2015 (5) TMI 548 - HC - Income Tax

Estimation of ALV of property - IT estimating the ALV of the property at Nos. 14-16, Aurangzeb Road, New Delhi at ₹ 9,32,888 as against ₹ 5,12,932 declared by the assessee in the return - Held that - Annual value of the property for determining the income from house property is deemed to be the sum for which the property might reasonably be expected to let from year to year or where the property is let and the annual rent received or receivable is in excess of such sum, the amount so received or receivable. It thus follows that the determination of the annual value is to be made at a sum for which the property might be reasonably expected to let from year to year and the same is to be compared with the actual rent received. If the rent so received or receivable is higher than the amount at which it would be reasonably expected to let from year to year, then the actual rent received will be adopted as an annual value. The swimming pool and health club were not business apparatus and were not used for carrying on business of trading or manufacturing or professional activities. Hence, the swimming pool could not be treated as plant. See Anand Theatre 2000 (5) TMI 4 - SUPREME Court - AO shall proceed to determine the annual letting value (ALV) of the suit property in respect of the years 1990-91 and 1992-93 in terms of the above directions.

Summary

Issues Involved:
1. Restoration of appeal and condoning delay.
2. Question of law regarding determination of annual letting value (ALV) of a property.
3. Interpretation of relevant provisions of law for determining ALV.
4. Consideration of judicial precedents in determining ALV.
5. Overruling of impugned order regarding depreciation on swimming pool.

Analysis:

1. The judgment begins with the court accepting the request for restoration of the appeal and condoning the delay, emphasizing the interest of justice. The Court allows the applications and restores the appeal to the file.

2. The main issue revolves around the question of law framed by the Court regarding the determination of the annual letting value of a property for assessment years 1990-91 to 1992-93. The case involves a limited company dealing in real estate, the valuation of properties, and alterations made by the lessee, leading to a dispute over the ALV adopted by the Assessing Officer.

3. The judgment delves into the interpretation of relevant provisions of law, specifically Section 23(1) governing the determination of ALV. It highlights the application of clauses (a) and (b) of the section, emphasizing the comparison between the expected rent and actual rent received to determine the ALV. Reference is made to judicial decisions like John Tinson & Co. (P) Ltd. v. CAT, outlining the calculation of standard rent for determining ALV.

4. The Court extensively considers judicial precedents such as Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee, citing the Supreme Court's observations on the displacement of rent approximation in the presence of rent control legislation. The judgment elucidates on the Controller's role in fixing standard rent and the assessing authority's function in estimating standard rent for ALV determination.

5. The judgment concludes by overruling the impugned order regarding depreciation on a swimming pool, affirming the earlier view on the matter. It directs a re-examination of the decision of the Special Bench and application of principles therein for determining the ALV of the property in question for specific assessment years.

This comprehensive analysis of the judgment showcases the Court's meticulous consideration of legal provisions, precedents, and factual circumstances to resolve the issues at hand, ultimately providing clarity on the determination of annual letting value and related matters in the case.