SMT. JAISHRI CHANDEL,MUMBAI vs. ITO 19 (2)(1), MUMBAI

Shri Vimal Punmiya appearing on behalf of the assessee submitted that the assessee in return of income has offered Income from House Property Rs. 9,00,000/-. During the period relevant to AY under appeal, the assessee had rented out her property located at 41A, Miramar CHS, 3 Nepeansea Road, Mumbai. A leave and license agreement dated 10.04.2013 was executed between the assessee and Consulate General of the Islamic Republic of Iran. The said agreement is at page 20 to 33 of Paper Book (PB). The ld. AR referred to Clause-7 of the agreement to show that the property was let out on monthly rent of Rs. 1,25,000/-. Municipal taxes and society charges were to be paid by the assessee. The ld. AR pointed that the AO made addition in respect of the house property by taking into consideration sent received in previous AYs i.e. AY 2012-13 & 2013-14. In immediate proceeding AYs the property was let out on monthly rent of Rs. 2,50,000/-. The ld. AR pointed that in preceding AYs, the assessee had let out property to her spouse at an inflated rent. The actual rental value of the property was far less. The ld. AR asserted that the AO instead of placing reliance on the rent received in the preceding AYs, should have determined Fair Rental Value after making enquiries from the local market or the society or after considering the municipal value. The ld. AR referred to letter dated 05.09.2019 from the society (at page 34 of Paper Book) indicating that the capital value of the flat for the year 2013-14 is Rs. 1,93,40,510/- and the property tax paid for the flat in 2013-14 is Rs. 7,736/- p.a. The ld. AR submitted that the issue can be restored back to the file of AO for fresh determination of Fair Market Value (FMV) for letting out the property.

On the contrary, Shri Sushil Kumar Mishra representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. DR submitted that in preceding AYs, the assessee had rented the property on monthly rent of Rs. 2,50,000/-, it is highly improbable that the rental value of the property in subsequent AY is half the value.

Both side heard, orders of authorities below examined. The primary issue raised by the assessee in appeal is against determination of rental value of property located at 41A, Miramar CHS, 3 Nepeansea Road, Mumbai. The assessee has offered to tax actual rent received i.e. Rs. 1,25,000/-. To substantiate rent received, the assessee has placed on record leave and license agreement entered into with Consulate General of the Islamic Republic of Iran. A perusal of the said agreement reveals that the monthly rent has been mutually fixed at Rs. 1,25,000/- p.m. for a period of 24 months starting from April 2013. The AO has brushed aside leave and license agreement which was in force during the relevant period and has given more credence to the agreement in preceding AYs. As per provisions of section 23 of the Act, the AO was required to determine FMV, if in his opinion, the actual rent received was less than the FMV. Ostensibly, no enquiries were conducted by the AO for determining FMV and no reference was made to Municipal records. I am of considered view that determination of rental value by the AO in the present case is not in accordance with the provisions envisaged under the Act. The CIT(A) has also erred in upholding the same without giving due consideration to the factors necessary for determination of FMV. The findings of the CIT(A) on this issue are set-aside. The issue is restored back to the file of AO for आअसं. 5700/मुं/2019 (िन.व.2014-15) (A.Y.2014-15)

determination of FMV of the property, in accordance with law. Consequently, ground no. 1 & 2 of the appeal are allowed for statistical purpose.

There is no ground no.3 in the grounds of appeal.

In the result, appeal of assessee is partly allowed for statistical purpose in the terms aforesaid.