- (1.) THIS appeal by the assessee is directed against the order passed by the learned DCIT (Appeals) for the assessment year 1989-90.
(2.) The first grievance of the assessee is that the DC (Appeals) has erred in upholding the action of the Assessing Officer assessing the annual letting value of the house at Rs. 87,960 including the disputed rent of Rs. 38,295 regarding which the matter was sub judice before the Court. Alternatively, the assessee has also challenged the finding given by the DC (Appeals) stating that he has erred in not accepting the claim of the appellant for exclusion/deduction of Rs. 38,295 for the purpose of determining the property income. The facts relating to the aforesaid case are that the assessee let out the house property at Vasant Vihar Moradabad to the Food Corporation of India on monthly rent of Rs. 3,275. Subsequently, this rent was enhanced to Rs. 4,930.75 per month which remained in force till 31st July, 1984 on which date the lease expired. The assessee on 15-7-1984 had sent a notice to the FCI for vacating the said property on expiry of the lease. The Manager, FCI had replied by letter dated 25-7-1984 and assured the assessee to vacate the said house as soon as alternative accommodation was available to it. FCI also offered to accept the fresh terms and conditions for rental, if the assessee so desired. The assessee, thereafter, vide letter dated 28th August, 1984 informed the FCI that he was not willing to renew the lease. He further made it clear that, in case the FCI could not vacate the building immediately on expiry of the lease, it would have to pay monthly rent of Rs. 7,280 as a temporary arrangement besides the payment of house tax, water tax and electricity dues. The Assessing Officer and the DCIT (Appeals) have observed that the above offer was apparently accepted by the FCI and the assessee thereafter started submitting the bills at the rate of Rs. 7,280 per month. However, the FCI continued to make the payment at the lesser amount which was earlier being paid by it. This lesser payment was received by the assessee under protect. The assessee subsequently served notice on the FCI demanding the amounts due as mentioned in the bill and requested the FCI to vacate the premises. The FCI did not act on the aforesaid notice and, therefore, the assessee filed suit for recovery before the Third Additional District Judge, Moradabad. The issue was decided in favour of the assessee vide Court's order dated 24-5-1990. Subsequently, the FCI obtained stay against the said order from the Hon'ble Allahabad High Court. However, as on the date of hearing of this appeal before the DCIT (Appeals), the stay had been vacated and the issue stood finally decided in favour of the assessee. The assessee received the entire amount of arrears of rent and other dues in the period relevant to the assessment year 1993-94. The amount of arrears received by the assessee pertaining to assessment years 1985-86 to 1992-93 was shown as income in the statement of income filed for assessment year 1993-94.
(3.) THE Assessing Officer observed that since the assessee has shown the increased amount of rent as having already accrued in the statement of affairs, the ALV will have to be determined by taking into consideration the enhanced rent of Rs. 7,280 per month. THE assessee is also not entitled to deduction in respect of the disputed rent under section 24(1)(x) of the IT Act, 1961 read with rule 4 of the Income-tax Rules as the various conditions prescribed under rule 4 are not satisfied in the present case. He, therefore, determined the ALV of the said house property at Rs. 87,960.;