FILMKRAFT PRODUCTIONS (I) P.LTD, MUMBAI V. ACIT 16(1), MUMBAI

ITA 5183/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1795 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 07-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Question of law; Cost of acquisition
• Section: 195; 191; 208; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5183/M/2018 ASSESSMENT YEAR: 2014-15 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD., B/27, COMMERCE CENTRE, OFF NEW LINK ROAD, ANDHERI WEST, MUMBAI 400 053 PAN: AAACF3549E VS. ACIT CIRCLE -16(1), AAYAKAR BHAVAN, M.K. MARG, NEW MARINE LINES, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI K. GOPAL, A.R. SMT. NEHA PARANJPE, SHRI SUMANTA SEN, A.R. REVENUE BY : SHRI RAJEEV GUBGOTRA, D.R. DATE OF HEARING : 27.08.2019 DATE OF PRONOUNCEMENT : 30.09.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 18.01.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. 2. THE MAIN ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.77,75,5 67/-, UPHOLDING THE ORDER OF AO ON ASSESSING THE DEEMED ALV IN RESPECT OF 16 TH FLOOR AT LOTUS BUSINESS PARK ON THE BASIS OF ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 2 ANNUAL RENT RECEIVED IN RESPECT OF 15 TH FLOOR OF THE SAME PROPERTY. 3. THE FACTS IN BRIEF ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAS NOT RETURNED ANY INCOME IN RESPECT OF 16 TH FLOOR IN LOTUS CORPORATE BANK. ACCORDINGLY, A SHOW CAUSE NO TICE WAS ISSUED AS TO WHY THE ALV SHOULD NOT BE ESTIMATED ON THE BASIS OF RENT OF 15 TH FLOOE WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTE R DATED 18.11.2016. THE AO, REJECTING THE SUBMISSION S AND CONTENTIONS OF THE ASSESSEE, ADDED A SUM OF RS. 77, 75,567/- TO THE INCOME BY OBSERVING AS UNDER: A) 7% OF THE COST OF THE PROPERTY, AS ASSESSED FO R AY 2013-14, IN ASSESSEE'S OWN CASE. B) PREVAILING MARKET RENT, OBTAINED FROM INFORMATI ON AVAILABLE FROM INTERNET OR ACTUAL INSTANCES. THE INCOME FROM HOUSE PROPERTY IS TAKING 7% BASIS IS WORKED OUT AS UNDER: PARTICULARS 16 TH FLOOR (AMT. IN RS.) GROSS DEEMED ANNUAL VALUE COST AS PER BALANCE SHEET 9,15,26,740 '7% OF COST 64,06,872 LESS : MUNICIPAL TAXES 7,58,806 56,48,066 LESS : 30% 16,94,420 ------------------- NET DEEMED ALV 39,53,646 4.16. THE ASSESSEE HAS POINTED OUT THAT DURING THIS YEAR, IT HAS ACTUALLY LET OUT 15 TH FLOOR IN THE SAME BUILDING, WHICH IS MORE RELIABLE TO COMPUTE DEEMED- RENT. FURTHER, ACTUAL RENT RECEIVED FOR 15 TH FLOOR IS HIGHER THAN THE 7% OF COST IN THIS CASE AND THE SAME IS MORE REASONABLE BASIS FOR DEEMED AL V. HENCE THE RENT INCOME WHICH IS OFFERED FOR 15 TH FLOOR OF THE SAME BUILDING IS CONSIDERED AS 'DEEME D ALV. ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 3 THEREFORE, THE ACTUAL RENT RECEIVED FOR 15TH FLOOR OF RS.77,75,567/- IS HEREBY ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS DEEMED RENT FOR 16 TH FLOOR OF LOTUS PARK BUILDING. 4. IN THE APPELLATE PROCEEDINGS , THE LD. CIT(A) HA S UPHELD THE ORDER OF AO BY OBSERVING AND HOLDING AS UNDER: 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ORAL CONTENTIONS AND WRITTEN SUBMISSION OF THE ASSESSEE, DISCUSSION OF THE AO IN THE ASSESSMENT ORDER AND MATERIAL AVAILABLE ON RECORD. I HAVE ALSO GONE THRO UGH THE VARIOUS CASE LAWS REFERRED TO BY THE LD. A.R. I FIND THAT THIS PROPER TY OF LOTUS BUSINESS PARK IS NOT AT ALL COVERED UNDER MAHARASHTRA RENT CONTROL ACT, 1999 BE CAUSE THE ASSESSEE ITSELF HAS SHOWN ACTUAL RENT OF PROPERTY ON 15 TH FLOOR OF THE SAME BUILDING @RS.77,75,567/-. WHEN THE PROPERTY SITUATED AT 15 TH FLOOR OF LOTUS BUSINESS PARK IS RENTED ON HIGHER SIDE HENCE, IT CANNOT BE PLEADED THAT ALV OF PROPER TY SITUATED AT 16TH FLOOR SHOULD BE ADOPTED AS PER THE MUNICIPAL RATEABLE VALUE. THE VARIOUS ARGUMENTS ADVANCED BY THE LD. A.R. IN THIS REGARD ARE NOT APPLICABLE. WHEN PROPERTY WAS IN WORKING CONDITION, IT WAS TO BE LET OUT. IF IT WAS NOT LET OUT, THEN ANNUAL LETTING VALUE WAS TO BE ESTIMATED. WHEN PROPERTY UNDER REFERENCE IS NOT COVERED UNDER RENT CONTROL ACT, FAIR RENT OF PROPERTY HAS TO BE TAKEN AS ANNUA L VALUE WHICH IS TO BE DETERMINED ON THE JL BASIS OF FACTS OR MATERIAL ON RECORD, VID E: WOODLAND ASSOCIATES (P) LTD. VS. ITO 5(3)(4) (2013) 29 TAXMAN.COM 216 {MUM.)(TRIB.}. IN THE CASE OF CIT-DELHI CENTRAL-3 VS. MONIKUMAR SUBBA (2011) 10 TAXMANN.COM 195 ITAT(DEIHI)(FULL BENCH), IT IS HELD THAT IF RATEABLE VALUE UNDER MUN ICIPAL LAW DOES NOT REPRESENT CORRECT FAIR RENT THEN ASSESSING OFFICER CAN DETERM INED ANNUAL LETTING VALUE ON THE BASIS OF MATERIAL OR EVIDENCES ON RECORD. THE COMME RCIAL PROPERTY IS CAPABLE OF RENTING OUT. THE 15TH FLOOR HAS BEEN RENTED OUT @RS .77,75,567/- HENCE, SUCH ESTIMATION OF ALV @RS.77,75,567/- IS NOT AT ALL ON HIGHER SIDE OR UNREASONABLE. SUCH FINDING OF ASSESSING OFFICER GET SUPPORT FROM DECISION OF HON'BLE ITAT IN CASE OF EMTICI ENGINEERING LTD. VS. ACIT(1991) 58 TTJ 27 (AHMEDABAD)., ITO VS. CHEM MECH PVT. LTD.(2002) 83 ITD 427 (MUM.)(ITAT) AND SH RI BIPINBHAI VADILAL FAMILY TRUST NO.1 VS. CIT (1994) 208 ITR 1005(GUJ.). IT IS SEEN THAT SAME ISSUE ON SAME FACTS WAS THERE IN THE CASE OF APPELLANT FOR A.Y. 2 011-12 & A.Y. 2012-13 WHICH HAS BEEN DECIDED AGAINST THE ASSESSEE BY MY LD. PREDECE SSOR. HOWEVER, IN THE APPELLANT'S CASE FOR A.Y. 2013-14 THE LD. CLT(A)-7, MUMBAI DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT OBSERVING AS UNDER: 'I HAVE CONSIDERED THE APPELLANT'S SUBMISSION. ASSE SSING OFFICER IS DIRECTED TO COMPUTE THE ANNUAL VALUE OF THE PROPERTY ON MUNICIP AL RATEABLE VALUE. GROUND OF APPEAL IS ALLOWED SUBJECT TO ABOVE COMPUTATION.' IT CAN BE SEEN THAT THE ORDER OF CIT(A)-7, MUMBAI I N ASSESSEE CASE FOR A.Y. 2013-14 IS CRYPTIC AND NON-SPEAKING AND HENCE CANNOT BE GIV EN PRECEDENCE OVER REASONED AND SPEAKING ORDERS OF CIT(A)-4, MUMBAI FOR A.Y. 20 11-12 A.Y. 2012-13. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND DISCUSS IONS HEREIN ABOVE, THE CONTENTIONS AND SUBMISSIONS OF ASSESSEE ARE NOT FOU ND TO BE ACCEPTABLE AND ARE ACCORDINGLY REJECTED. THEREFORE, THE ESTIMATION OF ANNUAL LETTING VALUE OF COMMERCIAL PROPERTY AT RS.77,75,567/- IS SUSTAINED. ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 4 5. THE LD. A.R., AT THE OUTSET, POINTED OUT THAT TH E ISSUE IS SQUARELY COVERED IN ASSESSEES OWN CASE IN ITA NO.2 882/M/2017 A.Y. 2011-12 AND OTHERS VIDE ORDER DATED 12.10.2018 WHEREIN THE IDENTICAL ISSUE HAS BEEN DECIDED BY RESTORING T HE SAME TO THE FILE OF THE AO AFTER CONSIDERING THE RATIO LAID DOW N BY THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. TIP TOP TYPOGR APHY 48 TAXMAN 191 (BOM.). THE LD. A.R., THEREFORE, PRAYED THAT THE CURRENT YEAR MAY ALSO BE DECIDED IN THE SAME MANNER AND APPEAL OF THE ASSESSEE MAY KINDLY BE ALLOWED. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AUTHORITIES BELOW. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD AND ALSO THE IMPUGNED ORDER OF ITAT IN ITA NO.2882/M/2017 IN ASSESSEES OWN CASE FOR A.Y. 2011 -12 & ORS., WE OBSERVE THAT IDENTICAL ISSUE HAS BEEN DECI DED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THE OPERATIVE PART WHEREOF IS REPRODUCED AS UNDER: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE FLATS IN RESPECT OF WHICH THE ASSESSING OFFICER HAS DETERMIN ED THE ALV UNDER SECTION 23(1)(A) REMAINED VACANT DURING THE RELEVANT PREVIO US YEAR/ ASSESSMENT YEARS. THE ASSESSING OFFICER DETERMINED THE ALV ON THE BASIS O F COST OF THE PROPERTY SHOWN IN THE BALANCE-SHEET OF THE ASSESSEE. DURING ASSESSMEN T YEAR 2011-12 AND 2012-13, THE ASSESSING OFFICER TREATED THE 7% OF THE COST OF THE PROPERTY (7% OF RS. 9,15,26,740/-) AS DEEMED ALV AND AFTER GRANTING STA NDARD DEDUCTION UNDER SECTION 24(A) @ 30% WORKED OUT INCOME FROM HOUSE PROPERTY O F RS. 44,84,81 0/-. THE ID. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. 10. FOR ASSESSMENT YEAR 2013-14 THE ASSESSING OFFIC ER DETERMINED THE SIMILAR ALV. HOWEVER, THE ASSESSEE WAS ALLOWED THE DEDUCTION O F MUNICIPAL TAXES OF RS.7,58,806/-. ON APPEAL BEFORE THE ID. CIT(A), THE ASSESSMENT ORDER WAS SET-ASIDE AND THE ASSESSING OFFICER WAS DIRECTED TO ADOPT THE MUNICIPAL RATEABLE VALUE FOR COMPUTING THE INCOME FROM THE SAID FLAT/HOUSE PROPE RTY. ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 5 11. FOR APPRECIATION OF LAW, SECTION 23(1) OF THE A CT IS REPRODUCED BELOW: ANNUAL VALUE HOW DETERMINED. 23.(1) FOR THE PURPOSE OF SECTION 22, THE ANNUAL VA LUE OF ANY PROPERTY SHALL BE DEEMED TO BE (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 RECEIVE D OR RECEIVABLE; OR (C) WHERE THE PROPERTY OR ANY PAN OF THE PROPERTY I S LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR A ND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE: PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORITY IN RE SPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PRE VIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWN ER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THAT PREVIOUS YEAR IN WHIC H SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION.- FOR THE PURPOSES OF CLAUSE (B) OR CLA USE (C) OF THIS SUB-SECTION, THE AMOUNT OF ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES AS MAY BE MADE IN TH IS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CANNOT REALIZE. 12. BARE READING OF THE AFORESAID PROVISION REVEALS THAT WHERE ANY PART OF THE PROPERTY IS LEI OUT AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND DUE TO SUCH VACANCY RENT RECEIVED/RECEIVABLE BY THE OWNER IS LESS THAN THE ALV DETERMINED UNDER SECTION 23(1 )(A) IN THAT CASE THE ACTUAL RENT RECEIVED OR RECEIVABLE IS TO BE TREATED AS THE ALV. IN OUR VIEW THE WORD 'LET AND 'VACANT' ARE MUTUALLY EXCLUSIVE. WE MAY APPRECIATE IT FURTHER, T HE UNDERLYING PRINCIPLE OF THIS PROVISION HAS TO BE VIEWED WITH REGARD TO THE INTEN TION TOGETHER WITH EFFORTS PUT BY ASSESSEE IN LETTING OUT THE PROPERTY, ETC. AND THEN GROSS ANNUAL VALUE IS REQUIRED TO BE DETERMINED. IF THE ASSESSEE INTENDED TO LET THE PROPERTY AND TOOK APPROPRIATE EFFORTS IN LETTING THE PROPERTY BUT ULTIMATELY FAIL ED TO LET THE SAME, THE ACTUAL RENT RECEIVED FROM IT WILL HAVE TO BE CONSIDERED AS 'NIL ' BEING LESS THAN THE SUM REFERRED IN SECTION 23(L)(A) OF THE ACT. SIMILAR VIEW WAS TA KEN BY PUNE BENCH IN VIKAS KASHAV GARUD VS ITO (SUPRA).THE ID. AR OF THE ASSESSEE VEH EMENTLY ARGUED THAT THE ASSESSEE MADE EFFORTS TO LET OUT THE PROPERTY, BUT FACTS REMAIN THE SAME THAT ASSESSEE COULD NOT FIND SUITABLE TENANT. THE ASSESS EE HAS PLACED ON RECORD THE DOCUMENTARY EVIDENCES TO SHOW ITS BONAFIDIES ABOUT THE LETTING OF FLAT BY FILING CONFIRMATION OF BROKERS/REAL ESTATE CONSULTANT (PAG E NO. 53 TO 55 OF PB). IN APPEALS, THE QUESTION BEFORE US IS AS TO WHETHER TH E ALV DETERMINED BY ASSESSING OFFICER BY ADOPTING 7% OF COST OF ACQUISITION IS FA IR ENOUGH OR NOT. 13.THE HON'BLE BOMBAY HIGH COURT IN CASE OF CIT VS. TIP TOP TYPOGR APHY 48 TAXMANN.COM 191 (BOMBAY) HELD THAT IN ORDER TO DETERMINE ANNUAL VAL UE OF PROPERTY, MUNICIPAL RATEABLE VALUE MAY NOT BE BINDING ON ASSESSING OFFI CER BUT THAT IS ONLY IN CASES WHERE HE IS CONVINCED THAT INTEREST FREE SECURITY D EPOSIT AND MONTHLY ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 6 COMPENSATION DO NOT REFLECT PREVAILING RATE AND, IN SUCH A CASE, ASSESSING OFFICER CAN HIMSELF RESORT TO ENQUIRE ABOUT PREVAILING RATE IN LOCALITY. WHERE A PREMISES IS COVERED BY RENT CONTROL ACT, ASSESSING OFFICER MUST UNDERTAKE EXERCISE TO FIX RENT HIMSELF IN TERMS OF SAID ACT OR HAVE IT DETERMINED BY COURT OR TRIBUNAL AND UNTIL THEN HE IS NOT JUSTIFIED IN APPLYING ANY OTHER FORM ULA OR METHOD AND DETERMINE 'FAIR RENT' BY ABIDING WITH SAME. THE RELEVANT PART OF TH E JUDGMENT OF HON'BLE BOMBAY HIGH COURT IS EXTRACTED BELOW: 46. WE HAVE AND AFTER CAREFUL READING OF THE PROVIS ION IN QUESTION AND THE CONCLUSION OF THE FULL BENCH OF THE DELHI HIGH COUR T CONCLUDED THAT A DIFFERENT VIEW CANNOT BE TAKEN. WE RESPECTFULLY CON CUR WITH THE VIEW TAKEN IN THIS FULL BENCH DECISION OF THE DELHI HIGH COURT . 47. WE ARE OF THE VIEW THAT WHERE RENT CONTROL LEGI SLATION IS APPLICABLE AND AS IS NOW URGED THE TREND IN THE REAL ESTATE MARKET SO ALSO IN THE COMMERCIAL FIELD IS THAT CONSIDERING THE DIFFICULTI ES FACED IN EITHER RETRIEVING BACK IMMOVABLE PROPERTIES IN METRO CITIES AND TOWNS , SO ALSO THE TIME SPENT IN LITIGATION, IT IS EXPEDIENT TO EXECUTE A LEAVE A ND LICENSE AGREEMENTS. THESE ARE USUALLY FOR FIXED PERIODS AND RENEWABLE. IN SUC H CASES AS WELL, THE CONCEDED POSITION IS THAT THE 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 REFUND ABLE INTEREST FREE AND THE MONTHLY COMPENSATION SHOWS A TOTAL MISMATCH OR DOES NOT REFLECT THE PREVAILING RATE OR THE ATTEMPT IS TO DEFLATE OR INF LATE THE RENT BY SUCH METHODS, THEN, AS HELD BY THE DELHI HIGH COURT, THE ASSESSING OFFICER IS NOT PREVENTED FROM CARRYING OUT THE NECESSARY INVESTIGA TION AND ENQUIRY. HE MUST HAVE COGENT AND SATISFACTORY MATERIAL IN HIS P OSSESSION AND WHICH WILL INDICATE THAT THE PARTIES HAVE CONCEALED THE REAL P OSITION. HE MUST NOT MAKE A GUESS WORK OR ACT ON CONJECTURES AND SURMISES. TH ERE MUST BE DEFINITE AND POSITIVE MATERIAL TO INDICATE THAT THE PARTIES HAVE SUPPRESSED THE PREVAILING RATE. THEN, THE ENQUIRIES THAT THE ASSESSING OFFICE R CAN MAKE, WOULD BE FOR ASCERTAINING THE GOING RATE. HE CAN MA KE A COMPARATIVE STUDY AND MAKE A ANALYSIS. IN THAT REGARD, TRANSACTIONS OF ID ENTICAL OR SIMILAR NATURE CAN BE ASCERTAINED BY OBTAINING THE REQUISITE DETAI LS. HOWEVER, THERE ALSO THE ASSESSING OFFICER MUST SAFEGUARD AGAINST ADOPTI NG THE RALE STATED THEREIN STRAIGHTWAY. HE MUST FIND OUT AS 