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2021 (1) TMI 411 - AT - Income TaxIncome from house property - Determination of gross annual value - rent realizable by the assessee - AO took adhock rate of 7% of value of property - CIT(A) directed to AO to compute the value, from December 14, 2012 to March 31, 2013 as from the date of the occupation certificate from Mumbai Metropolitan Region Development Authority (MMRDA) - HELD THAT - Perusal of the assessment order goes to prove that the AO without bringing on record any evidence of the quantum of rent realizable by the assessee qua the property in question proceeded to take ad hoc rate of 7% of the value of property in question to be its annual value. So, we are of the considered view that GAV computed by the AO by ignoring the provisions contained u/s 23(1)(a) of the Act is not sustainable in the eyes of law. Findings returned by the ld. CIT (A) are based upon the facts factually dealt with on record wherein the assessee contended that since he (assessee) has not received the permission to occupy the property before 30.03.2013, the provisions of section 22 and 23 (1) of the Act in regard to notional income was wrongly applied by the AO. CIT(A) reached the conclusion on facts that though assessee was granted permission to occupy the building w.e.f. 30.03.2013 but he had obtained the occupation certificate from Mumbai Metropolitan Region Development Authority (MMRDA) till 17th floor of the building on 14.12.2012. - So, finding no illegality or perversity in the impugned order, appeal filed by the Revenue is hereby dismissed.
Issues:
1. Calculation of Gross Annual Value (GAV) for the assessment year 2013-14. 2. Applicability of section 23(1) of the Income-tax Act, 1961. 3. Adequacy of evidence for determining annual value of the property. 4. Interpretation of judicial precedents in similar cases. 5. Validity of directions issued by the CIT (A) regarding GAV calculation. Analysis: 1. The Appellant, DCIT, sought to set aside the order passed by the Commissioner of Income-tax (Appeals)-38, Delhi regarding the calculation of Gross Annual Value (GAV) for the assessment year 2013-14. The Assessing Officer made an addition to the income from house property based on the failure of the assessee to provide details, deeming 10% of the cost of assets as the annual value of the property under section 23(1) of the Income-tax Act, 1961. 2. The dispute revolved around the interpretation of section 23(1)(a) of the Act, which deems the annual value of property to be the sum for which the property might reasonably be expected to let from year to year. The Revenue contended that GAV should be computed on a financial year basis, while the CIT (A) directed the AO to calculate the GAV from a specific period, leading to the appeal. 3. The assessment order was criticized for lacking evidence regarding the quantum of rent realizable by the assessee for the property in question. The AO arbitrarily applied an ad hoc rate of 7% of the property's value as its annual value, disregarding the provisions of section 23(1)(a) of the Act. 4. The CIT (A) referred to judicial precedents, including the case of Sunil Kumar Saha vs. ITO, to emphasize the necessity of providing a basis for estimating notional rent and allowing deductions for interest on loans taken for property acquisition. These precedents influenced the decision-making process in the current case. 5. The CIT (A) analyzed the facts presented, noting that although the assessee was granted permission to occupy the building from a specific date, the occupation certificate was obtained earlier. Based on these findings, the CIT (A) directed the computation of GAV from a particular period, rejecting the Revenue's challenge. The Tribunal upheld the CIT (A)'s decision, dismissing the Revenue's appeal for lack of illegality or perversity in the impugned order. This detailed analysis of the judgment highlights the key issues, legal interpretations, evidentiary concerns, reliance on precedents, and the validity of directions issued, resulting in the Tribunal's decision in the matter.
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