TaxTMI 
TaxTMI 
2018 (4) TMI 1177
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....the case and in law, the Ld. CIT(A) has erred in deleting the enhancement made in the annual letting value without appreciating that the valuation was based on the expert opinion of the Government Registered valuer and market trend. 3. Brief facts of the case are as under: The assessee is the owner of the property at Cuffe Parade, Mumbai measuring 3,100 sq.ft. of carpet area. It had entered into a leave and license agreement with TATA Motors for a monthly compensation of Rs. 50,000/-and interest free refundable deposit of Rs. 2.35 crores w.e.f. 31.12.2007. The Assessing Officer sought information from a Govt. Registered Valuer to provide the market value of the flat so let out for the year 2007. In a letter of reply the valuer stated that the market value for the said flat based on the stamp duty ready reckoner would be Rs. 4,07,29,273/- and Rs. 6,79,30,523/- in 2007 and 2009 respectively. In the said letter, the said valuer mentioned as under: This letter shall not be construed as a Valuation Report of the Registered Valuer or opinion of the Registered valuer. The undersigned has replied and given information purely based on letter received, oral discussion with the department....
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....n be taken as per the reasonable yardstick, unless there is sufficient material on records for the assessing officer to take a different valuation. The assessee also referred to the provisions of section 154 of the BMC Act. It also referred to the decision of honourable Bombay High Court in the case of CIT vs. Tiptop Typography [2014] 48 taxman.com 191 (Bom). It was submitted that the Hon'ble High Court had held that although the municipal rateable value may not be binding on the assessing officer in certain cases but is definitely a safe guide. The Assessing Officer further submitted that the valuation report relied upon by the assessing officer suffers from various discrepancies. In support of these contentions, the assessee had itself obtained fresh valuation report from the registered value M/s.Techno Arch Consultants for assessment year 2010-11 and it was submitted as additional evidence. Furthermore, the additional evidence were also submitted for assessment years 2011 - 12 and 2012 - 13. 7. The additional evidences were forwarded to the assessing officer. The ld. Commissioner of Income Tax (Appeals) obtained remand report from the assessing officer and also rejoinder from t....
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....ssed on account of interest free deposit received would lead to double taxation of interest or such deposits. This aspect has also been appreciated by the Hon'ble Mumbai Tribuna in case of Kaira Can (supra), which has considered the decision of Bombay High Court in case of Tip Top Typography (supra) and the decision of Full Bench of Delhi High Court in case of Moni Kumar Subbah (supra). The facts involved in the decision before Mumbai Tribunal was similar. The Tribunal has held as under: "6. We have heard both the parties on this issue of inclusion of notional interest income on the interest free security deposit. It is a settled proposition of law by virtue of the judgement of the Hon'ble jurisdictional High Court in the case of J. K. Investors (Bombay) Ltd. (supra) and Tip Top Typography (supra) that the notional interest should not be included while computing the income from house property under section 23(i)(a) and (b) of the Act. It is also a settled proposition that actual rent received or receivable by the land lord constitutes a reliable evidence to ascertain the properties' capacity to earn rent in open market. The forms should be accepted unless the Assessin....
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....o. 2733/M/2008 dated 30.01.2015) 3. Savani Brothers (46 CCH 64) (Mum) 11. He also referred to the valuation report from the M/s.Techno Arch Consultants submitted by the assessee before the ld. Commissioner of Income Tax (Appeals). He further submitted that the said letter of the valuer relied upon by the Assessing Officer itself mentioned that it should not be treated as valuation report or opinion of the government valuer. 12. Per contra, the ld. Departmental Representative placed reliance upon the order of the Assessing Officer. He however referred to the valuation report obtained by the Assessing Officer from the government. The ld. Departmental Representative further placed reliance upon the decision of the ITAT, Mumbai in the case of ACIT vs. Sh. Virendra Jain (in ITA No.2116/Mum/2012 vide order 12.08.2015). The ld. Departmental Representative further referred that the decision of the Hon'ble jurisdictional High Court in the case of Tip Top Typography (supra) has been totally wrongly applied by the ld. Commissioner of Income Tax (Appeals). 13. We have carefully considered the submissions of both the counsel. We find that in this case the assessee is the owner of the p....
