TaxTMI 
TaxTMI 
2012 (10) TMI 525
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.... submitted that both the grounds have been decided by the Tribunal in favour of the assessee in the earlier years and the ld. CIT(A) has followed those orders and allowed the appeals of the assessee. The grievance of the revenue is that the revenue has not accepted the order of the Tribunal passed in the case of the assessee in the earlier years and has filed appeal there against to the Hon'ble Madras High Court, which is pending and therefore, the ld. CIT(A) was not justified in allowing the appeals of the assessee by following the orders of the Tribunal in earlier Assessment Years. 3. On the other hand, the ld. A.R. Shri S. Sridhar has supported the orders of the ld. CIT(A). 4. We have heard the rival submissions and perused the orders of the lower authorities as well as the relevant material on record. The ld. CIT(A) has decided both the grounds of appeal by observing as under: Property Particulars and Location Rent paid per annum Interest-free paid for the property Anand Estates Flat Nos. 12,12B, 13.14A, l4B and 15, No. 189 A, Sane Guruji Marg Chinchpokli, Mahalakshmi, Mumbai-13 (commercial Area 3,525 sq.ft. Rs.25,56,000/- Rs. 90,00,000/- Elphi....
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....(a) Dewan Daulat Rai Kapur Vs. New Delhi Municipal Corporation and another 122 ITR 700 (SC). (b) Corporation of Calcutta Vs. Smt. Padma Devi AIR 1962 S.C 151. (c) Sheila Kaushik Vs. CIT (1981) (S.C) (d) Amolak Ram Khosia Vs. CIT (1981) (S.C) (e) Dr. Balbir Singh Vs. MCD (1985) 152 1TR 388 (S.C) The Addl.CIT has inferred from the ratio laid down by the Hon'ble Apex Court in the afore cited cases that the Rent Control Act provides for fixation of a standard rent and that a landlord cannot charge a higher rent from the tenant in breach of the Rent Control Legislation. The Addl.CIT went on observing that the Rent Control Legislation recognized 8.5% return on investment as a measure of the standard rent. In this regard the Addl.CIT placed reliance on the judgement of the Hon'ble LT.A.T, Mumbai Bench in the case of ITO Vs. M/s. Chem Mech Private Limited 82 ITD 427 (Mum.). In the instant case, the landlord i.e. M/s. TIPL was found by the Addl.CIT to have shown an investment of Rs. 15,70,52,835/- in respect of the impugned let out properties. 8.5% thereof worked out to Rs. 1,33,49,490/- which, according to the Addl.CIT, constituted the standard rent. Since the appellant was ....
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....y the department in Mumbai and Delhi for the sake of comparison were not at all at par with the properties taken on rent by the appellant from M/s. TIPL, because they differed significantly on various counts. 4.1.3 The arguments put forward by the learned A.R. have carefully been examined vis-a-vis the contention raised by the Addl.CIT in the assessment order. All the facts and figures and evidences tendered by the appellant during the appellate proceedings of the earlier years have been examined by my predecessor in detail. My predecessor's have found force in the appellant's arguments and accordingly held that the rent paid by the appellant company in respect of all the five properties were reasonable, thereby warranting no disallowance. Since the facts in this assessment year remain unchanged, find no reason for deviating from the stand taken in the appellate proceedings of earlier assessment years. 4.1.4. Further, Appellant has given documentary evidence that Hansa Vision has vacated the premises in March 2007. 4.1.5. This matter of disallowance has been going on from Assessment Year 1996-1997 onwards. The ITAT has also allowed from 1996-1997 to 2003-2004 in lin....
