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2014 (4) TMI 549 - AT - Income TaxIncome from house property - Notional interest on interest free deposit – Determination of annual value (AV) - Whether the CIT(A) is right in directing the AO to consider the rent of the premises in accordance with the income returned by the assessee instead of fair market rent & ALV arrived at by the AO as per the provision of Section 23(1)(a) of the Act – Held that:- The rent actually received or receivable for the relevant years could only be reckoned for the purpose of section 23(1)(b) which, therefore, would not include any notional interest (i.e., on the interest-free deposit) - This is in view of the absence of any specific provision in law toward the same in-as-much as the same would require a deeming provision - whatever benefit or addition may have been derived by the assessee from the said interest-free deposit, whether by way of saving on the interest or earning interest or making profit by investing the deposit money, etc. would find reflection in computing the income of the assessee under other heads of income – Relying upon CIT vs. J. K. Investors (Bombay) Ltd. [2000 (6) TMI 9 - BOMBAY High Court] - the direction by the CIT(A) to the AO is in conformity with the law - the field is clear for the AO and there are no fetters on him - his mandate under law being to assess the fair rent, and for which all the information and material that is relevant could be employed. Claim of proportionate relief on account of vacancy – Held that:- It is also trite that hardship in a particular case is no reason for not observing the clear mandate of the provision – Relying upon Vivek Jain vs. Asst. CIT [2011 (1) TMI 897 - Andhra Pradesh High Court] - section 23(1)(c) is an incident of the condition of actual letting – thus, the matter is remitted back to the AO for determination of the fair rent, which may or may not exceed the monthly rent. Deduction for municipal taxes – Held that:- The municipal tax/es paid by the assessee, as disallowed, is for the period relating to the previous years relevant to A.Ys. 2002-03 to 2007-08, i.e., prior to the current year - the order of the CIT(A) is confirmed - The tax levied as contemplated u/s. 23 is only as per law - The deduction qua the tax paid shall stand to be withdrawn (i.e., to the extent of the deduction allowed in its respect) on any part of it being directed to be refunded to the assessee - the amount as finally held as not refundable is which can be said to have been paid by way of tax - Decided against Revenue.
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