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2019 (2) TMI 1679 - AT - Income TaxIncome from house property - ALV determination - AO has determined the ALV of the house property on the basis of field report obtained from Inspector of Income Tax as per which the prevailing market rate of rent is higher than the ALV determined by the assessee - HELD THAT - In this view of matter and consistent with view taken by the Co-ordinate Bench in assessee s own case for the AY 2012-13 2018 (12) TMI 1681 - ITAT MUMBAI which was in turn followed the decision of the Hon ble jurisdictional High Court in assessee s own case 2018 (4) TMI 1644 - BOMBAY HIGH COURT , we are of the view that there is no error in the finding of the Ld. CIT(A) in determining the ALV of house property on the basis of municipal rateable value. Hence, we are inclined to upheld the finding of the Ld. CIT(A) and dismissed the appeal filed by the Revenue. In so far as, appeal filed by the assessee challenging the findings of the Ld. CIT(A) in enhancing the ALV on ad-hoc basis, we find that Co-ordinate Bench has considered similar issue for AY 2012-13 and held that there is no reason for the AO to make ad-hoc enhancement towards ALV determined on the basis of municipal rateable value and hence, we are of the considered view that there is no reason for the lower authorities to enhance ALV on ad-hoc basis. Accordingly, we direct the AO to delete additions made towards ALV of house property on ad-hoc basis, consequently, the appeal filed by the assessee is allowed.
Issues Involved:
1. Determination of Annual Letting Value (ALV) of house property. 2. Consideration of municipal rateable value versus market rate for ALV. 3. Ad-hoc enhancement of ALV by the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Determination of Annual Letting Value (ALV) of House Property: The primary issue in these cross appeals is the determination of the ALV of house properties for the assessment years 2013-14 and 2014-15. Both the Revenue and the assessees contested the ALV determined by the authorities. The Revenue argued that the ALV should be based on the market rate, while the assessees contended that the ALV should be based on the municipal rateable value. 2. Consideration of Municipal Rateable Value Versus Market Rate for ALV: The Tribunal noted that the issue of determining the ALV on the basis of municipal rateable value had been deliberated in the assessee’s own case for the assessment year 2012-13. The Tribunal had upheld the findings of the CIT(A) in determining the ALV based on the municipal rateable value, following the decision of the Hon’ble Bombay High Court in the case of CIT vs. M/s TIP Top Typography (2014) 368 ITR 330. The Tribunal emphasized that the municipal rateable value is a safe guide for determining the ALV unless there is cogent and reliable material to suggest otherwise. The Tribunal reiterated that the AO is not bound by the municipal rateable value but can resort to the market rate only when the case is suspicious or the determination by the parties is doubtful. 3. Ad-hoc Enhancement of ALV by the Assessing Officer (AO): The Tribunal also addressed the issue of ad-hoc enhancement of the ALV by the AO. It was noted that in the assessee’s own case for the assessment year 2012-13, the Tribunal had rejected the AO’s ad-hoc enhancement of the ALV by applying a certain percentage over the previous year’s ALV. The Tribunal found no reason for the lower authorities to enhance the ALV on an ad-hoc basis and directed the AO to delete the additions made towards the ALV of the house property on an ad-hoc basis. Conclusion: The Tribunal concluded that there was no error in the CIT(A)’s determination of the ALV based on the municipal rateable value and dismissed the appeals filed by the Revenue. The appeals filed by the assessees challenging the ad-hoc enhancement of the ALV were allowed. The Tribunal directed the AO to delete the additions made towards the ALV of the house property on an ad-hoc basis. Order Pronouncement: The Tribunal pronounced the order in the open Court on 27/02/2019, dismissing the appeals filed by the Revenue for the assessment years 2013-14 and 2014-15 and allowing the appeals filed by the different assessees for the same assessment years.
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