2011 (3) TMI 497 - DELHI HIGH COURT

Addition on house rent - notional interest on interest free security deposit - if AO finds that the actual rent received is less than the "fair/market rent" because of the reason that the assessee has received abnormally high interest free security deposit and because of that reason, the actual rent received is less than the rent which the property might fetch, he can undertake necessary exercise in that behalf - High Court in the case of Commissioner of Income Tax Vs. J. K. Investors (Bombay) Ltd., [2000 -TMI - 14566 - BOMBAY High Court] categorically rejected the formula of addition of notional interest while determining the "fair rent" - Decided in favor of the assessee

whether the annual letting value fixed by the Municipal Authorities under the Delhi Municipal Authority Act can be the basis of adopting annual letting value for the purposes of Section 23 of the Act - Calcutta High Court in Satya Co. Ltd. (1985 -TMI - 60423 - ITAT CALCUTTA-C) that in such circumstances, the annual value fixed by the Municipal Authorities can be a rationale yardstick. However, it would be subject to the condition that the annual value fixed bears a close proximity with the assessment year in question in respect of which the assessment is to be made under the Income Tax laws - Held that: If the assessing officer can show that rateable value under municipal laws does not represent the correct fair rent, then he may determine the same on the basis of material/ evidence placed on record - Appeal is dismissed