TMI Blog2015 (3) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... t Hem Kunt Chemicals was the assessee’s tenant without appreciating that as per Sec. 16(a) and (b) of the Delhi Rent Act no tenant without the previous consent in writing of the land lord has the right to sublet or assign the premises occupied by him. Once eviction orders are passed the relationship of land lord/tenant comes to an end. Thereafter, the land lord can be awarded only compensation by the Court till possession is handed back to the land lord by the tenant. Thus, there was a gross error in the assessment order in increasing the rents of all the Appellant's remaining 39 protected tenants (being ₹ 23,769/- per Month paid to the Appellant by its lawful/ protected tenants) by 19000% i.e. to ₹ 50, 72,233/ - Per Month because these lawful tenants are 'protected tenants' who enjoy protection under the Delhi Rent Control Act,1958. Sec 6A of the Delhi Rent Act 1958 has restricted the power of land lords (i.e. the appellant herein) to increase rents beyond 10% and that too only after every 3 years. Section 105 and 107 of the transfer of Transfer of Property Act does not confer any right on any Civil Court to fix the rent of any premises, which is a matter between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther units apart from L-40. Fact remains that the entire amount was received in A. Y. 2007-08 and 2008-09 for the period commencing from August, 2003, the rent for prior period of four months, i.e. April 2003, May 2003, June 2003 and July 2003 was determined at the rate of ₹ 1,42,2001 - only. Accordingly, the Assessing Officer worked out rental income of Hemkunt IBOP as under: Details of Office/shops As per assessee rent (Rs) per Month As per Hon ble High court per month (Rs.) for F.Y.2003-04 Deemed value per month (in Rs.) Rental income of balance properties (Rs.24,502 ₹ 733) 23,769 (Excluding -733) 733=1,56,420 50,72,233 Rental income for the year [Rs.50,72,233X12] Rs.6,08,66,796 2.1. In view of the above, Assessing Officer worked out the deemed rental income at ₹ 6,08,66,796/-. After allowing deduction u/s.24(a) @ 30% total income was assessed at ₹ 4,26,06,757/-. We note that, as obsorbed by the ld. Commissioner of Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by the tenant from the sub-tenants/ occupant. The Assessing Officer had committed an error in considering the amount of money deposited, in court, by Bank of Punjab in the subsequent assessment years as rent due to the assessee instead of compensation/occupation charges, which is directed by the court to be paid by party (in this case Bank of Punjab) against whom eviction order had been passed, which is in direct contradiction of the Assessing Officer's own finding in Page-2 of the Assessment Order, wherein the Assessing Officer has admitted that in July,2003, Bank of Punjab was directed to pay compensation of ₹ 1,42,000/- per month by Delhi High Court. This amount (deposited by Bank of Punjab) which the Assessing Officer treats as rental income is in reality compensation for wrongful possession which was deposited only in the subsequent assessment years by Bank of Punjab, and was received by the assessee only in A.Y.2007-2008, and A.Y.2008-09. There is wrong presumption by the Assessing Officer that Bank of Punjab and not Hem Kunt Chemicals was the assessee s tenant without appreciating that as per Sec. 16(a) and (b) of the Delhi Rent Act no tenant without the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been taken as the deemed rental value. It is found, firstly that the order of Delhi High Court was only specific to L-40 premises, which were let out to Hemkunt Chemicals further sublet to 8ank of Punjab. The properties were under the Delhi Rent Control Act. The ITAT Mumbai in ITA No. 35241MI2008 A.Y.2002-03 in Shri Deepak Vaswani v ITO Ward 12(2)(40 Mumbai has laid down principles on how the determination of ALV is to be made. It has been held that in case the property is covered by the Rent Control Act, the annual value u/s 23(1) (a) cannot exceed the standard rent determined under the Rent Control Act because of the restriction on the value of rent as held by the Supreme Court in the case of Sheela Kaushik (113 ITR 435). Thus without any specific order in respect of other properties, the Assessing Officer could not have extrapolated the rent using the basis of the Court decision in respect of the L-40 property. The Assessing Officer is thus directed to restrict the rental income in respect of properties other than L-40 to the standard rent determined under the Rent Control Act. As regards the L-40 property (under dispute), provisions of section 25AA and 258 have to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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