If AO finds actual rent received is less than the fair market rent because of the abnormally high interest-free security deposit, he can adjust it

By TG Team Income Tax Judiciary May 12, 2011

TaxGuru Citation: 2011 taxguru.in 393
Case Name: Tivoli Investment and Trading Co Vs. ACIT (ITAT Mumbai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 1992- 93 and 1993- 94)
Courts: ITAT Mumbai

Tivoli Investment and Trading Co Vs. ACIT (ITAT Mumbai)- the municipal value or standard rent is not binding on the AO but is a guiding factor for determining the reasonable rent expected to be fetched by the property. If the AO finds that the actual rent received is less than the fair market rent because of the abnormally high interest-free security deposit, he can undertake necessary exercise in that behalf. However, the notional interest on interest free security cannot be taken as determinative factor to arrive at fair rent.

IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES, ‘F’, MUMBAI

BEFORE SHRI S V MEHROTRA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER

ITA No. 2808 and 2809/Mum/1 996
(Assessment years 1992- 93 and 1993- 94)

Tivoli Investment and Trading Co.,

Private Limited

7, Champaklal Udyog Bhavan,

Sion (E), Bombay-400022,

GIR No.Cir 4(2)/T-4 Appellant

Asstt.Commissioner of Income Tax

Circle 4(2),

Aayakar Bhavan, M K Road,

Mumbai-400020 …… Respondent

Appellant by : Shri S E Dastur, Sr. Advocate and Sh. Nitesh Joshi, Advocate

Respondent by : Smt.Ashima Gupta

O R D E R

PER VIJAY PAL RAO,JM

These appeals by the assessee are directed against two separate orders of the CIT(A) both dated 19.12.1995 for the assessment years 1992-93 and 1993-94.