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TMI Blog2021 (12) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 1982-83 and being used for self occupation and profession. The Assessing Officer relying on the decision of the Hon'ble Supreme Court in the case of M/s Goetze India ltd. vs CIT observed that fresh claim of the assessee cannot be admitted by the Assessing Officer without revising the ITR. The so called revised return is barred by limitation of time since the period of revising the return has lapsed. He, therefore, did not accept re-revised return. 3. During the course of assessment proceedings, the Assessing Officer deputed an inspector to enquire about the prevailing market rent and submit the report in respect of property situated at E-30, Greater Kailash II, New Delhi. The Inspector after spending three hours at surrounding locality and talking to residents, property dealers and guards came to a broad conclusion that Rs. 40,000/- to Rs. 60,000/- is the prevailing rental value of commercial and residential floors. Further, lift facility, corner and location of the house are also factors in fluctuation of rent. In view of the above, the Assessing Officer considered Rs. 50,000/-as the rent for each floor and accordingly determined the yearly rent at Rs. 18,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is owning two properties one at Shimla and other one at Greater Kailash-ll, New Delhi. Both these properties are self-occupied. In her original return of income, the assessee omitted to include deemed self-occupied property income from Greater Kailash-II property. In her re-revised return, the assessee treated the Shimla property as self-occupied and annual value has been taken as NIL as per section 23(2) and considered the Greater Kailash-II property as deemed let out as per section 23(4). The GK-II property consist of Basement, Ground Floor and First Floor. The assessee declared the basement being used for self and family for commercial purpose and did not offer any income on deemed let out basis by applying the provisions of section 22. In the rerevised return, the assessee declared ALV of Ground and First Floor at Rs. 1,08,800/- on notional basis on the basis of the ALV declared in the record of Municipal Corporation of Delhi (SDMC) for assessment of property tax. The AO did not accept the declaration of ALV of GK- II property as the Municipal Corporation value did not represent the true market value of the property as per the section 23(1 )(a). In Municipal record, the basemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sufficient to satisfy the conditions laid down by section 22 of the Act, which lays the condition that the property to be exempt from charging under the provisions of Income from House Property must be occupied by the assessee and should be used for the purposes of any business or profession carried on by him/her profit of which are chargeable to Income Tax. In the present case, no such income from business or profession has been shown by the appellant. The only income (loss) shown from business or profession is the share from the partnership firm which is exempt u/s 10(2A) of the Act. The use factor "4" in Municipal record can be for any of the reasons according to that law but cannot be the basis for arriving at any conclusion that commercial activities or business or profession has been carried out by the appellant. Therefore, I am inclined to accept the decision of the AO that the basement should be assessed under the provisions of Income from House property at deemed annual lettable value. With the above findings, the next step is to determine the deemed ALV of the entire GK-II property comprising of basement, ground floor and first floor. The AO proceeded to estimate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made under Income tax Act. The property is let-out at a much higher rent. Thus, the Assessing Officer in a given case can ignore the municipal valuation for determining annual letting value if he finds that the same is not based on relevant material for determining the 'fair rent' in the market and there is sufficient material on record for taking u different valuation. We may profitably reproduce the following observations of the Supreme Court in the case of Corpn. of Calcutta v. Smt. Padma Debi AIR 1962 SC 151 : "A bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasonableness. An inflated or deflated rate of rent based upon fraud, emergency, relationship and such other considerations may take it out of the bounds of reasonableness." 17. Thus the rateable value, if correctly determined, under the municipal laws can be taken as ALV under section 23(l)(a) of the Act. To that extent we agree with the contention of the learned Counsel of the assessee. However, we make it clear that rateable value is not binding on the Assessing Officer. If the Assessing Officer can show that rateable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these floors. Thus, he had sufficient reasons to ignore the ALV determined by the Municipal Corporation of the property as well. Therefore, I hold that the fair market value of the property as determined by the A.0 at Rs. 18,00,000/- per annum as per the provisions of section 23(1 )(a) is the correct value and accordingly, dismiss the appeal of the assessee. Therefore, the ground no. 2 is dismissed." 5. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal:- 1. The Ld. CIT (A) has erred in law and on the facts in holding the action of the A.O. in estimating the fair market value of property at E-30, Greater Kailash- II, New Delhi as determined by the A.O. at Rs. 18,00,000/- per annum as per the provisions of section 23(l)(a) is the correct value, ignoring the facts and submissions of the appellant, which is arbitrary and bad in law. 2. The ld. CIT (A) has erred in law and on the facts in holding the action of the A.O. in estimating the fair market value at Rs. 18,00,000/- per annum based on inspector's enquiry report dated 06.12.2017 which was not supported by any material evidence and also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basement should be assessed under the provisions of the income from house property as deemed annual lettable value. 6.1. Referring to the decision of the Hon'ble Delhi High Court (Full Bench) in the case of CIT vs Moni Kumar Subha reported in 333 ITR 38 (Del.) which has been followed by the Assessing Officer and the Ld. CIT(A), he submitted that the relevant portion of the said decision as relied on by the Assessing Officer and the Ld. CIT(A) is distinguishable and not applicable to the facts of the present case. In that case, the issue involved was in respect of the addition of notional interest on interest free securities deposit. However, in the instant case, the property of the assessee has not been let out, since the assessee has neither received nor was entitled to receive any rent and is covered u/s 23(4)(b) r.w.r. 23(1)(a) of the Act. The ld. Counsel for the assessee submitted that no opportunity whatsoever was given by the Assessing Officer to the assessee. He submitted that during the Assessment Year 2016-17, the tax deducted u/s 194J as reflected in 26AS has been allowed by the Assessing Officer. Relying on various decisions including the decision of the Hon'ble Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract any income from house property on notional basis was rejected by the Assessing Officer. On the basis of the report of the Inspector, the Assessing Officer determined the annual value of two floors and one basement property situated at Greater Kailash-II, New Delhi at Rs. 18,00,000/- and after allowing deduction u/s 24 of the Act made addition of Rs. 12,60,000/- to the total income of the assessee. 8. I find the Ld. CIT(A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the ld. Counsel for the assessee that she was running her business/profession from the basement and has declared the income of the two floors on the basis of municipal lettable value. The Inspector, in the instant case, based on some unauthentic information as per some local enquiry reported to the Assessing Officer, the possible rent of the property as per the market standard and the Assessing Officer on the basis of some unauthentic information as per the local enqury determined the ALV instead of actual rent or municipal lettable value as per provisions of section 23(1)(a) of the Act. Further, the income decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt Ltd., Vs. ITO in ITA No. 387, 388 & 390/Mum/2018 dated 15.06.2018, wherein the Co-ordinate Bench of this Tribunal has accepted the plea of the assessee that municipal rateable value is a recognised basis for determination of ALV, having regard to the decision of the Hon'ble Bombay High Court in the case of Tip TOP Typography (supra). In view of the legal proposition emerging from the precedents cited above, we do not find any justification for the action of the lower authorities in disregarding the municipal rateable value for determination of estimated ALV and substitution thereof by some expected rent based on some unauthentic information. Consequently, the action of the deserves to be set aside and the additions made on this score requires to be cancelled." 11. So far as the decision relied upon by the Ld. CIT(A) in the case of CIT vs Moni Kumar Subha (supra) is concerned, the ld. Counsel for the assessee successfully distinguished the same since in that case the issue was in respect of addition of notional interest on interest free security deposits. Even in the said decision also the Hon'ble High Court has held that the annual letting value fixed by the municipal aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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