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TMI Blog2018 (5) TMI 1898X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Tip Top Typography (supra), respectfully, following the same I delete the addition made by AO and allow the appeal of assessee. - Appeal of assessee is allowed. - ITA No. 5354/Mum/2017 (Assessment Year 2012-13) - - - Dated:- 31-5-2018 - Sri Mahavir Singh, J. Assessee by: Bhupendra Shah, AR Revenue by: PR Chauhan, DR ORDER Mahavir Singh, This appeal by the Assessee is arising out of the order of Commissioner of Income Tax (Appeals)-20, Mumbai [in short CIT(A)], in appeal No. CIT(A)/ITO-12(2)(4)/IT-70616/2016-17 dated 29.06.2017. The Assessment was framed by the Income Tax Officer, Mumbai Ward 12(2)(4) Mumbai (in short ITO') for the A.Y. 2012-13 vide order dated 09.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in assessing the deemed rent under the head of income from House property. For this assessee has raised the following ground:- 1. In the facts and circumstances of the case and in law, the learned AO erred in adding ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, its reasonable expected rent cannot exceed the standard rent, fixed or determinable under the Rent Control Act. In view of the above, I find that ALV of the property is more than the rateable value of BMC. Having regard to the facts of the case it would be fair and reasonable if the as ALV under section 23(1)(c) of the Act is taken at Rent declared of ₹ 6,00,000/- @ ₹ 50,000/- p.m. plus additional income of ₹ 9,00,000/- and the total ALV will be ₹ 15,00,000/-. The assesse would be entitled for standard deduction 30% of this amount which comes to ₹ 4,50,000/-. The income from House property of the assessee would thus be worked out at ₹ 10,50,000/- (₹ 15,00,000 - ₹ 4,50,000) as against the value of ₹ 16,80,000/- worked out by the AO. The AO is so directed. Accordingly, this ground of appeal is party allowed. Aggrieved, now assessee is in second appeal before Tribunal. 5. I have heard the rival contentions and gone through the facts and circumstances of the case. The learned Counsel for the assessee Shri Bhupendra Shah argued on behalf of the assessee and on the other hand, the learned Sr. Departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. He should also satisfy himself as to whether the rate obtained by him from the deals and transactions and documents in relation thereto can be applied or whether a departure therefrom can be made, for example, because of the area, the measurement, the location, the use to which the property has been put, the access thereto and the special advantages or benefits. It is possible that in a high rise building because of special advantages and benefits an office or a block ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hetical tenant. She has in making this submission, answered the issue and summed up the conclusion as well. Then, it is but natural and logical that in the event, the transaction is influenced by any extraneous circumstances or vitiated by fraud, or the like that the Assessing Officer can adopt a fair rent based on the opinion obtained from reliable sources. There as well, we do not see as to how we can uphold the submissions of Mr. Chhotaray that the notional rent on the security deposit can be taken into account and consideration for the determination. 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 Assessing Officer should not presume that this sum or the interest derived therefrom at Bank rate is the income of the assessee till the determination or conclusion of the transaction. The Assessing Officer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal valuation, of obtaining interest free security deposit and the properties being covered by the Maharashtra Rent Control Act but no standard rent thereunder is fixed, our attention has not been invited to any other case. Suffice it to hold that in those cases and to which our attention is not invited the principles laid down in the decisions of the Hon'ble Supreme Court and referred to by the Full Bench of the Delhi High Court would govern the enquiry. 6. Even the same issue has been decided by Hon ble Delhi High Court in the case of CIT vs. Moni Kumar Subba [2011] 333 ITR 38 (Delhi) (FB) that even ALV cannot be determined by adding notional interest on the interest free deposit and according to Hon ble High Court that it is not permissible. Hon ble Delhi High Court and Hon ble Bombay High Court, both are in consonance that only value fixed by Municipal Authorities can be a rational yardstick for computing deemed rent under section 23(1)(a) of the Act. As the issue is squarely covered by the decision of Hon ble Bombay High Court in the case of Tip Top Typography (supra), respectfully, following the same I delete the addition made by AO and allow the appeal of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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