ASST CIT 16(2), MUMBAI V. GOVINDBHAI L KAKADIA, MUMBAI

ITA 323/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed owner of house property; Business income; Charitable institution; Notional interest
• Section: 143(3)

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 323 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) ASSISTANT COMMISSIONER OF INCOME TAX 16(2), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI 400007. / V. SHRI GOVINDBHAI L. KAKADIA, 1001, PRASAD CHAMBERS, OPERA HOUSE, TATA ROAD NO. 2, MUMBAI 400 004. ./ PAN :AFTPK4028A ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI RAJESH OJHA ASSESSEE BY : NONE / DATE OF HEARING : 4-11-2015 / DATE OF PRONOUNCEMENT : 30-11-2015 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 32 3/MUM/2014, IS DIRECTED AGAINST THE ORDER DATED 31-10-2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS) - 27, MUMBAI (HEREINAFTER CA LLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THE ASSESSEE WAS ELIGIBLE FOR MUNICIPAL RATABLE VALUE EVEN THOUGH THE ASSESSEE HAS OFFERED THE NOTIONAL INCOME ON DEEMED LET OUT PROPERTY @ 8.50% OF THE TOTAL ITA 323/M/14 2 INVESTMENT MADE TO ACQUIRE SUCH RESIDENTIAL AND COMME RCIAL PROPERTIES IN PRECEDING ASSESSMENT YEAR I.E. A.Y.2009-10?' 2. THE LD. CIT(A) GROSSLY ERRED ON FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO TAX THE PROPERTIES BASED ON ANNUAL LETTING VALUE AS PER MUNICIPAL RATABLE VALUATION, WHICH IS AN AFTE RTHOUGHT OF THE ASSESSEE AND CHANGE OF STAND FROM THE PREVIOUS YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DEALING IN SHARES AND DERIVATIVES AND HAS DERIVED INCOME FR OM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE CASE WAS SELECTED FO R SCRUTINY AND THE ASSESSING OFFICER(HEREINAFTER CALLED THE AO) OBS ERVED FROM THE BALANCE SHEET FILED BY THE ASSESSEE THAT THE ASSESSEE HAS N OT OFFERED ANY TAXABLE INCOME FROM THE FOLLOWING PROPERTIES UNDER THE HEAD INCOME FROM HOUSE PROPERTY OWNED BY THE ASSESSEE, THE DETAILS OF WHI CH AS EXTRACTED FROM THE BALANCE SHEET OF THE ASSESSEE BY THE AO ARE AS UNDE R:- 1 FLAT AT GOKUL NAGAR RS.5,41,575 2 SIDDHIVINAYAK FLAT RS.6,47,890 3 THANE SHOWROOM RS.15,76,110 4 LUDHIANA SHOWROOM RS.8,16,800 5 SHOP AT RAJKOT RS.18,20,000 6 FLAT AT WORLI RS.5,16,56,040 7 CALCUTTA SHOW ROOM RS.74,12,221 TOTAL RS.6,44,70,636 THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY NOTIONA L VALUE ( 8.5% OF TOTAL INVESTMENT ) CANNOT BE TAKEN FOR TAXATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN REPLY, THE ASSESSEE SUBMITTED THAT T HANE SHOW ROOM IS UNDER CONSTRUCTION AND LUDHIANA SHOW ROOM FOR WHICH ONLY ADVANCE PAID BUT IN ASSESSMENT YEAR 2009-10 THE ASSESSEE HAS AGREED TO OFFER NOTIONAL INCOME ON BOTH THE PROPERTIES, THEREFORE, THE A.O. CONSIDERED BOTH THESE PROPERTIES FOR NOTIONAL INCOME IN ASSESSMENT YEAR 2010-11 ALSO. S IMILARLY, THE ASSESSEE SUBMITTED BEFORE THE A.O. THAT FLAT AT WORLI ON WHI CH POSSESSION WAS RECEIVED ITA 323/M/14 3 BY THE ASSESSEE BUT THE SAME IS LYING VACANT I.E. N O RENTAL INCOME ON THE SAME HAS BEEN RECEIVED BY THE ASSESSEE AND THE FLAT AT TAHNEE HEIGHT IS ALREADY CONSIDERED AS SELF OCCUPIED PROPERTY, HENCE FLAT AT WORLI IS CONSIDERED FOR NOTIONAL INCOME BY THE AO . THE ASSESSEE ALSO AGREED TO OFFER NOTIONAL INCOME ON THE REMAINING PROPERTIES OWNED BY THE ASS ESSEE. ACCORDINGLY THE A.O. CALCULATED THE INCOME FROM HOUSE PROPERTY BY T AKING 8.5% ON INVESTMENT VALUE OF RS. 6,44,70,636/- ON THE PROPE RTIES DETAILED ABOVE AND ADDED THE SAME TO THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH COMES TO RS. 54,80,000/- BEFORE ALLOWING DEDU CTION U/S 24(A) OF THE INCOME TAX ACT,1961(HEREINAFTER CALLED THE ACT) V IDE ASSESSMENT ORDER DATED 09 TH MARCH 2013 PASSED U/S 143(3) OF THE ACT. 4.AGGRIEVED BY THE ASSESSMENT ORDERS DATED 09 TH MARCH 2013 PASSED BY THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT (A) IN FIRST APPEAL WHEREBY THE ASSESSEE HAS CHALLENGED THE COMPUTATION OF NOTI ONAL INCOME @ 8.5% ON THE VALUE OF INVESTMENT IN THE PROPERTIES OF RS.6,4 4,70,636/- BEING INCOME OF RS.54,80,000/- DETERMINED BY AO UNDER THE HEAD INC OME FROM HOUSE PROPERTY AND ELABORATE SUBMISSIONS WERE MADE AS CO NTAINED IN THE CIT(A) ORDERS. THE ASSESSEE ALSO CONTENDED