TaxTMI 
TaxTMI 
2022 (5) TMI 932
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....ithout admitting that the deemed rental income from the above properties is taxable as income from house property u/s 23(1 )(a), it is submitted as under - 2] The learned CIT(A) erred in holding that the fair market rent of the show room at Rushiraj Regency, Nashik was rightly considered by the A.O. at Rs. 18,00,000/- per annum on the basis of alleged market enquiry and thereby making the addition of Rs. 12,60,000/- as net income u/s 23(1 )(a) pertaining to the said property after allowing the standard deduction u/s 24 of the Act. 3] The learned CIT(A) further erred in holding that the fair market rent of the flat at Siddhivinayak Park, Nashik was rightly considered by the A.O. at Rs. 1,44,000/- per annum on the basis of alleged market enquiry as against the actual rent received by the assessee of Rs.28,625/- and thereby making the net addition of Rs.80,763/- as net income u/s 23(1 )(a) pertaining to the above flat after allowing the standard deduction u/s 24 of the Act. 4] The learned CIT(A) failed to appreciate that the fair market rent of the above properties was estimated by the A.O. at a very high value and in view of the settled position of law, the....
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....ate of this premises should be Rs.2,50,000/- per month during the period. 04. Regarding flat at Siddhivinayak Park, Anandwalli, I have enquired with a local person of the area, he has stated that rent of this area should be Rs.12,000/- to Rs.15,000/- per month during the period." It is mentioned in the Assessment Order that the assessee company has offered for taxation as income from House Property on the premises i.e. Showroom Rushiraj Height, Parijat Nagar to amounting to Rs.1,00,000/- after claiming standard deduction of Rs.9,00,000/- @30% and Flat at Siddhivanayak Park amounting to Rs.20,037/- after claiming standard deduction of Rs,8,588/-. 2.2. It is further mentioned in the assessment order as under : "In view of the above, it was observed that assessee has let-out of the above two properties. Therefore, assessee was required to show deemed rent on the showroom, Rushiraj Regency. Since, the assessee has not shown deemed rent on the above property and failed to produce any supporting evidence in respect of business use of property. ON the basis of assessee's submission and inspector report of the Revenue, I am of belief that assessee should have ....
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.... • ACIT v. Avinash N.Bhosale [ITA No.2582/PUNE/2012] dated 21.05.2014 • PCIT v. Karia Can Company Ltd. [(2018) 257 Taxman 189 (Bom)(HC)] • Smt.Smitaben Ambani v. CIT [(2010) 323 ITR 104 (Bom)(HC)] 4. Per contra, the ld.Departmental Representative(ld.DR) relied upon the order of the ld.CIT(A) and AO. 5. We have heard both the parties, perused the material available on record and orders of the Lower Authorities. The AO has relied on the Inspector's Report. On perusal of the Inspector's Report which is produced in the assessment order, it is observed that the Inspector has merely enquired with some person and based on that information stated the Rent of the impugned area. The Inspector has not studied actual rental agreement pertaining to the neighbourhood premises. The Inspector has neither recorded any statement under section 131 or collected information under section 133(6) of the Act. In this factual background, the Inspector's Report is not fully reliable. 5.1. In similar circumstances, the Hon'ble ITAT Pune Benches, in the case of Addl.CIT vs Avinash Bhosale, ITA No.2582/PUN/2012 dated 21.05.2014 has held as under: "4. The nex....
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.... value of a property determined under section 23 shall be adopted for computing the income from property in terms of section 22. The annual value determination shall be strictly in accordance with the provisions contained in section 23 as upheld by the Co-ordinate Bench in the case of Delite Enterprises (P) Ltd. V. ITO (2008) 22 SOT 245 (Mum). Accordingly, where the Rent Control Act is applicable only the standard rent is to be taken as the annual letting value. In the absence of standard rent the municipal ratable value is to be taken. Where the municipal ratable value of rent is less than actual rent, the actual rent shall be fair rental value for computing income from house property. However, it is the decision of the co-ordinate Bench in the case of Makrupa Chemicals (P) Ltd. (2007) 108 ITD 95/12 SOT 68 (Mum) that the standard rent is the upper limit for determining the annual value. The above synopsis goes well with the decisions of the Apex Court in the case of Dewan Daulat Rai Kapoor (supra) and also apex court judgment in the case of Dr. Balbir Singh and others (supra) for the proposition that the ratable value determined by the municipal authority is binding unless the sta....
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....which the assessment is to be made under the income-tax laws. If there is a change in circumstances because of passage of time, viz., the annual value was fixed by the Municipal Authorities much earlier in point of time on the basis of rent than received, this may not provide a safe yardstick if in the assessment year in question when assessment is to be made under Income-tax Act. The property is let-out at a much higher rent. Thus, the Assessing Officer in a given case can ignore the municipal valuation for determining annual letting value if he finds that the same is not based on relevant material for determining the 'fair rent' in the market and there is sufficient material on record for taking a different valuation" Unquote. 5.2.1 Hon'ble Bombay High Court in the case of CIT v/s Tip TopTypography , [2014] 48 taxmann.com 191 (Bombay) has agreed with the above view of the Hon'ble Delhi High Court in para 50 of the order as under: Quote , "50. We have broadly agreed with the view taken by the Full Bench of the Delhi High Court. Hence, the issue of determination of the "fair rental value" in respect of properties not covered by or covered by the Rent Control Act....