HEBAL CONSTRUCTIONS PVT. LTD.,CHENNAI vs. DCIT COMPANY CIRCLE II(2), CHENNAI

This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-6, Chennai in dated 30.11.2017 for the assessment year 2011-12.

Mr.V.S.Jayakumar represented on behalf of the Assessee and Mr.Balina Suresh Babu represented on behalf of the Revenue.

The appeal filed by the assessee is delayed by 121 days for which the assessee has filed an affidavit for condonation of delay. The delay is on account of misplace of the order of the CIT(Appeals) by one of the employees, who was subsequently removed from assessee-company. It was a prayer that the delay may be condoned. The ld.D.R did not raise serious objections. We have considered the submissions of both sides. As it is noticed that the assessee has explained the reasons for the delay and the same is found to be reasonable and beyond the control of assessee, in the interest of natural justice, the delay in filing the appeal is condoned and the appeal is disposed of on merit.

It was submitted by ld.A.R that the only issue in this appeal was against the action of the Ld.CIT(A) upholding the determination of the rental income as made by ld. Assessing Officer by applying provisions of the section 23(1)(a) of the Act. It was a submission that the business of the assessee was construction and letting out properties. It was a submission that the assessee had constructed a five storey building. It was a submission that the property of the assessee was at Anna Salai, Chennai and assessee had during relevant assessment year, rented out the second floor of the building; the basement was used for car-parking and Third and Fourth floor was vacant. It was a submission that the first floor was being used by the assessee. The ld. Assessing Officer had deputed his inspector for verification and determining the fair rental value. It was a submission that the fair rental value was determined by the Inspector on the basis of local enquiry and ld. Assessing Officer completed the assessment by applying the provisions of the section 23(1)(a) of the Act on the basis of Inspection report by the Inspector of the Department and assessed a notional rental income from the said property at `56 lakhs in respect of all floors. It was a submission that the determination of annual letting value as done by the ld. Assessing Officer was erroneous. It was a submission that if at all annual letting value in respect of the said property was to be done as part of the building was vacant, the same was to be determined by applying the provisions of the section 23(1)(c) of the Act and the annual letting value was to be determined by applying the principle laid down by the Hon’ble Supreme Court in the case of Mrs.Shiela Kaushish Vs. CIT in (1981) 24 CTR 351(SC) wherein it has been held that the standard rent determinable under the provisions of the Rent Act, would be the annual value. It was a submission that the valuation done by the ld. Assessing Officer may be deleted.

In reply, ld.D.R vehemently supported the orders of the ld. Assessing Officer and the Ld.CIT(A).

In the result, the appeal of the assessee is partly allowed for statistical purposes.