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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 ..... in case of Dy. CIT Versus Reclamation Realty India Pvt. Ltd [2010 (11) TMI 477 - ITAT, MUMBAI] AO directed to accept the income from house property declared by the assessee adopting the municipal ratable value as annual letting value of its property. - in favor of assessee. - IT Appeal Nos. 4088 & 4657 (Mum.) of 2010 - - - Dated:- 12-10-2012 - P.M. JAGTAP AND VIVEK VARMA, JJ. Hiro Rai for the Appellant. Naveen Gupta for the Respondent. ORDER P.M. Jagtap, Accountant Member - These two appeals, one filed by the assessee being I.T.A. No. 4088/Mum/2010 and other filed by the Revenue being I.T.A. No. 4657/Mum/2010 are cross appeals which are directed against the order of learned CIT(Appeals)-9, Mumbai dated 30-03-2010. 2. The main common issue involved in these appeals as raised in ground No.1 of the assessee's appeal and in the solitary ground 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupying 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 determine the annual letting value of the property in the earlier years were deleted by the learned CIT (Appeals) as well as by the Tribunal. It was contended that the addition made by the AO under the head "Income from house property" by taking into consideration the notional interest on security deposits, therefore, should be deleted and income declared by the assessee under the said head by adopting the municipal ratable value should be accepted. The submissions made by the assessee were not accepted by the learned CIT (Appeals) fully. According to him, although there was merit in the contentions of the assessee that notional interest on security deposits could not be taken into consideration for determining the annual letting value of the property, there was no merit in the contention of the assessee that ratable value as determined by the municipal authorities should be taken as the annual letting value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent received is less than the rent which the property might fetch, he can undertake necessary exercise in his behalf. 6. The learned counsel for the assessee, on the other hand, has relied on the decision of coordinate bench of this Tribunal in the case of Dy. CIT v. Reclamation Reality India Ltd. in support of the case on this issue. He has also placed on record a copy of the order passed by the Tribunal in the said case 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 equal to the municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord from the tenant. The Hon'ble Apex Court also observed that this interpretation which was being placed on the language of section 23(1) of the Income Tax Act can be said to have received legislative approval by the amendment made in the said provisions whereby it was provided in section 23(1)(b) that where the property is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum for which the property might reasonably be expected to let from year to year, the amount so received or receivable shall be deemed to the annual value of the property. 9. The Tribunal in its order passed in the case of Reclamation Realty India (P.) Ltd. (supra) then went on to refer to the decision of Hon'ble Calcutta High Court in the case of CIT v. Smt. Prabhabati Bansali [1983] 141 ITR 419 wherein it was held that relying on the decision of the Hon'ble Supreme Court in the case of Dewan Daulat Rai Kapoor (supra) and Mrs. Sheila Kaushish (supra) while deciding the issue relating to determination of actual value of the assessee's property in Mumbai the income from house property must be computed on the basis of the sum which might reasonably be expected to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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