TaxTMI 
TaxTMI 
TaxTMI 
2008 (3) TMI 363
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....al Limited. It is also engaged in selling the developed plots to the holding company or to the nominees of the holding company. Apart from this, the assessee company also derives income from house property and hiring of motor vehicles. A return of income for the year under consideration i.e., assessment year 1993-94 was filed by it on 24-12-1993 declaring a total income of Rs. 13,64,610. In the said return income from house property situated at 14-16, Aurangzeb Road, New Delhi was declared by the assessee under the head 'Income from house property' at Rs. 5,07,021. The said income was worked out as under:- Municipal ALV of 14, Aurangzeb Road, New Delhi 31,021 Municipal ALV of 16, Aurangzeb Road, New Delhi 21,519 52,540 &n....
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....perty should not be enhanced as done in the earlier years. In reply, it was submitted on behalf of the assessee company that the income from the said property has been declared by it on the basis of municipal valuation as in the earlier years and the basis so adopted in the earlier years has already been accepted by the appellate authorities including ITAT in the earlier years. It was pointed out that even the reference applications filed by the department under section 256(1) on this issue have been dismissed by the Tribunal in assessment years 198182 and 1984-85 to 1987-88. It was further pointed out that there was an increase shown in the income from the said property (on the basis of increase in municipal valuation) on account of additions of Rs. 9,63,419 made in the previous year relevant to assessment year 1988-89 and the said increase shown by the assessee for the first time in assessment year 1988-89 as well as in the subsequent year has been accepted by the Tribunal in assessment years 1988-89 and 1989-90 vide its common order dated 10-2-1995 in ITA No. 6096/Delhi/1991 and 2032/Delhi/1993. It was also brought to the notice of the Assessing Officer that the similar issue ha....
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.... Cost of the property to the assessee : Rs. 37,61,541 Additions & Alterations in assessment year 1988-89 : Rs. 9,63,419 ------------- Total : Rs. 47,24,960 ------------- 6. The Assessing Officer noted that the appeal of the assessee for the immediately p....
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....he land comprised in the premises on the date of commencement of the construction. Since such total cost as already worked out by him was Rs. 47,24,960, the rental value was taken by him at Rs. 4,72,496 (10 per cent of Rs. 47,24,960) and the income from house property was worked out at Rs. 7,41,582 as given hereunder:- ALV as discussed above 4,72,496 Rent received for annexies & staff quarters as shown 4,60,392 ------------ 9,32,888 Less: House-tax paid &nb....
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....l was preferred by the revenue before the Tribunal. Meanwhile, the appeals filed by the revenue against the consolidated order passed by the learned CIT(A) for assessment years 1990-91 to 1992-93 deciding a similar issue in favour of the assessee relying on the order of the Tribunal in assessee's own case for assessment years 1988-89 and 1989-90 came to be heard and disposed of by the Tribunal vide its consolidated order dated 28-3-2002 in ITA No. 5481 to 5483/Delhi/1995. During the course of the said hearing, the following submissions were made on behalf of the revenue before the Tribunal:- (i) Lease agreement was between the two closely related parties inasmuch as the assessee company is 100 per cent subsidiary of the lessee company M/s. DLF Universal Limited. (ii) Keeping in view the location of the properties the total built-up area, the comparable rent etc., the rent at which these properties were let out by the assessee to its holding company was not fair and reasonable. The standard rent determined in 1971 could not be fair and proper basis for determining the ALV under the Income-tax Act especially when concerned authorities had failed to revise the standard rent ev....
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.... we set aside the issue of the ALV to the Assessing Officer for assessment years 1990-91 to 1992-93." 11. The Tribunal thus took a different view on the issue of determination of ALV of the assessee's property situated at 14-16, Aurangzeb Road, New Delhi in its appellate order for assessment years 1990-91 to 1992-93 than the one taken in assessee's own case for assessment years 1988-89 and 1989-90. Since there was no appeal preferred by the revenue before the Hon'ble High Court against the order of the Tribunal for assessment years 1988-89 and 1989-90 on the similar issue and according to the assessee-company, there was no change in the relevant facts of the case as involved in 1988-89 and 1989-90 with that of 1990-91 to 1992-93, a miscellaneous application was moved on its behalf before the Tribunal. The said miscellaneous application, however, was dismissed by the Tribunal which made the assessee-company to approach the Hon'ble President with a request to refer the issue for consideration of a Larger/Special Bench in view of the orders of the Tribunal taking a contradictory view on a similar issue. Acceding to the said request, the Hon'ble President has const....