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 S ATISFY HIMSELF AS TO WHETHER THE RATE OBTAINED BY HIM FROM THE DEALS AND TRANSACTIONS AND DOCUMENTS IN RELATION THERETO CAN BE APPLIED OR WHE THER A DEPARTURE THEREFROM CAN BE MADE, FOR EXAMPLE, BECAUSE OF THE AREA, THE MEASUREMENT, THE LOCATION, THE USE TO WHICH THE PRO PERTY 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 AN D BENEFITS AN OFFICE OR A BLOCK ON THE UPPER FLOOR MAY FETCH HIGHER RETURNS O R VICE VERSA. THEREFORE, THERE IS NO MAGIC FORMULA AND EVERYTHING DEPENDS UP ON THE FACTS AND CIRCUMSTANCES IN EACH CASE. HOWEVER, WE EMPHASIZE THAT BEFORE THE ASSESSING OFFICER DETERMINES THE RATE BY THE ABOVE EXERCISE OR SIMILAR PERMISSIBLE PROCESS HE IS BOUND TO DISCLOSE THE MAT ERIAL IN HIS POSSESSION TO ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 7 THE PARTIES. HE MUST NOT PROCEED TO RELY UPON THE M ATERIAL IN HIS POSSESSION AND DISBELIEVE THE PARTIES. THE SATISFACTION OF THE ASSESSING OFFICER THAT THE BARGAIN REVEALS AN INFLATED OR DEFLATED RATE BASED ON FRAUD, EMERGENCY, RELATIONSHIP AND OTHER CONSIDERATIONS MAKES IT UNRE ASONABLE MUST PRECEDE THE UNDERTAKING OF THE ABOVE EXERCISE. AFTER THE A BOVE ASCERTAINMENT IS DONE BY THE OFFICER HE MUST, THEN, COMPLY WITH THE PRINCIPLES OF FAIRNESS AND JUSTICE AND MAKE THE DISCLOSURE TO THE ASSESSEE SO AS TO OBTAIN HIS VIEW. 48. WE ARE NOT IN AGREEMENT WITH SHRI CHHOTARAY THA T THE MUNICIPAL RATEABLE VALUE CANNOT BE ACCEPTED AS A BONA FIDE RE NTAL VALUE OF THE PROPERTY AND IT MUST BE DISCARDED STRAIGHTWAY IN AI L CASES. THERE CANNOT BE A BLANKET REJECTION OF THE SAME, IF THAT IS TAKEN T O BE A SAFE GUIDE, THEN, TO DISCARD IT THERE MUST BE COGENT AND RELIABLE MATERI AL. 49. WE ARE OF THE OPINION THAT MARKET RATE IN THE L OCALITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VALUE BUT IT IS ONLY WHEN THE ASSESSING OFFICER IS CONVINCED THAT THE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATION BY THE PARTIES IS DOUBTFUL THAT HE CA N 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 B UT THAT IS ONLY IN CASES OF AFORE-REFERRED NATURE. IT IS DEFINITELY A SAFE GUID E. 50. WE HAVE BROADLY AGREED WITH THE VIEW TAKEN BY T HE 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 IS TO BE UNDERTAKEN IN TERMS OF THE LAW LAID DOWN IN T HE FULL BENCH DECISION OF THE DELHI HIGH COURT. 