Raghu Nandan Modi, Kolkata V. ITO, Ward-36(1), Kolkata, Kolkata

CO 3/KOL/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3091 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE JCITSRDR
• Assessee Lawyers: S M SURANA; P R KOTHARI
• Keywords: Notional interest
• Section: 133(6); 12; 28; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2186 - 2187 / KOL / 2014 ASSESSMENT YEARS:2010-11 & 2011-12 INCOME TAX OFFICER, WARD-36(1), AAYAKAAR BHAWAN (POORVA), 8 TH FLOOR, 110, SHANTIPALLY, KOLKATA-107 V/S . SRI RAGHU NANDAN MODI 20, R.N. MUKHERJEE ROAD, RAASOI COURT, KOLKATA-700 002 [ PAN NO.AEXPM 8474 P ] /APPELLANT .. / RESPONDENT C.O. NO. 03 - 04/KOL/2015 A/O ITA NO.2186-2187/KOL/2014) ASSESSMENT YEARS: 2010-11 & 2011-12 SRI RAGHU NANDAN MODI 20, R.N. MUKHERJEE ROAD, RAASOI COURT, KOLKATA-700 002 [ PAN NO.AEXPM 8474 P ] V/S . INCOME TAX OFFICER, WARD-36(1), AAYAKAAR BHAWAN (POORVA), 8 TH FLOOR, 110, SHANTIPALLY, KOLKATA-107 CO-OBJECTOR .. / RESPONDENT /BY ASSESSEE SHRI S.M. SURANA ADVOCATE & SHRI P.R. KOTHARI, FCA /BY REVENUE SHRI PINAKI MUKHERJEE, JCIT, SR-DR /DATE OF HEARING 24-05-2017 ! /DATE OF PRONOUNCEMENT 02-06-2017 / O R D E R PER BENCH:- THESE TWO APPEALS BY THE REVENUE AND CROSS OBJECTI ON (CO) FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT OR DERS OF COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA OF EVEN DATED I.E. 10.09.2014. ASSESSMENTS WERE FRAMED BY ITO WARD-36(1), KOLKATA U/S 143(3)/147) OF THE ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 2 INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDERS DATED 17.03.2014 FOR ASSESSMENT YEARS 2010-11 & 201 1-12 RESPECTIVELY. SHRI PINAKI MUKHERJEE, LD. DEPARTMENTAL REPRESENTAT IVE REPRESENTED ON BEHALF OF REVENUE AND SHRI S.M. SURANA & SHRI P.R. KOTHARI, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE. 2. BOTH THE APPEALS AND CO(S) OF ASSESSEE ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP ITA NO. 2186/KO/2014 FOR A.Y. 10-1 1 OF REVENUES APPEAL . 3. SOLITARY ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFI CER FOR 96 LAKH ON ACCOUNT OF RENT FREE ACCOMMODATION PROVIDED TO THE ASSESSEE WHICH WAS VALUED U/S. 28(IV) OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND HAS FIELD HIS RETURN OF INCOME DECLARING TOTAL INCOME OF 7,90,500/-. THE AO IN THE ASSESSMENT ORDER HAS OBSERVED THE BUSINESS OF THE A SSESSEE AS INTEREST INCOME. THE ASSESSEE WAS ALSO INTER ALIA A PART-TIM E DIRECTOR OF M/S PRABHUKRIPA OVERSEAS LTD. (POL FOR SHORT). IT WAS O BSERVED THAT POL IS OWNER OF A FLAT HAVING 3551.12 SQ. FT. AREA LOCATED AT 11 /12 BUCKLEY COURT, NATHALAL PAREKH MARG, NEXT TO ELECTRIC HOUSE, COLABA, MUMBAI -400005. M/S POL HAS ASSIGNED THE TASK TO LOOK AFTER THE EXPORT BUSINESS OF IT. THE ASSESSEE HAS NOT DRAWN ANY SALARY FROM THE COMPANY DURING HIS TENURE FROM 01.04.2005 TO 31.05.2011 AS EVIDENT FROM THE AUDITED REPORT OF PO L. HOWEVER, POL HAS PROVIDED RENT FREE ACCOMMODATION TO ASSESSEE BY GIV ING ITS FLAT AS DISCUSSED ABOVE. HOWEVER, THE AO WAS OF THE VIEW THE VALUE OF THE RENT FEE ACCOMMODATION IS TAXABLE IN THE HANDS OF THE ASSESS EE U/S 2(24)(IV) OF THE ACT R.W.S. 17(2)/ 28(IV) OF THE ACT. THE FACT THAT THE ASSESSEE WAS NOT GIVEN SALARY WAS ALSO VERIFIED BY THE AO FORM POL BY ISSUING THE NOTICE U/S. 133(6) OF THE ACT. THE AO FURTHER OBSERVED AS THE ASSESSEE IS NOT DRAWING ANY SALARY THE VALUE OF THE PERQUISITES U/S. 17(2) R.W.S RULE 3 OF THE IT RULES, 1962 (HEREINAFTER REFERRED TO AS THE IT RULES) WILL BE NIL. THE AO ALSO OBSERVED THAT ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 3 THE SERVICES RENDERED BY THE ASSESSEE FALL UNDER TH E CATEGORY OF PROFESSIONAL/VOCATIONAL ACTIVITIES AND THEREFORE TH E SAME IS TAXABLE IN THE HANDS OF THE ASSESSEE U/S. 28(IV) OF THE ACT. 5. THE AO ALSO OBSERVED THAT THE IMPUGNED FLAT WAS RENTED OUT BY POL TO A COMPANY IN THE FINANCIAL YEAR 2002-03 ON ANNUAL R ENTAL VALUE OF 96 LAKH. THEREFORE, THE AO WORKED OUT THE RENTAL VALUE OF TH E IMPUGNED FLAT FOR 96 LAKH WHICH WAS ADDED TO THE TOTAL INCOME OF ASSESSE E UNDER THE PROVISION OF SEC. 28(IV) OF THE ACT. