1983 (1) TMI 147 - AT - Income Tax

Summary

Issues:
- Determination of annual letting value of a property for the assessment year 1976-77.
- Applicability of rent control provisions on the property.
- Discrepancy in the income from SOP as declared by the assessee and assessed by the department.

Analysis:
1. The appeal before the ITAT Indore pertained to the assessment year 1976-77 involving an individual assessee's share in a jointly owned property. The dispute arose over the determination of the annual letting value of the property, specifically a house on Mitraniwas Road, Ratlam, owned jointly by four brothers, with the assessee's share being 1/4th of the property.

2. The Income Tax Officer (ITO) had assessed the annual letting value of the entire house at Rs. 9,200, considering it low compared to prevailing rates in the locality. The assessee had disclosed an annual letting value of Rs. 176, while the ITO assessed it at Rs. 750, leading to the dispute.

3. The matter was brought before the ld. AAC, who upheld the ITO's assessment, stating that the income from SOP (Standard Occupation Property) was correctly determined at Rs. 750 based on the building's condition and the ITO's findings.

4. The assessee contended before the Tribunal that the rent control provisions applied to the property, limiting the income from SOP to the standard rent. The assessee argued that the municipal authorities had valued the property higher than the standard rent, and past years' assessments supported a lower income from SOP. The department did not provide new evidence to justify the increase in SOP income.

5. The departmental representative supported the AAC's order, maintaining the assessment of SOP income at Rs. 750.

6. The ITAT analyzed the evidence and legal provisions, noting the applicability of Rent Control and Eviction Act to the property. Relying on the decision in Shiela Kaushish vs. CIT, the ITAT emphasized considering the fair rent determined by the Rent Controller for annual value determination. The ITAT found the municipal assessment supporting an SOP income of Rs. 1,020, but after deductions, the assessee's share amounted to Rs. 176, aligning with past years' disclosures.

7. The ITAT observed that the department failed to provide new evidence or show that the municipal value was lower than the standard rent. Given the consistency in past assessments and lack of fresh material, the ITAT concluded that the declared income of Rs. 176 from SOP should be accepted, leading to the deletion of the addition made by the department.

8. Consequently, the ITAT allowed the appeal in favor of the assessee, emphasizing the importance of considering Rent Control provisions and past assessments in determining SOP income, ultimately accepting the declared income and deleting the addition made by the department.