[2019] 103 taxmann.com 190 (Bombay)

IT: Where assessee let out shops in one building to various tenants and one of said shop was illegally sublet to ‘P’ bank, in view of fact that all other tenants were protected under Delhi Rent Control Act, order passed by Rent Control Tribunal in eviction proceedings directing illegal tenant to deposit certain compensation on monthly basis in Court, could not form basis to make addition to assessee’s rental income in respect of other tenants as well

Section 23 of the Income-tax Act, 1961 – Income from house property – Annual value (Standard rent) – Assessment years 2003-04 to 2006-07 – Assessee an owner of numerous shops in one building, let out those shops to persons who were tenants protected under Delhi Rent Control Act – One of its shops/premises which was given on rent to one ‘H’ (a protected tenant), had been illegally sublet to ‘P’ Bank – Therefore, proceedings were initiated by assessee for eviction of ‘P’ Bank, as a trespasser – In eviction proceedings Rent Control Tribunal directed ‘P’ Bank to deposit Rs. 1.42 lakhs per month in Court – In course of assessment, Assessing Officer took said amount as yardstick of rent which would be obtained even in respect of other premises/shops owned by assessee even when they were occupied by protected tenant under Rent Control Act – Thus, Assessing Officer made addition to assessee’s rental income – Tribunal, however held that all other shops/premises of which rent was sought to be enhanced, were covered by Rent Control Act and, thus, rent could not be in excess of standard rent determined under Rent Control Act – Tribunal thus deleted addition made by Assessing Officer – Whether since no order had been passed by Rent Control Tribunal fixing higher rent in respect of other premises nor had revenue brought on record any evidence of other premises being let out by assessee at more than declared rent, impugned order passed by Tribunal did not require any interference – Held, yes

Seth Properties