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT HE WAS HO LDING THE POST OF PART- TIME DIRECTOR IN THE COMPANY AS WELL AS THE POST OF EMPLOYEE TO LOOK AFTER THE EXPORT BUSINESS OF POL. THE ASSESSEE HAS RECEIVED N O SALARY FROM THE COMPANY, THEREFORE THE PERQUISITES VALUE U/S. 17(2) R.W.S. RULE 3 OF THE RULES BECOMES NIL. 7. SIMILARLY, THE PROVISION OF SEC. 28(IV) OF THE A CT CANNOT BE ATTRACTED IN RELATION TO THE RENT FREE ACCOMMODATION PROVIDED BY POL. IT IS BECAUSE THESE EXISTS EMPLOYEE AND EMPLOYER RELATIONSHIP BETWEEN T HE ASSESSEE AND THE POL. MOREOVER, ASSESSEE WAS NOT ENGAGED IN ANY BUSI NESS ACTIVITY AS WELL AS HOLDING ANY PROFESSIONAL QUALIFICATION AS ENVISAGED UNDER THE PROVISIONS OF SECTION 28(IV) OF THE ACT. 8. POL HAS GIVEN ITS FLAT ON RENTAL BASIS FOR FINAN CIAL YEARS 2001-02 & 2002-03 TO ITS 100% HOLDING COMPANY WHEREIN RENT OF 96 LAKH WAS RECEIVED ONLY FOR THOSE PARTICULAR YEARS. THERE WAS NO RENTA L INCOME IN THE EARLIER YEARS AND SUBSEQUENT YEAR. THEREFORE, THE AMOUNT OF 96 LAKH CANNOT BE VALUED AS THE PERQUISITES IN THE HANDS OF THE ASSESSEE. THE R ENT WAS RECEIVED BY THE POL FROM ITS HOLDING COMPANY FOR RS. 96 LACS FOR TH E SAID YEARS ONLY AND THERE CAN BE SEVERAL REASONS/FACTORS FOR THE PAYMENT OF T HE RENT AT SUCH HUGE VALUE E.G. TO PROVIDE THE LIQUIDITY TO THE SUBSIDIARY COM PANY. THEREFORE THE RENT BY THE HOLDING COMPANY CANNOT BE THE GUIDING FACTOR FO R DETERMINING THE PERQUISITE VALUE IN THE HANDS OF THE ASSESSEE. ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 4 THE ASSESSEE FURTHER SUBMITTED THE RENTAL VALUATION AS DETERMINED BY BRINHAN MUMBAI MAHANAGARPALIKA FOR THE FINANCIAL YEAR 2009- 10 WHICH COMES OUT TO 1,21,500/- ONLY. SIMILARLY, THE PROMOTERS OF THE BU ILDING NAMELY, BALKRISHNA DEVELOPER PVT. LTD. VALUED THE APARTMENT FOR 2,74,364/- UNDER THE MUNICIPAL VALUATION FOR THE PURPOSE OF MUNICIPAL TAX. THE ASS ESSEE ALSO SUBMITTED THAT ON THE MAXIMUM SIDE AFTER TAKING ALL THE LOCATION A DVANTAGES THE ANNUAL RESIDENTIAL LETTING VALUE DETERMINED BY THE BRINHAN MUMBAI MAHA NAGAR PALIKA WAS AT 5.06 LAKH ONLY. THE ASSESSEE ALSO SUBMITTED THAT T HERE WAS NO RENT FIXED UNDER THE RENT CONTROL ACT. THUS, IN THE ABSE NCE OF RENT CONTROL ACT, THE MUNICIPAL VALUATION WILL BE THE GUIDING FACTORS FOR THE VALUATION OF PERQUISITES I.E. RENT FREE ACCOMMODATION. THEREFORE THE VALUE DETERMINED BY THE BRINHAN MUMBAI MAHANAGARPALIKA SHOULD BE TAKEN AS ANNUAL LETTING VALUE AT WHICH THE PROPERTY MIGHT BE EXPECTED TO LET ON Y EAR-TO-YEAR BASIS. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE HAS DELETED THE ADDITION IN PART MADE BY AO BY OBSERVING AS UNDER:- AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND MERIT IN THE ARGUMENTS OF THE APPELLANT THAT BEING CLOSE REL ATIONSHIP BETWEEN THE HOLDING AND SUBSIDIARY COMPANY AND THE ANNUAL RENT WAS DECIDED IN CONSIDERATION OF SO MANY OTHER FACTORS TO GIVE BENE FIT TO THE SUBSIDIARY COMPANY, THEREFORE, THE SAME CANNOT BE SAID TO BE A NORMAL OR MARKET RENT. FURTHER, IT IS CORRECT THAT WHEN STANDARD RENT UNDE R RENT CONTROL ACT IS NOT FIXED THEN THE ONLY CRITERIA TO FIX THE ANNUAL LETT ING OUT VALUE OF THE PROPERTY WAS THE MUNICIPAL VALUATION. FURTHER, THE AO HAS NO T BROUGHT ANY OTHER MATERIAL ON RECORD TO ASCERTAIN THE ANNUAL VALUE AT RS.96 LAKH. UNDER THESE CIRCUMSTANCES AND ALSO IN VIEW OF THE CASE LAWS CIT ED BY THE APPELLANT, IS DIRECTED TO TAKE RS.14,00,000/- AS ANNUAL LETTING O UT VALUE OF THE IMPUGNED FLAT, WHICH IS AS FOLLOWS: THE MAXIMUM RESIDENTIAL LETTING RATE IN BRIHANMUMBAI MAHANAGARPALIKA AREA FOR A.Y 2010-11 FOR PER 10 SQ. MTRS. WAS RS.2,670/- PER MONTH, THEREFORE, 2,670/- X 12/107.64X 3551 SQ.FTS. + 20% OF THE PRESCRIBED LETTING RATE TOWARDS CAR PARKING + 10% OF THE LETTI NG RATE BEING 11 TH FLOOR = RS.13,74,081/- (IN ROUND FIGURE IT IS RS.14,00,000/ -) AND ACCORDINGLY THE BALANCE ADDITION IS DIRECTED TO BE DELETED. HOWEVER , SO FAR TAXING THE RENTAL VALUE IS CONCERNED, THE AO WAS JUSTIFIED TO INVOKE SECTION 28(IV) OF THE