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2013 (7) TMI 318 - KARNATAKA HIGH COURTIncome from House Property - inclusion of Notional Interest - Annual letting value section 23 - Whether the interest received on lease rent deposit is to be added to the actual rent agreed to be paid between the parties for the purpose of determining the annual letting value of the property under Section 23 - Held that:- The notional interest on the interest free security cannot be taken as the determinative factor to arrive at a fair rent - The provisions of section 23(1)(a) do not mandate this - In a taxing statute it would be unsafe for the court to go beyond the letter of the law and try to read into the provision more than what is already provided for - annual letting value would be the sum at which the property may be reasonably let out by a willing lessor to a willing lessee uninfluenced by any extraneous circumstances - An inflated or deflated rent based on extraneous consideration may take it out of the bounds of reasonableness - Actual rent received, in normal circumstances, would be a reliable evidence unless the rent is inflated/deflated by reason of extraneous consideration – as decided in COMMISSIONER OF INCOME TAX v/s MONI KUMAR SUBBA reported in (2011 (3) TMI 497 - DELHI HIGH COURT ) - Such annual letting value, however, cannot exceed the standard rent under the rent control legislation applicable to the property - If the standard rent has not been fixed by the Rent Controller, it is the duty of the Assessing Officer determine the standard rent according to the provisions of the rent control enactment - the Standard rent is the upper limit, and if the fair rent is less than the standard rent, it is fair rent which shall be taken as the annual letting value and not the standard rent. Remand appeal - The addition of notional interest on the interest free security deposit to the rent agreed upon is not permissible in law - It is open to the Assessing Authority to take note of the amount of advance paid which gives an indication of the fair rent of the property that fetches in the market - But the interest accrued on such deposit cannot be added to the agreed rent, so as to make a fair rent or market rent - remand cannot be granted – Decided against the revenue.
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