2014 (10) TMI 952 - HC - Income Tax

ALV determination - Income from house property - municipal valuation disregarded - Held that - Annual Letting Value has to be determined and in terms of section 23(1)(a) with reference to the municipal rateable value. If that is found to be vitiated and for the reasons set out in our judgment then alone a departure can be made. The Tribunal has held that there were no circumstances or factors brought on record which would enable the Assessing Officer to determine the Annual Letting Value by disregarding the municipal valuation. He could not have assumed any other value at which the property would be let from year to year. In such circumstances and his assumption being contrary to law the Tribunal was justified in allowing the Assessee s Appeal.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding determination of Annual Letting Value based on municipal rateable value.

Analysis:
The High Court, Bombay, heard an appeal by the Revenue challenging the order of the Income Tax Appellate Tribunal, Mumbai Bench, regarding the determination of Annual Letting Value. The only substantial question of law raised was addressed by the Tribunal's reversal of the Commissioner of Income Tax (Appeals) order. The Tribunal's decision was based on legal principles established in various judgments, including a Division Bench judgment of the High Court and judgments from other courts. The High Court, in a previous judgment, had clarified that the Annual Letting Value should be determined with reference to the municipal rateable value as per section 23(1)(a) of the Income Tax Act. The Tribunal concluded that there were no circumstances or factors to justify the Assessing Officer determining a different Annual Letting Value. Therefore, the Tribunal's decision to allow the Assessee's Appeal was deemed justified by the High Court.

The High Court found that the Tribunal's decision did not raise any substantial question of law and dismissed the Revenue's Appeal as lacking merit. The court highlighted that the Assessing Officer could not arbitrarily assume a different value for the property's Annual Letting Value without valid reasons. As such, the Tribunal's decision was upheld, and no costs were awarded in the case.