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2015 (10) TMI 1477 - AT - Income TaxAddition on notional rent from farm house - AO made addition considering rent as receipt from income from house property - CIT(A) restricted part addition - Held that - We find that the Assessing Officer while fixing the notional rent value at ₹ 2.5 lakhs per month from the Farm House has not given the basis for arriving at the figure. Though, he stated that it is on the basis of the enquiry got conducted by the Inspector of the Ward. The Report of the Inspector was not put to the assessee for his rebuttal. The value of ₹ 75,000/- per month as fixed by the Ld. CIT(A) is based on the ALV fixed by the Municipal Corporation as on 1.12.2005, which is very much reasonable and justified. Therefore, we are of the view that the Ld. CIT(A) was justified in estimating the notional rent of ₹ 75,000/- per month of the aforesaid Farm House, which is based on the ALV fixed by the Municipal Corporation. - Decided against revenue. Admission of additional evidence - Held that - Additional evidences have been admitted by the Ld. CIT(A) in the interest of natural justice and equity. The additional evidences admitted on record is nothing, but the ALV fixed by the Municipal Corporation, which is an accurate valuation fixed by the Joint Assessor and Collector of MCD, Delhi. After admitting the additional evidences, the Ld. CIT(A) had called for the Remand Report from the AO. The AO in his Remand Report has not per se faulted the ALV fixed by the Municipal Corporation, therefore, we see no reason to interfere with the Order of the Ld. CIT(A) in admitting the additional evidences.- Decided against revenue.
Issues involved: Assessment of notional rent from a farm house, admissibility of additional evidence, validity of CIT(A) order.
Assessment of Notional Rent: The Department raised concerns regarding the CIT(A) restricting the addition of notional rent from a farm house to Rs. 6,30,000 out of the total addition of Rs. 21,00,000 made by the Assessing Officer. The AO had initially added Rs. 21,00,000 as income from house property based on an estimated monthly rent of Rs. 2.5 lakhs. The CIT(A) accepted the notional rent at Rs. 75,000 per month, relying on the Annual Letting Value (ALV) fixed by the Municipal Corporation. The Tribunal agreed with the CIT(A), stating that the AO did not provide a basis for the higher rent value and that the ALV of Rs. 75,000 per month was reasonable and justified. Therefore, the Tribunal rejected the Department's appeal on this ground. Admissibility of Additional Evidence: The Department contended that the CIT(A) erred in admitting additional evidence in violation of Rule 46A of the I.T. Rule, 1961. The CIT(A) justified admitting the evidence, stating that if evidence relevant to deciding an appeal was not requested during assessment and was gathered later by the Assessee, it should be considered in the interest of natural justice. The additional evidence submitted was the ALV determined by the Municipal Corporation. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not dispute the accuracy of the ALV in the Remand Report. Consequently, the Tribunal rejected the Department's appeal on this ground as well. Validity of CIT(A) Order: The CIT(A) had rejected the Department's contentions regarding the farm house not being liable for assessment under 'income from house property' due to its agricultural nature and ownership registration. The CIT(A) accepted the ALV as the basis for determining notional rent. The Tribunal upheld the CIT(A)'s decision, emphasizing the reasonableness of the ALV and the lack of basis for the higher rent amount initially proposed by the AO. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order. In conclusion, the Tribunal upheld the CIT(A)'s decision on both the assessment of notional rent and the admissibility of additional evidence, ultimately dismissing the Revenue's appeal.
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