IT ACT BECAUSE THE SEQUENCE OF EVENTS CLEARLY SUGGEST THAT THE IDEA OF APPORTIONING AS PART TIME EMPLOYEE WAS AFTERTHOUGHT TO AVOID TAX LIABILITY. IN THIS REGARD RELIANCE IS PLACED ON THE JUDGMENT OF SUMATI DAYAL VS. CIT REPORTED IN 214 ITR 801 (SC) IN WHICH THE HON'BLE COURT HAS DISCUSS ED THE ISSUE OF HUMAN PROBABILITY AND SURROUNDING CIRCUMSTANCES. IT HAS B EEN HELD THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. IN THE PRESENT CASE, THE SURROUNDING CIRCUMSTANCES AND FACTS ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 5 CLEARLY SHOW THAT THE APPELLANT ADOPTED A COLOURABL E DEVICE FOR TAKING THE RENT FREE ACCOMMODATION UNDER RULE 3 OF THE IT RULES FOR CALCULATING VALUATION OF THE RENT FREE ACCOMMODATION WHICH IS OTHERWISE NOT APPLICABLE IN THIS CASE. IN VIEW OF THE ABOVE, THE AO HAD CORRECTLY CHARGED THE ANNUAL LETTING OUT VALUE OF THE FLAT U/S 28(IV) OF THE IT ACT. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 9. LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO WHER EAS LD. AR FOR THE ASSESSEE FILED PAPER BOOK WHICH IS RUNNING PAGES FR OM 1 TO 31 AND HE REITERATED THE ARGUMENTS THAT WERE MADE BEFORE THE LD. CIT(A). 10. WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE BEFORE US IN THE INS TANT CASE RELATES TO THE TAXABILITY OF RENT FREE ACCOMMODATION PROVIDED BY P OL TO THE ASSESSEE. THE ASSESSEE IS A PART-TIME DIRECTOR IN THE COMPANY FRO M 01.04.2005 AND HE WAS NOT GIVEN ANY SALARY BY POL. ADMITTEDLY THE ASSESSE E WAS GIVEN RENT FREE ACCOMMODATION BY POL IN THE CAPACITY OF DIRECTOR. F ROM THE SUBMISSION OF LD. AR, WE FIND THAT ASSESSEE WAS ACTING AS A PART-TIME DIRECTOR AS WELL AS EMPLOYEE IN THE COMPANY AS EVIDENT FROM THE MEETING OF BOARD OF DIRECTORS WHICH IS PLACED ON PAGES 7 AND 8 OF THE PAPER BOOK FILED ALONG WITH CO NO.3/KOL/2015. AS THE ASSESSEE WAS NOT DRAWING ANY SALARY FROM POL THEN IN OUR CONSIDERED VIEW THE PERQUISITES CANNOT BE DETER MINED IN TERMS OF THE PROVISION OF SEC. 17(2) R.W.R. 3 OF THE RULES. THE RULE 3 REQUIRES THE DETERMINATION OF THE VALUE OF THE PERQUISITE IN THE INSTANT CASE IN THE FOLLOWING MANNER. [ VALUATION OF PERQUISITES . 3. FOR THE PURPOSE OF COMPUTING THE INCOME CHARGEAB LE UNDER THE HEAD SALARIES, THE VALUE OF PERQUISITES PROVIDED BY THE EMPLOYER D IRECTLY OR INDIRECTLY TO THE ASSESSEE (HEREINAFTER REFERRED TO AS EMPLOYEE) OR T O ANY MEMBER OF HIS HOUSEHOLD BY REASONS OF HIS EMPLOYMENT SHALL BE DETERMINED IN ACCORDANCE WITH THE FOLLOWING SUB-RULES, NAMELY:- (1) THE VALUE OF RESIDENTIAL ACCOMMODATION PROVIDED BY THE EMPLOYER DURING THE PREVIOUS YEAR SHALL BE DETERMINED ON THE BASIS PROV IDED IN THE TABLE BELOW: TABLE I SL. NO. CIRCUMSTANCES WHERE ACCOMMODATION IS UNFURNISHED (1) (2) (3) (1) (2) WHERE THE ACCOMMODATION IS (I) 15% OF SALARY IN CITIES HAVING POPULATION ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 6 PROVIDED BY ANY OTHER EMPLOYER AND- (A) WHERE THE ACCOMMODATION IS OWNED BY THE EMPLOYER, OR EXCEEDING 25 LAKHS AS PER 2001 CENSUS; (II) 10% OF SALARY IN CITIES HAVING POPULATION EXCEEDING 10 LAKHS BUT NOT EXCEEDING 25 LAKHS AS PER 2001 CENSUS; (III) 7.5% OF SALARY IN OTHER AREAS, IN RESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE EMPLOYEE DURING THE PREVIOUS YEAR AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID BY THE EMPLOYEE. AS THE NON-FURNISHED RENT FREE ACCOMMODATION PROVID ED TO THE ASSESSEE IS OWNED BY M/S POL, THEREFORE 15% OF THE SALARY SHALL BE TAKEN AS PERQUISITES IN THE HANDS OF THE ASSESSEE. HOWEVER WE FIND THAT ADMITTEDLY THE ASSESSEE IS NOT WITHDRAWING ANY SALARY FROM THE POL THEN IN SUC H SITUATION IT CANNOT BE DETERMINED AS PER RULE 3 OF INCOME TAX RULE. THUS I T IS CLEAR THAT THE PROVISIONS OF SECTION 17(2) ARE VERY MUCH APPLICABLE TO THE IN STANT FACTS OF THE CASE BUT THE SAME CANNOT BE DETERMINED UNDER RULE 3 OF IT RU LES FOR THE REASONS AS DISCUSSED ABOVE. SIMILARLY, THE PROVISIONS OF SEC. 28(IV) OF THE ACT ARE ATTRACTED IF THE BENEFIT OF PERQUISITES IS ARISING TO THE ASSESSEE FROM THE BUS INESS OR EXERCISE OF THE PROFESSION. AS THERE IS NO DISPUTE THAT THERE WAS E XISTING EMPLOYEES AND EMPLOYER RELATIONSHIP BETWEEN ASSESSEE AND POL THEN THERE IS NO QUESTION OF ATTRACTING THE BENEFIT OR PERQUISITES AS DEFINE U/S . 