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2014 (4) TMI 629 - AT - Income TaxReasonableness of the sum offered - Addition of notional income on security deposit – Computation of house property u/s 23(1)(a) of the Act - Whether the rental income offered by the assessee @ Rs. 11 lakhs per month is reasonable or not – Whether the sum of Rs. 1.32 Crs is a reasonable ALV as offered by the assessee or Rs. 1.32 Crs, increased by the notional interest on the reducing balances of the security deposit calculated the notional interest rate of 8% - Held that:- The assessee received Rs. 11 lakhs per month as rent and the assessee offered the sum of around Rs. 1.33 Crs as a gross ALV of the assessee, including 1,34,558/- from Hughes Telecom / Tata Teleservices –The aspect of reasonableness was not examined by the authorities - The addition made by the AO on account of notional interest applying the rate of 8% on the reducing interest free security deposits is widely on ad-hoc basis and lack of material or evidence to support - There is no information brought on to the record to demonstrate that the rental income for similar property in similar location is higher than what is offered by the assessee in the rental income - applying the rate of 8% without examining the facts and without giving the findings, it is not appropriate to say that that the security deposit has earned interest income from the bank. The assessee’s failure to file the basis showing the justification for arriving at the monthly rent of Rs. 11 lakhs for the premises also cannot be appreciated - certain basic things are missing and it is required to remand the matter to the files of the AO - Lower authorities have not provided any discussion on whether the said sum of Rs. 1.32 Crs includes portion attributable to the interest segment on the security deposit - thus, all the three appeals are remitted back to the AO for examining the reasonableness of the computation of the monthly rent of Rs. 11 lakhs per month as offered by the assessee and in what way the same amounts to deflation of rent qua the other premises in the vicinity – Decided in favour of Assessee.
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