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2016 (1) TMI 407 - AT - Income TaxAddition on account of deemed lease rent - diversion of income by overriding title - Held that:- Assuming for moment that the assessee was the owner of the impugned flat therefore liable to be taxed at the annual let out value, as mentioned elsewhere, there was a specific charge on the property prior to the purchase of the said property by the assessee and by way of this charge Shri Samir Bojwani received the lease rent from the licencee M/s. Accor Radha Krishna Corporate Service Private Limited. Thus, if there is a iota of doubt that the impugned ALV should be taxed in the hands of the assessee, it is a clear case of diversion of income by overriding title. In our understanding of the facts, there is no need for going into the assumptions as in the purchase Deed itself, it is clearly mentioned that the assessee will get the physical possession of the said premise only after 31.10.2007. Therefore, there is no question of any accrual of rent during the year under consideration. The facts of the case are squarely covered by the decision of the Privy Council in the case of Raja Bejoy Singh Budhuria Vs CIT Bengal (1933 (3) TMI 20 - THE PRIVY COUNCIL) and also by the decision of CIT Vs Sitaldas Tirathdas [1960 (11) TMI 17 - SUPREME Court] . In both these cases, there was a charge for maintenance created against the assessee. In the case before us too, as evident from the above discussion, the lease rent was to go to Shri Sameer Bojwani by virtue of the specific clauses of Leave and Licence Agreement dated 27.11.2004. Since it stood pre-created against the assessee and in keeping with the enunciation by the Privy Council in Raja Bejoy Singh Budhuria (supra), the income must not be deemed to have reached the assessee, since it was actually earned by Shri Samir Bojwani. Therefore, the case of the present assessee falls squarely within the ratio of Raja Bejoy Singh Budhuria (supra) as considered in Sitaldas Tirathdas (supra). - Decided in favour of assessee. Addition on deemed interest earned by the assessee - Held that:- As mentioned elsewhere, the security deposit was taken by Shri Samir Bojwani pursuant to the Leave and Licence Agreement entred by him with M/s. Accor Radha Krishna Corporate Service Private Limited and since as mentioned elsewhere, the assessee could not have earned the rent during the impugned assessment year. We do not find any logic in taxing deemed interest in the hands of the assessee. The AO is directed to delete the same. The findings of the Ld. CIT(A) are accordingly reversed.- Decided in favour of assessee.
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