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TMI Blog2017 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 356 - BOMBAY HIGH COURT ]. X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- only. The AO asked the assessee to furnish the detail of the property let out and deemed let out along with the computation of notional income. The assessee submitted details of property. On the basis of the details the notional income from house property was computed @ 8.55% of total investment in these properties. The AO determined the rental income on the basis of detailed provided by assessee. The notional income of House Property was determined at ₹ 5,59,010/-. The AO after allowing deduction u/s 24(a) added the income of ₹ 3,91,307/-. The AO issued notice for levy of penalty under section 274rws 271(1)(c). In the reply of notice, the assessee contended that the assessee voluntary offered the notional income. We have seen that he AO worked out the notional rental income during the assessment on the basis of estimated deemed income from 'house property' and added the same in the income of the assessee. The assessee has not filed any appeal against the addition made by AO. The Hon'ble Bombay High Court in DIT Vs Administrator of Late Mr. F.E. Dinshaw (2013) Taxman.com 95(Bom) held that if the claim made by the assessee in the return of income, which was rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of investment, the AO computed the notional rental income @ 8.50% of total investment. The AO worked out the notional rent of ₹ 13,87,989/- and after giving deduction u/s 24(a), the addition of ₹ 13,87,989/- under the head "Income from House Property" was added in the total income of assessee. Aggrieved by the order of AO, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) directed the AO to verify the municipal ratable value of the disputed property and modify the order accordingly. Aggrieved by the order of AO, the Revenue has filed the present appeal before us. 9. The appeal came up for hearing on 12.04.2017, none-appeared on behalf of assessee despite the service of notice. This appeal was fixed along with the appeal ITA No. 332/Mum/2014. As none appeared on behalf of assessee, we left no option except to hear the submission of ld. DR for the Revenue and to proceed with on the basis of material available on record. Ld. DR for the Revenue argued that the ld. CIT(A) was not correct in giving direction to the AO that assessee was eligible for municipal ratable value. In fact, the assessee never offered the notional income on deemed let out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly. The Hon'ble Bombay High Court in CIT vs. Tip Top Typography 368 ITR 330 while deciding the issue relating to fair rental value a prescribed u/s 23(1)(a) held as under: "(i) We are not in agreement with the department that the municipal ratable value cannot be accepted as a bonafide rental value of the property and it must be discarded straightway in all cases. There cannot be a blanket rejection of the same. If that is taken to be a safe guide, then, to discard it there must be cogent and reliable material; (ii) The market rate in the locality is an approved method for determining the fair rental value but it is only when the AO is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality. The municipal rateable value may not be binding on the AO but that is only in cases of afore referred nature. It is definitely a safe guide; (iii) In the event the security deposit collected and refundable interest free and the monthly compensation shows a total mismatch or does not reflect the prevailing rate or the attempt is to deflate or inflate the rent by such methods, then, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual value. If the transaction itself does not reflect any of the afore stated aspects, then, merely because a security deposit which is refundable and interest free has been obtained, the AO should not presume that this sum or the interest derived there from at Bank rate is the income of the assessee till the determination or conclusion of the transaction. The AO ought to be aware of several aspects and matters involved in such transactions. It is not necessary that if the license is for three years that it will operative and continuing till the end. There are terms and conditions on which the leave and license agreement is executed by parties. These terms and conditions are willingly accepted. They enable the license to be determined even before the stated period expires. Equally, the licensee can opt out of the deal. A leave and license does not create any interest in the property. Therefore, it is not as if the security deposit being made, it will be necessarily refundable after the third year and not otherwise. Everything depends upon the facts and circumstances in each case and the nature of the deal or transaction. These are not matters which abide by any fixed formula and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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