BEFORE THE CIT(A) THAT THE ANNUAL LETTING VALUE (ALV) SHOULD BE TAKEN AS NIL AS THE PROPERTIES WERE NEVER LET OUT . THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A) THAT AS P ER SECTION 23(1)(A) OF THE ACT, THE INCOME WHICH CAN BE BROUGHT TO TAX IS EI THER THE RATABLE VALUE OR NIL, WHICHEVER IS LOWER. THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS TO SUPPORT ITS CONTENTIONS :- 1. KAMAL MISHRA, 19 SOT 251 (DEL) 2. PREMSUDHA EXPORTS, 110 TTJ 89 (MUM) 3. SMT. SHAKUNTALADEVI (2012) TIOL -64-ITAT (BAN) ITA 323/M/14 4 THE ASSESSEE ALSO SUBMITTED THAT WITHOUT PREJUDICE TO THE STAND TAKEN REGARDING THE DEEMED VALUE TO BE TAKEN AT NIL , THE REVENUE CAN AT BEST ADOPT THE MUNICIPAL RETABLE VALUE AS THE DEEMED VALUE OF THE PROPERTY IN QUESTION. IT WAS STATED BY THE ASSESSEE THAT IN A NUMBER OF D ECISIONS THAT WHAT IS TO BE BROUGHT TO THE TAX AS INCOME FROM HOUSE PROPERTY U/ S 23(1) OF THE ACT IS THE HIGHER OF THE RENT ACTUALLY RECEIVED OR THE MUNICIP AL RATABLE VALUE OR THE STANDARD RENT AS PER RENT CONTROL ACT. THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS 1. SHEILA KAUSHIK V. CIT(1981) 131 ITR 435 (SC) 2. AMOLAK RAM KHOSLA V. CIT (1981) 131 ITR 589(SC) 3. DEWAN DAULAT RAM KAPOOR V. NDMC (1980) 122 ITR 700( SC) 4. DR BALBIR SINGH V. MCD (1985) 152 ITR 388(SC) 5. CIT V. MAYUR RECREATIONAL & DEVELOPMENT LTD. (AIT - 2008-189 ITA SB) 6. CIT V. RAGHUBIR SALAN CHARITABLE TRUST 183 ITR 297( DELHI HIGH COURT) 7. L. BANSIDHAR & SONS HUF 201 ITR 655(DEL. HC) 8. CIT V. VINAY BHARAT RAM & SONS (HUF) 261 ITR 632(D ELHI HC) THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE CASE LAWS RELIED UPON BY THE ASSESSEE HELD THAT THE VALU E WHICH COULD BE ADOPTED BY THE A.O. IS THE MUNICIPAL RATABLE VALUE EVEN WHI LE BRINGING TO TAX THE DEEMED ANNUAL LETTING VALUE(ALV) IN RESPECT OF THE VACANT PROPERTIES AND DIRECTED THE A.O. TO VERIFY THE MUNICIPAL RATABLE V ALUE IN RESPECT OF THE ABOVE PROPERTIES AND MODIFY THE ORDER ACCORDINGLY. 5.AGGRIEVED BY THE DECISION OF THE LD. CIT(A) VIDE ORDERS DATED 31-10-2013, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA 323/M/14 5 6. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING T HE LD. D.R. 7.THE LD. D.R. RELIED UPON THE ORDER OF A.O. AND SU BMITTED THAT THE CIT(A) ERRED IN DIRECTING THE A.O. TO VERIFY THE MUNICIPAL RATABLE VALUE OF THE ABOVE PROPERTIES AND COMPUTE THE DEEMED ALV BASED ON MUN ICIPAL RATABLE VALUE IN RESPECT OF VACANT PROPERTIES TO BRING TO TAX INC OME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS PER SECTION 22 AND 23 OF TH E ACT. THE LD. DR RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF (2014) CIT V. TIPTOP TYPOGRAPHY, (2014) 48 TAXMANN.COM 191 (BOM. HC) AND STATED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS LAID DOWN THE GUIDELINES FOR COMPUTATION OF ALV WHICH IS TO BE FOLLOWED. 8.WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERI AL PLACED ON RECORD AND THE CASE LAWS RELIED UPON. WE HAVE OBSERVED THAT THE ASSESSEE IS OWNING THE FOLLOWING PROPERTIES ON WHICH INCOME FROM HOUSE PRO PERTY IS NOT BEING OFFERED FOR TAXATION BY THE ASSESSEE IN THE RETURN OF INCOM E FILED WITH THE REVENUE :- 1 FLAT AT GOKUL NAGAR RS.5,41,575 2 SIDDHIVINAYAK FLAT RS.6,47,890 3 THANE SHOWROOM RS.15,76,110 4 LUDHIANA SHOWROOM RS.8,16,800 5 SHOP AT RAJKOT RS.18,20,000 6 FLAT AT WORLI RS.5,16,56,040 7 CALCUTTA SHOW ROOM RS.74,12,221 TOTAL RS.6,44,70,636 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TIPTOP TYPOGRAPHY (SUPRA) HAS LAID DOWN THE GUIDELINES FOR DETERMINATION OF ALV F OR COMPUTING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE FU RTHER OBSERVE THAT THE A.O. HAS NOT MADE ANY ENQUIRY TO COMPUTE THE ALV IN ACCORDANCE WITH THE ITA 323/M/14 6 GUIDELINES LAID DOWN BY THE HONBLE BOMBAY HIGH COU RT IN THE ABOVE CASE AND SIMPLY MADE THE ADDITION BASED ON 8.5% OF THE T OTAL INVESTMENT MADE BY THE ASSESSEE IN THE PROPERTY WITHOUT MAKING ANY EN QUIRY AS THE ASSESSEE AGREED TO OFFER THE NOTIONAL INCOME ON THE SAID PRO PERTIES. WE HAVE ALSO OBSERVED THAT THE CIT(A) HAS DIRECTED THE AO TO COM PUTE DEEMED ALV BASED ON MUNICIPAL RATABLE VALUE IN CASE OF VACANT PROPER TIES TO COMPUTE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH I S AGAIN NOT IN