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TMI Blog2018 (8) TMI 1620X X X X Extracts X X X X X X X X Extracts X X X X ..... property to be taxed u/s 22 of the Act. As a consequence, we set-aside the order of CIT(A) and restore the matter back to the file of the Assessing Officer who shall recompute the income assessable under the head ‘Income from House Property’ in terms of our aforesaid directions. Thus, on this aspect, assessee succeeds. Disallowance of expenses - additional ground - Held that:- Once the income declared from rental income has been assessed under the head ‘Income from House Property’, the income under the head ‘Income from Business’ has to be separately assessed. While assessing the income from business, the entire expenditure claimed have been disallowed, an aspect which was sustained by the CIT(A) also. It is pointed out that though assessee does not have an active business activity, but expenses which are necessary for existence of the company as such are required to be allowed. The said Ground was omitted to be raised at the time of filing of appeal and is now being raised as an Additional Ground of appeal. On the issue of Additional Ground, we deem it fit and proper to direct the Assessing Officer to consider the same on merits and allow such expenses as are permissible and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timate made by the AO under the head income from house property when the only basis was a magazine report published by ICICI and the Inspector report which also relied on hearsay reports. c) The Learned CIT(A) erred in not considering that the rent disclosed by the appellant was in excess of rateable value. d) The Learned CIT(A) erred in not considering the appellant had also received a substantial deposit which was not considered by the AO in considering Annual Rateable value as reasonable and fair. 6. Insofar as the first Ground relating to initiation of reassessment proceedings under Sections 147/148 of the Act is concerned, the same has not been pressed at the time of hearing and is accordingly dismissed. 7. The substantive dispute in Ground of appeal no. 2 is with regard to the addition of ₹ 8,09,810/- made by the Assessing Officer under the head Income from House Property . On this aspect, the relevant facts are that the appellant is a private limited company incorporated under the provisions of the Companies Act, 1956 and it has been explained that it s only activity is by way of investments. Apart therefrom, in the return of income, assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500/- declared by the assessee and in this manner, the annual value of the property was determined at ₹ 11,56,872/- and after allowing the statutory allowances u/s 24(a) of the Act, the income of ₹ 8,09,810/- was assessed under the head Income from House Property . This action of the Assessing Officer has been affirmed by the CIT(A), and accordingly assessee is in further appeal before us. 8. So far as the grievance of the assessee against the action of the Assessing Officer in treating the rental income as assessable under the head Income from House Property as against Business income declared in the return is concerned, no arguments have been raised and, therefore, the action of the income-tax authorities in this regard is affirmed. 9. The only point raised by the appellant before us is with regard to the estimation of the annual value of the property made by the lower authorities, which is much higher than the actual rent declared by the assessee. At the time of hearing, the learned representative for the assessee pointed out that there was no ground for the Assessing Officer to find fault with the actual rent derived by the assessee, which was much more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and, therefore, the determination of annual value of the property be restricted to the actual rent declared by the assessee. 10. On the other hand, the ld. DR appearing for the Revenue relied upon the orders of the authorities below and pointed out that, in the present case, the Assessing Officer has referred to certain instances in the vicinity of assessee s property to show that the actual rent declared by the assessee was lower than the prevailing market rent. 11. We have carefully considered the rival submissions. As our aforesaid discussion shows, the short-point for our consideration is as to whether the Assessing Officer was justified in rejecting the value declared by the assessee and instead, determining the annual value of the property for the purposes of Sec. 23 of the Act based on estimation arrived at by him, having regard to the two instances noted in the vicinity of assessee s property ? 12. Sec. 23 of the Act prescribes the manner in which the annual value of any property is to be arrived at for the purpose of assessment under the head Income from House Property . Sec. 23(1)(a) of the Act relates to the determination of annual value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent declared, but rather there has to be a definite and positive material to indicate that the parties have suppressed the prevailing rate and the exercise of ascertaining the going rate would follow his satisfaction of disagreeing with the stated rent on the basis of definite and positive material :- 47. ............................ He must have cogent and satisfactory material in his possession and which will indicate that the parties have concealed the real position. He must not make a guess work or act on conjectures and surmises. There must be definite and positive material to indicate that the parties have suppressed the prevailing rate. Then, the enquiries that the Assessing Officer can make, would be for ascertaining the going rate. He can make a comparative study and make a analysis. In that regard, transactions of identical or similar nature can be ascertained by obtaining the requisite details. However, there also the Assessing Officer must safeguard against adopting the rate stated therein straightway. He must find out as to whether the property which has been let out or given on leave and license basis is of a similar nature, namely, commercial or residential. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of CIT(A) and restore the matter back to the file of the Assessing Officer who shall recompute the income assessable under the head Income from House Property in terms of our aforesaid directions. Thus, on this aspect, assessee succeeds. 14. The only other issue is on account of Additional Ground of appeal raised by the assessee, which reads as under :- 1. The Learned CIT(A) erred in confirming disallowance of expenses of ₹ 99,139/- by holding that no arguments were advanced while the appellant in its submission had submitted that the AO did not give reason to make the disallowance and on a cursory glance of expenses claimed the same were regular expenses were allowable as per law. 15. On this aspect, the learned representative pointed out that once the income declared from rental income has been assessed under the head Income from House Property , the income under the head Income from Business has to be separately assessed. While assessing the income from business, the entire expenditure claimed have been disallowed, an aspect which was sustained by the CIT(A) also. It is pointed out that though assessee does not have an active business acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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