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2016 (3) TMI 452 - ITAT MUMBAI

2016 (3) TMI 452 - ITAT MUMBAI - TMI - Estimation of rental income - determination of annual value of the property - Held that:- By the Finance Act, 2001 (14 of 2001), substitution was made in the section for and from A.Y. 2002-03 in place of than existing section 23 for the purposes of determination of annual value of the property. As per section 23(1), for the purposes of section 22, the annual value of any property shall be deemed to be :-

-The sum for which the property might reas .....

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- from M/s West Coast Construction Pvt. Ltd. in respect of property no. 51 and 52, which are of the same size and located in the same building, thus, the receipt of actual rent is not in dispute, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against assessee - ITA NO.1570/Mum/2012 - Dated:- 3-2-2016 - Shri G.S. Pannu, Accountant Member and Shri Joginder Singh, Judicial Member For The Assessee by Shri Hariom Patel For The Revenu .....

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rting that the Assessing Officer estimated the rental income at ₹ 5,89,600/- of two rooms and the assessee let out identical two rooms to another person on rent for ₹ 48,000/- only. Reliance was placed upon the decision in CIT vs Akshay Textile Trading and Agencies Pvt. Ltd. 304 ITR 401 (Bom.) and ACIT vs Mayur Recreational and Development Ltd. (2008) 301 ITR (AT) 324 (Del.)(SB). The crux of the argument is that actual rent was received only to the tune of ₹ 48,000/-. 2.1. On t .....

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The assessee is an individual, showed salary income, income from house property, long term capital gain and income from other sources. The assessee for the year under consideration, in its computation of income also declared rental income of ₹ 5,89,600/- for M/s West Coast Construction Pvt. Ltd. On asking by the ld. Assessing Officer, the assessee furnished the written submissions, which were considered by the Assessing Officer. The assessee at the relevant time was owner of property no.3 .....

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of all individual flats have licensed the commercial rights among themselves. The totality of facts clearly indicates that the arrangement of cross leasing of flats was to reduce the incidence of taxes. The whole arrangement is designed to defeat the law. Fact remains that the income of ₹ 5,89,600/- was actually received and the assessee exploited the commercial rights as beneficial owner. Hence, the fact that the assessee has chosen not to receive the fair rent from his legally owned flat .....

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ed to let out. 2.3. Before proceeding further, we are reproducing hereunder the provision of section 23 of the Act, which deals as to how the annual value to be determined. 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be- (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in .....

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ective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him. Explanation.-For the purposes of clause (b) or clause (c) of this subsection, the amount of actual rent received or receivable by the owner shall not include, subject to such rules8 as may be made in this behalf, the amount .....

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rovisions of sub-section (2) shall not apply if- (a) the house or part of the house is actually let during the whole or any part of the previous year; or (b) any other benefit therefrom is derived by the owner. (4) Where the property referred to in sub-section (2) consists of more than one house- (a) the provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf; (b) the annual value of the house or houses, othe .....

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itself) to the tune of ₹ 5,89,600/-, thus, as per the provisions itself, there is no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals), because, the decision was arrived at on the basis of factual figures of rent provided by the assessee himself. The ld. Assessing Officer, on the basis of material available on record, reasonably concluded accordingly. 2.4. So far as, the reliance placed by the assessee upon the decision in the case of Akshay Textiles and Trading .....

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pronouncement may not help the assessee. Likewise, in the case of Mayur Recreational and Development Ltd., the question before Tribunal was with respect to annual letting value and its determination and actual rent received by the assessee. The question was as to how the standard rent is to be determined. We have perused the facts of the case and found them altogether different. The Bench held that the standard rent of property is synonymous with the sum of which the property might reasonably b .....

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ned with the insertion of Explanation-1, which means (a) in case, where the property is let out throughout the previous year, the actual rent received or receivable by the owner in respect of such years and (b) in any other case, the amount which bears the same proportion to the amount of the actual rent received or receivable by the owner for the period for which the property is let, as the period of twelve months bears to such period, thus, as per the provision itself. The ratio laid down in C .....

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