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TMI Blog2012 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... O observed that the assessee had let out the premises to group concerns but no rent was being charged. He, therefore, asked the assessee as to why market rent should not be adopted as annual value of the property. 2.1 The assessee submitted that the property consisted of five floors as per details given below :- (i) Mezzanine Floor 623 sq.ft. built up (ii) First Floor 1086 sq.ft. built up (iii) Second Floor 1086 sq.ft. built up (iv) Third Floor 1086 sq.ft. built up (v) Fourth Floor 1086 sq.ft. built up Total Area 4967 sq.ft. built up 2.2 The assessee also submitted that the mezzanine floor, first floor and second floor remained vacant throughout the year and, therefore annual value sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from house property was determined at Rs. 6,98,409/-. 3. In appeal, CIT(A), after referring to the judgment of Hon'ble High Court of Allahabad in the case of Smt. Radha Devi Dalmiya (supra), confirmed the approach adopted by AO to determine the ALV based on the rate of return of investment @ 8.5%. Aggrieved by the said decision the assessee is in appeal before the Tribunal. 4. Before us the ld. AR for the assessee submitted that the disputes were in relation to determining the ALV, allowability of vacancy allowance in respect of the area vacant throughout the year under section 23(1)(c), and exclusion of area used for the purpose of business from the purview of the ALV. It was argued that the area used by the firm in which the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The only undisputed facts are that the property consisted of 5 floors of which mezzanine floor, first floor and second floor remained vacant throughout the year. The third and fourth floors were occupied by the partnership firm and company for carrying out business. The issue raised is as to whether annual value can be assessed in respect of portion which was vacant throughout the year and whether portion occupied by the company and the partnership firm could be excluded from the purview of computation of income while computing income from house property. The other related issue is method of determination of annual value. The ld. AR has argued that the portion which remained vacant throughout the year has to be excluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip carried on business, each partner thereof carried on that business and a partner thus carried on business although that business happened to be partnership business. Following these judgments, we hold that portion of the property used by the partnership firm in which assessee is a partner has to be excluded from the total income. As regard the portion used by the company in which the assessee was share holder and director, the same in our view cannot be considered for exclusion as company has separate and distinct identity and business being carried on by the company can not be considered as business done by share holder or director. Therefore, the portion occupied by the company for its business has to be considered while computing hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reference to profits earned from the property or to the cost of construction. The Hon'ble High Court had also referred to the judgment of Hon'ble High Court of Bombay in the case of CIT v. J.K. Investors (Bombay) Ltd. in which the Hon'ble High Court held that, while deciding fair rent, the various factors could be taken into account. Therefore, in our view, the fair rental value has to be determined on the basis of comparative cases in the locality and other relevant factors. The return on investment may not always be a reliable indicator of fair rent of the property which depends upon market conditions such as demand and supply position in an area. A comparative case in the locality will be the best guide for determination of fair rent. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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