August 2022
S. 23 – Where House Property was let out for monthly rentals along with a refundable security deposit, and the assessing officer takes a view that such a deposit is in lieu of reduced rent, no notional addition could be made to rental income where the assessee had furnished evidence to show that municipal value was much less than rental income.
24 MLL Logistics (P.) Ltd. vs. Assistant Commissioner of Income-tax
[2022] 93 ITR(T) 513 (Mumbai -Trib.)
ITA No.: 164 (MUM) of 2019
A.Y.: 2013-14; Date of order: 18th November, 2021
S. 23 - Where House Property was let out for monthly rentals along with a refundable security deposit, and the assessing officer takes a view that such a deposit is in lieu of reduced rent, no notional addition could be made to rental income where the assessee had furnished evidence to show that municipal value was much less than rental income.
FACTSThe assessee company had declared income from house property. On perusal of the rent agreement, it was noticed that the rentals were Rs. 50,000 p.m. Further, the licensee deposited a refundable deposit of Rs. 5 crore with the assessee. Based on the same, the assessing officer (AO) took a view that the refundable deposit had been given in lieu of reduced rent of the house property. The AO questioned the rationale of the refundable deposit and made a notional addition of 10 % of the refundable deposit to the rental income.
Aggrieved, the assessee filed an appeal before the CIT(A), however, the appeal of the assessee was dismissed. Aggrieved, the assessee filed further appeal before the ITAT.
HELDThe assessee submitted that he has actually received Rs. 50,000 p.m. towards rent as per the rent agreement. Further, the assessee stated that even though he has received interest fr
