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TMI Blog2006 (3) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting to recompute the statutory deductions admissible under section 24 of the Act and thereby withdrawn the excess deduction granted. 2. We have heard the rival submissions and carefully perused the orders of the authorities below and documents placed on record. 3. The facts borne out from the record are that the assessee is a co-owner of Flat No. 9 B-1, Great Eastern Royale Co-op. Housing Society along with her mother Smt. Ashwinaben Choksey, having 50% shares each. During this year, the said flat was given on leave and license basis to a Bank against monthly compensation of Rs. 20,000 p.m. from 25-12-1997 to March, 1998 and an interest-free security deposit of Rs. 50 lakhs. During the course of assessment proceedings, assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal before the Tribunal with the submissions that while estimating the ALV of the property, the Assessing Officer has adopted the rent to be fetched by the property if let out on the basis of the certificate of a broker M/s. Knight and Frank, filed by the assessee during the course of assessment proceedings. The rateable value determined by the municipality cannot form a basis for determining of the ALV under section 23(1)( a ) of the Income-tax Act. The rateable value of the municipality can only be used to determine a house tax/property tax of a property. But, the ALV is to be worked out as per section 23 (1)( a ) of the Income-tax Act, according to which, the ALV of the property, shall be deemed to be the same for which property might re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Assessing Officer has not added the notional interest to the rent received by the assessee. He has simply kept in mind the notional interest to be earned on the interest-free deposits while estimating the ALV. The learned DR further placed reliance upon the order of the Tribunal in the case of Fizz Drinks Ltd. v. Dy. CIT [2005] 95 TTJ (Delhi) 429 in which the Tribunal held that if the assessee having fixed meagre rent but having received large interest-free security deposit, annual letting value has to be determined in accordance with section 23(1)( a ) by taking into account notional interest on the amount of security deposit calculated @ 15% per annum. In the case of CIT v. Panbari Tea Co. Ltd. [1965] 57 ITR 422 their Lordship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, assessee himself has filed a certificate of a broker in which it has been stated that the flat could be let for a license fee of Rs. 80,000 p.m. if no security deposit is considered. Meaning thereby, this property can fetch a monthly rent of Rs. 80,000 if it is let in the open market. According to section 23(1), ALV shall be deemed to be the same for which the property might reasonably be expected to let from year to year and if the accepted amount is lesser than the actual rent received or receivable by the assessee, then the actual rent would be the ALV of the property. But, in the instant case, as per the certificate of the broker, property can reasonably be expected to let @ Rs. 80,000 per month which is more than the actual rent re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the other circumstances, to ascertain the intention of the parties. In the case of Tivoli Investment Trading Co. (P.) Ltd. ( supra ), the Tribunal has examined the scope of provisions of section 23 of the Income-tax Act and held that section 23(1)( a ) provides that for the purpose of section 22, the annual value of any property shall be deemed to be the same for which property might reasonably be expected to be let from year to year. It is, pertinent to note that the word used is "might" and not "can" or "is". It is thus a notional income to be gathered from what a hypothetical tenant would pay which is to be objectively ascertained on a reasonable basis irresp- ective of the fact whether the property is let out or not. We have al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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