ACCORDANCE WITH THE GUIDELINES LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF TIP TOP TYPOGRAPHY (S UPRA). THE RELEVANT EXTRACTS OF JUDGMENT OF HONBLE BOMBAY HIGH COURT W HICH STIPULATES HOW TO COMPUTE ALV IN ACCORDANCE WITH THE PROVISIONS OF TH E ACT ARE REPRODUCED BELOW:- 45. IN THE ABOVE BACKDROP, THE FULL BENCH HELD AS UNDE R: 'WITH THIS, WE REVERT BACK TO THE MOOT QUESTION, VI Z., HOW TO DETERMINE THE 'FAIR RENT' OF THE PROPERTY AND THEN TO FIND OUT AS TO WH ETHER ACTUAL RENT RECEIVED IS LESS OR MORE THAN THE 'FAIR RENT' SO THAT HIGHER OF TWO IS TAKEN AS ANNUAL LETTING VALUE UNDER SECTION 23(1)(B) OF THE ACT. FOR THIS P URPOSE, WE FIRST DISCUSS THE VALIDITY OF APPROACH TAKEN BY THE AO, VIZ., WHETHER IT IS PERMISSIBLE TO ADD NOTIONAL INTEREST OF INTEREST FREE SECURITY DEPOSIT AND ADD THE SAME TO THE ACTUAL RENT RECEIVED FOR ARRIVING AT ANNUAL LETTING VALUE. EVEN THE DIVISION BENCH WHILE MAKING REFERENCE DID NOT COUNTENANCE THE AFORESAID FORMULA ADOPTED BY THE AO AS IS CLEAR FROM PARA 12 OF THE REFERENCE ORDER WHE REIN IT IS OBSERVED AS UNDER: '12. IN THIS BACKDROP, THE IMPORTANT QUESTION WHICH ARISES FOR DETERMINATION IS: WHAT IS THE FAIR RENT OF THE PROPERTIES, WHICH WERE LET OUT IN THE INSTANT CASE? THE MISTAKE COMMITTED BY THE AO WAS THAT HE DID NOT ADDRESS THIS ISSUE AND STRAIGHTWAY PROCEEDED TO ADD NOTIONAL INTEREST ON T HE INTEREST FREE SECURITY DEPOSIT. ITA 323/M/14 7 THE AFORESAID CONCLUSION IS CORRECT. WE MAY RECORD THAT PERMISSIBILITY OF ADDING NOTIONAL INTEREST INTO ACTUAL MARKET RENT RE CEIVED WAS NOT APPROVED BY THE CALCUTTA HIGH COURT IN THE CASE OFCIT V. SATYA CO. LTD. [1997] 140 CTR (CAL) 569] AND CATEGORICALLY REJECTED IN THE FOLLOW ING WORDS: 'THERE IS NO MANDATE OF LAW WHEREBY THE AO COULD CO NVERT THE DEPRESSION IN THE RATE OF RENT INTO MONEY VALUE BY ASSUMING THE MARKE T RATE OF INTEREST ON THE DEPOSIT AS THE FURTHER RENT RECEIVED BY WAY OF BENE FIT OF INTEREST-FREE DEPOSIT. BUT SECTION 23, AS ALREADY NOTED, DOES NOT PERMIT SUCH CALCULATION OF THE VALUE OF THE BENEFIT OF INTEREST-FREE DEPOSIT AS PART OF THE REN T. THIS SITUATION IS, HOWEVER, FORESEEN BY SCHEDULE III TO THE WT ACT AND IT AUTHO RISES COMPUTATION OF PRESUMPTIVE INTEREST AT THE RATE OF 15 PER CENT AS AN INTEGRAL PART OF RENT TO BE ADDED TO THE OSTENSIBLE RENT. NO SUCH PROVISION, HO WEVER, EXISTS IN THE ACT. THAT BEING SO, THE ACT OF THE AO IN PRESUMING SUCH NOTIO NAL INTEREST AS INTEGRAL PART OF THE RENT IS ULTRA VIRES THE PROVISION OF SECTION 23(1) AND IS, THEREFORE, UNAUTHORISED. THOUGH WHAT HAS BEEN URGED ON BEHALF OF THE REVENUE IS NOT TO BE BRUSHED ASIDE AS IRRATIONAL, YET THE CONTENTION IS NOT ACCEPTABLE AS THE LAW ITSELF COMES SHORT OF TACKLING SUCH FACT-SITUATION.' THIS VIEW OF THE CALCUTTA HIGH COURT HAS BEEN ACCEP TED BY A DIVISION BENCH OF THIS COURT AS WELL IN THE CASE OF CIT V. ASIAN HOTE LS LTD. [2008] 215 CTR (DELHI) 84 HOLDING THAT THE NOTIONAL INTEREST ON RE FUNDABLE SECURITY, IF DEPOSITED, WAS NEITHER TAXABLE AS PROFIT OR GAIN FROM BUSINESS OR PROFESSION UNDER SECTION 28(IV) OF THE ACT OR INCOME FROM HOUSE PROPERTY UND ER SECTION 23(1)(A) OF THE ACT. RATIONALE GIVEN IN THIS BEHALF WAS AS UNDER (P AGE 493): 'A PLAIN READING OF THE PROVISIONS INDICATES THAT T HE QUESTION OF ANY NOTIONAL INTEREST ON AN INTEREST FREE DEPOSIT BEING ADDED TO THE INCOME OF AN ASSESSED ON THE BASIS THAT IT MAY HAVE BEEN EARNED BY THE ASSES SEE IF PLACED AS A FIXED DEPOSIT, DOES NOT ARISE. SECTION 28(IV) IS CONCERNE D WITH BUSINESS INCOME AND IS DISTINCT AND DIFFERENT FROM INCOME FROM HOUSE PROPE RTY. IT TALKS OF THE VALUE OF ANY BENEFIT ON PERQUISITE, 'WHETHER CONVERTIBLE INT O MONEY OR NOT' ARISING FROM ITA 323/M/14 8 'THE BUSINESS OR THE EXERCISE OF A PROFESSION.' IT HAS BEEN EXPLAINED BY THIS COURT IN RAVINDER SINGH THAT SECTION 28(IV) CAN BE INVOKED ONLY WHERE THE BENEFIT OR PERQUISITE IS OTHER THAN CASH AND THAT T HE TERM 'BENEFIT OR AMENITY OR PERQUISITE' CANNOT RELATE TO CASH PAYMENTS. IN THE INSTANT CASE, THE AO HAS DETERMINED THE MONE TARY VALUE OF THE BENEFIT STATED TO HAVE ACCRUED TO THE ASSESSED BY ADDING A SUM THAT CONSTITUTED 18% SIMPLE INTEREST ON THE DEPOSIT. ON THE STRENGTH OF RAVINDER SINGH, IT MUST BE HELD THAT THIS RULES OUT THE APPLICATION