June 2013
Bhawanji Kunverji Haria vs. ACIT ITAT Mumbai `B’ Bench Before B. R. Mittal (JM) and N. K. Billaiya (AM) ITA No. 5642/Mum/2011 A.Y.: 2008-09. Decided on: 23rd April, 2013. Counsel for assessee/revenue: G. C. Lalka/ Roopak Kumar
By Jagdish D. Shah, Jagdish T. Punjabi
Chartered Accountants
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Section 22 – Notional income in respect of property belonging to the assessee, but used by the firm in which the assessee is a partner, is not chargeable to tax under the head `Income from House Property’.
Facts: The property of the assessee, located at Mahavir Market, Navi Mumbai, was utilised by the firm M/s Lakhmichand Cooverji & Co., in which assessee was a partner. The Assessing Officer (AO) charged to tax notional income in respect of this property. Accordingly, a sum of Rs. 1,68,000 was added to total income of the assessee.
Aggrieved, the assessee preferred an appeal to CIT(A) who confirmed the action of the AO.
Aggrieved, the assessee preferred an appeal to the Tribunal.
Held:
The Tribunal noted that the issue was covered in favour of the assessee by the order of the Tribunal in the assessee’s own case for AY 2006-07 vide ITA No. 4032/Mum/2009. It noted the following observations in the said order –
“On the second issue of notional income in respect of property located at Mahalaxmi Market, Navi Mumbai. The Learned Counsel relied upon the decision of the CIT vs. Rabindranath Bhol (Ori) (1995) 211 ITR 299, in which on identical facts, the Hon’ble High Court of Orissa has held that the income from the house property owned by the assessee’s partner and used in the business carried out in the partnership firm in which the assessee is a partner would qualify for exemption u/s 22(2) (sic 22). We find that the facts of the present appeal are identical with the facts in as much as in the present appeal also the property of the assessee is being used by the firm in which the assessee is also a partner. Respectfully following the decision of the Hon’ble High Court, the addition of Rs.1,68,000 is deleted.”
Since the facts were identical the Tribunal deleted the addition made by the AO.
The appeal filed by the assessee was allowed.
