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2008 (8) TMI 599 - AT - Income TaxIncome from house property or income from business - rental value of the property - HELD THAT:- Assessee submitted that the directors of the assessee occupied the premises whenever they were in India and the use by the directors of the property belonging to a company should be considered as use of the property for the purpose of business. We are unable to accept the submission made on behalf of the assessee. Firstly, it is seen that in the return of income filed in response to notice u/s 148, the assessee has offered Annual value of the property as income under the head ‘Income from house property’. Apart from the above, there has been no plea on behalf of the assessee that the directors occupied the premises belonging to the assessee for their stay while in India. Thirdly, even the plea that the property was used for holding business meetings and conferences, which was put forth before learned CIT(A), was not substantiated with any convincing evidence. Even before us, there was no evidence let in on the above aspects. In the circumstances, we hold that the plea of the assessee that the income in question has to be assessed under the head income from business cannot be accepted. Determination of annual value of the property - quantum of income that has to be assessed under the head ‘Income-from house property’ - HELD THAT:- Decision in the case of Mrs. Sheila Kaushish [1981 (8) TMI 1 - SUPREME COURT] mentions standard rent under the Rent Control Act as one of the yardsticks. This does not mean that standard rent alone is to be considered. In the present case, we also notice that the AO has not chosen to adopt the standard rent as per the Rent Control Act as yardstick for determining the annual value. We also find from the decision in the case of Smt. Prabhabati Bansali [1981 (9) TMI 21 - CALCUTTA HIGH COURT] that standard rent, if it does not exceed the Municipal Valuation alone can be adopted in place of Municipal Valuation. Therefore, we hold that the Municipal Valuation should be the basis of determining annual value in the present case. Action of the revenue authorities in adopting annual value on the basis of inquiries conducted regarding market rent in the vicinity of the property is not in accordance with law. The AO is directed to accept the income from house property on the basis of Municipal Valuation. In the result, appeals of the assessee are allowed.
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