OF SECTION 28(I V) OF THE ACT. SECTION 23(1)(A) IS RELEVANT FOR DETERMINING THE IN COME FROM HOUSE PROPERTY AND CONCERNS DETERMINATION OF THE ANNUAL LETTING VALUE OF SUCH PROPERTY. THAT PROVISION TALKS OF 'THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR.' THIS CONTEMPLATES THE PO SSIBLE RENT THAT THE PROPERTY MIGHT FETCH AND NOT CERTAINLY THE INTEREST IN FIXED DEPOSIT THAT MAY BE PLACED BY THE TENANT WITH THE LANDLORD IN CONNECTION WITH THE LETTING OUT OF SUCH PROPERTY. IT MUST BE REMEMBERED THAT IN A TAXING STATUTE IT W OULD BE UNSAFE FOR THE COURT TO GO BEYOND THE LETTER OF THE LAW AND TRY TO READ INTO THE PROVISION MORE THAN WHAT IS ALREADY PROVIDED FOR. THE ATTEMPT BY LEARNE D COUNSEL FOR THE REVENUE TO DRAW AN ANALOGY FROM THE WEALTH-TAX ACT, 1957 IS AL SO TO NO AVAIL. IT IS AN ADMITTED POSITION THAT THERE IS A SPECIFIC PROVISIO N IN THE WEALTH-TAX ACT WHICH PROVIDES FOR CONSIDERING OF A NOTIONAL INTEREST WHE REAS SECTION 23(1)(A) CONTAINS NO SUCH SPECIFIC PROVISION.' WE APPROVE THE AFORESAID VIEW OF THE DIVISION BENCH OF THIS COURT AND OPERATIVE WORDS IN SECTION 23 (1)(A) OF THE ACT ARE 'THE SUM FOR WH ICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR'. THESE WORDS PRO VIDE A SPECIFIC DIRECTION TO THE REVENUE FOR DETERMINING THE 'FAIR RENT'. THE ASSESS ING OFFICER, HAVING REGARD TO THE AFORESAID PROVISION IS EXPECTED TO MAKE AN INQUIRY AS TO WHAT WOULD BE THE POSSIBLE RENT THAT THE PROPERTY MIGHT FETCH. THUS, IF HE FIN DS THAT THE ACTUAL RENT RECEIVED IS LESS THAN THE 'FAIR/MARKET RENT' BECAUSE OF THE REASON T HAT THE ASSESSEE HAS RECEIVED ABNORMALLY HIGH INTEREST FREE SECURITY DEPOSIT AND BECAUSE OF THAT REASON, THE ACTUAL ITA 323/M/14 9 RENT RECEIVED IS LESS THAN THE RENT WHICH THE PROPE RTY MIGHT FETCH, HE CAN UNDERTAKE NECESSARY EXERCISE IN THAT BEHALF. HOWEVER, BY NO S TRETCH OF IMAGINATION, THE NOTIONAL INTEREST ON THE INTEREST FREE SECURITY CAN BE TAKEN AS DETERMINATIVE FACTOR TO ARRIVE AT A 'FAIR RENT'. THE PROVISIONS OF SECTION 23(1)(A) DO NOT MANDATE THIS. THE DIVISION BENCH IN CIT V. ASIAN HOTELS LTD. [2010] 323 ITR 490 (DELHI) , THUS, RIGHTLY OBSERVED THAT IN A TAXING STATUTE IT WOULD BE UNSAFE FOR THE COURT TO GO BEYOND THE LETTER OF THE LAW AND TRY TO READ INTO THE PROVISION MORE THAN WHAT IS ALREAD Y PROVIDED FOR. WE MAY ALSO RECORD THAT EVEN THE BOMBAY HIGH COURT IN THE CASE OFCIT V . J.K. INVESTORS (BOMBAY) LTD. [2001] 248 ITR 723 CATEGORICALLY REJECTED THE FORMULA OF ADDITION OF NOTIONAL INTEREST WHILE DETERMINING THE 'FAIR RENT'. IT IS, THUS, MANIFEST THAT VARIOUS COURTS HAVE HELD A CONSISTENT VIEW THAT NOTIONAL INTEREST CANNOT FORM PART OF ACTUAL RENT. HENCE, TH ERE IS NO JUSTIFICATION TO TAKE A DIFFERENT VIEW THAT WHAT HAS BEEN STATED IN CIT V. ASIAN HOTELS LIMITED [2010] 323 ITR 490/[2008] 168 TAXMAN 59 (DELHI) . THE NEXT QUESTION WOULD BE AS TO WHETHER THE ANNUAL LETTING VALUE FIXED BY THE MUNICIPAL AUTHORITIES UNDER THE DELHI MUNICIPAL COR PORATION ACT CAN BE THE BASIS OF ADOPTING ANNUAL LETTING VALUE FOR THE PURPOSES OF S ECTION 23 OF THE ACT. THIS QUESTION WAS ANSWERED IN AFFIRMATIVE BY THE CALCUTTA HIGH CO URT IN CIT V. SATYA CO. LTD. [1997] 140 CTR (CAL.) 569 ON THE GROUND THAT THE PROVISION S CONTAINED IN THE DELHI MUNICIPAL CORPORATION ACT FOR FIXING ANNUAL LETTING VALUE IS IN PARI MATERIA WITH SECTION 23 OF THE ACT. THE COURT OPINED THAT THE FAIR RENT FIXED UNDE R THE MUNICIPAL LAWS, WHICH TAKES INTO CONSIDERATION EVERYTHING, WOULD FORM THE BASIS OF ARRIVING AT ANNUAL VALUE TO BE DETERMINED UNDER SECTION 23(1)(A) AND TO BE COMPARE D WITH ACTUAL RENT AND NOTIONAL ADVANTAGE IN THE FORM OF NOTIONAL INTEREST ON INTER EST FREE SECURITY DEPOSIT COULD NOT BE TAKEN INTO CONSIDERATION. IT IS CLEAR FROM THE FOLL OWING DISCUSSION THEREIN: '6. WITH REGARD TO QUESTION NOS. (5) AND (6) WHICH ARE ONLY FOR THE ASSESSMENT YEARS 1984-85 AND 1985-86 THE FURTHER ISSUE INVOLVE D IS WHETHER ANY ADDITION TO THE ANNUAL RENTAL VALUE CAN BE MADE WITH REFERENCE TO ANY NOTIONAL INTEREST ON THE DEPOSIT MADE BY THE TENANT. WHEN THE ANNUAL VAL UE IS DETERMINED UNDER SUB- ITA 323/M/14 10 CLAUSE (A) OF SUB-SECTION (1) OF SECTION 23 WITH RE FERENCE TO THE FAIR RENT THEN TO SUCH VALUE NO FURTHER ADDITION CAN BE MADE. THE FAI R