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Informative

AO Not Bound by Municipal Rateable Value, Can Fix Fair Rent Independently u/s 23(1)(a) Income Tax Act: Bombay HC

Update / Judgement Date

25 Aug 2025

Source

Taxscan

Author

Team — WCP Legal Desk

Reading Time

1 min read

Income TaxRERA & Property Act

The Bombay High Court has ruled that an "AO is not bound by a municipal rateable value" and "can fix a fair rent independently under Section 23(1)(a) of the Income Tax Act." The court's decision provides a significant victory for the government. The ruling clarifies that a tax authority can add an income to a taxpayer's account without a valid reason. The court’s decision is a crucial reminder to all that they must be diligent in their dealings.