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TMI Blog2023 (1) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved by the Order of the Learned Commissioner of Income Tax, (Appeals)53 Mumbai, the appellant prefers this appeal on the following amongst other grounds of appeal. 1. On the facts and in the circumstances of the case and in law, the Learned CIT (A) has erred in upholding the addition made by the Learned AO on account of notional income on property [flat which was vacant, calculated @8.5% of the cost price of the flat, without considering: a) the condition of the building and the flat and the rent which could have been received in respect of the said flat; b) that the premises in Mumbai are subject to rent control legislation and the maximum yield of residential properties in Mumbai is 3.5 to 4%. c) ignoring the certificate of the society's secretary which clearly stated that the rental which could be possibly received in respect of the said flat would be in the range of Rs 30,000/- to Rs. 50,000/-. 2. Hence, the notional income in respect of the vacant flat be reduced by adopting the average rent @Rs. 40,000/- per month for the entire flat and allowing a deduction of 30% there from in accordance with the provisions of section 24(a) of the Income tax Act, 1961, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of learned CIT(A) for the assessment year 2012-13. The learned AR further submitted that lower authorities have not carried out the exercise of determining the rent as per the rent control legislation applicable to the property. Further, the premises in Mumbai are subjected to rent control legislation and the maximum yield of residential properties in Mumbai is 3.5 to 4%. Learned AR further submitted that the annual letting value of the property be determined in light of the decision of the Hon'ble Jurisdictional High Court in CIT vs Tip Top Typography, (2014) 368 ITR 330 (Bom.). 7. On the contrary, the learned Departmental Representative by vehemently relying upon the orders passed by the lower authorities submitted that the learned CIT(A) followed its order rendered in assessee's own case for the assessment year 2012-13, which has been accepted by the assessee and therefore, the impugned order be upheld. 8. We have considered the rival submissions and perused the material available on record. As the assessee owned a flat at Bandra Breeze in addition to its self-occupied property in Capri Tower, the AO computed the deemed rent from the 2nd property by considering 8.5% of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession 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. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be expect to get from a hypothetical 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 aforestated 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court in Smt. Kokilaben D. Ambani v/s CIT: [2014] 226 Taxman 208 (Bombay), following the aforesaid decision in Tip Top Typography (supra), observed as under: "8. In our view, in the judgment in Tip Top Typography case (supra) after concurring with the conclusion of the Delhi High Court, we have held that the assessing officer in the cases of properties, which are subject to Rent Control Legislation cannot ignore the same. If the standard rent has not been fixed under the Rent Control Legislation by the competent authority, it is the duty of the assessing officer to determine the same in terms of the Rent Control Legislation. The law has been crystallized in terms of the decision of the Hon'ble Supreme Court as also the Full Bench of the Delhi High Court. In these circumstances, we do not find any basis for an apprehension that the Tribunal would ignore the Rent Control Legislation and prefer some other mode in determining the fair rent or annual letting value of the property under section 23(1)(a). We have also stated that the principle cannot be any different for self occupied properties and in relation to which the exercise must be carried out in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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