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2016 (2) TMI 34 - ITAT MUMBAI

2016 (2) TMI 34 - ITAT MUMBAI - TMI - Assessment of income from house property - actual rent received by the assessee - Held that:- The annual value of the property is required to be determined u/s 23(c) of the Act, since the property was let out in the preceding year as well as for a part of the year. It is seen that the actual rent received by the assessee for the year under consideration is less than the municipal rateable value as shown by the Ld A.R. In the case laws relied upon by the asse .....

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R> Clubbing of income - Rent received by the assessee whereas service charges received by wife and daughter of the assessee in relation to same property - Held that:- Considering the assessee's submissions that the two ladies cited have only received the payments, from which TDS was deducted by M/s Talwalkar. Further, it is not the case of the AO that the wife of the assessee and daughter-in-law did not provide any service to M/s Talwalkar Better Value Fitness Pvt. Ltd. The ld. AR also submitte .....

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of assessee. Since the assessee has not received any income and paid any payment to assessee’s wife and daughter-in-law, the question of deduction of TDS and application of the provisions of section 40(a)(ia) of the Act also does not arise. In view of the above, we set aside the order of ld. CIT(A) on this issue and direct the AO to delete the addition - Decided in favour of assessee - I.T.A. No.6686/Mum/20130 - Dated:- 5-1-2016 - SHRI B.R.BASKARAN, AM AND AMARJIT SINGH, JM For The Appellant : .....

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se property in respect of a flat located at RH-15, Madhuban CHS, Denor, Chembur, Mumbai. In the preceding year, the assessee had declared rental income of ₹ 25,000/- per month, whereas during the year under consideration, the assessee declared rental income of ₹ 1,503/- only. The assessee submitted that the property remained vacant for almost entire year. The AO did not agree with the contentions of the assessee and accordingly determined the annual value of property at ₹ 3,00, .....

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ng the whole or any part of the previous year and owing to such vacancy, the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable. 4. As per sec. 23(a), the annual value shall be deemed to be the sum which the property might reasonably be expected to let from year to year. Hence the annual value of the property shall be the actual amount of rent received or receivable, even if it is lower than the .....

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was ₹ 24,335/-. Accordingly he submitted that the actual rent received by the assessee should be considered as annual value u/s 23(c) of the Act. 6. The Ld D.R submitted that the issue relating to municipal rateable value requires verification at the end of the AO. 7. Having heard rival contentions, we notice that the annual value of the property cited above is required to be determined u/s 23(c) of the Act, since the property was let out in the preceding year as well as for a part of the .....

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t aside the order of Ld CIT(A) on this issue and direct the AO to adopt the actual rent received by the assessee as annual value for the year under consideration. 8. The next issue relates to the assessment of income belonging to assessee s spouse and daughter. The assessee owns a premises at Aggrawal Centre and the same was let out to M/s Talwalkar Better Value Fitness Pvt. Ltd. The AO noticed that the above said company has also paid a sum of ₹ 5,50,000/- to assessee s wife and ₹ 4 .....

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77; 9,50,000/- received by the assessee s wife and daughter-in-law as income of the assessee. The ld. CIT(A) also confirmed the view taken by the AO on diversion of income and hence he did not adjudicate the issue relating to sec. 40(a)(ia) by stating that the same has become infructuous. 9. The ld. AR submitted that the assessee has entered into a leave and licence agreement with the above said company for renting out the premises. The said agreement stated that a separate agreement in respect .....

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he company and TDS was also deducted there from. Accordingly he submitted that the AO was not right in presuming that the payment was received by the assessee and then handed over to the two ladies cited above. He further submitted that both of them have declared service charges in their respective return of income and claimed TDS. Accordingly, the ld. AR submitted that the assessee cannot be held to have diverted the income, since the assessee was not entitled to receive the income at all. He f .....

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00/- in the hands of the assessee. 11. We heard the rival contentions and perused the record. There is no dispute with regard to the fact that Leave and Licence Agreement was entered by the assessee with M/s Talwalkar Better Value Fitness Pvt.Ltd. in respect of renting of the premises only. In the said agreement, it was provided that a separate agreement would be entered for provision of services. However, for provision of services, the above said company has entered into separate agreement with .....

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cording to the convenience of parties. Hence, one cannot compel M/s Talwalkar to enter into the agreement with the assessee alone and not with anyone else. 12. We have earlier noticed that M/s Talwalkar Better Value Fitness Pvt. Ltd has entered into separate agreements with the assessee s wife and daughter-in-law for provision of prescribed Services and the payments have also been made directly to them. According to Ld A.R, the AO has wrongly presumed that the assessee has entered into the agree .....

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