28(IV) OF THE ACT. AT THIS JUNCTURE, WE WOULD LIKE TO REPRODUCE THE AFORESAID SECTION HEREUNDER:- 28(IV) OF THE ACT WHICH READS AS UNDER :- PROFITS AND GAINS OF BUSINESS OR PROFESSION. 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INC OME-TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, - (I) ... ... (II) ... ... (I) ... .. [(IV) THE VALUE OF ANY BENEFIT OR PERQUISITE, WHETH ER CONVERTIBLE TO MONEY OR NOT, ARISING FROM BUSINESS OR THE EXERCISE OF A PROFESSION;] 10.1 ON PERUSAL OF THE ABOVE PROVISION OF SEC. 28(I V) OF THE ACT IT IS REVEALED THAT A VALUE OF BENEFIT/PERQUISITES CAN BE BROUGHT TO TAX IF IT IS ARISE FROM THE BUSINESS OR FROM THE EXERCISE OF THE PROFESSION. IN THE CASE BEFORE US BOTH THE ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 7 ELEMENTS AS MANDATED UNDER THE PROVISION OF SEC. 28 (IV) OF THE ACT ARE MISSING THEREFORE, WE ARE INCLINED NOT TO TAX THE R ENT FREE ACCOMMODATION PROVIDED BY POL TO THE ASSESSEE UNDER SECTION 28(IV ) OF THE ACT. HOWEVER, AS PER THE PROVISION OF SEC. 2(24)(IV) OF THE ACT REQUIRES TO BRING THE BENEFIT OF PERQUISITES RECEIVE BY A DIRECTOR UNDER THE NET OF TAXES. THE RELEVANT EXTRACT OF THE PROVISION OF SEC. 2(24)(IV) READS AS UNDER:- DEFINITIONS 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUI RES,- (24) INCOME INCLUDES- (I). (II). (III) (IV) THE VALUE OF ANY BENEFIT OR PERQUISITE, WHETHE R CONVERTIBLE INTO MONEY OR NOT, OBTAINED FROM A COMPANY EITHER BY A D IRECTOR OR BY A PERSON WHO HAS A SUBSTANTIAL INTEREST IN THE COMP ANY, OR BY A RELATIVE OF THE DIRECTOR OR SUCH PERSON, AND ANY SU M PAID BY ANY SUCH COMPANY IN RESPECT OF ANY OBLIGATION WHICH, BU T FOR SUCH PAYMENT, WOULD HAVE BEEN PAYEE BY THE DIRECTOR OR O THER PERSON AFORESAID; FROM THE READING OF THE ABOVE PROVISION, WE FIND TH AT THE ASSESSEE IS A DIRECTOR IN THE COMPANY AND THEREFORE BENEFIT OR PE RQUISITES DERIVES BY THE ASSESSEE ARE TAXABLE. NOW THE ISSUE BEFORE US ARISE S FOR THE DETERMINATION OF VALUE OF THE BENEFIT/PERQUISITES DERIVED BY THE ASS ESSEE ON HAVING THE RENT FREE ACCOMMODATION. AS WE HAVE ALREADY CONCLUDED TH AT THE PERQUISITES VALUE AS DEFINE U/S. 17(2) R.W.S. RULE 3 OF THE RULES CAN NOT BE DETERMINED AS THE ASSESSEE IS NOT DRAWING ANY SALARY FROM POL. SIMILA RLY, THE AFORESAID INCOME CANNOT BE TAXED UNDER THE PROVISION OF SEC. 28(IV) OF THE ACT ON THE GROUND THAT THE CONDITION AS LAID DOWN IN THE SAID SECTION HAS NOT BEEN MET TO THE INSTANT RENT FREE ACCOMMODATION. NOW, THE RESIDUAL SECTION WHERE THE PERQUISITES VALUE CAN BE DETERMINED FOR THE SEC. 23 (1) OF THE ACT FOR THE PURPOSE OF TAXATION OF RENT FREE ACCOMMODATION AND RELEVANT PROVISION OF SEC. 23(1) READS AS UNDER:- [ ANNUAL VALUE HOW DETERMINED . 23.(1) FOR THE PURPOSES OF SECTION 22, THE ANNUAL V ALUE OF ANAYA PROPERTY SHALL BE DEEMED TO BE- ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 8 (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THER EOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED O R RECEIVABLE; OR 10.2 NOW THE 2 ND ISSUE BEFORE US ARISES WHETHER THE VALUE SHALL BE DETERMINED AS PER CLAUSE (A) OR CLAUSE (B) OF SECTI ON 23(1) OF THE ACT. FROM THE READING OF THE ABOVE PROVISION, IT IS CLEAR THA T THAT THE CLAUSE (B) IS APPLICABLE WHERE THE PROPERTY IS ACTUALLY LET OUT. IN THE CASE BEFORE US THE PROPERTY IS NOT LET OUT THEN APPLICABILITY OF CLAUS E (B) IS RULED OUT. NOW THE CLAUSE (A) REMAINS THERE TO BE APPLIED FOR THE DETE RMINATION OF THE ANNUAL VALUE OF THE PROPERTY WHICH REQUIRES TO DETERMINE T HE SAME AS PER MUNICIPAL GUIDELINES. IN HOLDING SO WE RELY IN THE ORDER OF H ONBLE ITAT IN CASE OF DCIT VS RECALAMATION REALTY PVT. LTD . IN ITA NO.1411/MUM/2007 FOR THE AY 2004- 05 VIDE ORDER DATED 26-11-2010. THE RELEVANT EXTRAC T OF THE ORDER IS REPRODUCED BELOW:- 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ORIG INALLY PROVISIONS