2021 (3) TMI 921 - AT - Income Tax

Tribunal directs Assessing Officer to align Annual Letting Value with municipal rateable value

Smt. Rina Jain Versus The DCIT, CC-6 (4), Mumbai And ACIT-17 (3), Mumbai Versus Smt. Rina Virendra Jain

The Tribunal allowed the assessee's appeal, directing the Assessing Officer to determine the Annual Letting Value (ALV) of the property as per the ... Income from house property - determination of the ALV of the property owned by the assessee lying vacant during the year in question - CIT(A) directing the AO to re-compute Annual Letting Value (ALV) of the premises owned by the appellant at Central Garden Complex Chunabhatti, Mumbai by increasing the municipal rateable value by 5 % every year instead as offered by the appellant based on the municipal rateable value of the said premises - second round of appeal - HELD THAT:- On a perusal of the order of the CIT(A), we find that the appellate authority observing that as the A.O in the course of the ‘set aside’ proceedings had despite specific directions by the Tribunal not carried out any inquiries thus, did not find favour with the mere endorsement by the A.O of the ALV that was earlier determined by his predecessor in the course of the original assessment that was framed under Sec. 143(3), dated 29.09.2010. But then, the CIT(A) relying on the view that was taken by him while disposing off the appeal in the assessee’s own case for A.Y. 2013-14 and A.Y. 2014-15 directed the A.O to adopt the municipal rateable value for A.Y. 2010-11 i.e ₹ 17,03,369/- as a basis, and therein determine the ALV after making an addition of 5% year after year and also a further increase of 1/9th to the said value to arrive at the ALV for the year in question. Tribunal while disposing off the appeal in the assessee’s own case for A.Y. 2010-11 which also was restored by the Tribunal for fresh adjudication had not found favour with the same view that was therein taken by the CIT(A), who had on similar lines directed the A.O to recompute the ALV by taking the municipal rateable value as the base and increase it by 5% every year, and had vacated the same. At the same time, the Tribunal while disposing off the aforesaid appeal for A.Y. 2010-11[2020 (2) TMI 1477 - ITAT MUMBAI], relying on its earlier order for A.Y. 2011-12, A.Y. 2012-13, A.Y. 2013-14 and A.Y. 2014-15, had therein directed the A.O to determine the ALV of the vacant flats as per the municipal rateable value. In fact, it was observed by the Tribunal that in case if the ALV determined by the assessee was as per the municipal rateable value then, the same should be accepted. As the facts and the issue involved in the assessee’s present appeal for A.Y. 2009-10 remains the same as were there before the Tribunal in A.Y. 2010-11, we, thus, respectfully follow the same. Accordingly, we herein direct the A.O to determine the ALV of the property in question as per municipal rateable value. As per the same terms, in case if the ALV of the property in question determined by the assessee is as per the municipal rateable value, the same shall be accepted. Issues Involved:1. Determination of Annual Letting Value (ALV) of the property owned by the assessee.2. Legitimacy of the method used by the Assessing Officer (A.O) to determine the ALV.3. Validity of the CIT(A)'s direction to re-compute the ALV based on municipal rateable value with incremental adjustments.Detailed Analysis:Issue 1: Determination of Annual Letting Value (ALV) of the PropertyThe primary issue revolves around the correct method to determine the ALV of the flats owned by the assessee at Central Garden Complex, Chunabhatti, Mumbai. The assessee had initially declared the ALV based on the municipal rateable value at Rs. 1,39,785/-. The A.O, however, determined the ALV at Rs. 2,51,97,600/- based on a market inquiry which suggested a rental rate of Rs. 42/- per sq. ft. This led to an addition of Rs. 1,76,38,320/- under the head 'Income from house property.'Issue 2: Legitimacy of the Method Used by the Assessing Officer (A.O)The A.O's method of determining the ALV was contested. The A.O had relied on a report from an inspector and market data from websites like www.magicbricks.com and www.99acres.com. The CIT(A) initially sided with the assessee, accepting the municipal rateable value as a yardstick, but the Tribunal had remanded the case back to the A.O for a thorough investigation. In the second round, the A.O reiterated the previous ALV determination, which was again contested by the assessee.Issue 3: Validity of the CIT(A)'s Direction to Re-compute the ALVThe CIT(A) directed the A.O to compute the ALV based on the municipal rateable value for A.Y. 2010-11, increased by 5% annually plus an additional 1/9th of the value. This method was consistent with the CIT(A)'s approach in previous years (A.Y. 2013-14 and A.Y. 2014-15). However, the Tribunal, in the assessee's case for A.Y. 2010-11, had vacated this approach, directing the ALV to be determined strictly as per the municipal rateable value.Tribunal's Findings:The Tribunal noted that the issue was recurring and had been previously addressed in the assessee's favor for A.Y. 2010-11, 2011-12, 2012-13, and 2013-14. The Tribunal reiterated that the ALV should be determined based on the municipal rateable value, and if the ALV declared by the assessee aligns with this value, it should be accepted.Conclusion for Assessee's Appeal:The Tribunal allowed the assessee's appeal, directing the A.O to determine the ALV of the property as per the municipal rateable value. If the ALV declared by the assessee is in line with the municipal rateable value, it should be accepted.Conclusion for Revenue's Appeal:Given the Tribunal's decision on the assessee's appeal, the revenue's appeal was rendered academic. The Tribunal dismissed the revenue's appeal, upholding the determination of the ALV based on the municipal rateable value.Final Order:- The appeal filed by the assessee (ITA No. 1573/Mum/2019) is allowed.- The appeal filed by the revenue (ITA No. 836/Mum/2019) is dismissed.Order pronounced in the open court on 03.03.2021.