Smt Ratnavati Venturupalli, Secunderabad V. DCIT, Hyderabad

ITA 916/HYD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5953 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Keywords: Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEM BER AND SHRI AKBER BASHA, ACCOUNTANT MEMB ER ITA NO.916/HYD/2010 : ASSESSMENT Y EAR 2006-07 SMT. RATNAVATI VENTURUPALLI, HYDERABAD. ( PAN- ABAPV 5915 R ) V/S DY. COMMISSIONER OF INCOME- TAX, CIRCLE 3(3), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.RATNAKAR RESPONDENT BY : SHRI K.E.SUNIL BABU O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORD ER OF THE CIT(A)-IV, HYDERABAD DATED 31.3.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPEAL READ AS FOLLOWS- '(I) THE ORDER OF THE LEARNED COMMISSIONER OF INCO ME- TAX(APPEALS) IV IS CONTRARY TO LAW AND FACTS. (II) THE APPELLANT CONTENDS THAT THE LEARNED COMMISSION ER OF INCOME-TAX(APPEALS) IV ERRED IN CONFIRMING THE ADDITION OF RS.1,20,000 M ADE. IT IS MERE SECURITY DEPOSIT AS PER AGREEMENT AND BOOKS OF ACCOUNTS MAINTAINED QUITE FOR SOME TIME. (III) WITHOUT PREJUDICE, THE APPELLANT CONTENDS THAT THE ESTIMATION OF LEASE RENT AT RS.2,32,500 ON THE GROU ND THAT THE INTEREST FREE ADVANCE TAKEN FROM THE TENAN T HAS HAD AN INFLUENCE ON FIXING OVER THE ANNUAL LETTING VALUE IS MERELY AN IMAGINATION AND NOT SUPPORTED BY FACTS. MORESO, THE ASSESSING OFFICER HAD NOT MADE OUT ANY ITA.NO.916/HYD/2010 SMT. RATNAVATI VENTURUPALLI, HYDERABAD. 2 COMPARABLE CASES AS TO THE FAIR RENTAL VALUE OF THE PROPERTY TO REJECT THE VALUE ALREADY ADMITTED BY TH E ASSESSEE IN THE RETURN NOR AFFORDED AN OPPORTUNITY TO THE ASSESSEE BEFORE MAKING SUCH ADDITION. (IV) IN VIEW OF THE FATS AND GROUNDS MENTIONED ABOVE, TH E APPELLANT REQUESTS TO DELETE THE ENTIRE ADDITION.' 4. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES, SUBMI TTED THAT NOTIONAL INTEREST ON THE SECURITY DEPOSIT TAKEN BY THE ASSESSEE FROM THE LESSEE CANNOT BE TAKEN INTO ACCOUNT FOR DETERMINING THE ANNUAL RENTAL VALUE OF THE PROPERTY. HE STRONGLY RELIED ON T HE DECISIONS OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V/S. HEMRAJ MAHABIR PRASAD LTD. (279 ITR522) AND OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V/S. M. RATANCHAND CHORDIA(228 ITR 626) 3. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O THER HAND, STRONGLY RELYING ON THE ORDERS OF THE ASSESSING OFFICER AN D THE CIT(A) AND SUBMITTED THAT THE NOTIONAL INTEREST ON THE HEFT Y SECURITY DEPOSIT TAKEN BY THE ASSESSEE FROM THE LESSEE, WHILE LEASING OUT THE PROPERTY IN QUESTION, HAS TO BE TAKEN INTO ACCOUNT WHILE DETERMI NING THE ANNUAL RENTAL VALUE OF THE PROPERTY FOR THE PURPOSES OF ASSESSI NG THE INCOME FROM HOUSE PROPERTY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES, AND OTHER MATERIAL A VAILABLE ON RECORD, INCLUDING THE CASE-LAW RELIED UPON BY THE LEARNED COUNSE L FOR THE ASSESSEE. THE ONLY POINT IN DISPUTE INVOLVED IN THE GRO UNDS OF THIS APPEAL IS WITH REGARD TO DETERMINATION OF ANNUAL LET TING VALUE OF THE PROPERTY FOR THE PURPOSES OF ASSESSING THE INCOME FROM HO USE ITA.NO.916/HYD/2010 SMT. RATNAVATI VENTURUPALLI, HYDERABAD. 3 PROPERTY. THE SPECIFIC QUESTION THAT ARISES FOR CONSIDERAT ION IS WHETHER THE NOTIONAL INTEREST ON HEFTY SECURITY DEPOSIT TAKEN B Y THE ASSESSEE FROM THE LESSEE OF THE PROPERTY WHILE LEASING OUT THE PROPERTY HAS TO BE INCLUDED IN THE ANNUAL LETTING VALUE DETERMINED F OR THE PURPOSES OF ARRIVING AT THE INCOME FROM HOUSE PROPERTY. WE FIND THAT THE DECISIONS OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V/S. HEM RAJ MAHABIR PRASAD LTD. (SUPRA) AND OF THE HON'BLE MADRAS HIGH COU RT IN THE CASE OF CIT V/S. M.RATANCHAND CHORDIA (SUPRA), WHEREIN IT HAS BEEN HELD THAT IT IS ONLY THE ACTUAL RENT RECEIVED WHICH HAS TO B E TAKEN INTO ACCOUNT FOR DETERMINING THE ANNUAL VALUE AND NOT ANY NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT, LOAN ETC., SQUARELY CO VER THE ISSUE INVOLVED IN THIS APPEAL IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE. IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE SET ASIDE THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES ON THIS ISSU E AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE INCOME FROM PROPERTY, WITHOUT TAKING INTO ACCOUNT ANY NOTIONAL INTEREST ON SECURITY DE POSIT RECEIVED BY THE ASSESSEE FROM THE LESSEE, WHILE LEASING OUT THE PRO PERTY. ACCORDINGLY GROUNDS OF THE ASSESSEE IN THIS APPEAL ARE ALL OWED. 6. IN THE RESULT, ASSESSEE'S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29.12.2010 SD/- SD/- (N.R.S.GANESAN) (AKBER BASHA) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 29TH DECEMBER, 2010 ITA.NO.916/HYD/2010 SMT. RATNAVATI VENTURUPALLI, HYDERABAD. 4 COPY FORWARDED TO: 1. SMT. RATNAVATI VENTURUPALLI, C/O. M/S. SESHACHALAM & CO., CHARTERED ACCOUNTANTS, SP ROAD, SECUNDERABAD 500 003. 2. DY. COMMISSIONER OF INCOME-TAX, CIRCLE 3(3), HYDERAB AD 3. CIT(A) IV HYDERABAD 4. COMMISSIONER OF INCOME-TAX-III, HYDERABAD. 5. THE D.R., ITAT, HYDERABAD. B.V.S.