OF SECTION 23 OF THE ACT PROVIDED FOR DETERMINATION OF ANNUAL VALUE OF HOUSE PROPERTY ONLY ON THE BASIS OF SUM FOR WHICH, THE PR OPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR. THE ACTUAL RE CEIPT OF RENT WAS IRRELEVANT. BY THE TAXATION LAWS (AMENDMENT) ACT, 1975 W.E.F. 1 .4.1976, SECTION 23(1)(B) WAS INTRODUCED, WHEREBY IT WAS PROVIDED TH AT IF THE ACTUAL RENT RECEIVED BY AN ASSESSEE IS IN EXCESS OF THE SUM FOR WHICH, THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR, AN NUAL VALUE WILL BE THE RENT RECEIVED. WHILE EXPLAINING THE AFORESAID AMENDMENT, CBDT IN CIRCULAR 204 DATED 24.7.1976 IN PARAGRAPH 9 HAS STATED AS FOLLOW S :- 'HITHERTO, THE ANNUAL VALUE OF HOUSE PROPERTY, CHAR GEABLE TO INCOME TAX UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY WAS DEE MED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPE CTED TO LET FROM YEAR TO YEAR. IN MANY CASES, HOWEVER, THE ACTUAL RE NT RECEIVED OR RECEIVABLE IN A YEAR EXCEEDS THE MUNICIPAL VALUATIO N OF THE PROPERTY. SUB SECTION (1) OF SECTION 23 HAS BEEN AMENDED TO P ROVIDE THAT THE WHERE ANY PROPERTY IS IN OCCUPATION OF A TENANT AND THE ANNUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IS IN EXCESS OF THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FR OM YEAR TO YEAR, THE ANNUAL RENT RECEIVED OR RECEIVABLE SHALL BE TAKEN A S THE ANNUAL VALUE OF THE PROPERTY'. 18. FROM THE AFORESAID CIRCULAR, IT IS CLEAR THAT T HE LAW PRIOR TO INTRODUCTION OF SECTION 23(L)(B) WAS THAT ANNUAL VALUE WAS EQUAL T O MUNICIPAL VALUATION OF THE PROPERTY. THE ABOVE CIRCULAR GIVES AN INDICATION AS TO HOW THE EXPRESSION ' THE ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 9 SUM FOR WHICH, THE PROPERTY MIGHT REASONABLY BE EXP ECTED TO LET FROM YEAR TO YEAR ' USED IN SECTION 23(L)(A) HAST TO BE INTERPRETED. 19. IN THE CASE OF DIWAN DAULAT KAPPOR VS. NEW DELH I MUNICIPAL COMMITTEE, 122 ITR 700 (SC), THE QUESTION BEFORE THE HON'BLE S UPREME COURT WAS AS TO WHAT SHOULD BE THE BASIS OF DETERMINING THE ANNUAL VALUE FOR THE PURPOSE OF LEVY OF PROPERTY TAX. THE EXPRESSION ' ANNUAL VALUE ' AS DEFINED IN THE DELHI MUNICIPAL CORPORATION ACT, 1957 AND PUNJAB MUNICIPA L ACT, 1911 WAS ' GROSS ANNUAL RENT AT WHICH SUCH HOUSE OF BUILDING MAY REA SONABLY BE EXPECTED TO LET FROM YEAR TO YEAR '. THE HON'BLE SUPREME COURT HELD THAT THE ANNUAL VALUE IS ALWAYS RENT REALIZABLE BY LANDLORD AND THAT ACTUAL RENT IS ONLY AN INDICATOR WHAT THE LANDLORD MIGHT REASONABLY EXP ECT TO GET FROM A HYPOTHETICAL TENANT. THE HONOURABLE COURT FURTHER H ELD THAT WHERE TENANCY IS SUBJECT TO RENT CONTROL LEGISLATION, STANDARD RENT WOULD BE A PROPER MEASURE AND IN ANY EVENT, ANNUAL VALUE CANNOT EXCEED SUCH S TANDARD RENT. IN THE CASE OF MRS. SHEILA KAUSHISH VS. CLT, 131ITR 435 (SC), T HE QUESTION AROSE IN THE CONTEXT OF PROVISIONS OF SECTION 23 OF THE LT. ACT. THE HON'BLE SUPREME COURT APPLYING THE DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF DEWAN DAULAT RAI KAPOOR (SUPRA) OBSERVED AS FOLLOWS :- 'NOW THIS WAS A DEFINITION GIVEN ON THE INTERPRETAT ION OF THE DEFINITION OF ' ANNUAL VALUE ' IN THE DELHI MUNICIPAL CORPORATION ACT, 1957, AND THE PUNJAB MUNICIPAL ACT, 1911, FOR THE PURPOSE OF LEVY OF HOUSE TAX, BUT IT WOULD BE EQUALLY APPLICABLE IN INTERPRETING THE DEF INITION OF ' ANNUAL VALUE ' IN SUB-SECTION (1) OF SECTION 23 OF THE I.T. ACT, 1961, BECAUSE THESE DEFINITIONS ARE IN IDENTICAL TERMS AND IT WAS IMPOSSIBLE TO DISTINGUISH THE DEFINITION OF ' ANNUAL VALUE ' IN SUB-SECTION (1) OF SECTION 23 OF THE IT. ACT, 1961, FROM THE DEFINITION OF THA T TERM IN THE DELHI MUNICIPAL CORPORATION ACT, 1957 AND THE PUNJAB MUNI CIPAL ACT, 1911. WE MUST, THEREFORE, HOLD ON AN IDENTICAL LINE OF RE ASONING, THAT EVEN IF THE STANDARD RENT OF A BUILDING HAS NOT BEEN FIXED BY THE CONTROLLER UNDER SECTION 9 OF THE RENT ACT AND THE PERIOD OF L IMITATION PRESCRIBED BY SECTION 12 OF THE RENT ACT FOR MAKING AN APPLICA TION FOR FIXATION OF THE STANDARD RENT HAVING EXPIRED, IT IS NO LONGER C OMPETENT TO THE TENANT TO HAVE THE STANDARD RENT OF