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TMI Blog2015 (10) TMI 1510X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in deleting the additions made u/s 2(24)(iv) being taxed under the head Income From Other Sources for the Rent received. 2. On the facts and in the circumstances of the case, the Hon'ble CIT(A), Nashik has erred in deleting the additions made u/s 2(24)(v) for Notional Interest. 3. The appellant craves leave to add, alter, modify, delete amend any of the grounds with prior permission of the Hon'ble CIT, as per the circumstances of the case. 4. The appellant prays to file any of the additional evidence appropriate to the grounds taken in appeal." 3. The relevant facts, in brief, are that the assessee is an individual deriving income from rent, capital gains and interest etc.. The assessment was originally completed under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has also simultaneously obtained interest-free deposit which is adjustable towards rent charges. The Assessing Officer observed that M/s JISL is a legal entity in which the husband of the assessee and other relatives are holding substantial interest. Accordingly, the Assessing Officer held that the gross rent receipt of Rs. 10,82,121/- is taxable income under section 2(24)(iv) of the Act as against the aforesaid income declared under section 22 of the Act by the assessee. As a consequence, standard deduction @ 30% eligible under S. 24 on the above rent was denied. Likewise, the notional interest @ 12% on the balance of unadjusted interestfree deposit of Rs. 1,04,68,422/- as on 01.04.2005 computed at Rs. 12,56,210/- was treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings under section 147 of the Act. He, therefore, cancelled the additions made by the Assessing Officer as uncalled for. 7. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us. 8. The Ld. Departmental Representative for the Revenue relied upon the order of the Assessing Officer and submitted that the provisions of section 2(24)(iv) of the Act is clearly attracted in the instant case. The Ld. Departmental Representative contended that the payment of rent is not commensurate and exorbitant. The rent is being received from a company in which the husband of the assessee and along with its relatives are holding substantial interest. Therefore, the value of benefit derived from company in the form of rent is ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and on the other hand seeks to further enhance the income by way of notional interest on the rent deposits which is self-contradictory. The property has been let out for last many years as per agreement filed in this regard. As regards the addition towards notional interest on rent free deposit, he relied upon the decision in the case of CIT vs. J.K. Investors, 248 ITR 723 (Bom) and other decisions as noted in para 6.2.2 of the CIT(A)'s order. He submitted that in view of the long line of judicial precedents, notional interest-free deposit is not taxable in law. The action of the Assessing Officer is contrary to theory of real income. Therefore, he pleaded that the order of the CIT(A) is in accordance with law and deserves to be upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover value of benefit/perquisite derived by assessee from a company which would have been payable the assessee or its relatives against the obligation. The provision is not intended to restrict the right of the Company to advance security deposits to its directors or relatives against the valuable consideration i.e. for obtaining house property on rent. As per section 22 of the Act, on the other hand, 'annual value' of the property consisting of any building or lands of appurtenant thereto of which the assessee is the owner is chargeable to income-tax under the income from house property subject to certain deductions as provided under section 24 of the Act. Therefore, the rental income derived from ownership property is liable to be taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is for letting out the property. It is not the case of the Assessing Officer that heavy interest-free deposit has been paid in the guise of rent. On the contrary, it is the case of the Assessing Officer, the exorbitant rent has been paid. Interest-free deposit in letting out the property is not anything unusual in common parlance and is attributable to decision taken based on exigencies involved. Such action of the assessee cannot be inferred adversely. The issue is squarely covered by the decision of the Hon'ble Jurisdictional High Court in the case of J.K. Investors (supra) relied upon by the assessee and other spate of judicial decisions. We also find the Pune Bench of the Tribunal in the case of Shri Bhavarlal Hiralal Jain (supra) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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