing that notional interest could not be adopted as ALV of the property - HELD THAT:- CIT(A) has rightly concluded that estimation of ALV on the basis of notional interest could not be upheld in the eyes of law. However, the same time, the findings that the property would not be subjected to Rent Control Legislation is bereft of any evidence on record. The income so earned notwithstanding the nomenclature of rental / lease rental or license fees, all are assessable under the head Income from House Property and subjected to similar computations. No difference has been carved out in law in all these different streams of income. The assessee nowhere denied the applicability of Rent Control Act to the stated stream of income. Therefore, the facts of the case are squarely covered by the earlier decision of the Tribunal in assessee s own case for AYs 1996-97 1997-98. There is no change in material facts. No contrary decision is on record. Nothing has been shown that the aforesaid decision of the Tribunal has ever been reversed or not applicable, in any manner. Therefore, respectfully f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in confirming the disallowance of ₹ 17,01,000/- in respect of trading loss. 4. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in not adjudicating ground no.6 before him regarding levy of interest u/s 234A, 234B and 234C of the I.T. Act. 2. The Ld. Sr. Counsel for assessee, Shri Percy Pardiwala, while advancing arguments on merit, placed on record the decision of coordinate bench of this Tribunal in assessee s own case in crossappeal for AYs 1996-97 1997-98, ITA Nos.1480-81/Mum/2001, CO No.164/Mum/2011 common order dated 04/10/2017 to submit that the issues under the appeal have already been delved into by the Tribunal and the factual matrix of this year is covered in terms of aforesaid order. 3. We have carefully heard the arguments and perused the relevant material on record including the orders of lower authorities and the cited decision of the Tribunal in assessee s own case for AYs 1996-97 1997-98. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 4. The material facts are that the assessee being resident individual was assessed for year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order, upheld the order of Ld. CIT(A) and dismissed the grounds raised by the revenue. Reliance was placed on the decision of Hon ble Bombay High Court in Kesavdas Ranchhod Das V/s CIT (1972) 83 ITR 1, the decision of Hon ble Apex Court in CIT V/s Sutlej Cotton Mills Supply Agency Ltd. (1975) 100 ITR 706 as well as Chainrup Sampatram V/s CIT (1953) 24 ITR 481 while arriving at such a conclusion. The bench held that an inactivity or lull in the business of the assessee for some years cannot conclusively dislodge the claim of the assessee that it was carrying on the business of trading in shares. Further, the valuation of stock-in-trade was in conformity with the method of valuation of stock in trade that was consistently followed by the assessee. Therefore, the claim on account of fall in value of scrips was well in order. We find that similar are the facts in this year. There being nothing contrary on record, respectfully following the earlier view of Tribunal, we hold that the trading loss of ₹ 17.01 Lacs on account of fall in value of scrips was an allowable trading loss. Ground No. 3 stands allowed. Issue No.2: Income from House Property 7.1 The additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring appellate proceedings, the assessee has relied upon the favorable first appellate orders for AYs 1996-97 1997-98. However, Ld. CIT(A) chose to differ from the same by observing as under: - 6.1 I have carefully considered the facts of the case, order of assessment and the submission of the learned representative of the appellant. The basic issue involved is the computation of income under the head 'Income from House Property' in terms of section 23(1) of the I.T. Act. The Assessing Officer has taken into account the interest attributable on the amount of ₹ 3 crores for the purpose of computing the annual value of the house property. My learned predecessor had allowed relief to the appellant relying on the various decisions cited by the appellant's A/R which are mentioned above. My learned predecessor has allowed the relief mainly on the grounds that notional interest cannot be included in the rental value of a house, that where the Rent Control Act is applicable only the standard rent can be adopted as Annual Rental Value, that the Assessing Officer was bound to fix the Annual letting Value based on the Municipal Valuation unless the same was lower than t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigious area of the city i.e. Malabar Hill near the Nepean Sea Road. The building