RENT, TAKES INTO CONSIDERATION EVERYTHING. THE NOTIONAL INTEREST ON THE DEPOSIT IS NOT ANY ACTUAL RENT RECEIVED OR RECEIVABLE. UNDER SUB-CLAUSE (B) O F SECTION 23(1) ONLY THE ACTUAL RENT RECEIVED OR RECEIVABLE CAN BE TAKEN INT O CONSIDERATION AND NOT ANY NOTIONAL ADVANTAGE. THE RENT IS AN ACTUAL SUM OF MO NEY WHICH IS PAYABLE BY THE TENANT FOR USE OF THE PREMISES TO THE LANDLORD. ANY ADVANTAGE AND/OR PERQUISITE CANNOT BE TREATED AS RENT. WHEREVER ANY SUCH PERQUI SITE OR BENEFIT IS SOUGHT TO BE TREATED AS INCOME, SPECIFIC PROVISIONS IN THAT B EHALF HAVE BEEN MADE IN THE ACT BY INCLUDING SUCH BENEFIT, ETC., IN THE DEFINIT ION OF THE INCOME UNDER SECTION 2(24) OF THE ACT. SPECIFIC PROVISIONS HAVE ALSO BEE N MADE UNDER DIFFERENT HEADS FOR ADDING SUCH BENEFITS OR PERQUISITES AS INCOME W HILE COMPUTING INCOME UNDER THOSE HEADS, E.G., SALARY, BUSINESS. THE COMPUTATIO N OF THE INCOME UNDER THE HEAD 'HOUSE PROPERTY' IS ON A DEEMED BASIS. THE TAX HAS TO BE PAID BY REASON OF THE OWNERSHIP OF THE PROPERTY. EVEN IF ONE DOES NOT INCUR ANY SUM ON ACCOUNT OF REPAIRS, A STATUTORY DEDUCTION THEREFORE IS ALLOWED AND WHERE ON REPAIRS EXPENSES ARE INCURRED IN EXCESS OF SUCH STATUTORY L IMIT, NO DEDUCTION FOR SUCH EXCESS IS ALLOWED. THE DEDUCTIONS FOR MUNICIPAL TAX ES AND REPAIRS ARE NOT ALLOWED TO THE EXTENT THEY ARE BORNE BY THE TENANT. HOWEVER, EVEN SUCH ACTUAL REIMBURSEMENTS FOR MUNICIPAL TAXES, INSURANCE, REPA IRS OR MAINTENANCE OF COMMON FACILITIES ARE NOT CONSIDERED AS PART OF THE RENT AND ADDED TO THE ANNUAL VALUE. ACCORDINGLY, THERE CAN BE NO SCOPE OR JUSTIF ICATION WHATSOEVER FOR MAKING ANY ADDITION FOR ANY NOTIONAL INTEREST FOR D ETERMINING THE ANNUAL VALUE. WHATEVER BENEFIT OR ADVANTAGE WHICH IS DERIVED FROM THE DEPOSITS - WHETHER BY WAY OF SAVING OF INTEREST OR OF EARNING INTEREST OR MAKING PROFITS BY INVESTING SUCH DEPOSIT - THE SAME WOULD BE REFLECTED IN COMPUTING THE INCOME OF THE ASSESSEE UNDER OTHER HEADS. IN OUR VIEW THERE IS NO SCOPE FOR MAKING ANY ADDITI ON ON ACCOUNT OF SO-CALLED NOTIONAL INTEREST ON THE DEPOSIT MADE BY THE TENANT, SINCE T HERE IS NO PROVISION TO THIS EFFECT IN SECTION 22 OR 23 OF THE IT ACT, 1961.' ITA 323/M/14 11 IN FACT, THIS IS THE VIEW TAKEN EVEN BY THE SUPREME COURT IN THE CASE OF MRS. SHIELA KAUSHISH V. CIT [1981] 131 ITR 435 ON ACCOUNT OF SIMILARITY OF THE PROVISIONS UNDER THE MUNICIPAL ENACTMENTS AND SECTI ON 23 OF THE ACT. IT IS ON THIS BASIS THAT IN THE PRESENT CASE, THE C OMMISSIONER OF INCOME TAX (APPEALS) GAVE PRIMACY TO THE RATEABLE VALUE OF THE PROPERTY FIXED BY THE MUNICIPAL CORPORATION OF DELHI VIDE ITS ASSESSMENT ORDER DATED DECEMBER 3 1, 1996 AND ON THIS BASIS, OPINED THAT THE ACTUAL RENT WAS MORE THAN THE SAID RATEABL E VALUE AND THEREFORE, AS PER SECTION 23(1)(B), THE ACTUAL RENT WOULD BE THE INCOME FROM HOUSE PROPERTY AND THERE COULD NOT HAVE BEEN ANY FURTHER ADDITIONS. SINCE THE PROVISIONS OF FIXATION OF ANNUAL RENT UND ER THE DELHI MUNICIPAL CORPORATION ACT ARE IN PARI MATERIA OF SECTION 23 OF THE ACT, W E ARE INCLINED TO ACCEPT THE AFORESAID VIEW OF THE CALCUTTA HIGH COURT IN SATYA CO. LTD. [ 1997] 140 CTR (CAL.) 569 THAT IN SUCH CIRCUMSTANCES, THE ANNUAL VALUE FIXED BY THE M UNICIPAL AUTHORITIES CAN BE A RATIONAL YARDSTICK. HOWEVER, IT WOULD BE SUBJECT TO THE CONDITION THAT THE ANNUAL VALUE FIXED BEARS A CLOSE PROXIMITY WITH THE ASSESSMENT Y EAR IN QUESTION IN RESPECT OF WHICH THE ASSESSMENT IS TO BE MADE UNDER THE INCOME-TAX L AWS. 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 ASS ESSMENT 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 H E FINDS THAT THE SAME IS NOT BASED ON RELEVANT MATERIAL FOR DETERMINING THE 'FAIR RENT' I N THE MARKET AND THERE IS SUFFICIENT MATERIAL ON RECORD FOR TAKING A DIFFERENT VALUATION . WE MAY PROFITABLY REPRODUCE THE FOLLOWING OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF CORPORATION OF CALCUTTA V. SMT. PADMA DEBI, AIR 1962 SC 151, 153. 