TMI Blog2005 (7) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... 1988 (12) TMI 82 - BOMBAY HIGH COURT] , following decision of Hon ble Calcutta High Court and also Hon ble Supreme Court in the case of Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee[ 1979 (12) TMI 3 - SUPREME COURT] and Dr. Balbir Singh v. M.C.D.[ 1984 (12) TMI 64 - SUPREME COURT] held that : the income from house property has to be computed on the basis of the sum for which the property might reasonably be let from year to year or the annual municipal rateable value. Thus, we agree that for determining the annual value of property, the adoption of Municipal Rateable Value is the correct method and in cases where the actual rent received is higher than the Municipal Rateable Value, the rent so received is to be adopted as Annual Letting Value of the property. In the circumstances we direct the Assessing Officer to verify the annual rateable value of the flat as per the Bombay Municipal Corporation Act and adopt the annual letting value of the said flat being the actual rent received by the assessee or the Municipal Rateable Value whichever is higher. This ground of appeal raised by the revenue for the assessment years 1991-92, 1992-93 and 1993-94 stands rejected. Loans a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and license basis on monthly lease rental of Rs. 7,000 with effect from 1st day of October, 1990. The assessee also received interest-free security deposit amounting to Rs. 30 lakhs from the Bank which is refundable at the time of vacation of the flat premises. The assessee had shown income of Rs. 42,000 in assessment year 1991-92 for a period of six months and Rs. 84,000 in assessment years 1992-93 and 1993-94 for the period of 12 months each under the head Business income . The Assessing Officer questioned the determination of annual value of the property as according to him the cost of acquisition of the flat being about Rs. 1 crore, the income shown by the assessee was low and also was not assessable as business income but income from house property. 4. The Assessing Officer during the assessment proceedings has questioned the determination of annual value of the property by invoking the provisions of section 23 of the IT Act. The Assessing Officer held that as per section 23 the annual value of the property is the sum for which the property may be expected to be let out or the actual rent received by the assessee, whichever is higher. For working out the standard or fair rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance on the decision of Hon ble Calcutta High Court in the case of Prabhavati Bansali ( supra ), and brought to our attention the fact that the property in consideration in the said decision is situated in Bombay and the Hon ble Calcutta High Court had considered the provisions of Bombay Municipal Act before deciding the issue of determination of annual letting value. He placed reliance on the decision of Jurisdictional High Court in the case of M.B. Sonawala ( supra ). He also relied on the decision of Mumbai Bench of the Tribunal in the case of Bhargava Estates P. Ltd. in IT Appeal Nos. 2242 and 2203 (Mum.) of 2001 for assessment years 1996-97 and 1997-98 dated 18th July, 2002, wherein on similar facts the Tribunal has held that the rateable value determined by the Municipal authorities should be adopted as the ALV of the property. 8. We have heard the rival submissions and perused the material on record. During the course of assessment the Assessing Officer has not brought on record any material to prove that the rent received by the assessee is hypothetical except alleging that the rent received is very low considering the high investment made by the assessee in the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee or the Municipal Rateable Value whichever is higher. 10. This ground of appeal raised by the revenue for the assessment years 1991-92, 1992-93 and 1993-94 stands rejected. 11. The second ground of appeal in assessment years 1992-93 and 1993-94 is that the CIT(A) has erred in holding that no interest is disallowable on the ground that Assessing Officer has not established any nexus between loans and advances without appreciating the facts that disallowance were made under section 40A(2). 12. The assessee had advanced loans to its sister concern at the rate of 18 per cent whereas loans had been obtained from M/s. SSKI Pvt. Ltd. and Aroh Trading Pvt. Ltd. another sister concern of the assessee at the rate of 24 per cent and 30 per cent respectively. The Assessing Officer invoking the provision of section 40A(2)( b ) disallowed the excess interest payment as the loans had been obtained at a higher rate but had been advanced at a lower rate to the sister concern. The CIT(A) deleted the addition as no nexus had been established between the borrowings and advances made and according to him the assessee may have borrowed the funds on emergency basis at a higher rate of interest but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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