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2016 (11) TMI 724 - KERALA HIGH COURTIncome from house property - Annual value estimation u/s 23 - assessee contended that Section 23 (1) cannot be applied to this case for the reason that the coowners themselves are the Directors of the lessee company - Held that:- Admittedly the property is owned by the co-owners themselves, who are also the Directors of the lessee company which has established the Hospital. As per the lease agreement between the co-owners and the lessee company, the mutually agreed rent is ₹ 1 per sq.ft. However, a portion of the very same building is let out by the co-owners, the assessees herein, to the Telephone Department and the lease rent that is received is ₹ 4 per sq.ft. This would show that this is a case to which Clause (b) of Section 23(1) is applicable and the annual value has to be estimated, quantifying the sum for which the property might reasonably be expected to let. It is adopting this method that the Assessing Officer has framed the assessment by fixing the annual value at ₹ 4 per sq.ft. which is the rate of rent received for a portion of the building let out by the assessees themselves to the Telephone Department. Assessee's contention that Section 23 (1) cannot be applied to this case for the reason that the coowners themselves are the Directors of the lessee company cannot be accepted for the reason that Section 23 does not exempt cases in which buildings have been let out by the owners to firms or companies in which they are interested. Further no other provision of the Income Tax Act, providing for a different method of fixation of annual rent has shown to us. On the other hand, reading of Section 23 would show that in all cases annual value has to be estimated applying the principles of Section 23. Therefore, since the annual value of the building which was let out was to be estimated, the estimation could be done applying Section 23(1)(b), which precisely was what was done by the Assessing Officer. - Decided aganist assessee
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