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.... back immovable properties in metro cities and towns, so also the time spent in litigation, it is expedient to execute a leave and license agreements. These are usually for fixed periods and renewable. In such cases as well, the conceded position is that the Annual Letting Value will have to be determined on the same basis as noted above. In the event and as urged before us, the security deposit collected and refundable interest free and the monthly compensation shows a total mismatch or does not reflect the prevailing rate or the attempt is to deflate or inflate the rent by such methods, then, as held by the Delhi High Court, the Assessing Officer is not prevented from carrying out the necessary investigation and enquiry. He must have cogent and satisfactory material in his possession and which will indicate 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 material to indicate that the parties have suppressed the prevailing rate. Then, the enquiries that the Assessing Officer can make, would be for ascertaining the going rate. He can make a comparative study and make a analysis.....
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.... guess work or act on conjecture and surmise. It was also expounded that the enquiries that the Assessing Officer can make would be for ascertaining the going rate, he can make a corporative study and make analysis. In that regards, transaction of identical nature can be ascertained by obtaining the requisite details. Now we examine as to what was the cogent material available to the Assessing Officer in rejecting the municipal lettable value. We find that except for the surmise, there was no material whatsoever. The Assessing Officer had obtained a letter from a government valuer, the said letter may be gainfully reproduced hereunder: Sir, With reference to Notice u/s. 133(6) of the IT Act, No. Mum. DCIT2(3)(OSD)/133(6) Sheba Properties/2012-13 dated 13/02/2013 received on 16/02/2013 and further as per telephonic talk of Dy. CIT(OSD)-2(3) with the undersigned relating to assisting the department in ascertain Stamp Duty Ready Reckoner Market Value Zone, rate and consequently it's market value for the year 2007 and year 2009 as per stamp duty ready reckoner, of the property known as Flat No. A3, on 3rd Floor of "A" - Wing in Pallonji Mansion CHSL situate at Plot No. 43, Prakash ....
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....s of the Hon'ble jurisdictional High Court directly on the subject, the decision of the tribunal referred by the ld. Departmental Representative are not germane. Accordingly, we affirm the order of the ld. Commissioner of Income Tax (Appeals). 19. The common issue raised by the assessee for assessment years 2008-09 and 2009- 10 reads as under: 1. Re-assessment proceedings under section 147 are invalid and bad in law 1.1 The learned CIT (A) has erred in law and on facts in upholding the action of invoking the provisions of section 147 of the Act. The learned CIT (A) ought to have appreciated that the proceedings initiated by the AO under section 147 of the Act and consequently the order passed by him under section 147 read with section 144 of the Act are invalid and bad in law. 1.2 The learned CIT (A) has erred in law and on facts in upholding the initiation of the proceedings under section 147 of the Act based on change of opinion. The learned CIT(A) ought to have appreciated that the order passed under section 147 read with section 144 of the Act based on change of opinion is invalid and bad in law. 20. In this regard, we may gainfully refer to the order of the ld. Com....
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....ready reckoner stamp duty rates for the property in the similar locality applicable in case of payment of stamp duty at the time of transfer of property in such locality. The AO rejected the submissions of the assessee and passed the order u/s.144 r.w.s. 147 as the assessee failed to respond to notices u/s.142(1). 4.2 The appellant made the detailed submissions objecting to the proceedings u/s.147 of the Act vide its letter dated 17.06.2013. The A.O. has vide detailed order dated 19.06.2013, rejected all the objections of the appellant in respect of reassessment proceeding. Consequent to the disposal of the objections filed by the appellant, the AO had sent notices u/s.142(1) dated 09.10.2013 and 13.12.2013 asking for certain details. The appellant contended that it had verbally submitted to the A.O. that most of the details as requested by the A.O. vide the above notices have already been submitted during the regular assessment proceedings and are already on the records. Further, details called for do not have any bearing on the issue under consideration for which reasons have been recorded. Further to above, consequent to order disposing our objection, the appellant made detail....
