2009 (12) TMI 985 - AT - Income Tax

Summary

Issues involved: The judgment involves the controversy regarding the addition of income from house property based on rent receivable versus municipal valuation for Assessment Years 1999-2000 to 2002-03, 2004-05, and 2005-06.

Assessment Year 1999-00 & 2000-01:
The Assessing Officer added Rs. 54,000/- for each year based on rent @ Rs. 3,000/- p.m., which the appellant contested as the properties being vacant. The CIT(A) upheld the addition citing the provisions of section 23(1)(c) and rejected the appellant's argument for municipal valuation at Rs. 500/-. The appellant appealed against this decision.

Assessment Year 2002-03, 2004-05 & 2005-06:
Similar additions were made by the Assessing Officer for these years, totaling Rs. 1,26,000/- and Rs. 75,600/- respectively, based on the same rent calculation. The appellant argued that the properties were vacant and should be taxed at municipal valuation of Rs. 500/-. The CIT(A) upheld the Assessing Officer's decision, leading to the appellant's appeal.

Appellant's Argument:
The appellant contended that the properties were self-occupied and not let out, thus municipal valuation should be the basis for determining the annual value. Referring to a decision by ITAT Mumbai 'D' Bench in a similar case, the appellant argued that municipal valuation should be adopted instead of market rent.

Revenue's Position:
The Revenue supported the decisions of the authorities below, maintaining that the annual value should be based on market rent rather than municipal valuation for self-occupied properties.

Judgment:
After considering the arguments from both sides and the ITAT Mumbai 'D' Bench decision, it was concluded that for self-occupied properties not let out, municipal valuation should be the basis for determining the annual value. The Assessing Officer was directed to adopt municipal valuation for all properties in the relevant Assessment Years, requiring the appellant to provide necessary evidence for the same. Consequently, all appeals were allowed in favor of the appellant.

This judgment highlights the importance of correctly determining the annual value of self-occupied properties for taxation purposes, emphasizing the relevance of municipal valuation over market rent in such cases.