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2023 (1) TMI 1209 - AT - Income TaxIncome from house property - Addition of notional income on property [flat which was vacant, calculated @8.5% of the cost price of the flat - determination of annual letting value of the property - As the assessee owned a flat at Bandra Breeze in addition to its self-occupied property in Capri Tower AO computed the deemed rent from the 2nd property by considering 8.5% of the value of the flat as appearing in the balance sheet - HELD THAT:- In the present case, it is evident that the lower authorities have determined the annual letting value by considering 8.5% of the value of the flat as appearing in the balance sheet. CIT(A) also upheld the findings of the AO on the basis that standard rent under the Bombay Rent Control Act is to be fixed @8.5% of the total investment. As noted above, in Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] held that the AO either must undertake the exercise to fix the standard rent himself and in terms of rent control legislation, if the same is applicable or leave the parties to have it determined by the court or tribunal under the said legislation - Also held until then the AO may not be justified in applying any other formula or method and determine the ‘fair rent’. In the present case, it is evident that the AO did not follow the applicable rent control legislation while determining the deemed rent of the property @8.5% of the value of the flat. Further, nothing has been brought on record to support that the findings of the learned CIT(A) were reached after undertaking the exercise to fix the standard rent in terms of applicable rent control legislation. Thus, we deem it appropriate to remand this issue to the file of the AO for determination of annual letting value in terms of the applicable rent control legislation in light of aforesaid decisions of the Hon’ble Jurisdictional High Court. Accordingly, grounds raised in assessee’s appeal are allowed for statistical purposes.
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