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TMI Blog2020 (9) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of the property and nature and history of the property. These factors play vital role in determining reasonable expected rent of a house property. In the instant case, as mentioned earlier, the leave and license agreement dated 01.01.2010 for a period of 36 months i.e. from 01.01.2010 to 31.12.2013 and subsequent leave and license agreement dated 01.01.2014 for a further period of 36 months i.e. from 01.04.2013 to 31.03.2016 are exactly the same. In the instant case, as stated by the AO as per the website of MCA the assessee was a major shareholder and Director in the company to whom property has been rented i.e. Joseph Leslie Dynamiks Mfg. Ltd. We are of the considered view that the above principles in Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] are applicable to this case. Considering the facts and circumstances of this case, we admit the additional evidence filed by the assessee. Accordingly, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make an order afresh by examining the Leave and License Agreement dated 7.7.2012 between Shri Ganesh Vishwas and one Joshi and Sameer Thakoor - Assessee appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that the rental income was less as compared to the previous year mainly because of monthly rent from Joseph Leslie Dynamics Mfg. Pvt. Ltd. is reduced from ₹ 2,68,125/- to ₹ 97,500/- and the reason for reduction was on account of change in management. It was clarified before the AO that previously it was German Collaborators Company Joseph Leslie Dragger Mfg. Pvt. and after exit of German collaborators, presently the agreement is with Joseph Leslie Dynamics Mfg. Pvt. The comparative details of rent were also filed, wherein the comparison of rent received in FY 2013-14 and 2012-13 are indicated as follows : Sr. No. Description of property Assessee s share Rent in FY 2013-14 Rent in FY 2012-13 1. Leslico House 50% ₹ 11,70,000/- ₹ 64,35,000/- 2. Flat No. 8, Plot No. 612, Windmere 100% ₹ 23,40,000/- ₹ 19,80,000/- 3. 504, Capricco 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income from house property. However, the AO was not convinced with the above explanation of the appellant for the reason that the assessee had actually rented the property to the same company in the preceding year for a rent of ₹ 5,36,250/- per month and on change of management the rent was drastically reduced to ₹ 1,95,000/- per month. The AO further mentioned that the assessee has not brought out any factual evidence of curtailment of space or lesser privileges during the impugned assessment year and therefore, it can be safely concluded that reasonable rent for which the property can be expected to be let out is ₹ 5,36,250/- per month for the provisions of section 23(1)(a) of the Act. The AO further noted that the assessee has not brought out any case that the said property is covered under the Rent Control Act. Then referring to the judgment of the Hon ble Bombay High Court in the case of CIT v. Tip Top Typography (2014) 48 taxmann.com 191 (Bom), the AO noted that as per the said decision in a normal course, the Municipal Valuation is a fair indicator of the ALV of the property; however, it is in circumstances when the rent is not influenced by extrane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second agreement dated 01.01.2014 is word-for-word replica of the earlier agreement dated 01.01.2010, (iv) each term and condition of rights and responsibilities of licensor and licensee are exactly similar without even an iota of difference. Having made an examination of the two agreements, the Ld. CIT(A) observed that the same property was let out to the same Company for a much higher value on similar terms and conditions in the earlier three years and therefore to adopt the ALV of the property, there would be no better comparable with the AO then the earlier actual rent being received by the assessee. Further, the Ld. CIT(A) observed that change of management of licensee company is irrelevant to the issue at hand. Observing that as per the agreements dated 01.01.2010 and 01.01.2014, the licensor is wholly and exclusively the assessee (Ms. Wendy Leslie Pereira), the Ld. CIT(A) dismissed the appeal. 5. Before us, the Ld. counsel for the assessee files a Paper Book (P/B) containing (i) return of income and computation of the assessee for the AY 2012-13 and 2014-15, (ii) license and agreement dated January 2010 and January 2014 and (iii) Municipal Valuation of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .01.2014 for a further period of 36 months i.e. from 01.04.2013 to 31.03.2016 are exactly the same. Further, it is stated by him that in the present case, because of the facts and circumstances of the case, change of management of licensee company is not relevant. Further stating that the transaction is between related parties, the Ld. counsel explains that the order passed by the Ld. CIT(A) be affirmed. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decision are given below. As per section 23(1)(a), the annual value of any property shall be the sum for which the property might reasonably be expected to be let from year to year. It may neither be the actual rent derived nor the municipal valuation of the property. It is something like notional rent which could have been derived, had the property been let. In determining the annual value, there are four factors which are normally taken into consideration i.e. (i) actual rent received or receivable, (ii) municipal value, (iii) fair rent of the property and (iv) standard rent. Reasonable expected rent is deemed to be the sum for which the property might reasonably be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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