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2019 (12) TMI 352 - AT - Income TaxAddition on house rent - Addition made on account of difference between rent received by the assessee and fair market value for the properties - As per AO the said properties were located in big cities like Mumbai, Delhi and Pune and according to ld. DR the value as determined by the municipal laws is not binding on the assessee - HELD THAT:- Hon’ble High Court of Delhi in the case of Moni Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT] held that the annual value fixed by the Municipal authorities can be valuable yardstick, however, it would be subject to the condition that the annual value fixed bears a close proximity with the Assessment Year in question in respect of which assessment is to be made under the Income Tax proceedings. It may not be a safe yardstick if there is a change in the circumstances because of passage of time that the annual value fixed by the municipal authorities much earlier. Therefore it is clear that the Hon’ble High Court of Delhi pleased to say the annual value fixed by the municipal authorities can be rationale and reasonable but subject to the condition that the value determined by the municipal value should be a close proximity with the Assessment Year under consideration. As noticed from Page No.28 wherein is a written submission, before the CIT(A) showing municipal value is far less than the rent received by the assessee. It is noted from the record as held by the CIT(A) that no evidence whatsoever brought on record by the AO for comparison that the rent received by the assessee is far less than to any of the property located in the similar area. The CIT(A) also held that Assessing Officer erred in applying the method provided in Schedule III of Wealth Tax Act. It is correct to note that the Assessing Officer did not accept the claim of rent received by the assessee and he doubted that it has been received between M/s Ballarpur Industries Ltd. and the assessee according to their suit will. Admittedly, the value determined by the municipal authority regarding the seven properties of assessee is much less than the rental income as shown by the assessee. Hon’ble High Court of Delhi opined that in the case of Moni Kumar Subba (supra), that if the Assessing Officer finds the value determined by the Municipal authorities is not reasonable, he can determine the value on the basis of material/evidence by placing on record. As discussed above, there was no such exercise done by the Assessing Officer. However it has to be noted that the appellant- Revenue is following consistently in accepting the income as offered by the assessee under the head income from house property for earlier A.Y. 2006-07 and subsequent assessment years. As noted above, the CIT(A) in the present year under consideration considering the reasoning given by his predecessor for A.Y. 2008-09 deleted the additions by holding the rental income as offered by the assessee is reasonable/fair, so therefore, in our opinion, the CIT(A) rightly justified in deleting the addition made by the Assessing Officer. Thus only ground raised by the Revenue fails and it is dismissed.
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