2004 (3) TMI 705 - AT - Income Tax

Summary

Issues:
1. Determination of annual letting value of the property.
2. Disallowance of capital loss on sale of shares.
3. Addition of household expenses.

Issue 1: Determination of annual letting value of the property:
The issue revolved around the determination of the annual letting value (ALV) of a property owned by the assessee and let out at a monthly rent. The Assessing Officer noticed a disparity between the declared ALV by the assessee and the rateable value determined by Municipal Authorities. The authorities doubted the genuineness of the lease deed due to alterations made by the lessee. However, the Tribunal found that the lease deed was genuine, and the ALV declared by the assessee was reasonable, considering Rent Control Legislation. The Tribunal referred to a Supreme Court judgment emphasizing the actual rent as reliable evidence unless influenced by extraneous factors. The Tribunal set aside the lower authorities' findings and directed the ALV to be adopted at Rs. 50,400 per annum.

Issue 2: Disallowance of capital loss on sale of shares:
The dispute involved the disallowance of a capital loss on the sale of shares by the revenue. The Assessing Officer reduced the cost of acquisition of shares based on bonus shares issued, resulting in a discrepancy in the capital gain calculation. However, the CIT(A) upheld the assessee's claim, noting that the shares were acquired before a specific date, allowing the fair market value option. The Tribunal affirmed the CIT(A)'s decision, stating that the fair market value of shares as on the specified date was acceptable, leading to the dismissal of the revenue's appeal on this issue.

Issue 3: Addition of household expenses:
The third issue concerned the addition of Rs. 40,000 on account of low withdrawals for household expenses. The Assessing Officer deemed the household expenses to be low based on the withdrawals made by the assessee. However, the CIT(A) considered additional withdrawals made by the assessee's parents, leading to the deletion of the addition. The Tribunal upheld the CIT(A)'s decision, stating that no justification was presented to challenge the explanation provided by the assessee. Consequently, the revenue's appeal on this issue was dismissed.

In conclusion, the Tribunal allowed the appeals of the assessee while dismissing the appeal of the revenue, resolving the issues related to property ALV determination, capital loss on shares, and household expenses addition comprehensively.