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2022 (5) TMI 932 - AT - Income TaxIncome from house property u/s 23 - deemed rental income - estimating the fair market rent in respect of two properties owned by the assessee - Municipal Ratable Value of the impugned property or the actual rent offered by the assessee in the return of income - whether said properties were held by the assessee for its business purposes and hence, the deemed rental income thereon was no assessable as income from house property u/s 23 - HELD THAT:- AO has merely relied on the report submitted by the Assessing Officer, which is based on hearsay opinions. AO was duty bound to conduct proper investigation before rejecting the assessee’s claim of deciding Annual value based on the Annual rateable value decided by Municipal Authorities. AO has also not given any specific reasons for rejecting the Rent claimed to be earned by the assessee from the impugned flat in Siddhivinayak Park. Thus, it is a settled proposition that , the places where Rent Control Act is not applicable, the Annual Value decided by Municipal Authorities can be a rational yardstick . In the case under consideration the DR has not brought to our notice any reason for which Municipal Value cannot be considered as Fair Rent u/s 23(1). Neither the AO nor the CIT(A) has discussed why Annual value decided by Municipal Corporation shall not be adopted as Fair Rent for the purpose of section 23(1) in this case. As already discussed why the report submitted by the Inspector cannot be considered. Therefore, we are of the opinion that , in this case the Municipal Ratable Value of the impugned property or the actual rent offered by the assessee in the return of income , whichever is higher, shall be adopted as fair rent u/s 23(1)(a) of the Act. Assessee appeal allowed.
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