2017 (2) TMI 1191

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.... to be taxed as income from house property and not as income from other sources as held by the AO. 3. On the facts and circumstances of the case, the Ld. CIT(A) erred in granting the relief to the assessee as per the decision of the ITAT Mumbai in the assessee's own case for A.Y.s 2008-09 & 2009-10 in which the perverse and bad in law findings of the CIT(A) have been relied upon. Hence the decision of the ITAT was not factually correct and had no force in law. 4. On the facts and circumstances the Id. CIT(A) erred in restricting the notional income from house properties in respect of unoccupied house properties to Rs. 5,45,760/- as against assessed by the AO at Rs. 20,65,000/- without appreciating the fact that rent estimated by the AO was reasonable having regards to the location of premises and investment made therein. 5. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the amount of Rs. 7,20,000/- added as ALV being the notional interest from security deposit of Rs. 72 lacs in respect of let out property and assessed to tax by the AO as inclusive rental value u/s 22. The Ld.CIT(A) ought to have appreciated the fact that no income from this security....

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....under 40A(2)(b) of the Act, the assessing officer has only disallowed these expenses observing that there was no commensurate increase in turnover. Before the ld. CIT (Appeals), the assessee relied on the decision of Supreme Court in the case of CIT Vs. Walchand and Co.(P) Ltd. [65 ITR 381] and submitted that the Hon'ble Supreme Court held that the rule that increased remuneration can only be justified if there is corresponding increase in the profits of the employer was erroneous. It is the finding of the ld. CIT (Appeals) that the assessee has demonstrated that these expenses were actually incurred which are evidenced from the bank statement and the confirmations from the employees and even the assessing officer has not doubted the fact of incurring of expenses. In the circumstances, we do not see any valid reason to disallow the said expenses. We agree with the view of the ld. CIT (Appeals). This ground of revenue is rejected. 6. Coming to the ground nos. 2 and 3 relating to the assessability of rental income, the ld. Counsel at the outset submits that the Co-ordinate bench of the Tribunal in ITA No. 2571/Mum/2012 dated 22.05.2013 for the assessment year 2008-09 held that the i....

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.... R.C.C. frame structures with cement sheet roof and one residential Premises having five rooms which are recorded in the record of Grampanchayat Kolkhe Assessment as under Milkat No. Area (Sq.mts.) 237 Godown 464.68 238 Godown 464.68 239 Godown 464.68 240 Godown 278.81   In the 11th Schedule of agreement there are four RCC old structures and one existing residential structure with 5 bedrooms with total area of 1858.72 sq.mtr. shown. Total area of the big plot which is 106920 sq.mtrs, when compared with built up part is disproportionate as there is very small area in form of RCC structure. The land being appurtenant to building, though disproportionately big, still during the year the nature of income having been derived from a big plot of land with some godowns on it which is undisputedly asset with share of appellant in it has to be assessed as Income from House Property." It is relevant to state that the Chennai ITAT in the case of ACIT V T&R Welding Products (India) Ltd. has held in a similar set of facts when major portion of the leased out property is a land and the lease agreement permits the lessee to build permanent structure therein, the lease income has....

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.... authorities below. From the perusal of the assessment order, we find that the assessing officer said to have estimated the rental values for the vacant properties looking at the location and area of the property. However, assessing officer did not cite any instances of similar properties deriving rent where the rental income is similar to the estimated value in respect of the properties of the assessee. We find that the ld. CIT (Appeals) has estimated the rental value of the current assessment year based on actual rent received by the assessee during the assessment year 2015-16. The ld. CIT (Appeals) has taken similar values of rental income of the assessment year 2015-16 for the current assessment year i.e.2010-11 and arrived at the rental value at Rs. 7,79,658/- which in our opinion is reasonable and has some basis. Therefore, we sustain the valuation arrived at by the ld. CIT(Appeals). The grounds raised by the revenue on this issue are rejected. 11. The last ground of revenue's appeal is with regard to deletion of notional interest from security deposit while computing the rental income. The Assessing Officer noticed that the assessee has received Rs. 72,00,000/- as interest ....