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TMI Blog2021 (9) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the location which the house can fetch in that locality and calculate the deemed rental income, as per the provision of section 251 of the Income Tax Act, 1961. 3. The Ld. CIT(A) has erred in ignoring the legislative intent of section 251 of the Income Tax Act, 1961 which states that CIT(A) may confirm, reduce, enhance or annul the assessment order against which appeal has been filed by the assessee. 4. The order of the Ld. CIT(A) is perverse in nature and against law as it grossly overlooked the scheme of the Income Tax Act, 1961 and material available on record. 5. The appellant craves to leave to add or amend any grounds of appeal before the appeal is heard or disposed off. 6. It is prayed that the order of the Ld. CIT(A) be cancelled and that of the assessing officers may be restored. ITA 247/CHD/2020 (Assessee's Appeal): 1. The Ld. CIT(A) has erred in making addition of Rs. 6,15,440/- being notional annual lettable value u/s. 22 of the Income Tax Act, 1961 after allowing 30% standard deduction u/s. 24(a) of the Income Tax Act, 1961. 2. The appellant craves leave to add or amend any ground of appeal. 2. The ld. Sr. DR inviting attention to the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be drawn cannot be considered as an evidence considering the fact that specific opportunity to demonstrate that it was a house not fit for inhabitation was the specific requirement of the Statute. 4.3. The ld. AR further submitted that the specific house was owned by him in January, 2017 and the new buyer after purchase had demolished the specific construction as it was not fit for living. Thus, a presumption can be drawn that the specific property was demolished by the new buyer because it was not fit for inhabitation. The said argument, it was pointed out again is on inferences and presumptions. There can be multiple reasons for demolishing a perfectly habitable construction to suit personal requirements of tastes and designs of a new buyer for building a basement etc. Thus, this fact by itself does not lead to the conclusion as the ld. AR would want the facts to be considered. He was required to bring to the notice of the Bench any other evidence which the assessee has placed on record to support the claim. Mr. Bhasin appearing on behalf of the assessee submitted that readily there is no other evidence however, attention of the Bench was invited to the decision of the ITAT rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving 70% share in the said house as per the title deeds. On query, the assessee was found to have replied that it was not in a habitable condition and hence its annual rental value should be taken as 'nil'. It was also stated that the house was sold on 30th January, 2018. 6.1. Considering, the reply, the Assessing Officer required the assessee to support the claim that it was not in habitable condition and what efforts etc. had been made to lease out the property. 6.2. In response, the assessee as per record made the following submissions: a.) The assessee purchased the house #101, Sector 18, Chandigarh during the relevant PY and sold the same on 03.01.2017. b.) The said house was very old, the construction of which was completed on 02.05.1959. The copies of completion certificate and transfer letter are enclosed as per Annexure I & II respectively. c.) The buyer of the said house from the assessee has also demolished the old construction and building new house" 6.3. Considering the same the Assessing Officer concluded that these documents did not prove that the house was not in habitable condition. 6.4. It is seen from the record that the Assessing Officer sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andigarh Estate Office: : Rs. 76,77,955/- c) Fair Market Value : Rs. 8,79,200/- Net Annual Value equals to higher of (a) & (b) i.e. Rs. 76,77,955/- and lower from higher among(a) & (b) and that of (c) : Rs. 8,79,200/-. 7. It is seen that the assessee before the CIT(A) objected to the comparison between the property of the assessee situated in Sector 18 with a property in Sector-9 and argued that the two were not comparable. Further, it was reiterated that the construction was old and dilapidated and the house had been demolished by the new purchaser. It was also argued that the house was old and required complete renovation and proper finishing. Considering the submissions in the facts the CIT(A) came to the following conclusion: 5. Grounds of Appeal No. 1: The appellant has challenged that the AO has erred in making addition of Rs. 6,15,440/- being annual lettable value after allowing 30 percent standard deduction u/s. 24(a) of the Income Tax Act, 1961. The AO has made the following observations:- "3. Addition on account of deemed rental income from house property: 3.1 During the course of assessment proceedings, the assessee was asked to submit details of his immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding plan was sanctioned by the Estate Office, UT, Chandigarh on 27.12.2017. The report gives a fair idea regarding the standard rent as per the cost of the land and property as the house existing in relevant F. Y. was also a double storey house hence the same can be used as fair standard rent for the property under consideration. 