TMI Blog2021 (11) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... it disproportionate to the monthly rent is nothing but a device to circumvent the liability to tax. We find no infirmity or perversity in the order impugned. Hence, the substantial questions of law are answered in favour of the Revenue and against the assessee. - I.T.A.No.164/2017 C/w. I.T.A.No.166/2017 - - - Dated:- 5-10-2021 - HON BLE MRS.JUSTICE S. SUJATHA AND HON BLE MR. JUSTICE RAVI V. HOSMANI APPELLANT (BY SRI ANNAMALAI, ADV. FOR SRI M. LAVA, ADV.) RESPONDENT (BY SRI M. DILIP, ADV. FOR SRI K.V.ARAVIND, ADV.) J U D G M E N T S. SUJATHA, J., Since common and akin issues are involved in these matters, they are taken up together and disposed of by this common judgment. 2. These appeals are filed under Section 260A of the Income Tax Act, 1961 ['Act' for short] assailing the common order dated 23.11.2016 passed by the Income Tax Appellate Tribunal A Bench, Bangalore ['Tribunal' for short] in ITA Nos.1607 and 1692/Bang/2012 relating to the assessment years 2007-08 and 2009-10 by the assessee M/s. Sobha Interiors [P] Ltd., and ITA No. 1630/Bang/2012 relating to the assessment year 2007-08 by the assessee M/s. Sobha Glazing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals]. The Commissioner of Income Tax [Appeals] confirmed the findings of the Assessing Officer and sustained the additions relating to the determination of the income from house property by partly allowing the appeals as regards the deduction of 30% under Section 24[a] of the Act. Being aggrieved by the same, the assessee preferred appeals before the Tribunal which came to be dismissed, confirming the findings of the Assessing Officer as well as the Commissioner of Income Tax [Appeals] by a common order dated 23.09.2016. Aggrieved by the said order, the assessee has preferred these appeals. 6. Learned counsel for the appellants-assessee submitted that the appellant M/s. Sobha Interiors [P] Ltd., had entered into a lease agreement with its sister concern, M/s. Sobha Developers [P] Ltd., to lease the factory building vide agreement dated 01.04.2006 for rental agreement of ₹ 5,00,000/-. Subsequently on 29.03.2007, executed a supplementary agreement wherein the terms as regards the payment of rent was reduced to ₹ 25,000/- p.m., as against the originally agreed rental of ₹ 5,00,000/- p.m., and the lessee agreed to pay a sum of ₹ 25 Crores as interest free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd., V/s. Commissioner of Income-tax [(1954) 26 ITR 775 (SC)] 4. Union of India and Another V/s. Azadi Bachao Andolan and Another [(2003) 263 ITR 706 (SC)] 7. Learned counsel for the Revenue argued that the original agreements entered into between the appellant-assessee and its sister concern agreeing to pay the rental would alone be suffice to consider the annual letting value of the property. Indeed no actual payments were made by the assessee, but were only journal entries made in terms of the subsequent agreements executed at the fag end of the assessment year i.e., on 29/30.03.2007 which is nothing but a fraudulent device designed by the assessee to avoid the payment of tax. The Authorities as well as the Tribunal have decided the issue based on the material evidence on record and no perversity is found in the orders impugned. 8. We have carefully considered the rival submissions of the learned counsel appearing for the parties and perused the material on record. 9. The several inconsistencies and the glaring discrepancies found in the claim made by the assessee as recorded by the Assessing Officer confirmed by the Commissioner of Income Tax [Appeals] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest free security deposit to the agreed rent in the present case. 12. In the case of Smt.Prabhabati Bansali supra, the Hon ble High Court of Calcutta while adjudicating upon the determination of annual letting value where the rent received exceeds the Municipal Valuation, has observed that where the actual rent received is higher than that for which the property might reasonably be expected to let from year to year in respect of the income accruing subsequent to the amendment different consideration might arise. It has been held that the income from the house property must be computed on the basis of the sum which might reasonably be expected to let from year to year and with the annual municipal value provided such a value is not above the standard rent receivable. 13. in the case of Dhakeswari Cotton Mills Ltd., supra, the Hon ble Apex Court while dealing with the principles of natural justice where the departmental representative had produced certain material, no opportunity having provided to rebut such material and in the context of material produced by the assessee was not considered by the Tribunal, opined that the Tribunal violated certain fundamental rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during 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 : Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective 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. 15. In terms of Section 23[1][b], the actual value agreed between the parties would have prominence than the municipal value which has to be supported by any guidelines or comparable statistical value. Merely on the assumptions and presumptions, the value certified by the local authority cannot be given primacy. Having regard to these facts, the Tribunal has recorded a finding that while computing the ALV, all sur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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