Delhi High Court
Cit vs Wellworth Agencies (P.) Ltd. on 10 August, 2007
Author: V Gupta
Bench: M B Lokur, V Gupta
JUDGMENT
V.B. Gupta, J.
1. If this common judgment three appeals filed by the revenue bearing Nos. 1093,1099 and 1464/2006 arising out of the orders dated 13-1-2006 and 3-3-2006, respectively passed by the Income Tax Appellate Tribunal (for short as 'Tribunal') in ITA Nos. 2336/Delhi/2001, 1502 and 587/Delhi/2003 for the assessment years 1997-98, 1998-99 and 1999-2000 are being disposed of, since cornmon question of f act and law is involved in these three appeals.
2. Brief of acts are that the assessed had declared rental income from Four Storey Building at 39, Community Centre, Zamrudpur, Kailash Colony, New Delhi let out to Group concerns. During the course of assessment proceedings, the assessing officer found that the assessed had not declared rent for basement though the same were occupied by other concerns and as such he computed the Annual Letting Value on the basis of rent declared for First Floor and determined income for house property as against the annual letting value declared for by the assessed.
3. Aggrieved by the order of the assessing officer, the assessed filed an appeal before the Commissioner (Appeals) ('Commissioner (Appeals)' for brevity). The Commissioner (Appeals) directed the assessing officer to accept the Annual Letting Value as declared by the assessed on the ground that no notional value can be taken other than what is envisaged under Section 23( 1) of the Income Tax Act, 1961 (for short as 'Act'). Since the assessed had declared actual rent received, which was more than the municipal value, the same was to be accepted.
4. The revenue challenged the order of Commissioner (Appeals) before the Tribunal and the Tribunal on appeal vide impugned order deleted the additions made by the assessing officer in Annual Letting Value on the ground that the Assessing Officer had not brought on record any evidence to show that the actual rent declared by the assessed was not the real rent received by it or that the assessed was receiving any rent for the basement and the ground floor which according to the assessed was not let out by it and was in its possession.
5. It has been contended by learned Counsel for the revenue that, the order passed by the Tribunal is not sustainable under the law since the assessing officer had clearly brought on record the facts that the ground floor and basement were in occupation of other concerns and were not self-occupied as claimed by the assessed and though the assessed was the owner of these floors, since the same were not occupied by it for the purposes of any business, the profits of which were chargeable to Income-tax and therefore the assessing officer was justified in determining Annual Letting Value at the sum for which the property might reasonably be expected to let from year to year.
6. On the other hand, it has been contended by learned Counsel for the assessed that the property owned by the assessed had always been used by it and its sister concerns and after the amendment to the provisions of Section 23 of the Act from 1976, the actual rent, if it is in excess of the fair rent, has to be taken as the annual value.
7. Relevant provision of Section 23 of the Act as it was then read as under:
Annual value how determined.(1) For the purposes of Section 22, the annual value 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 is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in Clause (a), the amount so received or receivable:
Provided that where the property is in the occupation of a tenant, the taxes levied by any local authority in respect of the property shall, to the extent such taxes are borne by the owner, be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him.
8. The undisputed facts in the present case are that the assessed has taken the actual rent received as the basis for computing income from house property, which is in accordance with law as per Section 23(1) of the Act.
9. As per findings of the Tribunal, the assessing officer could not bring on record any other evidence to show that the actual rent shown by the assessed was not the real rent received by the assessed or the assessed was receiving any rent for the basement and the ground floor, which according to the assessed, was not let out by it and was in its possession, so the assessing officer was not justified in. taking the annual value for the ground floor and the basement under occupation of the assessed for computing the income from house property.
10. Since the assessed has taken the actual rent received as the basis for computing income from house property, which is as per Section 23 of the Act, we find no ground to differ with the reasoning given by the Tribunal that the assessing officer was not justified in taking the annual value for the ground floor and the basement under occupation of the assessed for computing the income from house property.
11. Thus, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law, to f all within the limited purview of Section 260A of the Act, which is confined to entertaining only such appeal against the order which involves a substantial question of law.
12. Accordingly, all the present appeals filed by the revenue are dismissed.
