M.K. Chaturvedi, V.P. - (1.) BY this Miscellaneous Petition, the assessee claims that mistakes have crept into the order of the Tribunal in ITA 3269/ Bom/1993 and 3009/Bom./1994, dated 30-6-2003 and requests that the mistakes may appropriately be rectified either by recalling the order or otherwise.
(2.) We have heard the rival submissions in the light of material placed before us and precedents relied upon. We have also considered the written submissinos. The question posed before the Tribunal was whether the revenue authorities were correct in ascertaining the ALV for the assessment years 1990-91 and 1991-92. If there is no rent paid and in lieu of rent excessive deposit is being made, whether usufructus of the said deposit can be construed to be rent. After considering the factual details, Tribunal treated the usufructus of the deposit as rent for the user of the property. Tribunal considered the scheme of section 23 of the Act. It is imperative on the part of the assessing officer to first compute the value of the property as per section 23(1)(a) of the Act, which prescribes that ALV shall be deemed to be the sum for which the property might reasonably be expected to let from year to year, because clause (b) of section 23(1) stipulates that where the annual rent received or receivable is in excess of the sum referred to in clause (a), the actual sum is to be taken into consideration, meaning thereby that higher of the two value is to be adopted. As such, even for arriving at the value under clause (b), it is mandatory to make computation under clause (a) to find out the sum for which the property might reasonably be expected to let from year to year. A categorical finding is given by the Tribunal that no addition is possible with reference to the notional interest on interest free deposits. When the ALV is determined under clause (a) of section 23(1) with reference to the fair rent, then to such value no further addition can be made. The fair rent takes into considering everything. The notional interest on such deposit is not actual rent received or receivable. Under clause (b) of section 23(1) only the actual rent received or receivable can be taken into consideration and not any notional addition.
(3.) THE term actual rent was used in conformity with the decision of the Hon'ble Bombay High Court in the case of CIT v. J.K Investors (Bombay) Ltd. (2001) 248 ITR 723 (Bom), wherein it was held that the notional interest would not form part of actual rent received or receivable under section 23(1)(b) of the Act. In view of the decision of the jurisdictional High Court, enquiry as to the actual rent was made. While making such enquiry, the statement of Shri S. Vaidyanathan, Asstt. Vice President and Head of Services Administration was examined. On the basis of the reply given by Shri S. Vaidyanathan vide question No. 8 that the interest free security deposit of Rs. 1,54,00,000 was given to the company as a part of compensation towards occupying the premises at Sakhar Bhavan, the Tribunal concluded that the deposit amount was the consideration for the user of the property. As such, the usuf ructus can be considered as the licence fee.;