Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (8) TMI 356 - HC - Income TaxFair rental value u/s 23(1)(a) - Municipal value or actual rent received – Applicability of rent control legislation - Whether the Tribunal was right in holding that the fair rental value specified in section 23(1)(a) is the municipal value or actual rent received whichever is higher and not the annual letting value on the basis of comparable instances as adopted by the AO, though the property was not covered by the Rent Control Act – Held that:- Where Rent Control Legislation is applicable and as is now urged the trend in the real estate market so also in the commercial field is that considering the difficulties faced in either retrieving back immovable properties in metro cities and towns, so also the time spent in litigation, it is expedient to execute a leave and license agreements - Following the decision in Commissioner of Income Tax v. Mani Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT] - These are usually for fixed periods and renewable - market rate in the locality is an approved method for determining the fair rental value but it is only when the AO is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality - municipal rateable value may not be binding on the AO but that is only in cases of afore-referred nature - It is definitely a safe guide. Even in the cases and matters brought by him to our notice, it is evident that the AO cannot brush aside the rent control legislation is applicable to the premises - the AO has to undertake the exercise contemplated by the rent control legislation for fixation of standard rent - The attempt by the AO to override the rent control legislation and when it balances the rights between the parties has rightly been interfered with in the given case by the Appellate authority - The AO either must undertake the exercise to fix the standard rent himself and in terms of the Maharashtra Rent Control Act, 1999 if the same is applicable or leave the parties to have it determined by the Court or Tribunal under that Act - Merely because the rent has not been fixed under that Act does not mean that any other determination and contrary can be made by the AO. From the three aspects namely of a municipal valuation, of obtaining interest free security deposit and the properties being covered by the Maharashtra Rent Control Act but no standard rent thereunder is fixed. Wherever the AO has not adhered to the those principles, and his finding and conclusion has been interfered with, by the higher Appellate Authorities, the revenue cannot bring the matter as no substantial question of law can be arising for determination and consideration – Decided against Revenue.
|