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TMI Blog2022 (4) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... 27,48,594/- made by the Assessing Officer. 2) The Learned Commissioner of Income Tax has erred in estimating additional property income calculated at 9% on the interest free deposit of Rs. 95,00,000/- received by your petitioner from the Leave and Licensee of the office premises of which she is the tenant. 3) The Learned Commissioner of Income Tax has erred in treating,-the Leave and License fee received by her in respect of the tenanted office premises given by her two leave and licenses as property income. 4) The Learned Commissioner of Income tax erred in estimating @ 9% of an amount of Rs. 1,75,00,000/- received by her as interest free deposit in respect of the leave and license granted for giving on rental basis her residential flat and treating such amount of Rs. 15,75,000/- as additional property income of your petitioner. 5) The Learned CIT(A) has erred in confirming and adding of Rs. 193,400/- paid by your petitioner as interest on various loan raised by her in the part, these loans were utilized for the purpose of purchasing shares, which are her stock in trade. 6) The order appealed against is bad in law and is against the principle of natural justice. 7) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional High Court in CIT v/s Tip Top Typography (2014) 368 ITR 330 held that where a premises is covered by Rent Control Act, Assessing Officer must undertake exercise contemplated by the rent control legislation for fixation of standard rent. However, the aforesaid decision was not pointed out to the Co-ordinate Bench of Tribunal during the course of hearing of assessee's appeal for assessment year 2012-13. The learned AR further submitted that, in this regard, assessee also filed miscellaneous application under section 254(2) of the Act. However, the said miscellaneous application for assessment year 2012-13 was dismissed by the Tribunal on the basis that rectification cannot be made on the ground of a case law which was not referred during the course of appeal hearing, but subsequently referred during hearing of miscellaneous application. The learned A.R. further submitted that in another decision dated 4 September 2014, Hon'ble Jurisdictional High Court in CIT v/s Shailaja S. Hemdev in ITA No. 576 and 578 of 2012, following the earlier decision in Tip Top Typography (supra), held that notional interest on security deposits cannot be taken into consideration for determining and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the Assessing Officer with a direction to verify the rateable value fixed by the Municipal Authorities and if the same is less than the actual rent received, then the actual rent received should be taxed?" 10. The Hon'ble Jurisdictional High Court decided the appeal by observing as under: "47] We are of the view that where Rent Control Legislation is applicable and as is now urged the trend in the real estate market so also in the commercial field is that considering the difficulties faced in either retrieving back immovable properties in metro cities and towns, so also the time spent in litigation, it is expedient to execute a leave and license agreements. These are usually for fixed periods and renewable. In such cases as well, the conceded position is that the Annual Letting Value will have to be determined on the same basis as noted above. In the event and as urged before us, the security deposit collected and refundable interest free and the monthly compensation shows a total mismatch or does not reflect the prevailing rate or the attempt is to deflate or inflate the rent by such methods, then, as held by the Delhi High Court, the Assessing Officer is not preven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property and it must be discarded straightway in all cases. There cannot be a blanket rejection of the same. If that is taken to be a safe guide, then, to discard it there must be cogent and reliable material. 49] We are of the opinion that market rate in the locality is an approved method for determining the fair rental value but it is only when the Assessing Officer is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality. We are of the view that municipal rateable value may not be binding on the Assessing Officer but that is only in cases of aforereferred nature. It is definitely a safe guide. 50] We have broadly agreed with the view taken by the Full Bench of the Delhi High Court. Hence, the issue of determination of the "fair rental value" in respect of properties not covered by or covered by the Rent Control Act is to be undertaken in terms of the law laid down in the Full Bench decision of the Delhi High Court. 51] We quite see the force in the arguments of Ms. Vissanjee that ordinarily the license fee agreed between the willing licensor or a willing lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer cannot brush aside the rent control legislation, in the event, it is applicable to the premises in question. Then, the Assessing Officer has to undertake the exercise contemplated by the rent control legislation for fixation of standard rent. The attempt by the Assessing Officer to override the rent control legislation and when it balances the rights between the parties has rightly been interfered with in the given case by the Appellate authority. The Assessing Officer either must undertake the exercise to fix the standard rent himself and in terms of the Maharashtra Rent Control Act, 1999 if the same is applicable or leave the parties to have it determined by the Court or Tribunal under that Act. Until, then, he may not be justified in applying any other formula or method and determine the "fair rent" by abiding with the same. If he desires to undertake the determination himself, he will have to go by the Maharashtra Rent Control Act, 1999. Merely because the rent has not been fixed under that Act does not mean that any other determination and contrary thereto can be made by the Assessing Officer. Once again having respectfully concurred with the judgment of the Full Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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