2013 (8) TMI 895 - AT - Income Tax

Tribunal favors assessee, deems actual rent as annual letting value

The Tribunal ruled in favor of the assessee for the assessment years 2008-2009 and 2009-2010, determining the annual letting value (ALV) based on actual ... Estimation of rent - income from house property - CIT(A) held that the ALV was to be determined on the basis of municipal value and not some estimated rent - Held that:- Assessing Officer has relied on the case of Shri Puneet R.Gupta,another assessee in the same charge, for assessment year 2005-2006 has been placed on record in which income from house property has been reflected at ₹ 84,000. Similar order for assessment year 2006-2007 in the case of Shri Puneet R.Gupta has also been placed on record disclosing income from house property at ₹ 84,000 which stood accepted as such. The case of the learned AR is that the assessee gave its property on rent in the year 1992 and it was at the same rate of rent that the property continued to be let out. When we consider the facts in totality, being the assessee earning rent of ₹ 7,500 per month since 1992 and Shri Puneet R.Gupta earning rent from similar property at ₹ 10,000 per month from calendar year 2004, there hardly remains any dispute about the correctness of the value declared by the assessee. Respectfully following the precedents given in the case of Estate of Late Sadajiwatlal Chandulal (Indl.) v. ITO. [2013 (5) TMI 223 - ITAT MUMBAI] the Tribunal has held that the municipal ratable value represents fair rental value and the same needs to be adopted for determining the annual letting value u/s 23 of the Act. Issues:Assessment of annual letting value (ALV) based on municipal value vs. actual rent received.Analysis:Issue 1: Assessment of ALV based on municipal value vs. actual rent receivedThe appeals by the Revenue for the assessment years 2008-2009 and 2009-2010 were based on identical facts related to the assessment of income from a house property. The Assessing Officer estimated the monthly rental income at a higher rate than the disclosed income by proportionately increasing the rental income based on the area of the property. However, the learned CIT(A) held that the ALV should be determined based on municipal value rather than estimated rent. The Tribunal referred to previous cases and held that municipal ratable value represents fair rental value, and if actual rent received is more than municipal value, the actual rent should be considered as ALV. The Tribunal also noted that the Assessing Officer did not demonstrate that the ratable value under municipal laws did not represent the correct fair rent. Therefore, the Tribunal upheld the impugned order, considering the correctness of the value declared by the assessee based on precedents set by the Mumbai Benches of the Tribunal.Issue 2: Consistency in decision for subsequent assessment yearFor the subsequent assessment year 2009-2010, both parties agreed that the facts and circumstances were similar to the previous year. Following the view taken in the earlier assessment year, the Tribunal upheld the impugned order for the assessment year 2009-2010 as well.In conclusion, the Tribunal decided in favor of the assessee, upholding the impugned order for both assessment years based on the assessment of ALV using actual rent received rather than estimated rent, in line with the precedents set by the Mumbai Benches of the Tribunal.