TMI Blog1995 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Punita Singh for the area of 2,400 sq. ft. a monthly hire charge had been agreed at Rs. 12,000. Simran Singh entered into sub-lease agreement on14th Aug., 1979, with M/s Continental Device (India) Ltd. for letting out of 4,800 sq. ft. area at a monthly rent of Rs. 24,000 from the date of handing over of possession of the premises. As per cl. 1(iii) of sub-lease agreement, the Continental Device (India) Ltd. agreed to advance certain sums of money towards the construction/finishing of the said premises. 2. Similarly, Punita Singh also entered into a sub-lease agreement with Delta Electronics Pvt. Ltd. on1st Sept., 1986, subleasing 2,400 sq. ft. of space at a monthly rent of Rs. 12,000 from the date of handing over of the possession of the premises. Assessee filed returns of income for asst. yrs. 1987-88 to 1989-90. For asst. yr. 1987-88 for which the previous year ended on31st Aug., 1986, assessee disclosed gross rent of Rs. 2,88,000 from CDIL. Similarly, for asst. yr. 1988-89 assessee disclosed the gross rent of Rs. 4,32,000 and for asst. yr. 1989-90 for which the previous year comprised of 19 months, the actual rent received has been reflected at Rs. 6,84,000. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in the matter of letting out of the property at allegedly lower rent. 6. Learned counsel further contended that the AO has ignored the comparable lease rent rates prevalent in the adjoining vicinity in arriving at the conclusion that the rent received by the assessee was lower than the market rent. 7. Learned counsel also referred to the assessment made by the municipal authorities. The rental value of the building has been assessed as per the actual rent received. However, benefit at the rate of 10% of the loan calculated at Rs. 4,188 per month has been assessed to tax apart from the actual rent received. Learned counsel fairly conceded that he has no objection in assessment of the benefit on account of the loan advanced for the construction of the house property to be added as the rent received in respect of the let out portion. The learned counsel also conceded that after the amendment of the Rent Control Act, the provisions of s. 6 will not be applicable for determination of the standard rent. He further clarified that for asst. yr. 1987-88 and for asst. yr. 1988-89 the standard rent as worked out at 1,13,689 under Rent Control Act cannot be ignored. 8. Learned Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the house property cannot be more than the standard rent assessable under the provisions of the Rent Control Act. We may usefully refer to the decision of the Supreme Court in the case of Dr. Balbir Singh vs. MCD. In this case, their Lordships held as under: "Under the provisions of the DMC Act, 1957, the criteria for determining rateable value of a building is the annual 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 a hypothetical tenant if the building were let from year to year, affords the statutory yardstick for determining the rateable value. What is reasonable is a question of fact and it depends on the facts and circumstances of a given situation. Ordinarily, "a bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasonableness" and in normal circumstances, the annual rent payable by a tenant to the landlord would afford reliable evidence of what the landlord may reasonably expect to get from the hypothetical tenant, unless the rent is infla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, hence, the rateable value of the building was not limited to the standard rent determinable in accordance with the principles laid down in the Rent Control Act but was liable to be assessed by reference to the contractual rent recoverable by the landlord from the tenant. Rejecting the contentions raised on behalf of the municipal authorities their Lordships of the Supreme Court held that even if the standard rent of a building has not yet been fixed by the Controller under s. 9 of the Rent Control Act, the landlord cannot reasonably expect to receive from hypothetical tenant anything more than the standard rent determinable under the provisions of Rent Control Act and this would be so equally where the building has been let out to a tenant who has lost his right to apply for fixation of the rent by reason of expiration of the period of limitation prescribed by s. 12 of the Rent Act or the building is self occupied by the owner. Their Lordships further held that the standard rent determinable under the provisions of the Rent Act would constitute the correct measure of rateable value of the building. The Court pointed out that in each case the AO would have to arrive at its own fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sst. yr. 1987-88 at the rate of Rs. 24,000 per month. The monetary benefit which has been assessed by the municipal authorities on account of loan of Rs. 10,05,000 from the sublessee to the owners has not been disclosed by the assessee. However, there being no objection on behalf of the assessee for assessment of such a benefit, we take the sum of Rs. 4,188 per month as the rent received till the loan has actually been liquidated on this account. As per the assessment order of the municipal authorities, the loan has been liquidated on31st Aug., 1988. Therefore, the actual rent received in respect of 4,800 sq. ft. area would be assessed at Rs. 28,188 per month till31st Aug., 1988. From1st Sept., 1988, the actual rent received in respect of 4,800 sq. ft. would be assessed at Rs. 24,000 per month only. 13. With regard to 2,400 sq. ft. area leased to Punita Singh, assessee has not disclosed any rent for asst. yr. 1987-88. This is notwithstanding the terms of the agreement executed between the assessee and Punita Singh on19th Feb., 1979. Assessee had completed the building in the year 1983. No reasons have been given as to why rental income in respect of 2,400 sq. ft. area has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. 15. This disposes of the major common issue involved in these appeals of the assessee. 16. We shall not deal with the remaining grounds of appeal for the respective assessment years. 17. For asst. yr. 1987-88, the only other ground is relating to levy of interest under ss. 215 and 217. The prayer made before us is for allowance of consequential relief. Since there will be some reduction in the income, assessee is entitled to consequential relief. The AO is directed to allow the same. 18. For asst. yr. 1988-89, the assessee had claimed deduction under s. 80M at Rs. 43,695. The AO restricted the deduction to Rs. 36,000. For asst. yr. 1989-90 the CIT(A) has estimated the expenditure for earning of dividend income at Rs. 1,000. As against that, for asst. yr. 1988-89 the expenditure has been estimated at 10% of the gross dividend. In our view, the estimation of expenditure at Rs. 1,000 is more reasonable. We accordingly direct the AO to recalculate the deduction under s. 80M after deducting a sum of Rs. 1,000 only from the gross income. 18.1 The other ground involved in this appeal is relating to disallowance under s. 43B of Rs. 13,704. A sum of Rs. 5,232 on account ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