'A BARGAIN BETWEEN A WILLING LESSOR AND A WILLING L ESSEE UNINFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES MAY AFFORD A GUIDING TEST OF REASONABLENESS. AN ITA 323/M/14 12 INFLATED OR DEFLATED RATE OF RENT BASED UPON FRAUD, EMERGENCY, RELATIONSHIP AND SUCH OTHER CONSIDERATIONS MAY TAKE IT OUT OF THE BO UNDS OF REASONABLENESS.' THUS THE RATEABLE VALUE, IF CORRECTLY DETERMINED, U NDER THE MUNICIPAL LAWS CAN BE TAKEN AS ALV UNDER SECTION 23(1)(A) OF THE ACT. TO THAT E XTENT WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE. HOWEVER, WE MA KE IT CLEAR THAT RATEABLE VALUE IS NOT BINDING ON THE ASSESSING OFFICER. IF THE ASSESS ING OFFICER CAN SHOW THAT RATEABLE VALUE UNDER MUNICIPAL LAWS DOES NOT REPRESENT THE C ORRECT FAIR RENT, THEN HE MAY DETERMINE THE SAME ON THE BASIS OF MATERIAL/EVIDENC E PLACED ON RECORD. THIS VIEW IS FORTIFIED BY THE DECISION OF PATNA HIGH COURT IN TH E CASE OFKASHI PRASAD KATARUKA V. CIT [1975] 101 ITR 810 . THE ABOVE DISCUSSION LEADS TO THE FOLLOWING CONCLUS IONS: (I) ALV WOULD BE THE SUM AT WHICH THE PROPERTY MAY BE R EASONABLY LET OUT BY A WILLING LESSOR TO A WILLING LESSEE UNINFLUENCED BY ANY EXT RANEOUS CIRCUMSTANCES. (II) AN INFLATED OR DEFLATED RENT BASED ON EXTRANEOUS CO NSIDERATION MAY TAKE IT OUT OF THE BOUNDS OF REASONABLENESS. (III) ACTUAL RENT RECEIVED, IN NORMAL CIRCUMSTANCES, WOUL D BE A RELIABLE EVIDENCE UNLESS THE RENT IS INFLATED/DEFLATED BY REASON OF EXTRANEOUS CONSIDERATION. (IV) SUCH ALV, HOWEVER, CANNOT EXCEED THE STANDARD RENT AS PER THE RENT CONTROL LEGISLATION APPLICABLE TO THE PROPERTY. (V) IF STANDARD RENT HAS NOT BEEN FIXED BY THE RENT CON TROLLER, THEN IT IS THE DUTY OF THE ASSESSING OFFICER TO DETERMINE THE STANDARD RENT AS PER THE PROVISIONS OF RENT CONTROL ENACTMENT. (VI) THE STANDARD RENT IS THE UPPER LIMIT, IF THE FAIR R ENT IS LESS THAN THE STANDARD RENT, THEN IT IS THE FAIR RENT WHICH SHALL BE TAKEN AS ALV AND NOT THE STANDARD RENT. WE WOULD LIKE TO REMARK THAT STILL THE QUESTION REM AINS AS TO HOW TO DETERMINE THE REASONABLE/FAIR RENT. IT HAS BEEN INDICATED BY THE SUPREME COURT THAT ITA 323/M/14 13 EXTRANEOUS CIRCUMSTANCES MAY INFLATE/DEFLATE THE 'F AIR RENT'. THE QUESTION WOULD, THEREFORE, BE AS TO WHAT WOULD BE CIRCUMSTAN CES WHICH CAN BE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER WHILE DETERM INING THE FAIR RENT. IT IS NOT NECESSARY FOR US TO GIVE ANY OPINION IN THIS BEHALF , AS WE ARE NOT CALLED UPON TO DO SO IN THESE APPEALS. HOWEVER, WE MAY OBSERVE THA T NO PARTICULAR TEST CAN BE LAID DOWN AND IT WOULD DEPEND ON FACTS OF EACH CASE . WE WOULD DO NOTHING MORE THAN TO EXTRACT THE FOLLOWING PASSAGE FROM THE SUPR EME COURT JUDGMENT IN THE CASE OF MOTICHAND HIRACHAND V. BOMBAY MUNICIPAL COR PORATION, AIR 1968 SC 441, 442 : 'IT IS WELL-RECOGNIZED PRINCIPLE IN RATING THAT BOT H GROSS VALUE AND NET ANNUAL VALUE ARE ESTIMATED BY REFERENCE TO THE RENT AT WHI CH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. VA RIOUS METHODS OF VALUATION ARE APPLIED IN ORDER TO ARRIVE AT SUCH HYPOTHETICAL RENT, FOR INSTANCE, BY REFERENCE TO THE ACTUAL RENT PAID FOR THE PROPERTY OR FOR OTHERS COMPARABLE TO IT OR WHERE THERE ARE NO RENTS BY REFERENCE TO THE ASS ESSMENTS OF COMPARABLE PROPERTIES OR TO THE PROFITS CARRIED FROM THE PROPE RTY OR TO THE COST OF CONSTRUCTION.' 46. WE HAVE AND AFTER CAREFUL READING OF THE PROVISION IN QUESTION AND THE CONCLUSION OF THE FULL BENCH OF THE DELHI HIGH COURT COUNCLUDED T HAT A DIFFERENT VIEW CANNOT BE TAKEN. WE RESPECTFULLY CONCUR WITH THE VIEW TAKEN I N THIS FULL BENCH DECISION OF THE DELHI HIGH COURT. 47. WE ARE OF THE VIEW THAT WHERE RENT CONTROL LEGISLA TION IS APPLICABLE AND AS IS NOW URGED THE TREND IN THE REAL ESTATE MARKET SO ALSO I N THE COMMERCIAL FIELD IS THAT CONSIDERING THE DIFFICULTIES FACED IN EITHER RETRIE VING BACK IMMOVABLE PROPERTIES IN METRO CITIES AND TOWNS, SO ALSO THE TIME SPENT IN L ITIGATION, IT IS EXPEDIENT TO EXECUTE A LEAVE AND LICENSE AGREEMENTS. THESE ARE USUALLY FOR FIXED PERIODS AND RENEWABLE. IN SUCH CASES AS WELL, THE CONCEDED POSITION IS THAT T HE ANNUAL LETTING VALUE WILL HAVE TO BE DETERMINED ON THE SAME BASIS AS NOTED ABOVE. IN THE EVENT AND AS URGED BEFORE US, THE SECURITY DEPOSIT COLLECTED AND REFUNDABLE INTER EST FREE AND THE MONTHLY ITA 323/M/14 14 COMPENSATION SHOWS A TOTAL MISMATCH OR DOES NOT REF LECT THE PREVAILING RATE OR THE ATTEMPT IS TO DEFLATE OR INFLATE THE RENT BY SUCH M ETHODS, THEN, AS HELD BY THE DELHI HIGH COURT, THE ASSESSING OFFICER IS NOT PREVENTED FROM CARRYING OUT THE NECESSARY INVESTIGATION