THE BUILDING FI XED, THE ANNUAL VALUE OF THE BUILDING ACCORDING TO THE DEFINITION GIVEN I N SUB-SECTION (1) OF SECTION 23 OF THE IT. ACT, 1961, MUST BE HELD TO BE THE STANDARD RENT DETERMINABLE UNDER THE PROVISIONS OF THE RENT ACT A ND NOT THE ACTUAL RENT RECEIVED BY THE LANDLORD FROM THE TENANT. THIS INTERPRETATION WHICH WE ARE PLACING ON THE LANGUAGE OF SUB-SECTION (1) O F SEC.23 OF THE IT ACT,1961, MAY BE REGARDED AS HAVING RECEIVED LEGISL ATIVE APPROVAL, FOR, WE FIND THAT SEC.6 OF THE TAXATION LAWS (AMENDMENT) ACT, 1975 SUB- SECTION (1) HAS BEEN AMENDED AND IT HAS NOW BEEN MA DE CLEAR BY THE INTRODUCTION OF CLAUSE(B) IN THAT SUB-SECTION THAT WHERE THE PROPERTY IS LET AND THE ANNUAL RENT RECEIVED OR RECEIVABLE BY T HE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM FOR WHICH THE PROPE RTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR, THE AMOUNT SO RECEIVED OR RECEIVABLE SHALL BE DEEMED TO THE ANNUAL VALUE OF T HE PROPERTY. THE NEWLY ADDED CI.(B) CLEARLY POSTULATES THAT THE SUM FOR WHICH A BUILDING MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YE AR MAY BE LESS THAN ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 10 THE ACTUAL AMOUNT RECEIVED OR RECEIVABLE BY THE LAN DLORD FROM THE TENANT'. 20. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRABHABATI BANSALI, 141ITR 419 HAD TO DEAL WITH A CASE OF A PROPERTY IN MUMBAI, WHERE THE DISPUTE WAS WITH REGARD TO DETERMINATION OF ITS ANN UAL VALUE U/S. 23 OF THE ACT. HON'BLE CALCUTTA HIGH COURT AFTER MAKING REFERENCE THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DEWAN DAULAT RAI KAPOO R (SUPRA) AND MRS. SHEILA KAUSHISH (SUPRA) HELD AS FOLLOWS :- 'THEREFORE, IN CASE WHERE THE ACTUAL RENT RECEIVED IS HIGHER THAN THAT FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR IN RESPECT OF AN INCOME ACCRUING SUBSEQUENT TO THE AMENDMENT DIFFERENT CONSIDERATIONS MIGHT ARISE. BUT, WE ARE N OT CONCERNED WITH SUCH SITUATION IN THE INSTANT CASE. THEREFORE, IN V IEW OF THAT POSITION AND THE MUNICIPAL LAW AND IN VIEW OF THE DECISION O F THE SUPREME COURT, IT APPEARS TO US THAT THE INCOME FROM HOUSE PROPERTY MUST BE COMPUTED ON THE BASIS OF THE SUM WHICH MIGHT REASON ABLY BE EXPECTED TO LET FROM YEAR TO YEAR AND WITH THE ANNUAL MUNICI PAL VALUE PROVIDED SUCH A VALUE IS NOT ABOVE THE STANDARD RENT RECEIVA BLE AND THAT WOULD BE THE SAFEST GUIDE FOR THIS PURPOSE AND THE RENT A CTUALLY RECEIVED WOULD NOT BE OF ANY RELEVANCE'. 21. THE COURT IN THE AFORESAID DECISION ALSO RELIED ON THE PROVISIONS OF SECTION 154 OF THE BOMBAY MUNICIPAL CORPORATION ACT, WHEREI N THE MANNER OF DETERMINATION OF RATEABLE VALUE HAS BEEN LAID DOWN. THE SAID PROVISIONS ALSO SPEAK OF ' ANNUAL RENT FOR WHICH, THE PROPERTY MIGHT REASONABL Y BE EXPECTED TO LET FROM YEAR TO YEAR '. THUS, THE COURT CONCLUDED THAT THE MUNICIPAL VALUATION AND THE ANNUAL VALUE U/S. 23(1) (A} ARE ONE OF THE SAME. THE DECISION OF HON'BLE CALCUTTA HIGH COURT HAS BEE N FOLLOWED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF M.V. SONAVALA VS. CIT, 177 ITR 246 (BORN); WHEREIN HON'BLE BOMBAY HIGH COURT HAS OBSER VED AS FOLLOWS :- 'HOWEVER, THE QUESTIONS POSED TO US ARE NOT WHETHER THE ANNUAL VALUE OF THE PROPERTY FOR THE PURPOSE OF SECTION 23(1)(A) SHOULD BE TAKEN AT THE ACTUAL COMPENSATION RECEIVED OR ON THE BASIS OF STANDARD RENT. THE QUESTION IS WHETHER THE ANNUAL VALUE SHOULD BE TAKE N AT THE AMOUNT WHICH IS ACTUAL COMPENSATION RECEIVED OR AT THE AMO UNT FIXED AS MUNICIPAL RATEABLE VALUE. OBVIOUSLY, MUNICIPAL RATE ABLE VALUE CANNOT BE EQUATED TO STANDARD RENT. IN THIS CONTEXT, IT MAY BE DESIRABLE TO REFER TO TH E CALCUTTA HIGH COURT'S DECISION IN THE CASE OF CIT VS. PRABHABATI BANSALI, (1983) 1411TR 419. ONE OF THE QUESTIONS INVOLVED IN THAT CASE WAS WHETHER THE TRIBUNAL WAS JUSTIFIED IN DIRECTING THE INCOME TAX OFFICER TO RE-DETERMINE THE ANNUAL VALUE OF THE PROPERTY UNDER SECTION 23(1} AFRESH WITH REFERENCE TO ITS RATEABLE VALUE AS DETERMINED BY THE MUNICIPAL CORPORATION. THE QUESTI ON WAS ANSWERED IN THE AFFIRMATIVE AND THE COURT HELD THAT THE INCOME FROM HOUSE PROPERTY HAD TO BE COMPUTED ON THE BASIS OF THE SUM FOR WHICH THE PROP ERTY MIGHT REASONABLY BE LET FROM YEAR TO YEAR AND THE ANNUAL MUNICIPAL VALU E. ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 11 FOLLOWING THE CALCUTTA HIGH COURT DECISION (1983) 1 411TR 419, WHICH WE THINK, HAS TAKEN THE RIGHT VIEW, WE ANSWER THE QUES TIONS IN THE NEGATIVE AND AGAINST THE DEPARTMENT WITH A DIRECTION THAT THE AN NUAL VALUE OF DIFFERENT PROPERTIES WILL NOW BE DETERMINED BY THE TRIBUNAL I N ACCORDANCE WITH THE DIRECTIONS SET OUT ABOVE. NO ORDER AS TO COSTS'. 22. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SM ITABEN N. AMBANI VS. CWT 323 ITR 104 (BORN) IN THE CONTEXT OF RULE IBB T O THE WEALTH TAX RULES, WHICH USES THE SAME EXPRESSION ' THE SUM FOR WHICH THE PROPERTY MIGHT BE REASONABLY EXPECTED TO LET FROM YEAR TO YEAR ' AS IS FOUND IN SEC.23(1)(A) OF THE ACT, HELD THAT RATEABLE VALUE AS DETERMINED BY THE MUNICIPAL AUTHORITIES SHALL BE THE YARDSTICK. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON SEVERAL OTHER JUDICIAL PRONOUNCEMENTS IN SUPPORT OF HIS CON TENTION THAT THE MUNICIPAL VALUE SHOULD BE THE BASIS OF DETERMINING THE ANNUAL VALUE. WE ARE NOT MAKING REFERENCE TO THOSE DECISIONS, SINCE, IN OUR OPINION THE AFORESAID PRONOUNCEMENT OF HON'BLE BOMBAY HIGH COURT CONSIDER S THE DECISIONS OF HON'BLE CALCUTTA HIGH COURT WHICH IN TURN HAS CONSI DERED THE LAW LAID DOWN BY THE HON'BLE APEX COURT ON THE ISSUE. IT IS CLEAR FR OM THE AFORESAID EXPOSITION OF LAW THAT CHARGE U/S. 22 IS NOT ON THE MARKET REN T; BUT IS ON THE ANNUAL VALUE AND IN THE CASE OF PROPERTY WHICH IS NOT LET OUT, M UNICIPAL VALUE WOULD BE A PROPER YARDSTICK FOR DETERMINING THE ANNUAL VALUE. IF THE PROPERTY IS SUBJECT TO RENT CONTROL LAWS AND THE FAIR RENT DETERMINED IN A CCORDANCE WITH SUCH LAW IS LESS THAN THE MUNICIPAL VALUATION THEN ONLY THAT CA N BE SUBSTITUTED BY THE MUNICIPAL VALUE. THE DECISION IN THE CASE OF MRS. S HEILA KAUSHISH (SUPRA) MENTIONS STANDARD RENT UNDER THE RENT CONTROL ACT A S ONE OF THE YARDSTICKS. WE ALSO FIND FROM THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SMT. PRABHABATI BANSALI (SUPRA) THAT STANDARD RENT, IF IT DOES NOT EXCEED THE MUNICIPAL VALUATION ALONE CAN BE ADOPTED IN PLACE O F MUNICIPAL VALUATION. 23. AS FAR AS DECISIONS RELIED UPON BY THE LEARNED D.R. IN THE CASE OF BAKER TECHNICAL SERVICES (P) LTD. (SUPRA), WE FIND THAT T HE SAME IS BASED ON THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF IT O VS. MAKRUPA CHEMICALS (P) LTD. 108 ITO 95 (MUMBAI). IN THE CASE OF MAKRUPA CHEMICALS, IN PARA-14 OF THE DECISION IT HAS BEEN CLEARLY HELD THAT RATEABLE VALUE, IF CORRECTLY DETERMINED UNDER THE MUNICIPAL LAWS CAN B E TAKEN AS ALV U/S.23(1}(A} OF THE ACT AND IN THIS REGARD THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF SHEILA KAUSHISH(SUPRA} HAS BEE N FOLLOWED. IT HAS FURTHER BEEN OBSERVED THAT THE RATEABLE VALUE IS NOT BINDIN G ON THE AO, IF THE AO CAN SHOW THAT RATEABLE VALUE UNDER THE MUNICIPAL LAW DO ES NOT REPRESENT THE CORRECT FAIR RENT. IN COMING TO THE ABOVE CONCLUSIO N, THE BENCH HAS FOLLOWED THE DECISION OF THE PATNA HIGH COURT IN THE CASE OF KASHI PRASAD KATARVKA VS. CIT 101 ITR 810 (PATNA). WE FIND THAT THE BOMBAY HI GH COURT WHICH IS THE JURISDICTIONAL HIGH COURT HAS HELD THAT THE RATEABL E VALUE UNDER THE MUNICIPAL LAW HAS TO BE ADOPTED AS ANNUAL VALUE U/S.23(1)(A) OF THE ACT AND THEREFORE THE DECISION IN THE CASE OF MAKRUPA CHEMICALS (SUPR A) TO THE CONTRARY CANNOT BE FOLLOWED. FURTHER IN PARA-13 OF ITS DECISION IN THE CASE OF MAKRUPA CHEMICALS, THE TRIBUNAL HAS VERY CATEGORICALLY HELD THAT IF RATABLE VALUE IS LESS THAN THE STANDARD RENT (WHERE THE PROPERTY IS SUBJE CT TO RENT CONTROL LAWS) THEN ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 12 ONLY STANDARD RENT HAS TO BE TAKEN. IN COMING TO TH E ABOVE CONCLUSION THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF DEWAN DAULAT RAI KAPOOR (SUPRA). THUS THE DECISI ON IN THE CASE OF BAKER TECHNICAL SERVICES (P) LTD. (SUPRA) BEING CONTRARY TO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN OUR VIEW CANNOT BE FOL LOWED. 