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2015 (10) TMI 1510 - AT - Income TaxNature of rent received from the company - benefit or perquisite or rent itself - Additions made u/s 2(24)(iv) - AO taxed under the same under the head Income From Other Sources - AO alleged that the property has been let out an exorbitant rent of ₹ 10,82,121/- per annum against which the assessee has also simultaneously obtained interest-free deposit which is adjustable towards rent charges. - Held that:- Section 2(24)(iv) of the Act will normally come into play only when the company in which the directors or its relatives have taken advantage in respect of any obligation which the director and their relatives are expected to discharge. In the present facts, section 2(14)(iv) has no application. The agreement has been entered into with the company for which rent has been paid and hence the rent has been derived as a quid-proquo for letting out the property. Such receipt of rent cannot be characterized as benefit or perquisite under S. 2(24)((iv). This is not some kind of benefit bestowed gratuitous and without consideration. Accordingly, we subscribe to the view taken by the CIT(A) and decline to interfere with his order cancelling the addition made in taxing the rental income under section 2(24)(iv) of the Act. - Decided against revenue. Additions made u/s 2(24)(v) for Notional Interest - CIT(A) deleted the addition - Held that:- Interest-free deposit in letting out the property is not anything unusual in common parlance and is attributable to decision taken based on exigencies involved. Such action of the assessee cannot be inferred adversely. The issue is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of J.K. Investors (2000 (6) TMI 9 - BOMBAY High Court) relied upon by the assessee and other spate of judicial decisions. We also find the Pune Bench of the Tribunal in the case of Shri Bhavarlal Hiralal Jain (2015 (10) TMI 1278 - ITAT PUNE) has decided the issue in favour of the assessee on similar facts. Respectfully following the binding precedents, this issue regarding the chargeability of notional interest on interest-free deposits is also decided in favour of the assessee.
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