AND ENQUIRY. HE MUST HAVE COGENT AND SATISFACTORY MATERIAL IN HIS POSSESSION AND WHICH WILL INDICATE THAT THE PARTIES HAVE CONCEALED THE REAL POSITION. HE MUST NOT MAKE A GUESS WORK OR ACT ON CONJECTURES AN D SURMISES. THERE MUST BE DEFINITE AND POSITIVE MATERIAL TO INDICATE THAT THE PARTIES HAVE SUPPRESSED THE PREVAILING RATE. THEN, THE ENQUIRIES THAT THE ASSESSING OFFICER CAN MAKE, WOULD BE FOR ASCERTAINING THE GOING RATE. HE CAN MAKE A COMPARATIVE STUDY AND MAK E A ANALYSIS. IN THAT REGARD, TRANSACTIONS OF IDENTICAL OR SIMILAR NATURE CAN BE ASCERTAINED BY OBTAINING THE REQUISITE DETAILS. HOWEVER, THERE ALSO THE ASSESSING OFFICER MUST SAFEGUARD AGAINST ADOPTING THE RATE STATED THEREIN STRAIGHTWAY. HE MUST FIND OUT A S TO WHETHER THE PROPERTY WHICH HAS BEEN LET OUT OR GIVEN ON LEAVE AND LICENSE BASIS IS OF A SIMILAR NATURE, NAMELY, COMMERCIAL OR RESIDENTIAL. HE SHOULD ALSO SATISFY H IMSELF AS TO WHETHER THE RATE OBTAINED BY HIM FROM THE DEALS AND TRANSACTIONS AND DOCUMENTS IN RELATION THERETO CAN BE APPLIED OR WHETHER A DEPARTURE THEREFROM CAN BE MADE, FOR EXAMPLE, BECAUSE OF THE AREA, THE MEASUREMENT, THE LOCATION, THE USE TO WHI CH THE PROPERTY HAS BEEN PUT, THE ACCESS THERETO AND THE SPECIAL ADVANTAGES OR BENEFI TS. IT IS POSSIBLE THAT IN A HIGH RISE BUILDING BECAUSE OF SPECIAL ADVANTAGES AND BENEFITS AN OFFICE OR A BLOCK ON THE UPPER FLOOR MAY FETCH HIGHER RETURNS OR VICE VERSA. THERE FORE, THERE IS NO MAGIC FORMULA AND EVERYTHING DEPENDS UPON THE FACTS AND CIRCUMSTANCES IN EACH CASE. HOWEVER, WE EMPHASIZE THAT BEFORE THE ASSESSING OFFICER DETERMI NES THE RATE BY THE ABOVE EXERCISE OR SIMILAR PERMISSIBLE PROCESS HE IS BOUND TO DISCL OSE THE MATERIAL IN HIS POSSESSION TO THE PARTIES. HE MUST NOT PROCEED TO RELY UPON THE M ATERIAL IN HIS POSSESSION AND DISBELIEVE THE PARTIES. THE SATISFACTION OF THE ASS ESSING OFFICER THAT THE BARGAIN REVEALS AN INFLATED OR DEFLATED RATE BASED ON FRAUD, EMERGE NCY, RELATIONSHIP AND OTHER CONSIDERATIONS MAKES IT UNREASONABLE MUST PRECEDE T HE UNDERTAKING OF THE ABOVE EXERCISE. AFTER THE ABOVE ASCERTAINMENT IS DONE BY THE OFFICER HE MUST, THEN, COMPLY WITH THE PRINCIPLES OF FAIRNESS AND JUSTICE AND MAK E THE DISCLOSURE TO THE ASSESSEE SO AS TO OBTAIN HIS VIEW. ITA 323/M/14 15 48. WE ARE NOT IN AGREEMENT WITH SHRI CHHOTARAY THAT T HE MUNICIPAL RATEABLE VALUE CANNOT BE ACCEPTED AS A BONA FIDE RENTAL VALUE OF T HE PROPERTY AND IT MUST BE DISCARDED STRAIGHTWAY IN ALL CASES. THERE CANNOT BE A BLANKET REJECTION OF THE SAME. IF THAT IS TAKEN TO BE A SAFE GUIDE, THEN, TO DISCARD IT THERE MUST BE COGENT AND RELIABLE MATERIAL. 49. WE ARE OF THE OPINION THAT MARKET RATE IN THE LOCA LITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WH EN THE ASSESSING OFFICER IS CONVINCED THAT THE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATI ON BY THE PARTIES IS DOUBTFUL THAT HE CAN RESORT TO ENQUIRE ABOUT THE PREVAILING RATE IN THE LOCALITY. WE ARE OF THE VIEW THAT MUNICIPAL RATEABLE VALUE MAY NOT BE BINDING ON THE ASSESSING OFFICER BUT THAT IS ONLY IN CASES OF AFORE-REFERRED NATURE. IT IS DEFINITELY A SAFE GUIDE. 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 'FA IR RENTAL VALUE' IN RESPECT OF PROPERTIES NOT COVERED BY OR COVERED BY THE RENT CO NTROL ACT IS TO BE UNDERTAKEN IN TERMS OF THE LAW LAID DOWN IN THE FULL BENCH DECISI ON OF THE DELHI HIGH COURT. 51. WE QUITE SEE THE FORCE IN THE ARGUMENTS OF MS. VIS SANJEE THAT ORDINARILY THE LICENSE FEE AGREED BETWEEN THE WILLING LICENSOR OR A WILLIN G LICENSEE UNINFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES WOULD AFFORD RELIABLE EVID ENCE OF WHAT THE LANDLORD MIGHT REASONABLY BE EXPECT TO GET FROM A HYPOTHETICAL TEN ANT. SHE HAS IN MAKING THIS SUBMISSION, ANSWERED THE ISSUE AND SUMMED UP THE CO NCLUSION AS WELL. THEN, IT IS BUT NATURAL AND LOGICAL THAT IN THE EVENT, THE TRANSACT ION IS INFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES OR VITIATED BY FRAUD, OR THE LIKE THA T THE ASSESSING OFFICER CAN ADOPT A 'FAIR RENT' BASED ON THE OPINION OBTAINED FROM RELI ABLE SOURCES. THERE AS WELL, WE DO NOT SEE AS TO HOW WE CAN UPHOLD THE SUBMISSIONS OF MR. CHHOTARAY THAT THE NOTIONAL RENT ON THE SECURITY DEPOSIT CAN BE TAKEN INTO ACCO UNT AND CONSIDERATION FOR