TaxTMI 
TaxTMI 
2017 (11) TMI 1149
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....he Assessing Officer did not accept the ALV so offered by the assessee and he proceeded to re-compute the ALV based on the market value and accordingly he determined the ALV at Rs. 68,36,502/-. 4. Assessee approached to the CIT(A) and the CIT(A) after considering the various judicial pronouncements and also the decision of the Hon'ble Bombay High court directed the AO to adopt ALV of the house property as per the rateable value fixed by the Municipal Authority at Rs. 4,63,651/-. However, the CIT(A) directed for enhancement of such Municipal Rateable Value by 5% which works out to Rs. 4,86,834/-. The precise observation of CIT(A) was as under:- 7.4.1 I have considered the submissions of the appellant and perused the materials available on record. The appellant has challenged the action of the Ld. AO in determining the ALV of properties/flats at Rs. 68,36.502/- as against Rs. 3,86,376/- admitted by the appellant in respect of Flats/properties at Central Garden Complex. The appellant's main contentions are that the flats/properties under consideration were vacant and not let out during the year; since the flats/properties under consideration was not let out so the ALV ....
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.... above, it is evident that inspite of giving opportunities the Ld. AO has chosen not to carry out any further enquiries and has relied upon the enquiry conducted by the ITI earlier. The ITI in his said report dated 23.12.2010 has submitted as under. "As directed I visited the premises af Central Garden Complex, City Survey No. 477B, Village Kurfa III, S.M. Road, Chunabhatti/ (East) Mumbai. ! enquired with the security person about the society's office and he told that there is no society formed here. These tower's flat is used as guest house. Then I enquired Mr. Sekhar P More (OM Sai Estate, Maitry Shopping Centre, V.N. Purov Marg, Sion Chunabhaffi East who is working as an estate consultants in the area about the rent flats. He told that this is a Chawl area, here is not any good building for rent purposes and further added that the rent of alike the same flats similar to the above said tower's flat is Rs, 25000/- per month for I 8HK approximately 600 sq. fts. (55.74 sq. mtrs Carpet area. Accordingly, rate is approximately Rs. 421- per sq.ft/ Rs. 446/- per sq. mfrs. Similar to another building in Chunabhatti." Further the ITI vide his report dated 13.....
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....ed. It is pertinent to note that in the recent judgement of Hon'ble jurisdictional High Court in CIT v/s Tip Top Typography, 368 ITR 330 which is rendered in context of section 23 of Income Tax Act, 196s, the Hon'ble jurisdictional High Court has held that market rate in the locality is an approved method for determining the fair rental value but it is only when the Assessing Officer is convinced that the case before him is suspicious, determination by the parties is doubtful then he can resort to enquiry about the prevailing rate in the locality. It is held by the Hon'ble jurisdictional High Court that municipal ratable value may not be binding on the assessing officer if the AO on the basis of material has reason to believe that Municipal Ratable Value is not representing the correct FMV. it is definitely a safe guide unless a cogent and reliable material to discard it. In the event, the transaction is influenced by any extraneous circumstances or vitiated by fraud or like with the Assessing Officer can adopt fair rental value based on the details and information obtained from reliable source. In the impugned case, the Assessing Officer has doubted the rateable value ....
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....to say that the assessee be given fair and adequate opportunity to present their case. Accordingly, both the appeals are restored to the file of the Assessing Officer for de novo adjudication in the manner indicated above." 7.4.5 From the above it is observed that the Hon'ble Tribunal in AY 2009-10 has observed that the Hon'ble Bombay High Court in the case of Tip Top Typography has held that market rate in the locality is an approved method for determining the fair rental value but it is only when the AO is convinced that the case before him is suspicious and determination by the parties is doubtful then he can resort to enquiry about the prevailing rate in the locality. The Hon'ble Tribunal further held that in the event the transaction is influenced by any extraneous circumstances or vitiated by fraud or like with the assessing officer can adopt fair rental value based on the details and information obtained from reliable source, "he Hon'ble Tribunal has also held that rateable value is safe guide to determine the ALV unless a cogent and reliable material to discard it. From the said finding of the Hon'ble Tribunal it is evident that the rateable val....
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....e Ld. AO has relied upon the data available on www.magicbricks.com and www.99acres.com but in her report the Ld. AO has submitted that no details are found in the rent enquiry folder regarding enquiry from various websites like magicbrick.com, 99acres.com etc. Further the appellant has submitted that the above referred websites issued disclaimer that they are not responsible for the information contained therein and the data available therein is based on asking prices of the properties and the same is not based on actual transactions. In view of facts discussed above, no reliance can be placed on the same. 7.4.7 In her report the Ld. AO has also submitted that the facts adjudicated by the Hon'ble Bombay High Court in the case of Tip Top Typography is completely different from .the facts of the present case, as in the said case of Tip Top Typography the assessee had received security deposits, whereas in the present case the properties under considerations were vacant. The said submission of the Ld. AO is found to be correct. From Para 2 of the said decision of the Hon'ble Bombay High Court it is observed that the properties therein were rented and the assesses had ....
