The Commissioner Of Income-Tax, Mumbai City V, Mumbai Appellant v. M/S.priceless Properties And Development Pvt. Ltd. Respondent

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORIGINAL SIDE INCOME TAX APPEAL NO. 80 OF 2002 The Commissioner of Income-tax,Mumbai City V, MumbaiAppellant vs. M/s.Priceless Properties andDevelopment Pvt. Ltd.Respondent Mr. K. R. Chaudhary i/b. Mr. H. D. Rathod for the appellant. Mr.Sudhir Mehta i/b. M/s. S. P. Mehta & Co. for the respondent. J. P. DEVADHAR,JJ. P.C.: Date :9[th] August 2004 Heard the learned counsel for the revenue. 2.The Tribunal in paragraph 4 of the impugned order observed thus: “4.We have carefully considered the rival submissions.Under the provisions of Income tax Act, “Income fromhouse property” is a tax on the annual value of propertyafter allowing such deduction as permissible under various provisions of the Act. The provisions of section 23 laydown as to how this annual value should be determined,.There are two limbs of this provision. Section 23(1)(a) laysdown that the annual value of any property should bedeemed to be the sum for which the property mightreasonably be expected to let from year to year. Provisionsof section 23(1)(b) provide that where a property is let andthe annual rent received or receivable exceeds the sum forwhich the property might reasonably be expected to let fromyear to year u/s. 23(1)(a) then annual value should bedetermined at the same amount as the annual rent receivedor receivable. In so far as provisions of section 23 (1)(a) areconcerned, Hon'ble Supreme Court have in the case ofSheila Kaushish v. CIT (131 ITR 435)(SC) held that thesum for which the property might reasonably be expected tolet from year to year cannot exceed the standard rentprescribed under the provisions of the Rent Control Act. Inthe instant case, according to the assessee, municipalrateable value was only Rs.9,332/- and, therefore, thestandard rent could not exceed the annual rent received orreceivable by the assessee. In this view of the mater, theannual of the property in this case has to be determinedunder the provisions of section 23(1)(b) only. As far as theprovisions of sub-section (b) are concerned, the judgment ofHon'ble Bombay High Court in the case of J.K. Investors(Bombay) Ltd. (supra) is quite clear that no amountattributable to interest-free deposit received by the landlordcan be added to the amount of rent actually received by thelandlord. Thus looked from any angle, the order of theassessing officer officer as originally made cannot befaulted. In this view of the matter the impugned order u/s.263 has to be considered as uncalled for. The same isaccordingly cancelled. However, the assessing officerwould be at liberty to find out standard rent in respect of theproperty in question for the assessment year underconsideration and if it is found that the same exceeds themonthly rent of Rs. 10,000/-, the assessing officer would beat further liberty to substitute the amount of standard rent asannual value of the property.” 3.The order of the Tribunal cannot be said to surfer from any error oflaw. 4.No substantial question of law arises. 5.Appeal is dismissed in limine. (R. M. LODHA, J.) (J. P. DEVADHAR,J.)