51. WE QUITE SEE THE FORCE IN THE ARGUMENTS OF MS. VISSANJEE THAT ORDINARILY THE LICENSE FEE AGREED BETWEEN THE WILLING LICENSOR OR A WILLING LICENSEE UNINFLUENCED BY ANY EXTRANEOUS CIRCUMSTANCES WOULD AFFORD RELIABLE EVIDENCE OF WHAT THE LANDLORD MIGHT REASONABLY BE E XPECT TO GET FROM A HYPOTHETICAL TENANT. SHE HAS IN MAKING THIS SUBMISS ION, ANSWERED THE ISSUE AND SUMMED UP THE CONCLUSION AS WELL. THEN, IT IS B UT NATURAL AND LOGICAL THAT IN THE EVENT, THE TRANSACTION 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 F ROM RELIABLE SOURCES. THERE AS WELL, WE DO NOT SEE AS TO HOW WE CAN UPHOL D THE SUBMISSIONS OF MR. CHHOTARAY THAT THE NOTIONAL RENT ON THE SECURIT Y DEPOSIT CAN BE TAKEN INTO ACCOUNT AND CONSIDERATION FOR THE DETERMINATIO N. IF THE TRANSACTION ITSELF DOES NOT REFLECT ANY OF THE AFORE STATED ASP ECTS: THEN, MERELY BECAUSE A SECURITY DEPOSIT WHICH IS REFUNDABLE 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 ASSESSEE TILL THE DETERMINATION OR CONCLUSION OF THE TRANSACTION. THE ASSESSING OFFICER OUGHT TO BE AWARE OF SEVERAL ASPECTS AND MATTERS INVOLVE D IN SUCH TRANSACTIONS. IT IS NOT NECESSARY THAT IF THE LICENSE IS FOR THRE E YEARS THAT IT WILL OPERATIVE AND CONTINUING TILL THE END. THERE ARE TERMS AND CO NDITIONS ON WHICH THE LEAVE AND LICENSE AGREEMENT IS EXECUTED BY PARTIES. THESE TERMS AND CONDITIONS ARE WILLINGLY ACCEPTED. THEY ENABLE THE LICENSE TO BE DETERMINED ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 8 EVEN BEFORE THE STATED PERIOD EXPIRES. EQUALLY, THE LICENSEE CAN OPT OUT OF THE DEAL. A LEAVE AND LICENSE DOES NOT CREATE ANY I NTEREST IN THE PROPERTY. THEREFORE, IT IS NOT AS IF THE SECURITY DEPOSIT BEI NG MADE, IT WILL BE NECESSARILY REFUNDABLE AFTER THE THIRD YEA R AND NOT OTHERWISE. EVERYTHING DEPENDS UPON THE FACTS AND CIRCUMSTANCES 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, TH EREFORE, THIS MODE OF INDUCTING A 'THIRD PARTY' IN THE PREMISES IS ADOPTE D. THIS MAY NOT BE THE TREND TOMORROW, THEREFORE, WE DO NOT WISH TO CONCLU DE THE MATTER BY EVOLVING ANY RIGID TEST. 52. WE HAVE ALSO NOTED THE SUBMISSIONS OF SHRI AHUJ A. WE ARE OF THE OPINION THAT EVEN IN THE CASES AND MATTERS BROUGHT BY HIM T O OUR NOTICE, IT IS EVIDENT THAT THE ASSESSING OFFICER CANNOT BRUSH ASI DE THE RENT CONTROL 1 LEGISLATION, IN THE EVENT, IT IS APPLICABLE TO THE PREMISES IN QUESTION. THEN, THE ASSESSING OFFICER HAS TO UNDERTAKE THE EXERCISE CONTEMPLATED BY THE RENT CONTROL LEGISLATION FOR FIXATION OF STANDARD R ENT. THE ATTEMPT BY THE ASSESSING OFFICER TO OVERRIDE THE RENT CONTROL LEGI SLATION AND WHEN IT BALANCES THE RIGHTS BETWEEN THE PARTIES HAS RIGHTLY BEEN INTERFERED WITH IN THE GIVEN CASE BY THE APPELLATE AUTHORITY. THE ASSE SSING OFFICER EITHER MUST UNDERTAKE THE EXERCISE TO FIX THE STANDARD RENT HIM SELF AND IN TERMS OF THE MAHARASHTRA RENT CONTROL ACT, 1999 IF THE SAME IS A PPLICABLE OR LEAVE THE PARTIES TO HAVE IT DETERMINED BY THE COURT OR TRIBU NAL UNDER THAT ACT. UNTIL, THEN, HE MAY NOT BE JUSTIFIED IN APPLYING ANY OTHER FORMULA OR METHOD AND DETERMINE THE 'FAIR RENT' BY ABIDING WITH 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 DOCS NOT MEAN THAT ANY OTHER DETERMINATION AND CONTRARY THERETO CAN BE MADE BY THE ASSESSING OFFICER. ONCE AGAIN HA VING RESPECTFULLY CONCURRED WITH THE JUDGMENT OF THE FULL BENCH OF TH E DELHI HIGH COURT, WE NEED NOT SAY ANYTHING MORE ON THIS ISSUE. 