INCOME TAX ACT, 1961

Section 23(1)(a)

Income from house property - Determination of gross annual value - Rent realizable by assessee - AO took ad hoc rate of 7% of value of property

AO made addition while calculating income from house property on the ground that assessee had failed to furnish any detail in this regard and as such, 10% of the cost of assets was being deemed to be the annual value of the property under section 23(1). CIT(A) by way of filing the appeals who had partly allowed the appeal. Held: Perusal of the assessment order goes to prove that AO without bringing on record any evidence of the quantum of rent realizable by assessee qua the property in question proceeded to take ad hoc rate of 7% of the value of property in question to be its annual value. Gross annual value computed by AO by ignoring the provisions contained under section 23(1)(a) was not sustainable in eyes of law. CIT(A) reached the conclusion on facts that though assessee was granted permission to occupy the building w.e.f. 30-3-2013 but he had obtained the occupation certificate from State Metropolitan Region Development Authority on 14-12-2012. Therefore, appeal filed by the Revenue was dismissed.

Followed:Sunil Kumar Saha v. ITO (2015) 64 Taxmann.com 109 (Kol) : 2015 TaxPub(DT) 5380 (Kol-Trib) and Universal Precision Screws v. Asstt. CIT (2016) 69 Taxmann.com 368 (Del) : 2015 TaxPub(DT) 640 (Del-Trib).