SIKANDER KHAN, A.M.: These are cross-appeals by assessee and Revenue relating to asst. yrs. 1991-92 and 1992-93. Since common grounds are involved, these appeals were heard together and are decided by this consolidated order. grounds of appeals are as under: ITA No. 3155/Del/1996 for asst. yr. 1992-93 (Assessee s appeal). "1. CIT(A) erred in confirming addition of Rs. 25,97,760 made by AO to appellant s income from house property. same is liable to be fully deleted. CIT(A) erred in confirming AO s estimate of annual letting value of house property at Rs. 26,03,232. CIT(A) erred in holding that notional interest @ 15 per cent on interest-free security deposit of Rs. 1,62,36,000 received by appellant should be added to actual rent received for determining annual letting value of house property. CIT(A) erred in confirming observations of AO that transactions of purchase and sale of GP/GC sheets do not appear to be genuine. CIT(A) erred in confirming action of AO in assessing income of Rs. 33,457 from business of trading of GP/GC sheets under head "Income from other sources". same is liable to be assessed under head "Profits and gains from business or profession. appellant craves leave to add, alter or modify aforesaid grounds of appeal." ITA No. 5223/Del/1996 for asst. yr. 1992-93 (Department s appeal): "1. On facts and in circumstances of case, learned CIT(A) has erred in treating income from rental out of flats as income from business. On facts and in circumstances of case learned CIT(A) erred in restricting addition of Rs. 25,97,760 to Rs. 4,88,465 made under head income from house property when during asst. yr. 1992-93 CIT(A)-XV confirmed addition vide order dt. 29th Feb., 1996." ITA No. 5203/Del/1996 for asst. yr. 1991-92 (assessee s appeal): CIT(A) erred estimating annual letting value of appellant s commercial flats located at B-II/100, MCIE, Badarpur, New Delhi, at Rs. 4,88,465 as against rent of Rs. 1,94,832 actually received by appellant. CIT(A) has erred in not giving specific direction for statutory allowance of 1/6th repairs inspite of facts that on p. 6 of appellate order he has mentioned non-allowance of this deduction as one of facts for holding that addition made by AO arbitrarily." assessee in this case is company engaged in business of bottling of soft drinks under brand name of Thrill, Rush and Sprint. In assessee s appeal for asst. yrs. 1991-92 and 1992-93 (ITA Nos. 5203 & 3155/Del/1996), there is common ground against determination of income from house property. During period relevant to asst. yr. 1991-92, assessee-company gave 90 flats on lease to M/s Usha Rectifier Corpn. of India Ltd., having covered area of 16,236 sq.ft. on meager sum of Re. 1/ per sq. ft. However, Rs. 1,000 per sq. ft. had to be taken as interest-free security deposit which came to Rs. 1,62,36,000. security deposit was thus to compensate low rents. AO further noted that assessee diverted amount of security deposit to its sister-concern free of interest/at interest lower than market rate. He observed that annual letting value of aforesaid flats had to be determined at fair market rent. He added that even for purpose of calculating house tax on rented property house tax department considered actual rent received plus security deposit received from lessee as interest-free security is nothing but compensation in lieu of rent. In view of same and in view of provision of s. 23 of Act he determined income from house property at Rs. 26,97,760 adding interest calculated at 16 per cent on security deposit. Aggrieved, assessee preferred first appeal before learned CIT(A) who in asst. yr. 1991-92 directed AO to work out annual letting value o n basis of rateable value fixed by Municipal Corporation of Delhi. He relied on Calculatta High Court decision in case of CIT vs. Satya & Co. Ltd. (1997) 140 CTR (Cal) 569: (1994) 75 TAXMAN 193 (Cal). He observed that AO had not properly appreciated facts of case and had determined income from house property without allowing statutory deduction of 1/6th for repair and without considering fact that assessee had earned interest of R s . 1,38,082 from Western India Industries Ltd. on sum of Rs. 50 lakhs advanced to it by way of short deposit. He, therefore, held that addition of Rs. 26,97,760 worked out by applying interest rate of 16 per cent on security deposit of Rs. 1,62,36,000 could not be sustained. He added that during course of appellate proceedings assessee was asked to give details of rateable value of entire property. He further added that it was submitted before him that Municipal Corporation of Delhi had determined rateable value of entire property at Rs. 8,50,210. On proportionate basis, rateable value in respect of area of 16,236 sq. ft. which was let out by assessee would work out to Rs. 4,88,633 declared. He held that keeping in view facts of case it would be fair if annual letting value was taken at Rs. 4,88,465 as against Rs. 2,93,633. He further observed that in immediately preceding assessment year rental income shown by assessee was duly accepted by AO vide assessment order passed under s. 143(3) of Act. However, in appeal for asst. yr. 1992-93 learned CIT(A) took different view. He observed that rental income shown was too low which fact had been admitted by assessee itself. He added that assessee had also admitted that