53. THUS, APART FROM THE THREE ASPECTS NAMELY OF A MUNICIPAL VALUATION, OF OBTAINING INTEREST FREE SECURITY DEPOSIT AND THE PR OPERTIES BEING COVERED BY THE MAHARASHTRA RENT CONTROL ACT BUT NO STANDARD RE NT THEREUNDER IS FIXED, OUR ATTENTION HAS NOT BEEN INVITED TO ANY OTHER CAS E. SUFFICE IT TO HOLD THAT IN THOSE CASES AND TO WHICH OUR ATTENTION IS NOT IN VITED THE PRINCIPLES LAID DOWN IN THE DECISIONS OF THE HON'BLE SUPREME COURT AND REFERRED TO BY THE FULL BENCH OF THE DELHI HIGH COURT WOULD GOVERN THE ENQUIRY. 54. AS A RESULT OF THE ABOVE DISCUSSION, WE ARC OF THE OPINION THAT WHEREVER THE ASSESSING OFFICER HAS NOT ADHERED TO THE ABOVE PRINCIPLES, AND HIS FINDING AND CONCLUSION HAS BEEN INTERFERED WITH, BY THE HIGHER APPELLATE AUTHORITIES, THE REVENUE CANNOT BRING THE MATTER TO THIS COURT AS NO SUBSTANTIAL QUESTION OF LAW CAN BE ARISING FOR DETE RMINATION AND CONSIDERATION OF THIS COURT. THEN, THE FINDINGS BY THE LAST FACT FINDING AUTHORITY NAMELY THE TRIBUNAL AND AGAINST THE REVE NUE SHALL HAVE TO BE UPHELD AS THEY ARE CONSISTENT WITH THE FACTS AND CI RCUMSTANCES BROUGHT ITA NO.5183/M/2018 M/S. FILMKRAFT PRODUCTIONS (I) P. LTD. 9 BEFORE. IF THEY ARE NOT VITIATED BY ANY PERVERSITY OR ERROR OF LAW APPARENT ON THE FACE OF THE RECORD, THE APPEALS OF THE REVENUE CANNOT BE ENTERTAINED. THEY HAVE TO BE ACCORDINGLY DISMISSED. 14. CONSIDERING THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CASE OF TIP TOP TYPOGRAPHY ALL THE APPEALS ARE RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO DETERMINE THE ALV AFTER CONSIDERING THE RATIO LAID DOWN BY HON'BLE HIGH COURT. NEEDLESS TO SAY THAT ASSESSING OFFICER SHALL GRANT FAIR AND PROPER OPPORTUNITY BEFORE PASSING THE ORDER IN ACCORDANCE WITH LAW. IN THE RESULT, APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2011-12 & 2012-13 ARE ALLOWED F OR STATISTICAL PURPOSE. 8. SINCE THE FACTS ARE MATERIALLY SAME IN THE PRESE NT CASE BEFORE US VIS--VIS THE FACTS OF THE CASE IN THE AB OVE DECISION, WE ,THEREFORE RESPECTFULLY FOLLOWING THE SAME, RESTORE THE ISSUE BACK TO THE FILE OF THE AO TO DECIDE THE ALV OF THE PROPE RTY AFTER FOLLOWING THE RATIO LAID DOWN BY HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS. TIP TOP TYPOGRAPHY (SUPRA) AFTE R AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.09.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30.09.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.