2013 (1) TMI 872 - AT - Income Tax

Summary

Issues involved:
The appeal concerns the adoption of notional rent as income from house property instead of actual rent received by the assessee.

Facts and Decision:
- The case involves a flat rented out at a monthly rent of &8377; 5,000, with the AO estimating the rent at &8377; 30,000 per month.
- The AR argued that notional rent cannot be accepted when there is a proper agreement in place for actual rent.
- Referring to previous judgments, the AR highlighted that the issue of notional rent versus actual rent has been clarified by the Hon'ble Bombay High Court and followed by ITAT benches.
- The decision cited the interpretation of 'Annual Value' u/s 23 of the Income Tax Act, emphasizing that even if standard rent is not fixed, the annual value must be based on what the property could reasonably be expected to let for.
- Following precedent and judicial discipline, the ITAT modified the CIT(A) order, directing the AO to accept the income based on municipal ratable value as the annual letting value of the property.
- The ITAT decision in this case aligns with the decision in a similar case, Gagan Trading, leading to the deletion of the addition of &8377; 3,00,000.
- Consequently, the appeal by the assessee was allowed, and the addition of &8377; 3,00,000 was directed to be deleted.

This summary provides a detailed overview of the legal judgment, focusing on the issues involved and the decision rendered by the ITAT Mumbai regarding the adoption of notional rent as income from house property.