TMI Blog2014 (1) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... f rental income shown by the assessee has been accepted for the said years - There is no evidence on the file that annual rental value of the property was higher during the relevant year than that declared by the assessee – the order of the CIT(A) upheld – Decided against Revenue. Unexplained expenditure – Held that:- Though the CIT(A) has observed that the transactions as noted above were made by the assessee, has deleted the addition made by the AO in this respect - the finding portion of the order of learned CIT(A) is in contradiction to the factual finding - the matter on this issue is restored back to the learned CIT(A) to verify as to whether there was any mistake while giving the factual findings given in this respect and to give his findings afresh on the issue after giving both the parties opportunity of hearing – Decided partly in favour of Assessee. - ITA No. 3709 /Mum/2012 - - - Dated:- 3-7-2013 - R.S. SYAL AND SANJAY GARG , JJ. For the Appellant : O.P. Meena. For the Respondent : Ashok Puri. ORDER:- PER : Sanjay Garg With this common order, we will dispose of appeal of the revenue as well as cross objections of the assessee directed against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A). During the appellate proceedings, the learned CIT(A) called for a remand report from the A.O. directing him to make available the relevant material to determine the market rate of rent of the property in question, on the day on which it was rented to the tenant in question and further to make necessary enquiries in this regard from the society/nearby area in respect of the market rate which the flat could have fetched and also to allow the assessee to cross examine the Inspector. It was further directed to make necessary enquiries regarding AIR information relating to expenditure of Rs. 6,38,191/- from the concerned banks and to make the necessary information available to the assessee and to verify the genuineness of the facts. The concerned A.O. instead of making enquiries regarding the fair/market rent of the property as on the day of tenancy, reported in the remand report dated 28.02.2011 that the addition was not made on the basis of report of the Inspector rather, the same was made by adding back 15% notional interest on the interest free security deposit of Rs. 50 lakhs. He, thus reported that there was no necessity to make any enquiry regarding the fair/market rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f J.K. Realtors (248 ITR 723) as also as per decision of full Bench of Hon'ble Delhi High Court in the case of Moni Kumar Subha. To sum up, the Assessing Officer has failed to determine the fair/reasonable rent expected to be fetched by the property in a proper manner. The appellant has offered Rs. 25,000/- per month as rental income from above property. The notional interest on interest free security cannot be taken as a determinative factor to arrive at fair rent. The addition is, therefore, deleted. This ground of appeal is allowed." 5. The revenue is, thus, in appeal before us. Learned DR before us has submitted that in the case in hand, the interest free security deposit was about 200 times of the monthly rent of the property, hence the assessee has shown a very low rent of the property, whereas, the actual fair market rent of the property was much more. He justified the action of the A.O. in adding 15% notional interest into the rental income of the assessee. On the other hand, the learned AR before us has relied upon the authority of the Full Bench of the Delhi High Court styled as CIT v. Moni Kumar Subba (2011) 333 ITR 38, to submit that no addition can be made of notiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no requirement to do so. Even he did not allow the assessee to cross examine the Inspector. When despite directions by the CIT(A), the Assessing Officer did not choose to determine the fair/market rental value of the property by making necessary enquiries then in our view the rental income offered by the assessee is to be treated as the fair/market rental income or the Annual Letting Value of the property. The Hon'ble Full Bench of the Delhi High Court has held that the notional interest on the interest free security deposit cannot be taken as determining factor to arrive at the fair rent. In view of law laid down by the Hon'ble Delhi High Court, the notional interest cannot be added back to the rental income of the assessee. At this stage, the learned DR has submitted that the matter be remanded back to the AO for making necessary enquiries relating to the fair/market rental value of the property. We are unable to accept this contention of the learned DR at this stage. In view of the fact that despite specific directions given by the CIT(A), the AO did not choose to comply the same and to make enquiries regarding the fair rental value of the property, the assessee cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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