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2014 (6) TMI 111 - AT - Income TaxIncome from house property - estimation u/s 23(1)(a) of the Act – Notional interest - Standard rental value of three rented flats – Proper enquiry not made by AO – Held that:- Following COMMISSIONER OF INCOME TAX, Versus MONI KUMAR SUBBA & Miracle Exporters P. Ltd. [2011 (3) TMI 497 - DELHI HIGH COURT] The AO did not examine the cost of assets leased/rented and the adequacy of the rent in comparison to its value and further that whether the interest free deposit was in lieu of rent which was not offered by the assessee - The comparative market rates were not called for and the applicability of section 23(1)(a) was not examined - ordinarily the notional interest that may accrue on the security deposit would not form part of income from house property to determine the fair rent which is reasonably expected to be fetched from the property - The AO has to make necessary enquiries. After having undertaken the necessary exercise in that behalf, it comes out from the facts that the payment of security deposit is to circumvent the real rent then the same may be considered for computing the income from house property - interest earned from security deposit cannot be included in the annual letting value to be determined by the AO - the adding of interest income into the rent would lead to double assessment of the same income – thus, there was no reason to interfere with the finding of the CIT(A) that the estimation of income was wrongly made by the AO – Decided against Revenue.
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