The Tax Publishers2021 TaxPub(DT) 0590 (Mum-Trib)

INCOME TAX ACT, 1961

Section 23

Where Annual Letting Value of property could not exceed Standard Rent as per the Rent Control Legislation as applicable to property and Standard Rent is upper limit and ALV of property has to be determined at sum at which property might reasonably be let out between willing parties, since methodology as adopted by AO to estimate the income @8% of value of the property was not in accordance with the principles laid down as above, therefore, estimation made could not be sustained.

Income from house property - ALV determination - AO estimated rental income @8% of value of the property -

Assessee was assessed for year under section 143(3) wherein returned income was e-filed by the assessee after certain additions/disallowances. Assessee was an Actor, film producer and director in Marathi/Hindi Television Serials, Games shows, feature film and advertisement films. During assessment proceedings, it transpired that AO deemed rental income of Rs. 8,400 against flat. This flat was in self-occupation. Assessee submitted that no rental was received from the property and the income was offered on the basis of municipal valuation of the property. However, rejecting the same, AO estimated rental income @8% of value of the property. Held: Annual Letting Value (ALV) of the property could not exceed Standard Rent as per the Rent Control Legislation as applicable to the property and the Standard Rent is the upper limit. ALV of property had to be determined at sum at which property might reasonably be let out between willing parties. Methodology as adopted by AO to estimate the income @8% of value of the property was not in accordance with principles laid down by Court and therefore, the same could not be sustained. Nothing was brought on record by AO that the said estimation was the approximate sum between willing parties. Therefore, estimation made and confirmed by lower authorities could not be sustained.

Followed:CIT v. Tip Top Typography (2014) 368 ITR 330 (Bom) : 2014 TaxPub(DT) 3370 (Bom-HC), CIT v. Moni Kumar Subba & Miracle Exporters P. Ltd. (2011) 333 ITR 38 (Del-Trib) : 2011 TaxPub(DT) 989 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14



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