TMI Blog2022 (11) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in assessee s own case for AYs 1996-97 1997-98. There is no change in material facts. No contrary decision is on record. Nothing has been shown that the aforesaid decision of the Tribunal has ever been reversed or not applicable, in any manner. Therefore, respectfully following the consistent stand of the Tribunal, we are inclined to quash the directions given by Ld. CIT (A). The additions, thus made by Ld.AO, stand deleted. Thus we allow ground no.1 to 6 of the appeal in this case and direct the learned Assessing Officer to delete the addition made under income from house property. - ITA No. 3142/Mum/2010, 3143/Mum/2010, 3141/Mum/2010 - - - Dated:- 31-10-2022 - Shri Prashant Maharishi, AM And Ms. Kavitha Rajagopal, JM For the Assessee : Shri Jeet Kamdar, AR For the Revenue : Shri Vranda U Matkarni, DR ORDER PER PRASHANT MAHARISHI, AM: 01. These are three appeals filed by the assessee for A.Ys. 2001-02, 2005-06 and 2006-07 on the similar facts against the order passed by the learned Commissioner of Income-tax (Appeals) [the learned CIT (A)]. 02. For AY 2000-01, ITA No. 3141/Mum/2010 is filed against the order of the learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bai. This flat was purchased by the assessee from one Mr. Chandrakant G. Saraiya as per the MOU dated 27th October, 1995 for consideration of ₹5,75,00,000/-. b. The assessee also entered into lease and license agreement with the seller of the flat on monthly rent of ₹5,000/- per month. The lease agreement is for lifetime of Mr. C.G. Saraiya. c. As per this lease agreement, the assessee received interest free deposits of ₹3 crores. d. The lease agreement was stated to be indivisible part of the purchase agreement. e. Municipal taxes and society charges of the flat are to be paid by the assessee. f. During the year, assessee shown Nil income from this flat as society charges and Municipal taxes paid by the assessee are much more than the rent received by the assessee. 07. The learned Assessing Officer determined the annual let-out value of this flat for the purposes of computing income from house property. The assessee claimed that annual letting value should be taken at ₹5,000/- per month. In the original assessment order the learned Assessing Officer computed the annual letting value of the property at ₹24 lacs based on notional inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee by the decision of the co-ordinate Bench. 011. The learned Departmental Representative supported the orders of the lower authorities. 012. We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also carefully perused the order of the co-ordinate Bench in assessee s own case dated 17-12-2020. Vide Para 7 onwards issue no.2, the taxability of income from house property was determined. The co-ordinate Bench held as under:- Issue No.2: Income from House Property 7.1 The addition under Income from House Property stem from the fact the assessee purchased one residential property situated at 7B, Manek, L.D. Ruparel Marg, Mumbai from one individual namely Dr. Saraiya vide an agreement dated 15/02/1996. However, he leased back the said property on the same very day to the seller Dr. Saraiya vide a leave and license agreement on a monthly license fees of Rs.5,000/-. The said income was offered to tax during the year after deduction of municipal taxes as well as statutory deduction of 20%. However, as per the terms of leave license agreement, the assessee received interest free deposit of Rs.3 Crores as security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssor had allowed relief to the appellant relying on the various decisions cited by the appellant's A/R which are mentioned above. My learned predecessor has allowed the relief mainly on the grounds that notional interest cannot be included in the rental value of a house, that where the Rent Control Act is applicable only the standard rent can be adopted as Annual Rental Value, that the Assessing Officer was bound to fix the Annual letting Value based on the Municipal Valuation unless the same was lower than the actual rent received, that the notional interest on the deposit is not an actual rent received or receivable , that there is no corresponding provision in sections 22 and 23 of the I.T. Act with the Schedule III of the W.T, Act 1957. My learned predecessor had also held that the appellant is owner of the residential house. With due respect to my learned predecessor, I beg to differ with him on certain issues being relevant to computation of ALV of the property. I agree with him that notional interest worked out on the deposit of Rs.3 crores in itself cannot be adopted as the ALV of the House Property. To this extent, I agree with the view of my learned predecessor. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt though received nominal rent, however, enabled itself to enjoy substantial funds without paying any interest. The arrangement does not confirm to the normal commercial or prudential norms. 6.2 It has been held by the Patna High Court (101 ITR 810) that Municipal Valuation affords an indication as to the reasonable Annual Letting Value of a building but the same can be rebutted on the basis of other materials on record. In such a case, the Annual Value may be determined either at a reduced or enhanced figure than that of Municipal Valuation. Similarly, Delhi High Court, in the case of CIT vs. H.P. Sharma 122 ITR 675 has held that the municipal valuation is only a piece of evidence and it cannot override the figure of actual rent as the basis for determination of Annual Value. Gujarat High Court (100 ITR 97) has held that in absence of any better way of estimating rent, the rate of interest on cost, or on capital value, of building and land may provide a reasonable basis for determining the ALV of a properly. The decisions of the Hon'ble Supreme Court, while holding that standard rent may be considered as a sum for which the property might reasonably be expected to let fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the impugned order. Aggrieved as aforesaid, the assessee is in further appeal before us by way of ground nos.1 2. 8. Upon perusal of cited order of the Tribunal, we find that in AY 1996-97, Ld. AO treated the leave and license arrangement entered into by the assessee with Dr. Saraiya as transfer as contemplated in Sec.2(47) of the Act and therefore, denied the exemption u/s 54F as claimed by the assessee. Proceeding further, Ld.AO also formed an opinion that rental value of the property was to be considered as 12% of interest free deposit of Rs.3 Crores received by the assessee from Dr. Saraiya and brought the same to tax. Upon further appeal, Ld. CIT(A) relying upon the decision of Hon ble Bombay High Court in Hameed Jaffery V/s CIT (1997) 227 ITR 724 held that no transfer of property was carried out by the assessee to licensee. Dr. Saraiya and the license granted was not for exclusive use but the assessee was vested with the right to enter and use the said premises. The entire transaction could not be characterized as a colorable device to avoid payment of tax. Hence, the assessee was eligible to claim exemption u/s 54F. The estimation of rental value as mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re inclined to quash the directions given by Ld. CIT (A). The additions, thus made by Ld.AO, stand deleted. Ground Nos. 1 2 stands allowed. 013. Nothing was pointed out before us by revenue , which suggests any change in the facts and circumstances of the case. Accordingly, judicial discipline demands that the order of the co-ordinate Bench needs to be followed. Therefore, respectfully following the decision of the co-ordinate Bench, we allow ground no.1 to 6 of the appeal in this case and direct the learned Assessing Officer to delete the addition made under income from house property. 014. Accordingly ITA no 3141/M/2010 for AY 2000-01 is partly allowed. 015. ITA No.3142/Mum/2010 is filed by the assessee for A.Y. 2005-06 against the order of learned CIT (A)-9, Mumbai where in Ground no 1 to 6 relates to income from house property determined by the learned Assessing Officer of ₹24,12,905/- was partly allowed. There is no change in the facts and circumstances of the case, except change in amount of annual lettable value determined by ld. AO . Therefore, respectfully following the order of the co-ordinate Bench in assessee s own case as stated earlier, we dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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