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TMI Blog2012 (12) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... round raised in the Revenue's appeal relates to the computation of income chargeable to tax in the hands of the assessee under the head "Income from house property" which has been determined by the learned CIT(Appeals) at Rs. 1,05,06,720/- as against Rs. 9,84,58,080/- computed by the AO and Rs. 7,42,833/- declared by the assessee. 3. The assessee in the present case is a Company which filed its return of income for the year under consideration on 04-11-2006 declaring total income of Rs. 7,58,556/-. It is the owner of commercial premises known as Jindal Mansion, situated at Pedar Road in Mumbai. The said building is consisting of ground plus five floors which were let out by the assessee to other companies belonging to the same group. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 143(3) vide an order dated 23-12-2008. 4. Against the order passed by the AO u/s 143(3), an appeal was preferred by the assessee before the learned CIT(Appeals). During the course of appellate proceedings before the learned CIT(Appeals), it was submitted by the assessee that a large amount was spent on the renovation of the property in the previous year relevant to assessment year 1996-97 and for this purpose, security deposits were collected from the tenants occupying the said property. It was submitted that notional interest on such security deposits could not be taken into consideration for the purpose of determining the annual letting value of the property and similar additions made by the AO on account of notional interest to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities. He, therefore, directed the AO to collect the information regarding the rent fetched by properties located in the same vicinity and on the basis of information received by him from the AO in this regard, the learned CIT (Appeals) found that the rent for the similar properties in the adjacent area was in the range of Rs. 57/- to Rs. 59/- per sq.ft. during the relevant period. He, therefore, determined the annual letting value of the property at Rs. 1,50,09,600/- by adopting the rate of rent at Rs. 59/- per sq.ft. per month and after allowing deduction u/s 24(1), he determined the income of the assessee chargeable to tax under the head "Income from house property" at Rs. 1,05,06,720/-. Aggrieved by the order of the learned CIT (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a perusal of the same shows that as per the amended provisions of section 23(1)(b) made applicable from assessment year 1976-77, the actual rent received was treated to represent the annual value of the property provided it exists the sum for which the property might reasonably be expected to let from year to year. The legislative intention of the said amendment was explained by the CBDT in Circular No.204 dated 24-7-1976 and after taking note of the said circular and after reducing the relevant portion thereof in this order passed in the case of Reclamation Reality India (P.) Ltd. (supra), the Tribunal held that the position of law prior to introduction of section 23(1)(b) as clarified by the Board itself is that the annual value was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act and it was held by the Hon'ble Supreme Court that the ratio of its decision in the case of Dewan Daulat Rai Kapoor (supra) would be equally applicable in interpreting the definition of 'Annual Value' given in section 23(1) of the Income Tax Act. It was held that these definitions are given in identical terms and it was impossible to distinguish the definition of 'annual value' given in section 23(1) of the Income Tax Act from the definition of that term given in the Delhi Municipal Corporation Act 1957 and the Punjab Municipal Act, 1911. It was therefore held adopting identical line of reasoning that even if the standard rent of a building has not been fixed by the Controller, the annual value of the building as per secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me could be adopted as the safest guide for this purpose. As mentioned by the Tribunal in its order passed in the case of Reclamation Realty India (P.) Ltd. (supra), the said decision was rendered by the Hon'ble Calcutta High Court after taking into consideration the provisions of section 154 of the Bombay Municipal Corporation Act wherein the manner of determination of ratable value was laid down which was based on the annual rent for which the property mighty reasonably be expected to let from year to year. The Hon'ble Calcutta High Court held that the Municipal valuation and annual value u/s 23(1)(a) of the income Tax Act thus are one and same. As noted by the Tribunal in its order passed in the case of Reclamation Realty India (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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