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TMI Blog2017 (6) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... have been filed by the assessee for expenditure in respect of change of a structure from residential to commercial in the year under consideration. The affidavit was filed on 29/06/2007, which is corresponding to the assessment year 2008-09. In the affidavit, the assessee has claimed that she was running retail shop in the premises. No period has been specified since when the assessee was running shop. In our opinion, from this affidavit it cannot be presumed that the assessee was running retail shop in the year corresponding to the assessment year 2007-08 i.e. the assessment year in consideration. In absence of any other evidences to support that the property was commercial in the year under consideration, the contention of the Assessing Officer and Ld. CIT-A, cannot be accepted. Estimation of monthly rent - Held that:- CIT-(A) has not held in clear terms, whether the property was residential or commercial and he has not given any basis for estimating monthly rent of ₹ 1,80,000/-. The rent has been estimated in the ad-hoc manner, which cannot be permitted in law. In the circumstances, we feel it appropriate to restore issue to the file of the Assessing Officer to make enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91,333/-and agriculture income of ₹ 62,235/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued and complied with. During the assessment proceeding, the Assessing Officer observed that the assessee owned a house property at plot No. 37, Nishant Kunj, Pitampura, Delhi -110034 having municipal No. 1316. On the basis of the affidavit filed by the assessee before the municipal authorities for conversion of use of the property from residential to commercial, the Assessing Officer took the total built-up area of the property as 600 m and converted the same into square feet and after multiplying rental rate of ₹ 200 per square feet i.e. a sum for which the property might reasonably be expected to let from year to year, computed the monthly rent of the property at ₹ 3,93,600/-. The Assessing Officer multiplied the monthly rent with 12 months and computed the Annual Lettable Value (ALV) at ₹ 47,23,200/- and after allowing deduction at the rate of 30% under section 24 of the Act, an addition of ₹ 33,06,240/- was made under the head income from house property . Before the Ld. CIT-A, the assessee submitted that municipal AL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contested that the assessee was entitled for the benefit of the section 23(2) of the Act, therefore it is relevant for us to reproduce the said section of the Act as under: Annual value how determined. 23. (1) (2) Where the property consists of a house or part of a house which - (a) is in the occupation of the owner for the purposes of his own residence; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil. 7. Thus the annual value of a house could be taken as nil only when either the house is occupied for own residence or could not be occupied by the owner, if he is residing in a building not owned by him at other place due to his employment, business or profession carried out at other place. 8. In the instant case, the property was not occupied by the owner and therefore, provision of section 23(2)(a) of the Act are not applicable. The provision of section 23( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the property in question was commercial in the year under consideration. 12. We have heard the rival submission and perused the relevant material on record. The Assessing Officer took the constructed area of the property at 600 m as is mentioned in the affidavit filed by the assessee before the Municipal Corporation of Delhi. The contention of the Ld. counsel of the assessee that the Assessing Officer took the area of the plot as 600 square meter, is in our opinion, not correct. The Assessing Officer has taken constructed area of four floors on the plot as 600 m , which was reported by the assessee itself in its affidavit. The Ld. CIT-(A) has taken the constructed area of each floor at 139 square meters, which is appearing in the property tax return filed by the assessee for financial year 2011-12 with the Municipal Corporation of Delhi, which is available on page 8 to 9 of the assessee s paper book. Now, the disputes is whether in the year under consideration the property was residential or commercial and what should be the annual lettable value of the property. The Assessing Officer has relied on the affidavit of the assessee which reads as under: 1. I, Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of house tax even as commercial property for the whole property, was only ₹ 3,56,864/-, and which might be adopted for the purpose of income from house property . The assessee has not filed property tax return form for the year under consideration. The only evidence relied by the Revenue, is the affidavit of the assessee filed before the Municipal Corporation of Delhi. No other evidences as to the structure of the building of commercial nature, in relevant period has been brought on record. No evidences have been filed by the assessee for expenditure in respect of change of a structure from residential to commercial in the year under consideration. The affidavit was filed on 29/06/2007, which is corresponding to the assessment year 2008-09. In the affidavit, the assessee has claimed that she was running retail shop in the premises. No period has been specified since when the assessee was running shop. In our opinion, from this affidavit it cannot be presumed that the assessee was running retail shop in the year corresponding to the assessment year 2007-08 i.e. the assessment year in consideration. In absence of any other evidences to support that the property was commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact remains that the property has become a commercial property once the convention charges are paid. The contention of the assessee that the name of the locality does not appear in the notified commercial area is not convincing since the assessee herself has paid the conversion charges. Therefore, the assessee will not be eligible to keep one property for self occupation in terms of section 23 of the income tax act. However the AO has used an estimate on rent of ₹ 200/'- sft. pm with no documentary evidence or an instance of a property fetching such a rental. The averment of the AR that such rents are not commanded even by centrally airconditioned buildings in established commercial areas such a Connaught place, Nehru Place or Jasola Business District etc. appears to be reasonable. At the same time the alternate submission that-the Municipal ALV taken for payment of House tax even as a commercial property for the whole property at ₹ 3,56,864/- for payment of the house tax at ₹ 42,820/- appears to be low. As evident from property tax return and municipal record the area per floor is 139 sq. meter, that is about 1400 sft. The locality Pitam Pura where t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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