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....om this house property at Rs. 4,50,000/-. InA.Y.2010-11, the issue of Annual Letting Value of this property with respect to section 23(i)(a) which was looked into. In this, it was found from the information received from Mr. Santosh Kumar (Govt. Registered Valuer) that the market value for the said flat based on stamp duty ready reckoners would be Rs. 4,07,29,273/- and Rs. 6,79,30,523/- in 2007 and 2009 respectively. From this, it can be seen that the rent income actually received by the assessee as per the provisions of sec.23(i)(b) of the Act is much less than the sum for which the property might reasonably be expected to be let from year to year as per section 23(i)(a) of the Act. Hence, I have reason to believe that income chargeable to tax has escaped assessment/is under assessed within the meaning of section 147. Issue notice under section 148 of the Income Tax Act, 1961." It is, therefore, clear that the case was re-opened to assess the income from house property correctly. It is seen from the assessment order and the details available on record that no specific query regarding the income from house property and the annual letting value (ALV) of the property at Cuff....
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....orrect information and details it is required and wider an obligation to disclose. Burden is on the assessee to make full and true disclosure." The Hon'ble High court decided the issue in favour of revenue though the reassessment was done after four year. It held that whether or not there was a failure or omission to disclose truly and fully is essentially a question of fact. It referred to the Explanation 1 of section 147 which stipulates that mere production of books of account or other evidence is not sufficient. Merely because material lies embedded in material or evidence, which the Assessing Officer could have uncovered but did not uncover, is not a good ground to strike down a notice for reassessment. The SLP filed against the above decision has been dismissed by the Hon'ble Supreme Court and therefore the issue has attended finality. There is no reason why the ratio of the above decision shall not be applicable to the facts of the instant appeal. I do not agree with the contention of the Ld. AR that disclosure in the statement of income and the return of income amount to full and true disclosures of material facts. There was no specific enquiry by the A.O. during....
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....d in law and on facts in confirming the disallowance under section 14A of the Act read with rule 8D of the Income Tax Rules, 1962 ("the Rules") and thereby directing the AO to re-compute the disallowance without appreciating the fact that no expenditure had been incurred in relation to exempt income. 1.2 The learned CIT (A) has erred in law and on facts in directing the AO to recompute the disallowance under section 14A of the Act disregarding the facts and details of expenses submitted showing that no expenses have been incurred for earning the income exempt from tax. 1.3 The learned CIT (A) has erred in law and on facts in directing the AO to recompute the disallowance under section 14A of the Act read with rule 8D of the Rules disregarding the decision of the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (328 ITR 81), which requires the AO to establish nexus of expenses having been incurred for earning exempt income before applying provisions of section 14A of the Act read with rule 8D of the Rules. 1.4 The learned CIT(A) has erred in law and on facts in directing the AO to recompute the disallowance under section 14A of the Act disregarding the....
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....t years 2010-11, 2011-1 2 and 2012- 13 he shall only be pressing for ground number 1.6 above and all other grounds are not pressed. Accordingly, except for ground number 1.6 above all other grounds raised by the assessee in these appeals are dismissed as not pressed. 26. Upon carefully consideration, we note that the only issue arising here is that in making disallowance u/s. 14A in the normal provisions of the Act, the Assessing Officer has erred in law and facts in considering the professional charges paid to consultants and auditors as indirect administrative charges for the purpose of making the disallowance u/s. 14A. In this regard, the ld. Counsel of the assessee has placed reliance upon the decision of the Hon'ble Bombay High Court in the case of Chennai & Co. Pvt. Ltd. v. CIT 206 ITR 616 (Bom). 27. Upon careful consideration, we note that this decision has been cited by the ld. Counsel of the assessee is for the proposition that a statutory expenses incurred is allowable expenditure even if no active business is conducted. We fail to understand as to how this decision is relevant here in deciding the expenses which are incurred in respect of the incurring tax free inc....