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ACIT-Circle-3 Kalyan Versus Shri Johar Hasan Zojwalla

2017 (9) TMI 572 - ITAT MUMBAI

Nature of income - rent received from mobile towers - income from house property OR income from other sources - AO disallowed 30% deduction - Held that:- As in the case of M/s. Bajaj Bhavan Owners Premises Co-op Society Ltd. [2012 (10) TMI 179 - Bombay High Court] held that rent received from mobile towers had to be treated as income from house property, that in the contract there was no obligation on part of the owner with regard to repairs and maintenance of the terrace, that on terrace there .....

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s, that it included the disputed amount of ₹ 1. 85 lakhs. If the amount in question was already offered for taxation, then there was no justification for taxing it again. We agree with the FAA that AO had not properly understood the entries in the books of account. Confirming the his order, we decide second ground of appeal against the AO. - Addition under the head income from house property - computation to taxable rent - Held that:- As gone through the registered leave and license ag .....

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ority i. e. Kalyan-Dombivili Municipal Corporation (KDMC). The AO had not alleged that the assessee had received any amount over and above the rent received in pursuance of the leave and license agreement. - The AO has estimated the house property income without any basis and ignoring the principles enumerated in Tip Top Typography (2014 (8) TMI 356 - BOMBAY HIGH COURT) and Akshay Textiles and Trading Agencies (P. ) Ltd. (2007 (10) TMI 251 - BOMBAY HIGH COURT ) - Decided against revenue - I. T. .....

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AO completed the assessment on 06/02/2014 , u/s. 143(3) of the Act, determining income of the assessee at ₹ 2. 37 crores. 2. First Ground of appeal is about treating income of ₹ 4. 51 lakhs from Mobile Tower Company under the head income from house property, as against income from other sources. During the assessment proceedings, the AO found the rental income declared by the assessee included rent of ₹ 4, 51, 000/- received from Mobile Tower companies, that he offered the sam .....

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case of Manpreet Singh of the Delhi Tribunal (ITA/3976/Del/2013, dt. 6/1/2015) . After considering the available material, he held that in the case of M/s. Bajaj Bhavan Owners Premises Co-op Society Ltd. the Hon'ble Jurisdictional High Court had held that rent received from mobile towers had to be treated as income from house property, that in the contract there was no obligation on part of the owner with regard to repairs and maintenance of the terrace, that on terrace there were no rooms/s .....

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g the judgment of Hon'ble Bombay High Court. Respectfully following the judgment of the Hon'ble High Court we decide the first Ground of appeal against the AO. 3. Second Ground of appeal is about deleting the addition of ₹ 1. 29 lakhs. During the assessment proceedings, the AO found that a sum of ₹ 1. 85 lakhs was credited as rent to the capital account of the assessee in his proprietary concern M/s. Sab Reality. Not finding the specific amount of rent, being part of computat .....

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him from Tata Tele Services, that the agreement was executed by the proprietary concern, that cheque from the licensee was received in the name of M/s. Sab Reality, that the amount was first credited to capital account of the assessee in the books of the proprietary concern, that later on same was taken to the capital account in his personal financial statements, that the AO had failed to understand the accounting concept, that the assessee had already offered the rent of ₹ 1. 85 lakhs as .....

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erstood the entries in the books of account. Confirming the his order, we decide second ground of appeal against the AO. 4. Last Ground of appeal is about deleting the addition of ₹ 97. 46 lakhs under the head income from house property. During the assessment proceedings , the AO examined details of various properties rented out on lease and license basis. He directed the assessee to file explanation about reasonableness of the rental income. After considering the submission of the assesse .....

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e taxable rent at ₹ 1. 32 crores, resulting in an addition of ₹ 97. 46 lakhs to the total income of the assessee . 4. 1. In the appellate proceedings, the assessee objected to the addition and filed a detailed explanation. After considering the available material, including the leave and license agreements entered into by the assessee, the FAA held that the assessee was holding several immovable properties in Kalyan, that each of the property was located at a different location, that .....

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and new properties, ground floor and basement premises, that the maximum area of any property was the basement premises (2600 sq. ft. ) that was acquired in the month of October 2008 for a consideration of ₹ 10. 50 lakhs, that the said property was rented out for a monthly rent of ₹ 50, 700/-, that the AO had substituted the rent of this property at ₹ 74. 25 lakhs, that as against the actual rent of ₹ 50, 700/- per month the AO adopted a sum of ₹ 6. 18 lakhs per mon .....

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eferred to any comparable instance to show that the rent offered by the assessee was not correct. Finally he deleted the addition made by the AO. 4. 2. Before us, the DR supported the order of the AO. The AR contended that the properties were rented out to third parties, that tenants were not related to the assessee, that AO had wrongly taken the highest rent ignoring the fact that shops were in the commercial area, that the shops could not be bench marked for determining the ALV of other proper .....

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the assessee was brought on record. It is also a fact that the actual rent received by the assessee is substantially higher than the rateable value as per the local authority i. e. Kalyan-Dombivili Municipal Corporation (KDMC). The AO had not alleged that the assessee had received any amount over and above the rent received in pursuance of the leave and license agreement. We will like to refer to the case of Tip Top Typography (368ITR330) and Akshay Textiles and Trading Agencies (P. ) Ltd. (304 .....

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of the sum referred to in clause (a), it is that amount so received or receivable which shall be deemed to be the annual value for the purposes of computing the tax under the head Income from house property . The principles applicable in determining the annual letting value are : (i) the annual letting value would be the sum at which the property may be reasonably let out by a willing lessor to a willing lessee uninfluenced by any extraneous circumstances ; (ii) an inflated or deflated rent bas .....

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to determine the standard rent as per the provisions of rent control enactment ; (vi) the standard rent is the upper limit, and if the fair rent is less than the standard rent, then it is the fair rent which shall be taken as the annual letting value and not the standard rent. It is a well-recognised principle in rating that both gross value and net annual value are estimated by reference to the rent at which the property might reasonably be expected to be let from year to year. Various methods .....

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and licence 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 a 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, the Assessing Officer is not prevented from carrying out .....

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that regard, transactions of identical or similar nature can be ascertained by obtaining the requisite details. However, there also the Assessing Officer must safeguard against adopting the rates stated therein straightaway. He must find out whether the property which has been let out or given on leave and licence basis is of a similar nature, namely, commercial or residential. He should also satisfy himself whether the rate obtained by him from the deals and transactions and documents in relati .....

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