2011 (11) TMI 797 - AT - Income Tax

Summary

Issues Involved:
1. Determination of Annual Letting Value (ALV) of the property for assessment years 1999-2000 to 2002-03.
2. Determination of ALV of the property for assessment year 2005-06.

Summary:

Issue 1: Determination of ALV for Assessment Years 1999-2000 to 2002-03

The assessee, an individual owning a house property, let out the property to M/s Credit Suisse First Boston (I) Securities Pvt. Ltd. for a monthly rent of Rs. 23,000/- and received a deposit of Rs. 2.24 crores. The rental income was initially accepted by the AO u/s 143(1) but later reassessed u/s 143(3)/147, determining the ALV at Rs. 4,80,000/- per annum. The CIT, Central-IV, set aside these assessments u/s 263, directing the AO to determine the ALV in accordance with section 23(1)(a). The AO, considering notional interest on the deposit, determined the ALV at Rs. 2,50,000/- per month. The CIT(Appeals) directed the AO to take the ALV at Rs. 28,000/- per month, based on comparable instances of rent in the same building, which was upheld by the Tribunal. The Tribunal found no infirmity in the CIT(Appeals)'s order, stating it was in consonance with the Delhi High Court's decision in CIT vs. Moni Kumar Subba, which held that notional interest on interest-free security deposits cannot be a determinative factor for ALV u/s 23(1)(a).

Issue 2: Determination of ALV for Assessment Year 2005-06

For the assessment year 2005-06, the property was let out to M/s ABN Amro Bank NV for a monthly rent of Rs. 15,000/- with a deposit of Rs. 2.5 crores. The AO determined the ALV at Rs. 2,50,000/- per month, similar to the previous years. The CIT(Appeals) directed the AO to take the ALV based on the actual rent received, i.e., Rs. 15,000/- per month. The Tribunal, following its decision for the earlier years, modified the CIT(Appeals)'s order and directed the AO to determine the ALV at Rs. 28,000/- per month, based on the fair rent.

Conclusion:

The appeals of the Revenue for assessment years 1999-2000 to 2002-03 were dismissed, and the appeal for assessment year 2005-06 was partly allowed. The ALV for the property was directed to be taken at Rs. 28,000/- per month for all the relevant assessment years.