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TMI Blog2012 (5) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. We, therefore, modify the impugned order to this extent. Determination of ALV - Held that:- For the immediately preceding assessment year 2004-05 we have held that the ALV of the property be taken at 11,13,700/- without deduction of any municipal taxes which were borne by the tenant and not the assessee. In this view of the matter, the impugned order is upheld and the ground raised by the assessee is dismissed. Denial of deduction towards education cess - Held that:- Education cess is nothing but additional surcharge. Since such surcharge or education cess is part of tax, the same, in our considered opinion, cannot be allowed as deduction. Such amount clearly constitutes part of tax which falls within sec. 40(a)(ii). We, therefore, up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Steel Ltd. since 1989. The assessee was paid lease rent of ₹ 60,000/- p.m. in addition to an interest free security deposit of ₹ 75 lakhs. The assessee had shown rent at ₹ 60,000/- p.m. on the basis of which income from house property was determined. On being asked to substantiate the determination of ALV, the assessee submitted as under : "The earnings attributable on renting the said premises are : Rent received 60,000 Interest on deposit @ 9% p.a. 56,250 Maintenance & other charges 11,667 borne by Tenant Municipal Taxes 25,110 -do- Total amount p.m. 1,53,027 The ongoing market rent of similar property is ₹ 1,50,000/- per month". 4. The AO, on the basis of assessee's admission that the on-go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the premises is not acceptable. However we find some force in the contention put forth that the notional rent on the amount of security deposit cannot be included in the ALV. The Hon'ble jurisdictional High Court in the case of CIT vs. J.K. Investors (Bombay) Ltd. (2001) 248 ITR 723 (Bom) has held that no addition can be made to ALV for notional interest on the interest free deposit u/s. 23(1)(b). The Full Bench of the Hon'ble Delhi High Court in the case of CIT vs. Moni Kumar Subba (2011) 333 ITR 38 (Del) (SB) has held that no addition to ALV can be made towards notional interest on interest free deposit received by the landlord u/s.23(1)(a). In that view of the matter, even if we accept the AO's contention that similar property fetc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar to the one decided for assessment year 2004-05 being the determination of ALV. Interestingly, the AO adopted municipal value as ALV at ₹ 11,13,700/- for computing the income under the head "income from house property". No relief was allowed in the first appeal. 8. Having regard to the facts of the case, we find that for the immediately preceding assessment year 2004-05 we have held that the ALV of the property be taken at ₹ 11,13,700/- without deduction of any municipal taxes which were borne by the tenant and not the assessee. In this view of the matter, the impugned order is upheld and the ground raised by the assessee is dismissed. 9. The other ground of the assessee in this appeal is against denial of deduction towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing but additional surcharge. Since such surcharge or education cess is part of tax, the same, in our considered opinion, cannot be allowed as deduction. Such amount clearly constitutes part of tax which falls within sec. 40(a)(ii). We, therefore, uphold the impugned order on this score. 12. In the result, the appeal is dismissed. A.Y. 2006-07: 13. The first ground of this appeal is against the determination of ALV. Both the sides are in agreement that the facts and circumstances of this ground are similar to those for assessment years 2004-05 and 2005-06. It is observed that for this year the AO again changed his stand and determined the ALV at ₹ 18 lakhs. In view of the discussion made above, we direct the AO to adopt the AL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order on this issue because the ld. CIT(A) has directed the AO to follow the mandate of the judgment of the Hon'ble jurisdictional High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (supra) on some reasonable basis. We uphold the impugned order but clarify that in no case the disallowance to be made by the AO pursuant to the order of ld. CIT(A) should exceed the original disallowance made by him. This ground is, therefore, disposed of accordingly. 17. In the result, the appeal is partly allowed. A.Y. 2007-08: 18. The first ground is against the determination of ALV. Both the sides are in agreement that the facts and circumstances of this ground are similar to those of earlier year including assessment year 2006-07. Here also, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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