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TMI Blog2016 (7) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of expenditure u/s 14A of the Income Tax Act, 1961 [hereinafter referred to as "the Act"] read with Rule 8D of the Income Tax Rules, 1962 [hereinafter referred to as "Rule 8D"]. 4. With regard to Grounds No.1, 2 and 3 of the appeal relating to the issue of determination of ALV, the brief facts are that during the assessment proceedings the AO noted that the assessee had shown rental income from its properties located at Corporate Park and Kamala Mills Compound. The assessee was asked to explain the ALV along with rent and deposits taken. The assessee in this respect filed the following chart:- Particulars of Property Name of Tenant Annual rent (Rs.) Deposit taken(Rs.) Unit 6, Corporate Park, Sion Trombay Road, Chembur, Mumbai (10150 sq. ft.) Axis Bank Ltd. 1,89,80,500 1,82,70,000 Unit 14, Corporate Park, Sion Trombay Road, Chembur, Mumbai (10150 sq. ft.) -do- 43,64,400 4,76,10,000 Unit 15, Corporate Park, Sion Trombay Road, Chembur, Mumbai (10150 sq. ft.) -do- 43,64,400 4,62,87,500 Unit 1 to 13, 2nd floor, Kamala Mill Compound, Trade World, B Wing, Senapati Bapat Marg, Lower authorities Parel, Mumbai ICICI Bank Ltd. 1,81,85,807 2,62,76,412 (Refunded on 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmining the ALV of the properties in question for the year under consideration. He also noted that the assessee had taken a plea that the said Inspector's report was not confronted to him. He, however, observed that even otherwise the report of the Inspector was more or less general report and not specific in nature. The said report did not contain the names and addresses of the property agents/dealers contacted by the Inspector for the purpose of ascertaining the prevailing market rate. Even, it did not mention any comparable instance of commercial properties in Corporate Park and Kamala Mill Compound which were let out. The Inspector had simply reported that he had contacted certain agents who were said to have been providing let out charges to various parties. The said report was vague and even no names of such agents were mentioned. No specific details were given, only the rates per sq. ft. were mentioned. However, no details of the specification or infrastructures etc. were mentioned to which those rates were applicable. He, therefore, held that no details of comparable instances were obtained by the Inspector. He, therefore, held that in the absence of any specific details, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1213/2011 vide Order dated 08-08-2014 observed that the Hon'ble High Court in the said case laid down certain principles regarding determination of ALV of properties and it was held that the actual rent received in normal circumstances would be a reliable evidence unless the rent is inflated or deflated by reasons of extraneous consideration and that the AO is not prevented from carrying out any independent investigation or enquiry regarding determination of fair market value where he has derived a positive material to indicate that the parties have suppressed the prevailing rate of the locality. The AO must not make a guess work or act on conjecture or surmises. He can make a comparative study and make analysis. In this regard, transactions of identical and similar nature can be ascertained by obtaining the requisite details. The AO must safeguard against adopting the rate stating therein straightway, rather, he should take into account all relevant factors. That the AO must comply with the principles of fairness and justice and should disclose the material in his possession to the assessee so as to obtain his view. That if the letting out of the properties does not reflect any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned AR of the assessee has invited our attention to Para 7.2.3 of the impugned Order, wherein the fact has been mentioned that that the identical issue has been decided by the learned CIT (A) in the assessee's own case for assessment year 2008-09 which has been further decided by the Tribunal in favour of the assessee. The learned AR of the assessee further invited our attention to the order of the Tribunal dated 12th March, passed in ITA No.6364/Mum/2012 for assessment year 2008-09 wherein the Tribunal, on identical facts and circumstances, as are in the year under consideration, has allowed the netting of interest and has held that the disallowance of interest should be made with reference to the net interest only. The Tribunal upheld the findings of the learned CIT (A) directing the AO to verify the figures given by the assessee and to take into consideration only net interest if any, for computation of disallowance of expenditure under Rule 8D of the Rules. The Tribunal has further upheld the findings of the learned CIT (A) allowing bifurcation of the expenses between the Head Office and Regional Offices and to re-compute the disallowance on proportionate basis relatabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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