TaxTMI 
TaxTMI 
2018 (5) TMI 250
X X X X Extracts X X X X
X X X X Extracts X X X X
.... service tax paid by the assessee was to the extent of Rs. 2,31,750/-. According to the Ld. counsel, the assessee has taken the land on lease and constructed building, therefore, the lease rent paid for the land has to be reduced to the extent of Rs. 4,80,000/-. The balance amount available for the assessee is only Rs. 91,10,000/-. In respect of the property known as Karuna Enclave at Annanagar, Chennai-40, according to the Ld. counsel, the total rent adopted by the Assessing Officer was Rs. 2,72,57,210/-. According to the Ld. counsel, the assessee has paid service tax to the extent of Rs. 5,50,166/-. The lease rent paid to the land owner was Rs. 30,00,000/-. The assessee has also paid equipment hire charges to the extent of Rs. 21,25,000/- and the balance rent amount is Rs. 2,15,82,044/-. According to the Ld. counsel, this was offered for taxation by the assessee. 4. Referring to Section 24 of the Income-tax Act, 1961 (in short 'the Act'), the Ld.counsel for the assessee submitted that the land does not belong to the assessee. The superstructure belongs to the assessee. The assessee received a composite rent for land and building. Therefore, according to the Ld. counsel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....982, the Ld.counsel for the assessee submitted that in relation to immovable property, for the purpose of transfer, there should be a registered document. In this case, there was no registered document, therefore, there was no transfer at all. Placing reliance on the judgment of Apex Court in Balbir Singh Maini (398 ITR 531), the Ld.counsel submitted that the assessable income from house property is only after reducing the lease rental for acquiring the sub-lease. At the best, according to the Ld. counsel, by virtue of Section 26 of the Act, the assessee can be considered as co-owner along with the owner of the land and the shares of ownership is definite, therefore, it has to be assessed as per the share. Hence, according to the Ld. counsel, the assessee has rightly declared the taxable income in respect of his right / share on the superstructure of the building. 8. Shri D. Anand, the Ld.counsel for the assessee, further submitted that as far as the land and other equipments are concerned, the assessee is not the owner, therefore, the rent portion which relates to land and other equipments shall be reduced from the total rent received by the assessee. Hence, according to the Ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee cannot claim any deduction while computing the income from house property. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. 11. We have considered the rival submissions on either side and perused the relevant material available on record. The dispute is, in computation of rental income from two house properties. The first property is at Annanagar known as Karuna Enclave and the other property is at No.10, Spurtank Road, Chennai. In respect of Karuna Enclave, the assessee has taken a piece of land on lease, on a monthly rental basis as per the lease agreement. The assessee has put up a superstructure / building and also let out the same. From the order of the CIT(Appeals) it appears that the assessee has constructed 56,656 sq.ft. of building and let out on monthly basis to M/s Office Tiger Database Systems India Pvt. Ltd. for a monthly rent of Rs. 22,25,587/-. In respect of the property at 10, Spurtank Road, the assessee claims that he has taken the land on lease for a monthly rent of Rs. 40,000/-. The assessee has also put up a construction and let out the same to M/s Cox and Kings India Pvt. Ltd. and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e taken to be nil. (3) The provisions of sub-section (2) shall not apply if? (a) the house or part of the house is actually let during the whole or any part of the previous year ; or (b) any other benefit therefrom is derived by the owner. (4) Where the property referred to in sub-section (2) consists of more than one house? (a) the provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf ; (b) the annual value of the house or houses, other than the house in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section Section 24 of the Act Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely : (a) a sum equal to thirty per cent. of the annual value ; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital : Provided that in respect of property referred to in sub-section (2) of secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs, it has to be construed as transfer. For the purpose of convenience, the provisions of Section 269UA(f) of the Act is reproduced hereunder:- 269UA (f) "transfer,"-- (i) in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882). Explanation For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years; (ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee is a right to occupation and enjoyment on the land. The other rights relating to ownership continues to remain with the original owner. Therefore, the amount payable / paid as a lease rent for occupation and enjoyment of the land, which belongs to third party, has to be necessarily reduced while computing annual rental value under Sections 22 and 23 of the Act. 16. Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 provides for determination of annual rental value. In the absence of any method for computation of annual rental value in the Income-tax Act, this Tribunal is of the considered opinion that the method prescribed under Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 has to be adopted. The market value of the land and cost of construction of the building has to be estimated for the purpose of determining the annual rental value. In case, the assessee is not the owner of the land on which the superstructure was constructed, the market value of the land or the lease rent paid / payable for the land needs to be excluded. Therefore, this Tribunal is of the considered opinion that for computing the annual rental value of the building, the lease rental pai....