TMI Blog2022 (5) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... can be a rational yardstick . In the case under consideration the DR has not brought to our notice any reason for which Municipal Value cannot be considered as Fair Rent u/s 23(1). Neither the AO nor the CIT(A) has discussed why Annual value decided by Municipal Corporation shall not be adopted as Fair Rent for the purpose of section 23(1) in this case. As already discussed why the report submitted by the Inspector cannot be considered. Therefore, we are of the opinion that , in this case the Municipal Ratable Value of the impugned property or the actual rent offered by the assessee in the return of income , whichever is higher, shall be adopted as fair rent u/s 23(1)(a) of the Act. Assessee appeal allowed. - ITA No.2325/PUN/2017 - - - Dated:- 8-4-2022 - SHRI S.S.VISWANETHRA RAVI, HON BLE JM AND DR. DIPAK P. RIPOTE, HON BLE AM Assessee by: Shri Sanket M Joshi AR Revenue by: Shri S.P.Walimbe - DR ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeals)-1, Nashik, Appeal Number NSk/CIT(A)-1/260/2016-17 dated 03.07.2017 for the Assessment Year 2014-15. The Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Section 23(1)(4) were applicable. Accordingly, the Assessing Officer made addition of Rs.13,40,763/- on account of deemed let out of house properties u/s 23(1)(a) of the Act and assessed the income of the appellant at Rs.1,33,49,293/-. The impugned properties whose deemed rent has been calculated by the AO are as under: Flat in Siddhivinayak Park ,Nasik - Given on Rent to employee Showroom in Rishiraj Regency ,Gangapur Road, Nasik.- Vacant Property However, the Assessing Officer(AO) , in the assessment order in para 5.5 has observed that the flat in Siddhivinayak Park was rented out by assessee at a rent of Rs.28625/-, which according to the AO was much below the market rate. 2.1 Inspector of the Department was deputed by the Assessing Officer (AO) to enquire the Market Rent of the properties as per local enquiry, the Inspector has submitted the following report , which is reproduced below: As directed I have visited the following premises for local enquiry regarding rent during F.Y.2013-14. i) Show Room (Rushiraj Regency Gangapur Road, Nashik) ii) Show Room (Rushiraj Heights, Parijat Nagar, Nashik). iii) Flat (Siddhivinayak Park, Anandwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant. The Assessing Officer had genuine belief that the rent received shown by appellant is less. Therefore, to ascertain the correct ALV of property the Assessing Officer conducted enquiry through his Inspector. Based on the Inspector s report the AO computed the ALV of the property. Section 23(1)(a) relates to the determination of the annual letting value of such property and speaks of the sum for which the property might reasonable be expected to let out from year to year. What the law contemplates by annual value is not actual rent received by the owner of the property but a notional income which is to be gathered from what a hypothetical tenant would pay for the property under assessment. The Court in Moni Kumar Subba, supra, has upheld this view. I do not find any infirmity in the action of the Assessing Officer and is upheld. 3. Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before this Tribunal. The ld.Authorised Representative (ld.AR) has submitted that ld.CIT(A) has erred in upholding the order of Assessing Officer. The ld.AR submitted that the AO should have adopted Municipal rateable Value instead of relying on some hearsay informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed information regarding rent available on the website www.realestatemumbai.com., according to which rent in Walkeshwarnagar area, Mumbai per month approximately was ₹ 2,50,000/- to ₹ 3,00,000/-. 4.1 The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and the CIT(A) on perusal of the order passed by ITAT, Pune Bench in the assessee s own case in ITA No.1425/PN/2008 dated 24.09.2010, wherein, the issue has been decided in favour of assessee as under: 21. We have heard the rival submissions and perused the orders of the revenue authorities as well as paper book filed before us and copies of the decisions filed before us. Undisputedly, this is the case, where the property is let to the sister concern for rent and therefore, clause (b) of section 23(1) apply to the case. AO has not made out a case that the case fall in the exempted cases of Maharashtra Rent Control Act, 1999. The provisions of clause (b) of section 23 are as under:- 23(1) Annual value how determined Subsection (1) for the purpose of section 22, the annual value of any property shall be deemed to be, (a)The sum f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and, therefore, ALV of the property shall be determined on the basis of the comparable cases. In any case, the standard rent is upper limit for determination the ALV as held in the case of Makrupa Chemicals Pvt Ltd (supra). Therefore, we are of the opinion that the order of the CIT (A) does not call for any interference. 22, Thus, it is not the case of the revenue that the ALV determined by the assessee is less than the standard rent. Considering the above factual and legal position in force, we are of the opinion that the order of the CIT(A) does not call for any interference for the above reasons. Accordingly, ground 1 of the revenue is dismissed. In this background, the CIT(A) granted relief to the assessee. This reasoned finding of CIT(A), which is based on decision of ITAT in assessee s own case, needs no interference from our side. We uphold the same. 5.2. The Hon ble Delhi High Court Full Bench in the case of CIT v/s Moni Kumar Subba [2011] 199 Taxman 301 (Del) in para 16 has observed as under: Quote Since the provisions of fixation of annual rent under the Delhi Municipal Corporation Act are pari materia of section 23 of the Act, we are inclined t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained by obtaining the requisite details. However, there also the Assessing Officer must safeguard against adopting the rate stated therein straightway. He must find out as to whether the property which has been let out or given on leave and license basis is of a similar nature, namely, commercial or residential. He should also satisfy himself as to whether the rate obtained by him from the deals and transactions and documents in relation thereto can be applied or whether a departure therefrom can be made, for example, because of the area, the measurement, the location, the use to which the property has been put, the access thereto and the special advantages or benefits. It is possible that in a high rise building because of special advantages and benefits an office or a block on the upper floor may fetch higher returns or vice versa. Unquote. 5.4 In the case under consideration the Assessing Officer has not carried out any such investigation as observed by the Hon ble High Court. Rather the AO has merely relied on the report submitted by the Assessing Officer, which is based on hearsay opinions. The AO was duty bound to conduct proper investigation before rejecting the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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