is sea facing. iii) The cost of the property. As can be seen from the agreement, the cost of the property at the time of purchase by the assessee was of more than ₹ 6 crores. iv) It cannot be ignored that the amount of ₹ 3 crores received by the appellant has direct connection with letting out of the property. In normal course, nobody would give such huge amount interest free. While determining the Annual Value this aspect also needs to be considered. The arrangement also proves that the property was let out on the basis of simple terms but a circumventing scheme was made by which the appellant though received nominal rent, however, enabled itself to enjoy substantial funds without paying any interest. The arrangement does not confirm to the normal commercial or prudential norms. 6.2 It has been held by the Patna High Court (101 ITR 810) that Municipal Valuation affords an indication as to the reasonable Annual Letting Value of a building but the same can be rebutted on the basis of other materials on record. In such a case, the Annual Value may be determined either at a reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the same is stated to be the fact that the property was neither rented out nor leased out but it was an arrangement in the nature of leave license. Thus, the assessee denies the applicability of Rent Control Act. Consequently, the receipts would be neither rent nor lease rent but license fees. Since this arrangement would not be governed by the prevalent Rent Control Act, the Standard Rent as per municipal valuation cannot be held to be the sum for which the property might reasonably be expected to let out from year to year. Rather the same was to be determined keeping in mind various factors. Finally, the Ld. AO was directed to re-fix the quantum keeping in mind various factors as enumerated in the impugned order. Aggrieved as aforesaid, the assessee is in further appeal before us by way of ground nos.1 2. 8. Upon perusal of cited order of the Tribunal, we find that in AY 1996- 97, Ld. AO treated the leave and license arrangement entered into by the assessee with Dr. Saraiya as transfer as contemplated in Sec.2(47) of the Act and therefore, denied the exemption u/s 54F as claimed by the assessee. Proceeding further, Ld.AO also formed an opinion that rental value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease rental or license fees, all are assessable under the head Income from House Property and subjected to similar computations. No difference has been carved out in law in all these different streams of income. The assessee nowhere denied the applicability of Rent Control Act to the stated stream of income. Therefore, the facts of the case are squarely covered by the earlier decision of the Tribunal in assessee s own case for AYs 1996-97 1997-98. There is no change in material facts. No contrary decision is on record. Nothing has been shown that the aforesaid decision of the Tribunal has ever been reversed or not applicable, in any manner. Therefore, respectfully following the consistent stand of the Tribunal, we are inclined to quash the directions given by Ld. CIT(A). The additions, thus made by Ld.AO, stand deleted. Ground Nos. 1 2 stands allowed. Issue No.3: Levy of interest 11. In Ground No.4, the assessee is aggrieved by non-adjudication of ground relating to levy of interest u/s 234A, 234B 234C. The Ld.Sr. Counsel submitted that the return of income was filed within time and therefore, there would be no question of levy of interest u/s 234A. Errors have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal. 16. Since the facts as well as issue of rental income in assessee s appeal is pari-materia the same as in AY 1998-99. Therefore, our findings as well as adjudication therein shall mutatis-mutandis apply to this year also. The Ld. AO is directed to re-compute correct interest u/s 234A, 234B 234C in accordance with law. 17. Resultantly, all these appeals stand allowed in terms of our above order. Assessee s Other Appeals 18. In AY 2002-03, the assessment was framed u/s 143(3) on 11/01/2005 wherein the rental income has been estimated @₹ 28.80 Lacs which was based on comparative rents of other flats located in same building. 19. Similar assessment was made for AY 2003-04 on 15/02/2006 wherein the rent was estimated @₹ 30.24 Lacs considering 5% appreciation in the rent. Similar was the addition in assessment orders for AYs 2004-05 2007-08, 2008-09, 2010-11, 2011-12, 2012-13 2013-14. 20. Upon further appeal, Ld. CIT(A) confirmed the stand of Ld. AO in all these years vide separate orders. Aggrieved, the assessee is in further appeal before us on this issue for all the years. 21. We find that same leave license agreement is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
