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TMI Blog2011 (2) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... d order. 2. The assessee in the present case is a company which is engaged in the business of developing and operating industrial parks. During the years under consideration, premises developed by it were given on rent to various tenants. In addition to the substantial rent received for the said premises, the assesse company had also received interest free deposits of sizeable amounts from the tenants/licencees. In the assessments completed under section 143(3) for both the years under consideration, the Assessing Officer added interest amount calculated at the rate of 8% per annum on the security deposits on notional basis to the annual values of the properties for the purpose of computing the income of the assessee chargeable to tax unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the case of M/s. Reclamation Reality (I) Pvt. Ltd., vide its order dated 26.6.2010 passed in ITA No. 1411 to 1413, 1733 and 1434/Mum/2007 after taking into consideration the relevant judicial pronouncements on the point. The said decision of the Tribunal in the case of M/s. Reclamation Reality (I) Pvt. Ltd., has been analysed recently by the Coordinate Bench of this Tribunal in the case of Everest Kanto Investment and Finance Ltd., vide its order dated 28.01.2011 passed in ITA Nos. 1718 to 1722 and 1747/Mum/2009 with reference to the provisions of section 3(1)(a) as well as various judicial pronouncements relied upon by the Tribunal to decide the issue in favour of the assessee and we find it worthwhile to reproduce paragraph N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e position of law prior to introduction of section 23(1)(b) as clarified by the Board itself was that the annual value was equal to the Municipal Valuation of the Property. The Tribunal held that this is how the Board sought to interpret the expression "the sum for which the property might reasonably be expected to let from year to year" used in section 23(1)(a). 12. The Tribunal also took note of the decision of Hon'ble Supreme Court in the case of Diwan Daulat Kapoor vs. New Delhi Municipal Committee 122 ITR 700 (SC) wherein the question that had arisen for consideration was as to what should be the basis of determining the annual value for the purpose of levy of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Municipal Corporation Act 1957 and the Punjab Municipal Act, 1911. It was therefore held adopting identical line of reasoning that even if the standard rent of a building has not been fixed by the Controller, the annual value of the building as per section 23(1) of the Income Tax Act must be held to be a standard rent determinable under the provisions of the Rent Control Act and not the actual rent received by the landlord from the tenant. The Hon'ble Apex Court also observed that this interpretation which was being placed on the language of section 23(1) of the Income Tax Act can be said to have received legislative approval by the amendment made in the said provisions whereby it was provided in section 23(1)(b) that where the property is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property mighty reasonably be expected to let from year to year. The Hon'ble Calcutta High Court held that the Municipal valuation and annual value u/s 23(1)(a) of the income Tax Act thus are one and same. As noted by the Tribunal in its order passed in the case of Reclamation Realty India P. Ltd. (supra) the said decision of the Hon'ble Calcutta High Court in the case of Prabhabati Bansali (supra) has been subsequently followed by the Hon'ble Bombay High Court in the case of M.V. Sonavala vs. CIT 177 ITR 246 (Bom) wherein the question posed to Their Lordships was whether the actual compensation received could be taken as annual value of the property as against the Municipal Ratable Value and the same was answered by the Hon'ble Bombay H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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