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TMI Blog2013 (7) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... o read into the provision more than what is already provided for - annual letting value would be the sum at which the property may be reasonably let out by a willing lessor to a willing lessee uninfluenced by any extraneous circumstances - An inflated or deflated rent based on extraneous consideration may take it out of the bounds of reasonableness - Actual rent received, in normal circumstances, would be a reliable evidence unless the rent is inflated/deflated by reason of extraneous consideration – as decided in COMMISSIONER OF INCOME TAX v/s MONI KUMAR SUBBA reported in (2011 (3) TMI 497 - DELHI HIGH COURT ) - Such annual letting value, however, cannot exceed the standard rent under the rent control legislation applicable to the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue has to be determined independently. 2. The assessee, for the assessment years 1998-99 and 1997-98 respectively has disclosed the lease rent income of Rs.6,00,000/-. The assessee had received Rs.80,00,000/- as lease rent deposit. The Assessing Authority held that the interest on deposit should be taken into account for computation of the rent received by the assessee. Therefore, he assessed the annual letting value of Rs.20,40,000/- which includes notional interest in respect of the deposit of Rs.80,00,000/-. The assessee preferred appeals before the Commissioner of Income Tax (Appeals) in respect of the assessment years 1998-99 and 1997-98, who in turn dismissed the appeals by upholding the order of the Assessing Authority. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961.? 7. Section 23 reads as under: (1) For the purposes of section 22, the annual value of any property shall be deemed to be - (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as income from house property. On the other hand, if it is less than the amount at which the property can reasonably be expected to be let from year to year, the amount determined under clause (a) shall be the income from house property. The operative words in section 23(1)(a) of the Act are the sum for which the property might reasonably be expected to be let from year to year. These words provide a specific direction to the Revenue for determining the fair rent. The Assessing Officer, having regard to this provision is expected to make an inquiry as to what would be the possible rent that the property might fetch. Thus, if he finds that the actual rent received is less than the fair/market rent because the assessee has received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air rent is less than the standard rent, it is fair rent which shall be taken as the annual letting value and not the standard rent. 9. In the light of the aforesaid discussion, the addition of notional interest on the interest free security deposit to the rent agreed upon is not permissible in law. It is open to the Assessing Authority to take note of the amount of advance paid which gives an indication of the fair rent of the property that fetches in the market. But the interest accrued on such deposit cannot be added to the agreed rent, so as to make a fair rent or market rent. Therefore, the Tribunal is justified in setting aside the said finding recorded by the authorities below. 10. In that view of the matter, the order of remand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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