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Income Tax Officer, Ward 5 (2) , Ahmedabad Versus M/s. PASL Windtech Pvt. Ltd.

2017 (9) TMI 841 - ITAT AHMEDABAD

Income from house property - property given to sister concern without charging any Interest - inclusion of Interest of investments (deemed income) - Estimation of Annual Value - determination of rate of interest for addition - Held that:- tribunal has already dealt with all these arguments in arriving at interest rate of 8.5% to form reasonable basis - We therefore direct the Assessing Officer to pass consequential order accordingly adopting 8.5% as the rate of return. Rest all other substantive .....

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013 in case no. CIT(A)-XI/295/ACIT.Cir-5/12-13, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short the Act . Heard both sides. Case file(s) perused. 2. A combined perusal of both the parties respective pleadings indicate that their identical grievance in nut shell revolves around computing income from house property in respect of assessee s properties A & B comprising of industrial shed at plot no.37-B and 5/1/B situated in phase-1, GIDC, Industrial Estate, Vatva, Ahmedabad. Th .....

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mount after a detailed discussion after taking into account this tribunal s directions in assessment year 2005-06 involving interest rate addition @17.25%. 3. The assessee preferred appeal. We notice that the CIT(A) takes into account his findings in the abovestated first assessment year 2005-06 adopting 8.5% to be the rate of return qua the two properties in question stated to be at par with prevailing interest rates on long term fixed deposits. He however observes that the impugned assessment .....

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e as return of investment (supra) and in not taking into consideration cost of the property in question as on 31.03.2010; respectively. The Revenue on the other hand pleads that the CIT(A) ought not to have disturbed Assessing Officer s computation arriving at the abovestated figure of ₹ 49,42,080/- as well as in holding rate of interest on investment to be the relevant benchmark for determining the notional income in question. 5. We have heard rival submissions in tune with above narrated .....

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the industrial shed to the sister concern without charging any rent. The Assessing Officer, in his order u/s 143(3) dated 31.12.2007, estimated the Annual Letting Value (ALV for short) of the property and assessed the same as income from house property. On appeal, the CIT(A) confirmed the addition made by the Assessing Officer. The assessee preferred an appeal before the ITAT which by order dated 31.03.2011 in ITA No.1165/Ahd/2009 set aside the matter back to the file of the Assessing Officer, .....

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nce in determining its annual letting value. In this case, the AO estimated the ALV on the basis of some information said to have been collected by him behind back of the assessee. Admittedly, those details were not confronted to the assessee. Neither the same is produced before us. Therefore, the same cannot be relied on for estimating the ALV . In the above circumstances, we deem it proper to set aside the order of the authorities below on this point and restore the matter back to the file of .....

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ate of 17.25% of the investment in the property by the assessee. On appeal, the CIT(A) vide his order dated 11.09.2013 computed the income at 8.5% of the cost of the property and allowed part relief to the assessee. The relevant portion in the order of the CIT(A) reads as under:- 2.2 I have carefully considered the rival contentions. I am of the opinion that the stand of A.O. in adopting the interest as if the appellant is borrowing funds equivalent to the investment is not reasonable. The appel .....

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ision of Hon'ble Bombay ITAT in the case of Smt. Indira S. Jain reported in 52 SOT 270 is relevant wherein the Hon'ble Bench has adopted and confirmed the rate of return at 8.5% on the cost of the property. I therefore deem it fit to adopt the rate of return on investment in the property at 8.5% which is at par with the prevailing interest rate on the long term fixed deposit during the relevant period. The ALV of the property is worked out as under:- Property detail (as per submission dt .....

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ground of appeal is partly allowed. 6. Both the parties, aggrieved with the order of the ld. CIT(A), are in appeal before us. 7. We have heard both the sides and perused the material placed before us. At the time of hearing before us, the ld. Counsel for the assessee stated that the Assessing Officer has estimated the interest which the assessee would have been required to pay had he borrowed the money for the purpose of investment in the property. He submitted that in the case of the assessee, .....

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.5% and therefore, income should be estimated at the rate of 6.5% on the cost of the property let out by assessee to sister concern. 8. The ld. Departmental Representative, on the other hand, relied upon the order of the Assessing Officer and he stated that the Assessing Officer was fully justified in estimating the interest at the rate of 17.25% on the basis of interest which would have been required to be paid by the assessee had borrowed money being utilized. He alternatively submitted that i .....

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ts of both the sides and perused the material placed before us. We find that this issue is squarely covered by the decision of the Hon'ble Jurisdictional High Court in the case of Sakarlal Balabhai vs Income-Tax Officer, reported in 100 ITR 97. In the first round of appeal also, the ITAT has set aside the matter back to the file of the Assessing Officer for determining the ALV as per the above decision of Hon'ble Jurisdictional High Court. In the above mentioned case, their Lordships of .....

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operty, and more particularly, as observed in Ryde on Rating, when the property is occupied by the owner. In our opinion, therefore, the contention of the learned Advocate-General that capital value of property may not have a bearing or relevance on the question of annual letting value, should be rejected, and more particularly, when, as in the instant case, the annual letting value of a self-occupied property is to be ascertained.... From the above, it is evident that their Lordships of Hon' .....

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see had the assessee borrowed the money for investment in the property or it should be interest receivable by the assessee had the similar money is invested somewhere else. In our opinion, for determining the income from the property, it should be rate of return on the investment of similar amount in another asset. Therefore, in our opinion, the CIT(A) was fully justified in estimating the ALV on the basis of interest which assessee would have earned on the investment of the similar amount. The .....

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