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TMI Blog2014 (6) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... the same are being taken together for disposal with this common order. For the sake of convenience, the facts have been taken from ITA No.932/M/2011 relevant to assessment year 2002-03. 2. The Revenue, through its grounds of appeal, has agitated the setting aside of the estimation by the CIT(A) which was made by the Assessing Officer (hereinafter referred to as the AO), u/s 23(1)(a) of the Income Tax Act, of the standard rental value in respect of three rented out flats at Rs.1,20,000/- per month, Rs.1,10,000/- per month and Rs.1,05,000/- per month respectively against the rental income of Rs.18,000/- per month for each of the flat as declared by the assessee. 3. During the course of assessment proceedings under Section 143(3) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of "Trivoly Investment and Trading Company Pvt. Ltd." reported in 90 ITD 163, to arrive at the fair rental, he computed usufructuous from security deposit and estimated the rent of the above mentioned three flats at Rs.1,20,000/- per month, Rs.1,10,000/- per month and Rs.1,05,000/- per month respectively. 4. The learned CIT(A), while adjudicating on the appeal preferred by the assessee, observed that though the AO was not barred from computing the income on the house property on the basis of 'annual letting value' as per Section 23 of the Income Tax Act, 1961, however, the said rental value was to be determined on the basis materials collected by him for determining the fair market value of the property. The AO should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentatives of both the parties and also have gone through the records. A perusal of the Assessment order reveals that the AO did not examine the cost of assets leased/rented and the adequacy of the rent in comparison to its value and further that whether the interest free deposit of Rs.195 Lakhs (Rs.65 lakh for each of the flat) was in lieu of rent which was not offered by the assessee. The comparative market rates were not called for and the applicability of section 23(1)(a) was not examined. The AO instead of examining the above issues and make necessary enquiries, relied upon the judgment of the Tribunal in the case of "Trivoly Investment and Trading Company Pvt. Ltd." (supra) and thus estimated the rent as observed above and added back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would depend on facts of each case. In the case of "CIT vs. K. Streetlite Electric Corpn." (supra), in the facts and circumstances of the case before the Hon'ble High Court, it was observed that the security deposit made by the assessee was much more higher than the rent offered by the assessee. Hence, under such circumstances it was held that ordinarily the notional interest that may accrue on the security deposit would not form part of income from house property as held by the Hon'ble Bombay High Court in the case of "CIT vs. J.K. Investors (Bombay) Ltd." (2001) 248 ITR 723. However, where payment of security deposit is to circumvent the real rent, the same shall fall within its ambit as income from house property. 7. The reasonable c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not be included in the annual letting value to be determined by the AO. The ld. A.R. has further brought into our notice that the assessee has already offered the interest income from the security deposits under the head income from other sources. Under such circumstances, even otherwise, the adding of interest income into the rent would lead to double assessment of the same income. So taking into consideration the overall facts and circumstances of the case, we do not find any reason to interfere with the finding of the ld. CIT(A) that the estimation of income in this case was wrongly made by the AO. There is no merit in the appeals of the Revenue, and the same are accordingly dismissed. Order pronounced in the open court on 23.05.2014. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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