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..... AO to discard the same. The Hon'bie Bombay High Court has also held that the market rate in the locality is an approved method for determining AlV but it is only when the AO is convinced, that the case before him is suspicious and determination by the parties is doubtful then he can resort to enquire about the prevailing rate in locality. From the same it is evident that the Hon'ble Bombay High Court has held that the Id. AO can resort to enquiry when the determination by the parties is doubtful i.e the property is rented and the rent is affected by extraneous conditions like suppression in rent due to interest free security deposits, etc. 7,4.8 From perusal of above referred decision of the Hon'ble Tribunal in appellant's own case for AY 2009-10, it is observed that the Hon'ble Tribunal had not followed the decision of Hon'bte Tribunal in appellant's family members namely Laxmi Jain, Anand Jain and Rameti Devi Jain on the ground that in the case before them there is enquiry conducted by the Inspector to ascertain the fair market rent. In this respect, during the course of appellate proceedings, the appellant has also submitted the copy of the....
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....there is no material difference in the orders passed in earlier years and this year. No new material has come on record to suggest that the ALV of the vacant flats should not be fixed at some other value other than the Municipal value. There is no change in fact therefore, the contention of the Ld. DR that during this year there are materials to show that the ALV is more than the Municipal valuation may not be correct. We find from the Co-ordinate Bench order dated 26.11.2015 in ITA Nos. 27I9/M/2013 and 2718/M/13 in assessee's own case that this issue has been decided in assessee's favour holding as under: "Apart from the aforesaid contention, he submitted that on merits also, the issue of ALV of vacant flats u/s 23 (1)(a) in the same very complex stands covered in favour of the assessee by series of decisions of the Tribunal in the Group/family concerns of the assessee, wherein the Hon'ble Tribunal upheld that the ALV on the vacant flat can be determined at a municipal ratable value. Not only that now the determination of ALV as per the Municipal ratable value has been principally upheld by the Hon'ble jurisdictional High Court In the case of Tip Top Typog....
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.... 17.04.15 Central Garden Complex Vacant Hon'ble ITAT held that amounts to be taxed u/s.23(1)(a) of the Act would be municipal ratable value 3 Laxmi Jain Wife 10 2118/12 26.11.14 Central Garden Complex Vacant Hon'ble ITAT held that amounts to be taxed u/s.23(1)(a) of the Act would be municipal ratable value 4 Rametidevi Jain Mother 2005-06 2006-07 3268/11 3269/11 25.4.12 Vacant Hon'ble ITAT held that amounts to be taxed u/s.23(1)(a) of the Act would be municipal ratable value Not only in the aforesaid cases, but now Hon'ble jurisdictional High Court In the case of Tip Top Typography, reported in (20I4) 368 ITR 330 has upheld that Municipal ratable value can be adopted for determining the ALV u/s 23(1)(a). The Hon'ble High Court held that for disturbing the ALV or rent shown by the assessee, the AO must have cogent and satisfactory material in his possession indicating that the parties have concealed the real position. He must not make a guess work or act on conjectures and surmises. There must be definite and positive....
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.... N Ambani vs. CWT, 323 ITR 104 wherein it was held that rateable value of the properties determined by the Municipal Authorities shall be the yard stick. Aggrieved with the decision of the CIT (A), Revenue is in appeal before the Tribunal by raising the above mentioned grounds. During the proceedings before us, Ld DR relied on various decisions to state that the ALV as determined by the Municipal Authorities is only one of the factors and same can be ignored if it does not reflect the true ALV, Ld DR relied on the order of the AO, On the other hand, ld Counsel for the assessee heavily relied on the order of the CIT(A) and reiterated the submissions made before the lower authorities. We have heard bath the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On hearing both the parties and on perusal of the orders of the Revenue Authorities, we find that the CU (A) has rightly relied on the binding judgment of the Hon'ble jurisdictional High Court in the case of Smitaben N Ambani (supra). There are many other decisions from the jurisdictional nigh Court in the similar lines, the copies of which are placed in the pa....
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.... infrastructure etc. were mentioned to which those rates were applicable. Finally the Ld. CIT(A) in said case has held that the Inspector's report cannot be considered to be reliable and credible evidence and after placing reliance on the decision of the Hon'ble jurisdictional Bombay High Court in the case of Tip Top Typography (supra) deleted the addition made by the AO to the ALV of the properties. The Hon'ble ITAT has upheld the decision of the Ld. CIT(A) and dismissed the appeal filed by the Revenue after holding as under. "We have heard the rival contentions and have a/so gone through the records. As discussed above, the learned CIT(A) has thoroughly discussed the factual aspects and has found that the AO has determined the fair market value on the basis of a vague and general report of the inspector. There was no credible and reliable evidence before the AO for arriving at the fair market value of the properties. Even, the municipal valuation of the properties was much lower than the actual rent received by the assessee. There is no evidence on record that similarly placed properties like that of the assessee were having higher rental value than that was ....
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....le value so arrived in the relevant financial year should be enhanced by l/9ih of said value, and the resultant value will be the ALV of these properties for the relevant assessment year. Respectfully following the same it is held that the ALV of the flats/properties under considerations need to be determined accordingly. Since my Ld. predecessor has determined the Annual rateable value of Flats at Central Garden Complex for A.Y. 2010-11 at Rs. 4,63,651/-, so for the relevant assessment year the same need to be increased by 5% and thereby works out be Rs. 4,86,834/-. The said rateable value for the financial year 2010-11 need to be further increased by l/9lh of said value to arrive at the ALV of F.Y. 2010-11 which is relevant to assessment year under consideration. The Ld. AO is directed to substitute the ALV of said flats at Rs. 4,86,834/- (as enhanced by 1 /9th of said value) as against Rs. 68,36,502/- considered by him in the impugned order. The Ld. AO is directed to re-compute the income form house property as per above directions. Hence, the Ground No. 3 raised in appeal is PARTLY ALLOWED, as indicated above. 5. Against the above order of CIT(A) both assessee and revenue ar....