3.5 In view of this for assessing the reasonable fair market rent of the property, as a comparable, House No. 336, Sector-9, Chandigarh was taken into consideration which was taken on rent &.1,57,000/- per month by PUS Finance Planner LLP. For which the lease document provided by PUS Finance Planner LLP has been placed on record. Hence, monthly rent of Rs. 57,000/- is considered as fair market rent. Further, it is necessary to bring on the record that the assessee did not submit any evidence/basis for Fair Market Rent of the property under consideration in any of his reply. 3.6 The counsel of the assessee attended the office for manual hearing on 20.12.2018 and he was confronted with these facts. Further report of the Estate Office, UT, Chandigarh and Lease deed of the House at 336, Sector-9, Chandigarh were confronted to him. The House No. 101, Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of which was completed on 02.05.1959. The copy of completion certificate and transfer letter is enclosed as per Annexure I & II respectively for your ready reference which is also submitted to Ld. ACIT during the assessment proceedings. 3. The Buyer of the said market rental value has been assessed at Rs. 1,50,000/- per month. To fetch the said rent the house must be fully renovated and beautifully furnished to match the status of the locality & tenant. The said house was old and required complete renovation & proper finishing. Further the buyer of the house from the assessee demolished the said old house and build new house after the approval of competent authorities. From the above facts it is clear that the said house was an old house beyond renovation & not in habitable condition. Accordingly the provisions of notional rent u/s. 22 of the Income Tax Act, 1961 are not applicable. The similar view has been taken by Honorable IT AT Kolkata in case of Shri Basant Kumar Nahata Vs. ACIT I.T.A. No. 2400/Kol/2018 Date of Judgment/Order: 07/06/2019 (attached as per Annexure-IV) 5. It may be further added that the comparison of fair market value of House in Secto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y whereas Sector-9, Chandigarh belongs to a very high profile society. The appellant also relied upon the judgment of Honorable ITAT Kolkata in the case of Shri Basant Kumar Nahata Vs. ACIT I.T.A. No. 2400/Kol/2018 Date of Judgment/Order: 07/06/2019. 5.2.2 However, on perusal of assessment record it is observed that, during the assessment as well as appellate proceedings, the appellant has completely failed to substantiate with documentary or any other evidence that such property is in dilapidated condition and is not habitable. Moreover, merely because the property requires repairs, it cannot be held that ALV of such property is NIL. As even the dilapidated property has its Annual letting Value, therefore, in view of facts and circumstances of the case, contention of the appellant that being an old house and beyond renovation & not in habitable condition and provision of Section 22 of the 'Act' are not applicable, is not acceptable as the property always has the value. However, further, it is observed that without making necessary analysis about the annual rental value for the year under consideration i.e. 2015-16, the AO considered the annual rental value provided by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, we hold that on the facts as they stand, the said decision is not applicable as in the facts of the said decision rendered by the Kolkata Bench, the house under construction was claimed to be "in dilapidated condition in a village situated in the State of Rajasthan which is not habitable at all." This claim, on considering the facts on record was found to be allowable. However, in the facts of the present case, this is a disputed fact and the specific property is not in a remote village and in a dilapidated condition but in Sector 18 in the midst of the City. Hence, the said case on the facts as they stand has no application. While so holding, we clarify that facts are in flux as the issue is being remanded back. 10. Thus, in the said background, we specifically required the ld. AR to address whether he is aggrieved by any specific observation in the impugned order which he would want us to address while remanding the issue back to the ld. CIT(A). The ld. AR was unable to address the query. 11. Accordingly on a consideration of the peculiar facts and circumstances of the case, the relevant provisions of the Act and the evidences on record, we find that in the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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