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2008 (3) TMI 363 - ITAT DELHI-GEstimation of rental income - determination of annual value of the property - residential premises - Income From House Property - Whether the Controller having fixed the standard rent in respect of the property in question in 1971, any revision thereof was warranted in the facts and circumstances of the case as per the relevant provisions of the Delhi Rent Control Act as held by the Assessing Officer and whether such revision made by him was in accordance with the principles of valuation laid down in the Delhi Rent Control Act, 1958 - HELD THAT:- It is observed that the principles relating to determination of standard rent are laid down in section 6 of the Delhi Rent Control Act, 1958 whereas the provisions of sections 6A and 7 deal with the revision/increase of standard rent. The standard rent was determined by the Controller in the year 1971 and the land having been acquired by the previous owner prior to the year 1971 as well as the construction having been done by the said owner before 1971, the value to be taken as basis as per clause (A)(2)(b) of section 6(1) ought to have been already considered by the Controller while determining the standard rent in the year 1971 itself. This being so, it was not permissible as per the relevant provisions of section (6) of the Delhi Rent Control Act, 1958 to substitute the said base price with the cost of the property to the assessee in order to determine/revise the standard rent and the said cost thus was entirely irrelevant in the context of determining the standard rent of the property. Periodic revision of standard rent already fixed by the Controller under the Delhi Rent Control Act, 1958, it is observed that the relevant provisions allowing such revision are contained in section 6A which has been inserted in the statute only with effect from 1-12-1988. Moreover, a perusal of the said provisions shows that the expression used therein is "may be increased by 10 per cent every three years" which, as rightly submitted by the learned counsel for the assessee, clearly shows that it is not mandatory. The discretion is given to the parties and if there is no agreement between them to revise the rent already fixed, such revision cannot be thrusted upon them under the Delhi Rent Control Act, 1958. keeping in view the relevant provisions of Delhi Rent Control Act, 1958, we are of the view that standard rent of the property in question belonging to the assessee can be determined by applying a rate of 10 per cent to the base value i.e. aggregate amount of the actual cost of construction and the market price of the land comprised in the premises on the date of the commencement of the construction. Since the said base value as taken while determining standard rent in the year 1971 was Rs. 4,15,267 (i.e. 31145 X 100/7.5), the standard rent of the property by applying the rate of 10 per cent to the said base value in accordance with the principles laid down in section 6 of the Delhi Rent Control Act, 1958 would come to Rs. 41,527. As the standard rent so determined at Rs. 41,527 is lower than the ALV of the relevant portion of the property declared by the assessee at Rs. 52,540 on the basis of the municipal valuation fixed by NDMC, we hold that no adjustment/addition to the ALV of the property declared by the assessee as done by the Assessing Officer is called for. We, therefore, agree with the view taken by the Tribunal on this issue in assessee's own case for assessment years 1988-89 and 1989-90 accepting the ALV of the property declared by the assessee which has been followed by the Assessing Officer himself subsequently in assessment years 1995-96, 1996-97 and even in assessment year 2000-01 and onwards. Accordingly, the question referred to this Special Bench is answered in negative i.e. in favour of the assessee. The matter will now go back to the Division Bench for disposing of the appeal of the revenue in conformity with the aforesaid decision of this Special Bench.
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