TaxTMI 
TaxTMI 
2017 (6) TMI 172
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....ntal as well as presuming it to be on a plot of 600 square meters, when the actual size is 160 square meters. 1.4 The learned CIT(A) has similarly made a presumption of monthly rent of Rs. 1,80,000/- or yearly rent of Rs. 21,60,000/- without bringing on record any evidence for such a rental especially when the ALV for Municipal taxes even on commercial basis after conversion is just Rs. 3,56,864/-." 2. That the above grounds are independent and without prejudice to each other. 3. That the appellant seek leave to add, amend, alter or abandon any of the above grounds at the time of hearing of the appeal. 2. The facts in brief of the case are that the assessee, an individual filed return of income on 31/07/2008 declaring total income of Rs. 91,333/-and agriculture income of Rs. 62,235/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued and complied with. During the assessment proceeding, the Assessing Officer observed that the assessee owned a house property at plot No. 37, Nishant Kunj, Pitampura, Delhi -110034 having municipal No. 1316. On the basis of the affidavit filed by the assessee before the municipal authorities for conversion ....
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....premises. The Ld. counsel submitted that according to the provisions of section 23(2) of the Act the assessee was allowed to retain one house for self occupation. 5. The Ld. Senior DR supported the finding of the lower authorities and submitted that the assessee in the affidavit submitted to the municipal Corporation of Delhi for conversion of the property has deposed that assessee was running a retail shop/commercial unit of 600 m² built-up area in the name and style of "Kusum Lata Jain & Sons". Thus, according to the Ld. Senior DR, the property was a commercial property and not residential. 6. We have heard the rival submission and perused the relevant material on record. The Ld. counsel of the assessee has contested that the assessee was entitled for the benefit of the section 23(2) of the Act, therefore it is relevant for us to reproduce the said section of the Act as under: "Annual value how determined. 23. (1) ....................................... (2) Where the property consists of a house or part of a house which- (a) is in the occupation of the owner for the purposes of his own residence; or (b) cannot actually be occupied by the owner by reason of the fac....
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.... from 01/04/2007. The clause (2) cannot be have meaning that assessee was running a shop/commercial unit in years earlier to the year in which the affidavit was submitted. Thus, the ld. counsel submitted that in the year under consideration the property was residential and it was converted for mixed use i.e. commercial as well as residential in the year subsequent to the assessment year under consideration. The Ld. counsel submitted that the rates estimated by the AO as well as the CIT(A) are arbitrary, without any basis, hence the issue of estimation of ALV might be restored to the Assessing Officer. 11. Ld. Senior DR, on the other hand, supported the finding of the Ld. CIT-(A) and submitted that the property in question was commercial in the year under consideration. 12. We have heard the rival submission and perused the relevant material on record. The Assessing Officer took the constructed area of the property at 600 m² as is mentioned in the affidavit filed by the assessee before the Municipal Corporation of Delhi. The contention of the Ld. counsel of the assessee that the Assessing Officer took the area of the plot as 600 square meter, is in our opinion, not correct. T....
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....the Assessing Officer concluded that the property was a commercial one. The contention of the assessee that assessee applied for conversion of a part of the house into commercial use on 29/06/2007 to the Municipal Corporation of Delhi and filed an affidavit along with the application. According to the assessee change of use has been applied in the year subsequent to the year under consideration and therefore in the year under consideration the property was residential only and thus ALV cannot be estimated treating it as a commercial property. Before the Ld. CIT-A , as an alternative plea, the assessee submitted that municipal ALV taken for payment of house tax even as commercial property for the whole property, was only Rs. 3,56,864/-, and which might be adopted for the purpose of 'income from house property'. The assessee has not filed property tax return form for the year under consideration. The only evidence relied by the Revenue, is the affidavit of the assessee filed before the Municipal Corporation of Delhi. No other evidences as to the structure of the building of commercial nature, in relevant period has been brought on record. No evidences have been filed by the assessee ....
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..... It is also clear that neither the property is self occupies nor it is fit to be self occupied hence benefit of section 23(2) cannot be given for the said property. .........." 15. The Ld. CIT-(A) estimated the rent of the property on the basis of the categorization of the area by the Municipal Corporation. Further, the Ld. CIT-(A) estimated an average rent of Rs. 60,000 per month per floor. No rent was estimated for basement. In this manner the Ld. CIT-(A) calculated monthly rent for the whole building at Rs. 1,80,000/-. The relevant finding of the Ld. CIT-A is reproduced as under: "5.7 The fact remains that the property has become a commercial property once the convention charges are paid. The contention of the assessee that the name of the locality does not appear in the notified commercial area is not convincing since the assessee herself has paid the conversion charges. Therefore, the assessee will not be eligible to keep one property for self occupation in terms of section 23 of the income tax act. However the AO has used an estimate on rent of Rs. 200/'- sft. pm with no documentary evidence or an instance of a property fetching such a rental. The averment of the AR t....