Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 948 - AT - Income TaxIncome from house property - ALV determination - AO estimated rental income @8% of value of the property - assessee has offered the deemed rental value on the basis of Municipal Valuation and property has not been let out, at all, during the year - HELD THAT - As per the provisions of Sec. 23(1)(a), the annual value of such property shall be deemed to the sum for which the property might reasonably be expected to be let out from year to year In the case of CIT V/s. Tip Top Typography 2014 (8) TMI 356 - BOMBAY HIGH COURT concurred with following principles laid down by full bench of Hon'ble Delhi High Court in the case of CIT V/s. Moni Kumar Subba 2014 (8) TMI 356 - BOMBAY HIGH COURT and held Annual Letting Value (ALV) of the property could not exceed Standard Rent as per the Rent Control Legislation as applicable to the property and the Standard Rent is the upper limit. ALV of the property has to be determined at sum at which property might reasonably be let out between willing parties. Methodology as adopted by Ld. AO to estimate the income @8% of value of the property is not in accordance with the above principles laid down by Hon'ble Court and therefore, the same could not be sustained. Nothing has been brought on record by Ld. AO that the aforesaid estimation was the approximate sum between willing parties. The assessee offered the rent on the basis of Municipal Valuation which is in accordance with the principle laid down by Hon'ble Court as above. Therefore, the estimation thus made and confirmed by lower authorities could not be sustained. We direct Ld. AO to adopt the ALV of the property at ₹ 8,400/-, being deemed rental value based on municipal valuation of the property - Decided in favour of assessee.
Issues:
1. Condonation of delay in filing the appeal 2. Addition of deemed rental income under the head 'Income from House Property' 3. Determination of Annual Letting Value (ALV) of the property Condonation of Delay: The appeal was filed with a delay of 250 days, seeking condonation supported by a condonation petition and the assessee's affidavit. The delay was attributed to the misplacement of the appellate order by the assessee's staff, leading to a delayed communication to the Chartered Accountant. The Tribunal, after perusing the documents, found a reasonable cause for the delay and thus condoned it, proceeding to adjudicate the appeal on merits. Addition of Deemed Rental Income: The appeal contested the addition of ?2.26 Lacs, being 8% of the book value of the property, under the head 'Income from House Property.' The assessee, an actor and producer, offered deemed rental income based on municipal valuation, which was disputed by the Assessing Officer (AO). The AO estimated rental income at 8% of the property value, resulting in an addition of ?1.50 Lacs to the assessee's income. The Tribunal noted that the AO's estimation method did not align with the principles laid down by the courts and directed the AO to adopt the deemed rental value of ?8,400 based on municipal valuation, as offered by the assessee. Determination of Annual Letting Value (ALV): The Tribunal referred to the principles established by the Bombay High Court and the Delhi High Court for determining the ALV of a property. It emphasized that the ALV should not exceed the standard rent as per rent control legislation and should represent a reasonable amount for letting out the property. The Tribunal found the AO's estimation method of 8% of property value to be inconsistent with these principles and upheld the assessee's approach of offering rent based on municipal valuation. Consequently, the Tribunal directed the AO to consider the ALV at ?8,400, in line with the municipal valuation. In conclusion, the Tribunal allowed the appeal, setting aside the addition of deemed rental income and directing the AO to adopt the deemed rental value based on municipal valuation for determining the ALV of the property.
|