benefit of huge interest-free deposit was given by lessee on account of fact of low rent. He, therefore, held that in circumstances of case, AO was justified in determining annual letting value in terms of s. 23(1)(a) of Act and in that connection he rightly considered benefit of interest-free deposit for determining "the sum for which properly might reasonably be expected to let from year to year". He added that AO had not added notional interest as such but had taken into account that interest for determining annual letting value in terms of s. 23(1)(a) of Act. learned CIT(A) in asst. yr. 1992-93 further observed that provisions of Delhi Rent Control Act, 1958, as amended by Amendment Act, 1988, w.e.f. from 1st Dec., 1988, were different from provisions of Madras/Calcutta Municipal Rent Control Act and hence Madras and Calcutta High Courts decisions relied by learned CIT(A) in asst. yr. 1991-92, referred to above were not applicable. In this connection he noted that after said amendment w.e.f. 1st Dec., 1988, provisions of Delhi Rent Control Act were not applicable to premises whose municipal rent exceeded Rs. 3,500. In other words, provision relating to standard rent is not applicable to property where rent paid was exceeding Rs. 3,500 after said amendment w.e.f. 1st Dec., 1988. He added that in present case rent received per month was Rs. 16,238 which was more than Rs. 35,000. In view of said amendment he held that earlier decisions of Supreme Court in cases of Dewan Daulat Rai Kapoor vs. New Delhi Municipal Committee & Anr. (1980) 122 ITR 700 (SC) and Mrs. Shiela Kaushish vs. CIT (1981) 24 CTR (SC) 351: (1981) 131 ITR 435 (SC) were also not applicable. learned CIT(A) in impugned order for asst. yr. 1992-93 further observed that provision in Sch. III to take into account notional interest at 15 per cent on account of interest-free security deposit for determining value of property is acknowledgement of fact that benefit of interest on interest-free deposit was part of fair market or reasonable rent of property. But similar provision has not been made in IT Act because wording of s. 23(1)(a) itself gives ample scope for taking into account all relevant factors to determine annual letting value of property. Sec. 23(1)(a) provides that "for purpose of s. 22, annual letting value of any property shall be deemed to be (a) sum for which property might reasonably be expected to let from year to year". In present case, actual rent was much lower as admitted by assessee itself. sum for which property might reasonably be expected to let from "year to year" had to be determined and for this all relevant factors including benefit of interest-free security deposit had to be taken into account. He observed that since details of actual rent of other similar properties were not available, AO was justified in taking into account notional interest on interest-free deposits to determine annual letting value. He, however, directed AO to adopt interest at 15 per cent instead of 16 per cent. assessee is aggrieved by CIT(A) s order in asst. yr. 1992-93. In asst. yr. 1991-92 both assessee and Revenue are aggrieved. In asst. yr. 1991-92 assessee is aggrieved on account of CIT(A) adopting figure of Rs. 4,88,465 as annual letting value as against Rs. 2,93,633 shown. Revenue is aggrieved because learned CIT(A) reduced annual letting value from Rs. 26,97,760 to Rs. 4,88,465. learned Authorised Representative of assessee reiterated submissions made before learned AO/CIT(A) and reasons given by learned CIT(A) in asst. yr. 1991-92. He also relied on decisions reported in (1994) 75 TAXMAN 193 (Cal) (supra), CIT vs. Poddar Bros. (P) Ltd. (1999) 240 ITR 925 (Cal), R.K.K.R. International (P) Ltd. vs. Asstt. CIT (1998) 65 ITD 512 (Del), J.K. Investors (Bombay) Ltd. vs. Dy. CIT (2001) 70 TTJ (Bom) 182: (2000) 74 ITD 274 (Bom). learned Departmental Representative, on other hand, relied on orders of AO. After considering rival submissions and materials on file, we are of view that in appeal for asst. yr. 1992-93 learned CIT(A) had appreciated facts of case and relevant provisions of law properly and correctly, and same deserves to be upheld. While disagreeing with view of his predecessor in appeal for asst. yr. 1991-92, he has met all points and given convincing reasons as mentioned above for holding different view. In impugned order for asst. yr. 1992-93 learned CIT(A) rightly observed that after amendment in 1988 effective from 1st Dec., 1988, provisions of Delhi Rent Control Act, 1958, were not applicable to premises whose rent exceeded Rs. 3,500 per month. Since rent of premises in question was Rs. 16,238 per month it did not fall within purview of Delhi rent Control Act. Hence Supreme Court s decisions in Dewan Daulat Rai Kapoor and Mrs. Shiela Kaushish (supra) were not applicable in present case. Again, he rightly observed that annual letting value of property has to be determined in accordance with provisions of s. 23(1)(a) as "the sum for which property might reasonably be expected to let from year to year" and for this all relevant factors including benefit of interest on deposit had to be taken into account. We are of view that learned CIT(A) in appeal for asst. yr. 1992- 93 had proceeded on right lines. It will be total injustice to Revenue and complete defiance of provisions