For properties subject to Rent Control legislation, the Assessing Officer cannot ignore the statutory framework to determine Annual Letting Value. The officer must either determine the standard rent per the applicable Rent Control Act or permit the parties to have it adjudicated by the competent authority under said Act.

O R D E R

PER SANDEEP SINGH KARHAIL, J.M.

The assessee has filed the present appeal against the impugned order dated 19.08.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional / Joint Commissioner of Income Tax (Appeals)-1, Vadodara, [“learned Addl./Joint CIT(A)”], for the assessment year 2014-15.

2. In this appeal, the assesse has raised the following grounds:

“1. On the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) (CIT(A)) has erred in confirming the action of the Assessing Officer in determining the appellant's total income at 1,59,21,790/- as against the returned income of Rs. 1,49,16,760/-.

2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in confirming the determination of Annual Letting Value (ALV) of the property situated at 64-B, Twin Towers, Prabhadevi, Nr. Siddhivinayak Temple to be at Rs.14,40,000/- as against the ALV of Rs.4,251/- declared by the appellant. In doing so the CIT(A) has further erred in not appreciating that the property was governed by the provisions of the Maharashtra Rent Control Act, 1999 and accordingly, the ALV could not exceed the municipal ratable value.

3. On facts & circumstances of the case and in law, the CIT(A) has failed to appreciate that in respect of vacant properties covered by Rent Control legislation, the ALV is to be restricted to municipal ratable value as laid down in binding judicial precedents including CIT v. Tip Top Typography [368 ITR 330 (Bom.)], and hence the addition sustained is unjustified, excessive, arbitrary and bad in law.

4. On facts & circumstances of the case and in law, the CIT(A) further erred in upholding the Assessing Officer's reliance on rental details of other flats in the society obtained u/s. 133(6), without considering that the appellant's property was in fact vacant during the relevant period, and therefore no notional rent could have been estimated on such basis.”

3. The solitary grievance of the assessee is against the computation of income from house property without taking into consideration the annual letting value as per the applicable rent control legislation.

4. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee is an individual and for the year under consideration filed his return of income on 31.07.2014, declaring a total income of Rs.1,49,16,760/-. During the assessment proceedings, it was noticed that the assessee in respect of his Flat No. A-42, Twin Towers, Prabhadevi, Mumbai, which was lying vacant during the year, computed loss from house property of Rs. 35,99,500/- after considering the annual letting value at Rs. 4,251/-. In respect of its claim of annual letting value at Rs. 4,251/-, the assessee submitted a letter from the Secretary of the Housing Society computing the annual letting value in respect of Twin Towers property at Rs. 3,826/-. During the assessment proceedings, in respect of its submission, the assessee relied upon various case laws, wherein it has been held that municipal valuations are a good yardstick for determining the reasonable letting value. The Assessing Officer (“AO”), vide order dated 19.12.2016 passed under section 143(3) of the Act, disagreed with the submissions of the assessee and held that the assessee has not taken cognizance of the fact that there are several decisions wherein it has been held that the AO is not bound by the annual lettable value determined as per municipal valuation. The AO held that if the