2020 (2) TMI 1477 - AT - Income Tax

Income from house property - determination of annual letting value (ALV) of the premises owned by the assessee that remained vacant - HELD THAT - The assessee is the owner of certain premises in a housing complex which remained vacant during the year under consideration - in the return of income filed for the impugned assessment year, the assessee offered income from such house property by determining the ALV under section 23 of the Act as per MRV. AO has determined the ALV on the basis of rent received by the assessee in the assessment year 2015 16. Commissioner (Appeals) has directed the Assessing Officer to re compute the ALV by taking the MRV as the base and increase it by 5% every year. Commissioner (Appeals) while giving such direction has followed the order passed by him in case of Smt. Laxmi Satyapal Jain, one of the family members - while deciding the issue in case of the aforesaid family member, the Tribunal in the order referred to above has disagreed with the aforesaid decision of learned Commissioner (Appeals) and directed the Assessing Officer to determine the ALV as per MRV. As respectfully following the aforesaid decisions of the Tribunal in assessee own case as well as in case of other family members, we direct the Assessing Officer to determine the ALV of the vacant flat as per MRV. In case, it is found that ALV determined by the assessee is as per MRV, the same should be accepted. Grounds are allowed.

Summary

Issues:
- Determination of annual letting value (ALV) of the premises owned by the assessee.

Analysis:
1. The appeal was filed by the assessee challenging the order passed by the Commissioner of Income Tax (Appeals) regarding the determination of the annual letting value (ALV) of the premises owned by the assessee for the assessment year 2010-11.

2. The Assessing Officer initially enhanced the ALV, but the Commissioner (Appeals) restricted it to a lower amount. Both the assessee and the Revenue appealed to the Tribunal, which sent the issue back to the Assessing Officer for fresh adjudication.

3. The Assessing Officer, in the fresh assessment proceedings, determined the ALV based on the rent received by the assessee in a later assessment year, which was contested by the assessee. The Commissioner (Appeals) directed the ALV to be computed based on the Municipal Ratable Value (MRV) increased by 5% annually.

4. The Tribunal noted that the Commissioner (Appeals) had followed his own order in a different case, but disagreed with this method in a consolidated order involving similar disputes. The Tribunal held that the ALV should be determined based on the MRV, as accepted in previous cases involving the same assessee and other family members.

5. The Tribunal emphasized that determining the ALV on an ad-hoc basis by increasing the MRV by 5% annually was not acceptable. It directed the Assessing Officer to determine the ALV of the vacant flat as per the MRV, and if the ALV determined by the assessee was based on MRV, it should be accepted.

6. Therefore, the Tribunal allowed the appeal, directing the Assessing Officer to determine the ALV of the vacant flat as per the Municipal Ratable Value, in line with previous decisions in similar cases involving the same assessee and family members.