TMI Blog2004 (1) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... it was stated on behalf of the assessee that the actual rent received by the assessee was more than the rent assessed by the Municipal Corporation ofDelhi, as such, the same should be adopted. The AO observed that the assessment of house-tax reveals that the property was self-occupied whereas the property has to be considered a commercial property because the same has been let out to M/s York Exports Ltd. for commercial use. The AO further observed that the property was on an area of 300 sq. yds., having three bed rooms, big hall, kitchen, etc. Relying upon the report of the Inspector dt. 29th Jan., 1996, that M/s York Exports Ltd. of other companies of the group were found to be occupying the premises, the AO turn down the contentions of the assessee to the effect that it was let out only for one and a half months. He accordingly held that the property was let out for whole of the year, after rejecting the claim of vacancy period of the assessee. He further observed from the local enquiries made through the property dealers in the vicinity of the area that the minimum rate of letting out of the properties of this kind was between Rs. 20,000 to Rs. 25,000 per month. He, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the premises were let out for whole of the year. 5. The CIT(A) reexamined the issue and held that s. 23 of the Act determines the ALV of the property. Relying upon the judgment of Sheila Kaushish and Dewan Daulat Rai Kapur, the CIT(A) held that the standard rent of such property be based on the valuation of the property made by the local authorities. He accordingly relied upon this valuation fixed by the Municipal Corporation ofDelhiand held that the AO was not justified in enhancing the ALV of the property. With regard to this period of letting the CIT(A) accepted the claim of the assessee and held that no income from the property was taxable after allowing the vacancy allowance, and deleted the addition. 6. Now, the Revenue is aggrieved and has preferred an appeal to the Tribunal. Besides placing the heavy reliance upon the AO s order, the learned Departmental Representative invited our attention to the provisions of s. 23(1) of the IT Act and various judgments of the apex Court in the cases of Dr. Balbir Singh Ors. vs. M.C.D. (1985) 46 CTR (SC) 208 : (1985) 152 ITR 388 (SC); Dewan Daulat Rai Kapur and Mrs. Sheila Kaushish, in support of its contention that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sheila Kaushish vs. CIT (5) CIT vs. Poddar Bros. (P) Ltd. (1999) 240 ITR 925 (Cal) (6) R.K.K.R. International (P) Ltd. vs. Asstt. CIT (1998) 65 ITD 512 (Del). 9. Having examined the aforesaid judgments, in detail the Tribunal has arrived at the conclusion that in view of the ratio laid down by the apex Court if the standard rent of building which is situated in an area to which Delhi Rent Control Act, 1958, applies has not been fixed by the Controller under s. 9 of the Act and the period of limitation prescribed by s. 12 for making application for fixation of standard rent having expired and it is no longer competent to the tenant to have standard rent of the building fixed, the ALV of the building according to the definition given in s. 23(1) of the IT Act, 1961, would be the standard rent determinable under the provisions of the Rent Control Act and not the actual rent received by the landlord or the tenant. The relevant portion of the order of the Tribunal is extracted hereunder, for the sake of reference: "Having considered the rival submissions and from a careful perusal of record, I find that admittedly, the assessee has received the interest-free security deposit amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the standard rent fixed under the Rent Control Act. In the case of Dr. Balbir Singh Ors. vs. M.C.D. (1985) 46 CTR (SC) 208 : (1985) 152 ITR 388 (SC), the apex Court has examined its earlier judgment rendered in the case of Dewan Daulat Rai Kapoor vs. New Delhi Municipal Committee Anr. (1980) 122 ITR 700 (SC) and held that under the provisions of DMC Act, 1957, the criteria for determining the rateable value of building is the normal rent at which such building might reasonably be expected to be let from year to year less certain deductions. The word "reasonably" is very important. What the owner might reasonably expect to get from hypothetical tenant if the building was let from year to year affords statutory yardstick for determining the ratable value. What is reasonable is a question of fact and it depends upon the facts and circumstances of a given situation. Ordinarily, "the bargain between the willing lessor and a willing lessee uninfluenced by army of extraneous circumstance may afford a guiding test of reasonableness and in normal circumstances, the actual rent payable by a tenant to the landlord would afford reliable evidence of what the landlord may reasonably expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent has not been determined so far under the Delhi Rent Control Act, the matter should go back to the file of the AO to determine the standard rent as per the provisions or guidelines prescribed under the Delhi Rent Control Act for computing the ALV in accordance with the provisions of the IT Act inasmuch as the agreed rent does not appear to be rent for which property might reasonably be expected to let from year to year as per provisions of s. 23(1) of the IT Act. I, therefore, set aside the order of the CIT(A) and restore the matter to the file of the AO for recomputation of the ALV after determining the standard rent as per the provisions of the Delhi Rent Control Act." 10. Though the Tribunal has taken a particular view that the ALV as defined in s. 23(1) should be determined as per the standard rent determinable under the Rent Control Act, we have again re-examined the impugned issue in the light of the judgments referred to by the parties and the rival submissions and we are of the considered opinion that whenever the rate of rent on which the property is let out is disputed for different reasons, the best course is to determine the standard rent as per the formula laid ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