THE DETERMINATION. IF THE TRANSACTION ITSELF DOES NOT R EFLECT ANY OF THE AFORE STATED ASPECTS, THEN, MERELY BECAUSE A SECURITY DEPOSIT WHICH IS RE FUNDABLE AND INTEREST FREE HAS BEEN OBTAINED, THE ASSESSING OFFICER SHOULD NOT PRESUME THAT THIS SUM OR THE INTEREST DERIVED THEREFROM AT BANK RATE IS THE INCOME OF THE ASSESSE E TILL THE DETERMINATION OR CONCLUSION OF THE TRANSACTION. THE ASSESSING OFFICER OUGHT TO BE AWARE OF SEVERAL ASPECTS AND ITA 323/M/14 16 MATTERS INVOLVED IN SUCH TRANSACTIONS. IT IS NOT NE CESSARY THAT IF THE LICENSE IS FOR THREE YEARS THAT IT WILL OPERATIVE AND CONTINUING TILL TH E END. THERE ARE TERMS AND CONDITIONS ON WHICH THE LEAVE AND LICENSE AGREEMENT IS EXECUTE D BY PARTIES. THESE TERMS AND CONDITIONS ARE WILLINGLY ACCEPTED. THEY ENABLE THE LICENSE TO BE DETERMINED EVEN BEFORE THE STATED PERIOD EXPIRES. EQUALLY, THE LICENSEE CA N OPT OUT OF THE DEAL. A LEAVE AND LICENSE DOES NOT CREATE ANY INTEREST IN THE PROPERT Y. THEREFORE, IT IS NOT AS IF THE SECURITY DEPOSIT BEING MADE, IT WILL BE NECESSARILY REFUNDAB LE AFTER THE THIRD YEAR AND NOT OTHERWISE. EVERYTHING DEPENDS UPON THE FACTS AND CI RCUMSTANCES IN EACH CASE AND THE NATURE OF THE DEAL OR TRANSACTION. THESE ARE NOT MA TTERS WHICH ABIDE BY ANY FIXED FORMULA AND WHICH CAN BE UNIVERSALLY APPLIED. TODAY , IT MAY BE COMMERCIALLY UNVIABLE TO ENTER INTO A LEASE AND, THEREFORE, THIS MODE OF INDUCTING A 'THIRD PARTY' IN THE PREMISES IS ADOPTED. THIS MAY NOT BE THE TREND TOMORROW, THE REFORE, WE DO NOT WISH TO CONCLUDE THE MATTER BY EVOLVING ANY RIGID TEST. 52. WE HAVE ALSO NOTED THE SUBMISSIONS OF SHRI AHUJA. WE ARE OF THE OPINION THAT EVEN IN THE CASES AND MATTERS BROUGHT BY HIM TO OUR NOTI CE, IT IS EVIDENT THAT THE ASSESSING OFFICER CANNOT BRUSH ASIDE THE RENT CONTROL LEGISLA TION, IN THE EVENT, IT IS APPLICABLE TO THE PREMISES IN QUESTION. THEN, THE ASSESSING OFFIC ER HAS TO UNDERTAKE THE EXERCISE CONTEMPLATED BY THE RENT CONTROL LEGISLATION FOR FI XATION OF STANDARD RENT. THE ATTEMPT BY THE ASSESSING OFFICER TO OVERRIDE THE RENT CONTR OL LEGISLATION AND WHEN IT BALANCES THE RIGHTS BETWEEN THE PARTIES HAS RIGHTLY BEEN INT ERFERED WITH IN THE GIVEN CASE BY THE APPELLATE AUTHORITY. THE ASSESSING OFFICER EITHER M UST UNDERTAKE THE EXERCISE TO FIX THE STANDARD RENT HIMSELF AND IN TERMS OF THE MAHARASHT RA RENT CONTROL ACT, 1999 IF THE SAME IS APPLICABLE OR LEAVE THE PARTIES TO HAVE IT DETERMINED BY THE COURT OR TRIBUNAL UNDER THAT ACT. UNTIL, THEN, HE MAY NOT BE JUSTIFIE D IN APPLYING ANY OTHER FORMULA OR METHOD AND DETERMINE THE 'FAIR RENT' BY ABIDING WIT H THE SAME. IF HE DESIRES TO UNDERTAKE THE DETERMINATION HIMSELF, HE WILL HAVE T O GO BY THE MAHARASHTRA RENT CONTROL ACT, 1999. MERELY BECAUSE THE RENT HAS NOT BEEN FIXED UNDER THAT ACT DOES NOT MEAN THAT ANY OTHER DETERMINATION AND CONTRARY THER ETO CAN BE MADE BY THE ASSESSING OFFICER. ONCE AGAIN HAVING RESPECTFULLY CONCURRED W ITH THE JUDGMENT OF THE FULL BENCH OF THE DELHI HIGH COURT, WE NEED NOT SAY ANYTHING M ORE ON THIS ISSUE. ITA 323/M/14 17 53. THUS, APART FROM THE THREE ASPECTS NAMELY OF A MUN ICIPAL VALUATION, OF OBTAINING INTEREST FREE SECURITY DEPOSIT AND THE PROPERTIES B EING COVERED BY THE MAHARASHTRA RENT CONTROL ACT BUT NO STANDARD RENT THEREUNDER IS FIXE D, OUR ATTENTION HAS NOT BEEN INVITED TO ANY OTHER CASE. SUFFICE IT TO HOLD THAT IN THOSE CASES AND TO WHICH OUR ATTENTION IS NOT INVITED THE PRINCIPLES LAID DOWN IN THE DECISIONS O F THE HON'BLE SUPREME COURT AND REFERRED TO BY THE FULL BENCH OF THE DELHI HIGH COU RT WOULD GOVERN THE ENQUIRY. WE ARE OF THE CONSIDERED VIEW THAT THE INTEREST OF JUSTICE WILL BE BEST SERVED, IF THE ORDERS OF THE CIT(A) BE SET ASIDE AND THE MATTE R BE RESTORED TO THE FILE OF THE A.O. FOR DETERMINATION OF ALV OF THE PROPERTIES OF THE ASSESSEE IN ACCORDANCE WITH SECTION 22 AND 23 OF THE ACT BY FOL LOWING THE GUIDELINES GIVEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TIPTOP TYPOGRAPHY (SUPRA). WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. # $% &' 30-11-2015 ( ) SD/- SD/- - (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 30-11-2015 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 323/M/14 18 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI