2011 (3) TMI 1621 - AT - Income Tax

Summary

Issues involved: Appeal against order of Commissioner of Income Tax(Appeals)-VI, Ahmedabad u/s 143(3) of the Income Tax Act, 1961 regarding addition of rent on property income.

Summary:
The appellant appealed against the order of the Commissioner of Income Tax(Appeals)-VI, Ahmedabad, challenging the addition of rent on property income. The appellant had given an industrial shed to a sister concern without charging any rent, as interest-free deposit was received. The Assessing Officer estimated the Annual Letting Value ("ALV") without basis, based on information collected without informing the appellant. The appellant argued for a more rational estimation based on rental valuation by municipal authorities or interest rate on the property cost, citing a High Court case. The Department did not object to setting aside the matter for re-adjudication based on the High Court decision. The Tribunal referred to the High Court case, emphasizing the relevance of the property's capital value in determining ALV. The Tribunal set aside the lower authorities' order and directed the Assessing Officer to determine ALV based on a reasonable interest rate on the property cost, ensuring the appellant's right to be heard. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal's decision emphasized the importance of a reasonable basis for estimating property income, following a High Court precedent and ensuring the appellant's right to a fair hearing.