Tribunal directs Assessing Officer to consider actual rent as annual value & rules income of wife & daughter-in-law not assessable.

The tribunal allowed the appeal, directing the Assessing Officer to consider the actual rent received as the annual value for the property in Mumbai, rather than the value determined under the Act. Additionally, the tribunal ruled that the income received by the assessee's wife and daughter-in-law from a company did not belong to the assessee, as there was no evidence of income diversion and the payments were declared in their tax returns with TDS deducted by the company. The tribunal instructed the AO to delete the addition of this income in the assessee's hands.

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Issues Involved:
1. Assessment of income from house property
2. Assessment of income belonging to assessee's spouse and daughter

Assessment of income from house property:
The appeal challenged the order regarding the assessment of income from a property in Mumbai for the year 2008-09. The property was declared vacant for most of the year, resulting in a significant difference in rental income compared to the previous year. The Assessing Officer (AO) determined the annual value of the property based on certain calculations, which was confirmed by the Ld CIT(A). However, the appellant argued that the municipal rateable value should be considered for determining the annual value. The tribunal noted that as per the Act, the annual value should be the actual rent received or receivable, even if it is lower than the value determined under the Act. Relying on previous court decisions, the tribunal agreed with the appellant's argument and directed the AO to adopt the actual rent received as the annual value for the property.

Assessment of income belonging to assessee's spouse and daughter:
The second issue involved the assessment of income received by the assessee's wife and daughter-in-law from a company to which the assessee had rented out a premises. The AO considered this income as belonging to the assessee, alleging diversion of income and failure to deduct tax at source. The appellant contended that separate agreements were made for renting the premises and providing services, with the wife and daughter-in-law directly receiving payments from the company. The tribunal observed that there was no evidence to support the AO's presumption of income diversion. The wife and daughter-in-law had declared the income in their tax returns, and TDS was deducted by the company. Therefore, the tribunal concluded that the income did not belong to the assessee, and there was no basis for assessing it in the assessee's hands. Consequently, the tribunal directed the AO to delete the addition of the income in question.

In conclusion, the tribunal allowed the appeal filed by the assessee, setting aside the orders of the lower authorities on both issues and providing specific directions to the Assessing Officer for each matter.

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