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.... the JCIT computed the excess interest-free deposit made by the appellant company with M/s. TIPL in relation to the let out properties and calculated the interest thereon at the rate of 12% per annum. The detailed working has been provided by the JCIT in the body of the order. As per the said calculation, the disallowable interest worked out to Rs. 28,40,983/- [Rs.26,95,075/- for the Mumbai properties + Rs. 1,45,908/- for the Delhi property] which was, however, restricted to the actual amount of interest paid by the appellant during the relevant accounting year i.e. Rs. 14,48,265/- which thus represented the disallowance made by the JCIT under this head. 4.2.2. In the course of the appellate proceeding, the learned A.R. have submitted the following: "The deposits paid by the appellant company are in tune with the market reality. It may kindly be appreciated that wherever the deposits are slightly high, the extent of rent paid is low and wherever the rent is high, the deposit has been low. In Mumbai where the Pagadi system is prevalent, prevalent, rents and deposits always work in proportion to each other. The A. 0 has considered only one year's deposit, irrespective of the am....
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....said finding of my predecessor-in-office and accordingly, the excess rent deposits in respect of the above mentioned three properties are computed as under):- (a) Mahalakshmi Property. Mumbai:- Excess rent deposit = The deposit made by the appellant (Rs.90,00,000/-) - 12 months' rent (Rs.25,56,000/-) = Rs. 64,44,000/- (b) Fort Property, Mumbai:- Excess rent deposit = The deposit made by the appellant (Rs.1,50,00,000) - 12 months' rent (Rs.90,00,000/-) = Rs. 60,00,000/-. (c) Pusa Road Property, New Delhi:- Excess rent deposit = The deposit made by the appellant (Rs.75,00,000/-) -12 months' rent (Rs.43,56,000/-) = Rs. 31,44,000/-. Thus the aggregate excess deposit works out to Rs. 1,55,88,000/-. The interest at the rate of 12% per annum on the said excess deposit works out to Rs. 18,70,560/-. My predecessor has disallowed this interest amount in prior assessment years and the appellant has appealed against my predecessor's order and obtained favourable order from the jurisdictional Appellant Tribunal > for the Assessment Years 2001-2002 to 2003-2004. 5. I have considered the facts of the case, the contention of the A.R. and I find that there is a force in t....
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....d this Tribunal by its order dated 30th November 2007, has elaborately dealt with the issues in paras 23 to 31 of above Order. For better appreciation, we reproduce here below paras 23 to 31 of the above order:- "23. We have considered the rival submissions carefully in the light of the material on record. We find that during the Asst. Year 2001-02 though rent was found to be reasonable but the deposits were held to be unreasonable by the Assessing Officer and part of which was allowed by the C.I.T. (Appeals) and some parts were confirmed by the C.I.T. (Appeals). However, the Assessing Officer has proceeded to determine the excessive deposit mainly on the basis of historical cost of properties which is not fair. The rent value of the property would depend on the date on which such premises are taken on rent and not on the actual cost of the property. In the Asst. Year 2002-03, the Assessing Officer has taken two instances where the rent was found to be excessive and deposit was also found to be excessive. But on perusal of the Assessment Order would clearly show that instances collected by the Assessing Officer are not comparable. For example in the case of Mumbai Property it wa....
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....ub,No.17,M urzban Road, Fourth Floor, Fort, Mumbai-1)- Fort 5000 617500 7410000 124 30000000 7410000 2710800 169 140-180 3. TIPL (Usha Sadan, Flat No. 9, A Block Coloba, Bombay COLOBA 2000 10000 120000 5 3000000 120000 345600 19 40-8 4. TIPL (Kshitij, Flat No.12,First floor, 47,Napean Sea Road, Mumbai-6 NAPEAN SEA ROAD 1700 15000 180000 9 8000000 180000 938400 55 5. TIPL (17,Pusa Road, New Delhi 17) 8900 357500 4290000 40 10000000 4290000 685200 47 Total 21125 1213000 14556000 57 63000000 14556000 5813280 This chart dearly shows that even when interest on deposit taken at 12% is considered then rent for various properties works out to Rs. 87,169,19,55 and Rs.47 per sq. ft This is comparable to the prevailing market rates as reported by two independent Real Estate agents and shown in last column of the above chart which has not been controverted before us end, therefore the deposit cannot be held to be excessive 31. In any case the Hon'ble Supreme Court in the case of S.A. Builders (sup....