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....in the assessee's case for assessment years 1988-89 and 1989-90 were different from the facts involved in assessment years 1990-91 to 1992-93 as well as in assessment year 1993-94 as pointed out on behalf of the revenue before the Tribunal during the course of appellate proceedings for assessment years 1990-91 to 1992-93 as well as by the Assessing Officer in his assessment order for the year under consideration i.e., assessment year 1993-94 and the Tribunal, therefore, was fully justified in taking a different view on the issue than the one taken in assessment years 1988-89 and 1989-90. 14. Relying on the decision of Mumbai Bench of ITAT in the case of Tivoli Investment & Trading Co. (P.) Ltd. v. Asstt. CIT [2004] 90 ITD 163, he contended that if the ALV on the basis of ratable value is not correctly declared, the Assessing Officer can always compute the same on the basis of the sum for which the property might reasonably be let from year to year. He also placed reliance on the decision of Hon'ble Kerala High Court in the case of CIT v. Kalpetta Estates Ltd. [1995] 211 ITR 635 wherein it was held that a different view can be taken on same set of facts in the subsequent ye....
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.... by the revenue and apparently accepted by the Tribunal in its order for assessment years 1990-91 to 1992-93 that there was no revision of municipal valuation by MCD after 1971 is not factually correct since there was such a revision made by MCD with effect from 1-4-1976 as well as again with effect from 1-4-1989. In this regard, he invited our attention to the relevant documentary evidence placed in the paper book to point out that the municipal valuation done by MCD of the property situated at 14, Aurangzeb Road at Rs. 14,000 in 1971 was revised to Rs. 28,436 with effect from 1-4-1976 and again to Rs. 31,021 with effect from 1-4-1989. He pointed out that similarly the municipal valuation of the property at 16, Aurangzeb Road was increased from Rs. 17,145 as made in 1971 to Rs. 19,726 with effect from 1-4-1976 and again to Rs. 21,519 with effect from 1-4-1989. He contended that there was thus no change in the facts and circumstances of the case as involved in the year under consideration or even for that matter in assessment years 1990-91 to 1992-93 from the facts as involved in assessment years 1988-89 and 1989-90 wherein the issue was decided by the Tribunal in favour of the ass....
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....received by the assessee in the present case was lower than the standard rent, the same was not relevant for the purpose of determining the ALV. In support of this contention, he relied, inter alia, on the decisions of Hon'ble Delhi High Court in the cases of CIT v. Raghubir Saran Charitable Trust [1990] 183 ITR 297, L. Bansidhar & Sons v. CIT [1993] 201 ITR 655, CIT v. Vinay Bharat Ram & Sons (HUP) [2003] 261 ITR 632 and that of Hon'ble Supreme Court in the cases of Dewan Daulat Rai Kapoor v. NDMC [1980] 122 ITR 700 and Amolak Ram Khosla v. CIT [1981] 131 ITR 589. 18. The learned counsel for the assessee also contended that even though the principle of res judicata does not apply to Income-tax proceedings, the rule of consistency is required to be followed in the income-tax proceedings. He also contended that the theory of precedent of the earlier pronouncement apply to quasi-judicial and judicial authorities and where the revenue has accepted the status and correctness of the earlier decisions, it is not open to them to challenge its correctness in other cases without any just cause. In support of this contention, he relied, inter alia, on the decision of Hon'ble Sup....
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....n of the annual value is to be made at a sum for which the property might be reasonable expected to let from year to year and the same is to be compared with the actual rent received. If the rent so received or receivable is higher than the amount at which it would be reasonably expected to let from year to year, then the actual rent received will be adopted as an annual value. As held by Hon'ble Delhi High Court in the case of John Tinson & Co., the standard rent of a property is synonymous to "the sum for which the property might reasonably be expected to let from year to year" and the Assessing Officer, therefore, is duty bound to calculate such standard rent. It was also held by the Hon'ble Delhi High Court that it is not necessary that standard rent should be fixed by the Rent Controller under the Rent Control Act for it to be taken into reckoning for the purposes of section 23(1) and even the Assessing Officer can fix the same adopting the principles and methodology laid down in the relevant Rent Laws. In the case of Raghuvir Saran Charitable Trust, it was held by the Hon'ble Delhi High Court that market rent could not be more than the standard rent and in a case ....