24. THE DECISION RELIED UPON BY THE LEARNED D.R. IN THE CASE OF FIZZ DRINKS LTD.(SUPRA), ARE DISTINGUISHABLE ON FACTS. THE FACT S IN THAT CASE WERE THAT THE AGREED RENT WAS RS..1/- PER MONTH AND INTEREST FREE SECURITY DEPOSIT OF RS.1,62,36,000/- WAS TAKEN BY THE OWNER. IT WAS THI S FACTOR WHICH WEIGHED IN THE MIND OF THE TRIBUNAL AS IS EVIDENT FROM THE OBS ERVATIONS IN PARA-8 OF ITS ORDER WHERE THEY HAVE HELD THAT ANY FAIR JUDICIAL A DMINISTRATION WOULD NOT ALLOW SUCH THINGS TO HAPPEN. THE DECISION IN THE CASE OF TIVOLI INVESTMENT & TRADING CO. (P) LTD. (SUPRA) IS AGAIN DISTINGUISHAB LE BECAUSE IT WAS A CASE WHERE THERE WAS NO RENT AND ONLY A HUGE INTEREST FR EE SECURITY DEPOSIT WAS TAKEN BY THE OWNER. 25. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT THE A NNUAL VALUE (ALSO REFERRED TO AS MUNICIPAL VALUATION/ RATEABLE VALUE) ADOPTED BY THE MUNICIPAL AUTHORITIES IN RESPECT OF THE PROPERTY AT RS.27,50,835 SHOULD B E THE DETERMINING FACTOR FOR APPLYING THE PROVISIONS OF SEC.23(1)(A) OF THE ACT. SINCE THE RENT RECEIVED BY THE ASSESSEE WAS MORE THAN THE SUM FOR WHICH THE PR OPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR, THE ACTUAL RE NT RECEIVED SHOULD BE THE ANNUAL VALUE OF THE PROPERTY U/S.23(1)(B) OF THE AC T. NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT/RENT RECEIVED IN ADV ANCE SHOULD NOT BE ADDED TO THE SAME IN VIEW OF THE DECISION OF THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF J.K.LNVESTORS (BOMBAY) LTD. (SUPRA). WE HOL D ACCORDINGLY. THE APPEAL OF THE REVENUE IS DISMISSED. FROM THE ABOVE, IT IS AMPLY CLEAR THAT THE PERQUISI TES OF RENT FREE ACCOMMODATION CAN BE DETERMINED ONLY IN PURSUANCE O F THE PROVISIONS OF SECTION 23(1)(A) OF THE ACT WHICH REQUIRES TO DETER MINE THE SAME AS PER THE GUIDELINES OF MUNICIPAL CORPORATION IN THE ABOVE FA CTS & CIRCUMSTANCES. THUS, THE VALUE OF RENT FREE ACCOMMODATION DETERMINED BY THE AO ON THE RENT FETCHED BY THE PROPERTY IN THE EARLIER YEARS FOR RS . 96 LACS CANNOT APPLIED IN THE CASE BEFORE US. IN VIEW OF ABOVE, WE FIND NO IN FIRMITY IN THE ORDER OF LD. CIT(A). HENCE THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. 11. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ITA NO.2187/KOL/2014 FOR A.Y. 11-12 . 12. AS STATED EARLIER, THE COMMON ISSUE IN THIS YEA R IS SAME AS THAT OF THE LAST YEAR. SINCE THE FACTS ARE EXACTLY IDENTICAL, B OTH PARTIES ARE AGREED WHATEVER VIEW TAKEN IN THE ABOVE APPEAL IN ITA NO.2186/KOL/2014 OF ITA NO.2186-87/KOL/2014 & CO 03-04/KOL/2015 A.YS. 1 0-11 & 11-12 ITO WD-36(1) KOL. VS. RAGHU NANDA MODI PAGE 13 REVENUE MAY BE TAKEN IN THIS APPEAL (ITA NO.2187/KO L/2014 OF REVENUE ALSO, WE HOLD ACCORDINGLY. NOW COMING TO ASSESSEES CO NO.03-04/KOL/2014 FOR A .Y. 10-11 & 11-12 . 13. AT THE TIME OF HEARING LD. AR OF THE ASSESSEE H AS NOT PRESSED GROUND. 1 OF BOTH CO, HENCE, BOTH GROUND NO.1 OF ASSESSEES COS ARE DISMISSED AS NOT PRESSED. 14. IN GROUND NO. 2 & 3 OF ASSESSEES COS HAS MEREL Y SUPPORTED THE IMPUGNED ORDER OF LD. CIT(A), WHEREBY HE DELETED TH E DISALLOWANCE MADE BY AO. SINCE WE HAVE ALREADY UPHELD THE ORDER OF LD. C IT(A) AND GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE WHILE DISMISSING THE APP EAL OF REVENUE, THE COS FILED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS AND T HE SAME ARE ACCORDINGLY DISMISSED. 15. IN COMBINE RESULT, BOTH APPEALS OF REVENUE STAND DI SMISSED AND THAT OF ASSESSEES COS ARE DISMISSED AS INFRUCTUOUS . ORDER PRONOUNCED IN THE OPEN COURT 02 /06/2017 SD/- SD/- (#$) () (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S &'(- 02 / 06 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SRI RAGHU NANDAN MODI,20, R.N. MUKHERJEE RD. RASOI COURT, KOL-001 2. /REVENUE-ITO, WARD-36(1), AAYAKAR BHAWAN (POORVA), 8 TH FLOOR, 110, SHANTIPALLY KOLKATA-107 3.'0'12 3 / CONCERNED CIT KOLKATA 4. 3- / CIT (A) KOLKATA 5.6 78$$12, 12!, / DR, ITAT, KOLKATA 6.8;<=> / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 12!,