In a major setback to the Moraj Group Director Priya M Gurnani, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the claim of vacancy allowance with respect to house properties held under her ownership.
A batch of seven appeals were filed by the assessee Ms Priya Mohan Gurnani [Assessee/ Appellant], Director and Co-Founder of Moraj Group for assessment year 2010-11 to 2016-17 involving certain common issues emanating from the same search.
Both the parties submitted that appeals involve common grounds, identical facts and circumstances for all those years. Therefore, the authorized representative argued all the matters raising similar contentions, the departmental representative also defended the orders of
the lower authorities raising similar arguments for all these years.
Therefore, the appeals were disposed of by this common order.
The Assessee was represented by CA Pradip Kapasi and Revenue by Manoj kumar Sinha, Senior Department Representative.
Facts show that an appellant is an individual assessed to income tax. She derives income from salary, house property, business and income from other sources by maintaining regular books of accounts.
Search and seizure action under Section 132 of the Income Tax Act was carried on 4/2/2016. Therefore the assessment for assessment year 2010-11 to 2014-15 were carried out by issuing a notice under Section 153A of the Income Tax Act and for assessment year 2015-16 and 2016-17 carried out under Section 153A read with Section 143(3) of the Income Tax Act.
On the first claim with respect to the standard rent or rateable value should be taken to arrive at the annual let out value of the property, the CIT – A had held that that appellant is owner of flat
number 13 and flat number 14 of model House operating housing society, Sion, Mumbai.
Assessee provided the working of the deemed rental income of the above 2 properties as per property tax levied by the Mumbai municipal Corporation which was not accepted by the AO.
On the merits of the addition of Rs. 227,625/–, the Assessing Officer (AO) held that both the House properties are located in Mumbai and Maharashtra Rent Control Act is applicable to properties, therefore the AO was duty-bound to determine “standard rent” as per the Maharashtra Rent Control Act.
As there was no standard rent fixed for the above property, return on investment in the property would be a guiding factor determining standard rent of the property. Accordingly, he confirmed the chargeability of income arising out of these two properties; he also confirmed denial of various deductions such as vacancy allowance etc. Accordingly, the addition on the merit was confirmed.
The Appellant also submitted that the CIT(A) had failed to appreciate the fact that no notional income was taxable under Section 22 under the head income from house property and that in the alternative vacancy allowance should have been granted under Section 23(1)(C) by the AO.
With respect to the vacancy allowance, the facts are clear that those properties are not let out during the whole of the year and therefore there is no question of granting any vacancy allowance to the assessee.
“This is the mandate of the decision of the Punjab and Haryana High Court. The SLP filed by the assessee against that decision has also been dismissed”, the tribunal bench of Shri Prashant Maharishi, Accountant Member and Kavitha Rajagopal, Judicial Member observed.
The tribunal Bench thus held that, “In view of that precedent, we do not find any merit in the claim of the assessee for allowability of vacancy allowance.”
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