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2019 (6) TMI 1218 - AT - Income TaxIncome from house property - determination of annual letting value (ALV) - property not let out - HELD THAT - As regards the property at sl. no.1 when the assessee has not let out the property in such circumstances the Assessing Officer cannot determine the ALV by applying the market rate but he can do so only on the basis of ratable value assessed by the Municipal Corporation. Assessing Officer is directed to verify whether the ALV shown by the assessee is as per ratable value determined by the Municipal Corporation and if it is not so the Assessing Officer is directed to determine the ALV on the basis of ratable value of Municipal Corporation. As regards the property at sl. no.2 if the ALV of the property shown by the assessee is more than the ratable value fixed by the Municipal Corporation then it has to be accepted. AO has determined the ALV purely on estimate basis without being backed by any material - That being the case the Assessing Officer is directed to verify the ALV shown by the assessee in respect of properties at sr. no.3 and 5 and if it is found that the ALV shown by the assessee is as per the ratable value of Municipal Corporation or more than that then it has to be accepted. Otherwise the Assessing Officer is directed to determine the ALV of these properties as per the ratable value of Municipal Corporation. As regards property at sr. no.4 of the Table the ALV has been shown by the assessee as nil - We direct the Assessing Officer to determine the ALV of this property as per the ratable value fixed by the Municipal Corporation. Before parting we must observe the Assessing Officer must afford reasonable opportunity of being heard to the assessee before deciding the issue. Ground no.1 and 2 are allowed for statistical purposes.
Issues:
Appeal against order of Ld. Commissioner of Income Tax for assessment year 2011-12 regarding addition made to house property income based on ALV. Analysis: 1. The dispute revolves around the addition made to house property income based on ALV determined by the Assessing Officer. The assessee filed the return of income, but the Assessing Officer questioned the rental income shown for properties other than the self-occupied one. The ALV was determined by the Assessing Officer significantly higher than what the assessee declared. 2. The appeal focused on five properties regarding the determination of ALV. The Assessing Officer's calculations were challenged by the assessee, emphasizing that the ALV determination was not in line with the provisions of the Bombay Rent Control Act or the municipal corporation's rateable value. The Authorized Representative cited various decisions to support the contention that ALV should be determined based on municipal corporation rates. 3. The Tribunal analyzed each property's ALV determination. For the first property, it was emphasized that the ALV should be based on the municipal corporation's ratable value if the property was not rented out. The Assessing Officer was directed to verify this aspect. Similarly, for the second property, the ALV determination based on another flat's rent was questioned, considering the security deposit difference. The Assessing Officer was instructed to reevaluate the ALV based on municipal corporation rates. 4. The Tribunal found that for properties at serial numbers 3, 4, and 5, the ALV was estimated by the Assessing Officer without substantial backing, which was not acceptable. The ALV determination for these properties should be based on municipal corporation rates if the assessee's declared ALV was not lower. The ALV for the property at serial number 4, shown as nil, was also directed to be determined based on municipal corporation rates. 5. The Tribunal allowed grounds 1 and 2 for statistical purposes, directing the Assessing Officer to reevaluate the ALV based on municipal corporation rates. Ground 3, challenging interest levy and penalty proceedings, was dismissed as consequential. The appeal was partly allowed for statistical purposes. This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the Tribunal's directions regarding the determination of ALV for various properties, ensuring compliance with legal provisions and municipal corporation rates.
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