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.... on the landlord and the tenant which can be done only by the controller under the Act. What the assessing authority thus arrives at is merely its own estimate of standard rent for the purpose of determination of annual letting value of the building and it is the perfect legitimate function within the scope of the jurisdiction of the assessing authority. 22. The position which thus emerges from the reading of the relevant provisions of section 23 and the ratio laid down in their judgments by the Hon'ble Apex Court as well as Hon'ble Jurisdictional High Court is that the annual value of the property which is let out during the relevant year would be the highest of the following three sums:- (i) Municipal valuation (ii) The fair rent determined by the Rent Control Act. (iii) The actual rent received by the owner. 23. Insofar as the facts of the present case are concerned, there is no dispute that the rent actually received by the assessee from the property in question was Rs. 4,91,537. Out of the said amount, a sum of Rs. 4,60,392 was received towards rent for Annexes to the properties situated at 14-16, Aurangzeb Road as well as staff quarters etc. attached thereto a....
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....pplied a rate of 10 per cent to the said cost aggregating to Rs. 47,24,960 to work out the standard rent of the said property at Rs. 4,72,496 as against Rs. 31,145 determined by the Controller in 1971 and the said amount being higher than the rent actually received by the assessee and municipal valuation of the property, the same was adopted by him as ALV of the property. 25. It is no doubt true that if the standard rent of the property is not fixed/revised by the Controller, the assessing authority is at liberty to arrive at its own figure of standard rent by applying the principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent as held by Hon'ble Supreme Court in the case of Dewan Daulat Rai Kapoor. The question in the present case, however, is that whether the Controller having fixed the standard rent in respect of the property in question in 1971, any revision thereof was warranted in the facts and circumstances of the case as per the relevant provisions of the Delhi Rent Control Act as held by the Assessing Officer and whether such revision made by him was in accordance with the principles of valuation laid down in the Delhi Rent Control ....
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.... the rent so fixed; or (ii) if such rent per annum exceeds twelve hundred rupees, the rent so fixed together with fifteen per cent of such rent; (b) in any other case, the rent calculated on the basis of [ten per cent] per annum of the aggregate amount of the [actual] cost of construction and the market price of the land comprised in the premises on the date of the commencement of the construction; (2) Notwithstanding anything contained in sub-section (1),- (a) in the case of any premises, whether residential or not, constructed on or after the 2nd day of June, 1951, but before the 9th day of June, 1955, the annual rent calculated with reference to the rent at which the premises were let for the month of March, 1958, or if they were not so let, with reference to the rent at which they were last let out, shall be deemed to be the standard rent for a period of seven years from the date of the completion of the construction of such premises; (b) in the case of any premises, whether residential or not, constructed on or after the 9th day of June, 1955, including premises constructed after the commencement of this Act [but before the commencement of the Delhi Rent Control (Ame....
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.... whether by means of an increase in rent or otherwise the amount of any tax on building or land imposed in respect of the premises occupied by the tenant; Provided that nothing in this sub-section shall affect the liability of any tenant under an agreement entered into before the 1st day of January, 1952, whether express or implied, to pay from time to time the amount of any such tax as aforesaid." 27. In the present case, the property in question is a residential premises and the same having been let out by the assessee after 2-6-1944 and no rent thereof having been fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947 or the Delhi and Ajmer Rent Control Act, 1952, the determination of standard rent is required to be done by applying the provisions of sub-clause (2)(b) of clause A of sub-section (1) of section 6 of the Delhi Rent Control Act, 1958. It stipulates that the standard rent in case of the properties like the one in the present case would be the rent calculated on the basis of 10 per cent per annum of the aggregate amount of the actual cost of construction and the market price of the land comprised in the premises on the date of the commencement of the constr....
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.... before 1971, the value to be taken as basis as per clause (A)(2)(b) of section 6(1) ought to have been already considered by the Controller while determining the standard rent in the year 1971 itself. This being so, it was not permissible as per the relevant provisions of section (6) of the Delhi Rent Control Act, 1958 to substitute the said base price with the cost of the property to the assessee in order to determine/revise the standard rent and the said cost thus was entirely irrelevant in the context of determining the standard rent of the property. 28. Undisputedly, an expenditure of Rs. 9,63,419 was incurred on additions and alterations made to the property in the previous year relevant to assessment year 1988-89. However, as submitted on behalf of the assessee before the authorities below as well as before us and remained uncontroverted by the revenue authorities, the said expenditure was incurred by the tenant and not by the assessee. As per the provisions of section 7(1) which are already extracted hereinabove, where a landlord has incurred with the written approval of the tenant or of the Controller, expenditure for any improvement addition or structural alteration in t....