TaxTMI 
TaxTMI 
2018 (8) TMI 1632
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....fects in the property, the said property could not be let out and not applying the provisions of section 23(l)(c) regarding vacancy allowance. (c) By dismissing the letters as self serving without any evidence of two real estate agents R. R. Real Estate and Nisha Dusija categorically stating that the property could not be let out as it was defective. (d) By relying on the letter of Secretary of Hicon Society who is not competent to give opinion that Maharashtra Rent Control Act was not applicable to the Society. (e) By taking as a base for purpose of arriving at the annual value the flat rented out on the first floor which had different characteristics and did not suffer from various defects vis-a-vis the flat on the terrace. (f) By not taking into consideration municipal tax which has to be factored in while determining the annual value. 3. Brief facts of the case are that the assessee has owned property at 12th & 13th floor of Hicon, Bandra, in addition to his own residential flats. However, the assessee has estimated ratable value on lower side as compared to the ratable value based on size, location of the property. Further, the assessee h....
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....y of valuation report of Patwardhan & Associates in respect of flat situated at "Hicon Residency", copy of assessment order of assessment year 2011-12, copy of letter of one R. R. Real Estate, copy of Nisha Dusija and copy of notice of Maharashtra Regional & Town Planning Departmnet dated 28.12.2011. Finally, the ld. Counsel of the assessee has pleaded that income from house property calculated by the Assessing Officer is not correct because "Hicon Residency" has been constructed unauthorizedly vide letter dated 09.02.0212 of Executive Engineer, Building Proposal (WS), 'H' Ward, Municipal Corporation of Central Mumbai. Thus, it was argued that the ALV shown by the assessee may be accepted and addition made by the Assessing Officer may be deleted. 7. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) held that the computation of rental value done by the Assessing Officer is not correct. Though he rejected the assessee's plea that there was some unauthorized construction to be removed before the premises could be properly let out, holding that the alteration required was minor. He referred to another let out flat in the premises at Rs. 1.75 lacs per month and....
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....; was issued on 12.03:2009. As per the notice of Executive Engineer, Building Proposals (Western Suburbs), 'H1 Ward, Mumbai, there was an alteration and modification against the O.C.C Plan dated 12.03.2009, hence; same was to be corrected, removed or modified within 1 month from the date of notice No. CE/1893/WS/AH dated 28,12.2011. Thus, the restoration work was to be completed as per the 'Occupation Plan1 within 1 month. This notice refers refused area on 8th floor & 12tn floor which has been merged with adjoining flats. It means, there was a minor work which could have been completed within 1 month i.e. in the month of January, 2012. Hence, this property was obviously, free from legal disability. Further, I find no supporting evidence that this property was not rented because of leakage from terrace and these flats were bad in all condition. Further, I find no convincing explanation that property was not rented because of inherent defects in the said property. The Ld. A.R. has not submitted any such evidence that these flats at 12 & 13 floor was defective one. Obviously, this statement of Ld. A.R. is found to be unsubstantiated one. Further, it is pertinent to mention th....
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.... and Nisha Dusija can be established by referring the evidence submitted by the Appellant, i.e. Report of Approved Valuer namely, M/s. Patwardhan & Associates dated 22.09.2014 as this report contains the evidence that 1 Flat in the same Building has been given on rent @1,75,000/- per month of 3 BHK having area of 2500 sq.ft. It means "Hicon" property was capable of habitation and Flats were being occupied for own residential purposes or were being given on rent. 3.7. As regards valuation done by M/s: Patwardhan & Associates of- Rs. 11,86,723/-, it is pertinent to mention that such Valuation Report is apparently baseless and is full of contradiction. While working of ratable value of the Flat under reference, he has admitted that "Hicon" Apartment has not been assessed by Assessor & Collector Department of MCGM. The assessment is levied only of vacant piece of Land. He has referred Public Interest Litigation in Bombay High Court regarding ratable value but as demonstrated in Para 3 that one Flat of 3 BHK 2500 sq.ft. area has been rented @Rs.1,75,000/- per-.month with deposit of Rs. 5 lakhs. He has estimated the rental value of Appellant's Flat of 6000 sq.ft. accordingly....
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....40,000/- per annum which is based on primary evidence, hence, the Assessing Officer is directed to take the ratable value of "Hicon Residency" at Rs. 50,40,000/- and allow the standard deduction u/s.24(a) and calculate the "Income from House Property, accordingly. 8. Against the above order, the assessee is in appeal before us. 9. We have heard both the counsel and perused the records. The ld. Counsel of the assessee referred to the provisions of section 23(1)(c). He also referred to the following case law in this regard: Premsudha Exports(P) Ltd. V/s.ACIT CC, Mumbai [2008] 110 TTJ 158(Mum); Referring to the above provisions of law and case law, the ld. Counsel of the assessee submitted that assessee in the present case was not in a position to let out the property. Hence, he pleaded that assessee should be granted vacancy allowance. The ld. Counsel of the assessee submitted that there were some inherent defects in the construction of the property. The deficiency was pointed out by the authorities. And it was necessary to remove the deficiencies in order to bring the property in accordance with the plan. He submitted that since the defects where subsisting there w....
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....puted by the assessee's valuer and prayed in the grounds of appeal. 11. Per Contra, the learned departmental representative relied upon the order's of the ld. Commissioner of Income Tax (Appeals). 12. Upon careful consideration we note that assessing the present case is the owner of the property being flat comprising of 6000 sq. ft. The said flat had remained vacant in the concerned assessment year. The assessee has offered Rs. 4 lacs as rent. In the grounds of appeal the assessee has offered Rs. 11,83,723/- as taxable rent as per its valuer. This has also been accepted by the ld. Counsel of the assessee. The assessing officer in this case has held that the sum of Rs. 56,76,172/- is taxable as rent but the ld. Commissioner of Income Tax (Appeals) has rejected this computation of the Assessing Officer. He has substituted a sum of Rs. 50,40,000/- as reasonable rent for the property. For this he has referred to rate of Rs. 1.75 lakh per month fetched by other flat of the same building. 13. While coming to the above conclusion, the ld. Commissioner of Income Tax (Appeals) has partly rejected the assessee's plea that assessee was under obligation to remove certain unaut....
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.... the 57sum for which the property might reasonably be expected to let from year to (b) where the property or any part of the property is let57 and the actual rent57 received or receivable57 by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during the to in clause (a), the amount so received or receivable : 12. From the above provision of law, it can be construed that in case the property or part thereof was vacant during the period, the proportion deduction should be allowed from the sum on which the property might reasonably be let out from year to year. We find that it is the plea of the assessee that due to inherent defects, the flat could not be let out. Hence, the flat remained vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly permits deduction in this regard. We find that the ITAT in the case of Premsudha Exports (P) Ltd. (supra) had the occasion to deliberate on the identical issue. The tribunal had expounded as under: From a reading of the provisions of sub-section (3) of....