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TMI Blog2015 (10) TMI 1510X X X X Extracts X X X X X X X X Extracts X X X X ..... o the view taken by the CIT(A) and decline to interfere with his order cancelling the addition made in taxing the rental income under section 2(24)(iv) of the Act. - Decided against revenue. Additions made u/s 2(24)(v) for Notional Interest - CIT(A) deleted the addition - Held that:- Interest-free deposit in letting out the property is not anything unusual in common parlance and is attributable to decision taken based on exigencies involved. Such action of the assessee cannot be inferred adversely. The issue is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of J.K. Investors (2000 (6) TMI 9 - BOMBAY High Court) relied upon by the assessee and other spate of judicial decisions. We also find the Pune Bench of the Tribunal in the case of Shri Bhavarlal Hiralal Jain (2015 (10) TMI 1278 - ITAT PUNE) has decided the issue in favour of the assessee on similar facts. Respectfully following the binding precedents, this issue regarding the chargeability of notional interest on interest-free deposits is also decided in favour of the assessee. - ITA No.1946/PN/2013 - - - Dated:- 8-10-2015 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny M/s Jain Irrigation Systems Ltd. (JISL) on 20.08.2002 for letting out her house property on rent. During the relevant year, the assessee has received a rent of ₹ 10,82,121/-, which was adjusted against interest-free deposit received from JISL. The Assessing Officer alleged that the property has been let out an exorbitant rent of ₹ 10,82,121/- per annum against which the assessee has also simultaneously obtained interest-free deposit which is adjustable towards rent charges. The Assessing Officer observed that M/s JISL is a legal entity in which the husband of the assessee and other relatives are holding substantial interest. Accordingly, the Assessing Officer held that the gross rent receipt of ₹ 10,82,121/- is taxable income under section 2(24)(iv) of the Act as against the aforesaid income declared under section 22 of the Act by the assessee. As a consequence, standard deduction @ 30% eligible under S. 24 on the above rent was denied. Likewise, the notional interest @ 12% on the balance of unadjusted interestfree deposit of ₹ 1,04,68,422/- as on 01.04.2005 computed at ₹ 12,56,210/- was treated as benefit or perquisite in terms of section 2(24)(iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which interest embedded therein is chargeable under section 2(24)(iv) of the Act. Accordingly, he pleaded for upholding the action of the Assessing Officer on this score also. 9. The Ld. Authorized Representative for the assessee, on the other hand, relied upon the order of the CIT(A) and submitted that there is no whiff of justification for making addition on the aforesaid account. He contended that the rent has been collected against letting out of the house property which is taxable income under section 22 of the Act. The rent received is in consideration of letting out of house property belonging to the Assessee. In view of the specific scheme of the Act for taxability of such income derived from house property under the head income from house property , it cannot be taxed under any other provisions of the Act including section 2(24)(iv) of the Act. The rent has been offered for taxation under section 22 of the Act and deduction has been claimed under section 24 of the Act as entitled to the assessee. The Assessing Officer has sought to deny the statutory deduction under S. 24 by resorting the section 2(24)(iv) of the Act, which is not permissible in law. He next contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of benefit/perquisite derived by assessee from a company which would have been payable the assessee or its relatives against the obligation. The provision is not intended to restrict the right of the Company to advance security deposits to its directors or relatives against the valuable consideration i.e. for obtaining house property on rent. As per section 22 of the Act, on the other hand, annual value of the property consisting of any building or lands of appurtenant thereto of which the assessee is the owner is chargeable to income-tax under the income from house property subject to certain deductions as provided under section 24 of the Act. Therefore, the rental income derived from ownership property is liable to be taxed in terms of Section 22 of the Act. It is an admitted fact that the amount of rent has been found to be exorbitant and excessive and therefore the annual value/rent from the property is not in dispute. In our considered view, the assessee has rightly offered the rental income under section 22 of the Act subject to statutory deduction available under section 24 of the Act. Section 2(24)(iv) of the Act deems value of any benefit of perquisite as income in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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