of law to accept extremely low rent (Rs. 16,238 for premises having 16,238 sq. ft. (covered area) as annual letting value of property. It will also amount to discriminatory application of law inasmuch as those who contract at real rent pay high tax and those who contract at extremely low rent get away with meagre tax. Neither law nor any fair judicial administration would allow such thing to happen or to continue in system. We are of view that even in cases where Rent Control Act and aforesaid decisions of Supreme Court would be applicable, AO must see whether standard rent/rateable value which assessee wants to be adopted as basis for determining annual letting value of property was determined by municipal corporation in accordance with provisions of law. Many cases of arbitrarily low and sham fixation of standard rent of high value properties at prime location have come to notice of authorities of corporation/Courts which were not in accordance with provisions of relevant law and procedure. If such standard rent/rateable value is routinely allowed to be taken as basis for determining annual letting value for income- tax purposes then such assessees would be allowed to mislead both municipal corporation and IT Department. Therefore, while he could not fix standard rent/rateable value in accordance with law and procedure of municipal valuation as it was beyond his domaine, AO definitely had to determine reasonable annual letting value as per s. 23(1)(a) of IT Act. This was what AO had done. point has been raised by assessee that it earned interest on amount received as interest-free deposit from lessee which had been shown as income and if annual letting value is determined taking into account notional benefit of interest at 15 per cent on deposit, it would amount to adding income doubly. In this regard, we are of opinion that first and foremost we have to determine annual letting value in accordance with provisions of s. 23(1)(a). There is nothing in this section which allows exemption from application of same on such ground. It is also worth mentioning here that AO noted that assessee had diverted most of amount to its sister concern as interest-free advance and it had shown interest income of Rs. 1,38,032.00 only. Therefore, plea itself is wrong and attempt to sidetrack and scuttle, and confuse matter. Moreover, learned CIT(A) in his order for asst. yr. 1992- 93 rightly observed that AO had not added to total income notional interest on amount, but considered it as factor for determining sum for which property might reasonably be expected to let from year to year in place of adopting comparable rent of similar property. AO may be directed to adopt rent of similar property as basis for annual letting value of property in question. But such directions will be of no avail as it will prolong dispute. It would neither bring any relief to assessee. We are of view that annual letting value determined taking into account factor of interest on amount was fair and reasonable. decisions cited by learned Authorised Representative in his support are not applicable to present case as facts and circumstances are different. Now let us consider one more aspect in regard to assessee s plea that it amounted to adding income doubly. If annual letting value were determined on basis of comparable rent of similar property and then additions were made to disclosed rent, would assessee s plea that because it had shown interest on advance made out of same amount, addition to disclosed rent amounted to adding income doubly be valid and acceptable? No, such specious arguments are meant to confuse authorities. In light of above discussion, we hold that order of learned CIT(A) in respect of above issue in asst. yr. 1992-93 is proper and correct. Accordingly, ground Nos. 1, 2, 3 of asst. yr. 1992-93 and ground No. 1 of asst. yr. 1991-92 of assessee s appeal are dismissed and ground No. 2 of Revenue s appeal for asst. yrs. 1991-92 is allowed subject to estimate of interest at 15 per cent as done by CIT(A) in asst. yr. 1992-93 above. Ground Nos. 4 and 5 of assessee s appeal for asst. yr. 1992-93 are not pressed. Ground No. 6 is of general nature. Ground No. 2 of assessee s appeal for asst. yr. 1992-93 relates to claims of 1/6th repairs. Since CIT(A) failed to give finding in this regard issue is restored to him to be decided in light of facts of case and provisions of law. Assessee should be given reasonable opportunity for being heard. Ground No. 1 of Revenue s appeal for asst. yr. 1991-92 relates to CIT(A) s direction to treat rental income as income from business instead of income from house property as treated by AO. After hearing both sides and considering materials on file, we are of view that matter has to be restored to CIT(A) for reconsideration and fresh order. It is noted that neither AO nor CIT(A) had gone into facts of case, provisions of law and decided case law for purpose. Both AO and CIT(A) took their respective opposite view in routine manner. learned CIT(A) is directed to decide issue afresh as per law. He should give reasonable opportunity to assessee for being heard. In result, assessee s appeal for asst. yr. 1992-93 is dismissed and assessee s and Revenue s appeals for asst. yr. 1991-92 are partly allowed. *** FIZZ DRINKS LTD. v. DEPUTY COMMISSIONER OF INCOME TAX