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2023 (10) TMI 394 - AT - Income TaxAddition of rent receipt - properties sub-letted to sister concerns - Fair rental value u/s 23(1)(a) - assessee has received rent from unrelated entity at a higher rate vis-à-vis rent received from its related sister concern lesser than the rent collected from unrelated parities - as per AO assessee has given 23 flats to its sister concerns which is nothing but a colorable devise and shifted its additional rental income to its sister concern - HELD THAT:- We observe from the record that assessee has not submitted any information regarding the cost involved in furnishing of above flats to the tax authorities. We also observe that during the hearing bench has asked the assessee to submit the balance sheet of assessee company as well as sister concern but no such information was submitted subsequently and till date. Since assessee has not submitted any information related to furnishing of flats which was leased out to unrelated parties and assessee has leased out majority of the flats i.e., 23 flats to its sister concern at ₹.25,000/- per month. In absence of any information we are not able to determine the expenditure of furnishing made by the assessee in furnishing of flats leased out to M/s.Hover India Automotive and M/s.Anmol rice Mills Pvt. Ltd., and we also observe that the carpet area of all the flats are more or less similar and from the record we observe that Assessing Officer has made an addition per month for each flat. We observe that assessee has leased out ₹.1,50,000/- and ₹.60,000/- respectively to the unrelated parties the average comes to ₹.1,05,000/-. Since Assessing Officer has determined the monthly rent of ₹.69,790/- which is less than ₹.1,05,000/-, in our considered view which seems to be proper in absence of any information of furnishing of flats. The case of relative on which Ld. AR relied heavily are distinguishable as it is relating to individual and held only few flats. Whereas in this case, the assessee itself a company and the business carried on by the LLP can also be carried on by the assessee itself. Therefore, we are inclined to sustain the additions made by the Assessing Officer and accordingly, Ground No.1 raised by the assessee is dismissed. Municipal tax receipts - CIT(A) / AO denied the deduction due to the fact that the name of the assessee is not mentioned in the tax receipt - HELD THAT:- We observe from the record that the municipal tax receipts are issued in the name of the land lord and the ownership of the flats are with Society. The taxes are borne by the society and collects the proportionate taxes from the flat owners. Accordingly, the assessee has paid the proportionate tax to the society. This system of collection of municipal taxes are common in the housing societies where the ownership of the building is with the society and the land belongs to 3rd parties as land owners. What is relevant is, whether the assessee has owned up the relevant taxes and remitted the same; in this case, the assessee has borned and paid the same through banking channels to the society. Therefore, the municipality register or receipt will not have the name of the flat owners, but the name of the land owners. Accordingly claim of the assessee is proper in this case and we direct the AO to allow the claim after verification. Accordingly, ground raised by the assessee is allowed.
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