TMI Blog2015 (1) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... ated:- 16-1-2015 - Shri Vijay Pal Rao And Shri D. Karunakara Rao,JJ. For the Petitioner : Shri Vijay Kumar Bora For the Respondent : Shri Dipal J. Shukla ORDER Per Vijay Pal Rao, JM This appeal by the revenue is directed against the order dated 9.11.2010 of CIT(A) for A.Y. 2005-06. The revenue has raised following grounds in this appeal 1. The Ld. CIT(A) erred in holding that the A. O. has merely estimated the Annual Value of the property u/s. 23(l)(a) of the L T. Act 1961 without having any material support of the same and the rent received and offered to tax during the year is higher than rateable value fixed by Municipal Corporation. 2. The Ld. CIT(A) erred in holding that the receipt of interest free deposites of ₹ 2.25 crores in respect of letout property did not have any material bearing on the calculation on Annual Value u/s. 23(1)(a) of the Income Tax Act 1961. 3. The Ld.CIT(A) has failed to appreciate the decision of the Hon'ble ITAT in the case of Baker Technical Services (P) Ltd. vs ITO 9(1)(2) Mumbai 125 ITD 1 (MUM) which is in favour of Revenue. 2. The only issue arises for our consideration and adjudication is regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is disproportionate to the rent per month, therefore, instead of receiving the fair market rent of the property, the assessee has received interest free deposits and consequently reduced the rent. He has also relied upon the Judgment of Hon ble Delhi High Court in the case of CIT Vs. Moni Kumar Subba( 333 ITR 38). 5. On the other hand, the Ld. Authorized Representative has submitted that the Assessing Officer has not determined the fair market rent of the property as per section 23(1)(a) but he has simply made the addition on account of notional interest to the actual rent received by the assessee. Therefore, the action of Assessing Officer is not sustainable when there is no finding by the Assessing Officer that the actual rent received by the assessee is less than the fair market rental value of the property. In support of his contention he has relied upon the Judgment of Hon ble Jurisdictional High Court in the case of CIT Vs. Tip Top Typography (368 ITR 330). 6. We have considered the rival submissions as well as relevant material on record. For the purpose of computation of annual value of the property, the procedure is stipulated u/s 23(1) of the Income Tax Act. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license agreements. These are usually for fixed periods and renewable. In such cases as well, the conceded position is that the Annual Letting Value will have to be determined on the same basis as noted above. In the event and as urged before us, the security deposit collected and refundable interest free and the monthly compensation shows a total mismatch or does not reflect the prevailing rate or the attempt is to deflate or inflate the rent by such methods, then, as held by the Delhi High Court, the Assessing Officer is not prevented from carrying out the necessary investigation and enquiry. He must have cogent and satisfactory material in his possession and which will indicate that the parties have concealed the real position. He must not make a guess work or act on conjectures and surmises. There must be definite and positive material to indicate that the parties have suppressed the prevailing rate. Then, the enquiries that the Assessing Officer can make, would be for ascertaining the going rate. He can make a comparative study and make a analysis. In that regard, transactions of identical or similar nature can be ascertained by obtaining the requisite details. However, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any extraneous circumstances would afford reliable evidence of what the landlord might reasonably be expect to get from a hypothetical tenant. She has in making this submission, answered the issue and summed up the conclusion as well. Then, it is but natural and logical that in the event, the transaction is influenced by any extraneous circumstances or vitiated by fraud, or the like that the Assessing Officer can adopt a fair rent based on the opinion obtained from reliable sources. There as well, we do not see as to how we can uphold the submissions of Mr. Chhotaray that the notional rent on the security deposit can be taken into account and consideration for the determination. If the transaction itself does not reflect any of the afore stated aspects, then, merely because a security deposit which is refundable and interest free has been obtained, the Assessing Officer should not presume that this sum or the interest derived therefrom at Bank rate is the income of the assessee till the determination or conclusion of the transaction. The Assessing Officer ought to be aware of several aspects and matters involved in such transactions. It is not necessary that if the license is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court, we need not say anything more on this issue. 53. Thus, apart from the three aspects namely of a municipal valuation, of obtaining interest free security deposit and the properties being covered by the Maharashtra Rent Control Act but no standard rent thereunder is fixed, our attention has not been invited to any other case. Suffice it to hold that in those cases and to which our attention is not invited the principles laid down in the decisions of the Hon'ble Supreme Court and referred to by the Full Bench of the Delhi High Court would govern the enquiry. 54. As a result of the above discussion, we are of the opinion that wherever the Assessing Officer has not adhered to the above principles, and his finding and conclusion has been interfered with, by the higher Appellate Authorities, the revenue cannot bring the matter to this Court as no substantial question of law can be arising for determination and consideration of this Court. Then, the findings by the last fact finding Authority, namely the Tribunal and against the revenue shall have to be upheld as they are consistent with the facts and circumstances brought before it. If they are not vitiated by any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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