1986 (10) TMI 72

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....Bombay, known as II Plaza, The flat in question is 2840 sq.ft. dimension and was purchased by the employer company in 1970 for a total consideration of Rs. 3,62,000. Thereafter several alterations were made up to 31st Dec., 1979 and the eventual value was of a sum of Rs. 5,45,129. The municipal valuation of the flat was determined at Rs. 9,349 per annum. 3. In the return filed by the assessee, the municipal valuation has been taken as the basis for determining the fair rental value of the premises. The ITO taking recourse to Expln. II to r. 3(a) (iii) of IT Rules, 1962, determined the fair rental value at Rs. 42,600 per annum. According to him, the fair rental value as per the Explanation referred to above is to be determined with refere....

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....aggrieved by the order of the Commissioner(A) and has come in appeal before us. We have heard both the representatives of the assessee as well as the Department. The cases before the Supreme Court were under s. 23 of the IT Act. Under s. 23 annual value of a property is deemed to be the sum for which the property might reasonably be expected to let from year to year. As stated by the ITO, the fair rental value as per the Expln. II to r. 3(a)(iii) is to be determined with reference to what a similar accommodation would have fetched, in that area or the municipal valuation in respect of the accommodation whichever is higher. The rent which the property would fetch, in our opinion, should be the standard rent and the observations of the Suprem....