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TMI Blog2018 (1) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the assessee. Valuation of the Mercedes Benz Car - whether value of the Mercedes Benz Car could not be included in the net wealth of the Assessee? - Held that:- As held on facts that though the Mercedes Car was held by the assessee in his name, it was in fact funded and maintained by his Foreign Principal, on whose behalf it was held by him. The foreign principal did not have any office or branch in India. The ITAT had taken note of all these facts and vide it its order dated 5.11.2011 for a previous year deleted a similar inclusion of the value of the car. This reasoning persuaded the ITAT in the facts of the present case for the current Assessment Year to direct the deletion of such value. Being concurrent findings of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that the valuation of the flat at Palcimo, Bombay was ₹ 52,48,968/-. The assessee had declared a return value at ₹ 2,65,200/-. The WTO took into account the rent receivable at ₹ 62,145/- and also added 15% on the deposits accepted by M/s Hertz Agencies Pvt. Ltd (the lessee/tenant, hereinafter referred to as HAPL ) from M/s BASF, the sub-lessee (hereinafter referred to as BASF ). The assessee contended that the higher valuation of the property was unjustified since what it received was only ₹ 2,600/- from HAPL. The CIT(A) rejected the assessee s contentions and upheld the value at ₹ 52,48,963/-. The ITAT, in the impugned order noticed that the deposit, upon which interest was generated, had not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that even though, the expression rent received or receivable has been used in the Wealth Tax Rules, a similar regime exists in respect of calculation of annual letting value, in Section 23(1)(b) of the Act. It was also pointed out that the ITAT relied upon the judgment in CIT Vs. Hemraj Mahabir Prasad Ltd., 2005, 279 ITR 522 (Calcutta), where a similar question had been decided. 5. During the course of hearing, learned counsel for the Revenue fairly conceded that a question identical to the first one framed in this appeal was the subject matter of a decision in Commissioner of Income Tax Vs. Akshay Textiles and Agencies Pvt. Ltd., (2008) 304 ITR 401 (Bom) whereto, the precise question was whether the rent and deposits received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or canvassed of sham contract or a colourable device on the ground that the intermediary is an alter ego of RIL was not in issue. It is not the case of the Revenue that the intermediary was another face of the assessee and consequently the agreement entered into with the tenant by the assessee was a colourable device. In these circumstances considering Section 23, what is assessable to tax is the income received from the tenant falling either under Sub-section (a) or (b) of Section 23(1). The compensation received by the tenant would be taxable in the hands of the tenant. Appeal would lie on substantial question of law from the order of the Tribunal in respect of the matters which were taken up before it and/or on a pure question of law ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 6,000 is paid for the purpose of tax incidence what has to be considered is ₹ 12,000 as that is the rent receivable. We have given our anxious consideration to the rival contentions. Section 23(1)(a) uses the expression the sum for which the property might reasonably be expected to be let from year to year. This has to be considered in the context of the applicable rent laws. The Courts have construed the rent receivable in such circumstances to be either the standard rent or the rateable value as fixed by the local authority. Though the rateable value may also on occasions has to consider the standard rent in cases where the rent law may be applicable. Before the amendment brought about to Section 23 by the Finance Act, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the contract between the assessee and the tenant is sham. The annual value would and be the value in terms of that contract. Therefore, the annual value is the annual value received or receivable by the owner from the tenant irrespective whether tenant on such letting has received higher rent from RIL . 6. This Court is of the considered view that the opinion expressed by Bombay High Court is sound and reasonable and requires to be followed. The emphasis placed upon expression rent received or receivables in explanation (2) to Rule 5 ought not to be given wide interpretation as is sought to be urged. For these reasons, the first question of law framed is answered against the Revenue and in favour of the assessee. 7. As far as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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