TMI Blog2008 (8) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... with any convincing evidence. Even before us, there was no evidence let in on the above aspects. In the circumstances, we hold that the plea of the assessee that the income in question has to be assessed under the head income from business cannot be accepted. Determination of annual value of the property - quantum of income that has to be assessed under the head Income-from house property - HELD THAT:- Decision in the case of Mrs. Sheila Kaushish [ 1981 (8) TMI 1 - SUPREME COURT] mentions standard rent under the Rent Control Act as one of the yardsticks. This does not mean that standard rent alone is to be considered. In the present case, we also notice that the AO has not chosen to adopt the standard rent as per the Rent Control Act as yardstick for determining the annual value. We also find from the decision in the case of Smt. Prabhabati Bansali [ 1981 (9) TMI 21 - CALCUTTA HIGH COURT] that standard rent, if it does not exceed the Municipal Valuation alone can be adopted in place of Municipal Valuation. Therefore, we hold that the Municipal Valuation should be the basis of determining annual value in the present case. Action of the revenue authorities in adopting ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order for assessment year 2003-04, the Assessing Officer adopted the annual value of the property. The Assessing Officer applied a yearly discount/increase of 10 per cent to the value adopted in assessment year 2003-04. viz., Rs. 1,35,000 per month. Thus, the ALV for assessment year 1999-2000 was determined on the basis of monthly rent at Rs. 88,574 applying an annual reduction of (10 per cent to the value determined in 2003-04. For assessment year 2001-02 it was determined at Rs. 1,09,350, per month. For assessment year 2002-03 it was determined at Rs. 1,21,500 per month. For assessment year 2004-05, it was determined at Rs. 1,48,500 per month. (10 per cent increase from 2003-04 monthly rent). The Assessing Officer allowed statutory deduction and determined the income from house property for all the aforesaid assessment years in the aforesaid manner. The action of the Assessing Officer was confirmed by learned CIT(A) giving rise to the present appeals before the Tribunal. 3. We have heard the submissions of learned counsel for the assessee and learned DR of the revenue. First submission of learned counsel for the assessee was that the income in question was lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On this aspect, we have heard the elaborate submissions of learned counsel for the assessee and learned DR of the revenue. Section 22 of the Income-tax Act reads as follows : "22. Income from house property. The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property." Reading of the provisions of section 22 shows that the charge to tax under the head Income from house property is on the annual value of the property. Section 23 of the Act lays down as to how the annual value has to be determined. The relevant portion of section 23 is as follows :- "23. (1) For the purposes of section 22 , the annual value of any property shall be deemed to be - ( a )the sum for which the property might reasonably be expected to let from year to year; or ( b )where the property or any part of the property is let and the actual rent received or receivable by the owner in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. Reading of the provisions of section 23(1)( a ) would show that one has to imagine a situation where the property in question is let out, though it is self-occupied. Originally provisions of section 23 of the Act provided for determination of annual value of house property only on the basis of sum for which, the property might reasonably be expected to be let from year to year. The actual receipt of rent was irrelevant. By the Taxation Laws (Amendment) Act, 1975 with effect from 1-4-1976. Section 23(1)( b ) was introduced, whereby it was provided that if the actual rent received by an assessee is in excess of the sum for which, the property might reasonably be expected to let from year to year, annual value will be the rent received. While explaining the aforesaid amendment, CBDT in Circular 204 dated 24-7-1976 in paragraph 9 has stated as follows : "Hitherto, the annual value of house property, chargeable to Income-tax under the head income from house property was deemed to be the sum for which the property might reasonably be expected to let from year to year. In many cases, however, the actual rent received or receivable in a year exceeds the municipal valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impossible to distinguish the definition of annual value in sub-section (1) of section 23 of the Income-tax Act, 1961, from the definition of that term in the Delhi Municipal Corporation Act, 1957 and the Punjab Municipal Act, 1911. We must, therefore, hold on an identical line of reasoning, that even if the standard rent of a building has not been fixed by the Controller under section 9 of the Rent Act and the period of limitation prescribed by section 12 of the Rent Act for making an application for fixation of the standard rent having expired, it is no longer competent to the tenant to have the standard rent of the building fixed, the annual value of the building according to the definition given in sub-section (1) of section 23 of the Income-tax Act, 1961, must be held to be the standard rent determinable under the provisions of the Rent Act and not the actual rent received by the landlord from the tenant. This interpretation which we are placing on the language of sub-section (1) of section 23 of the Income-tax Act, 1961, may be regarded as having received legislative approval, for, we find that section 6 of the Taxation Laws (Amendment) Act, 1975 sub-section (1) has been am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of M.V. Sonavala v. CIT [1989] 177 ITR 246, wherein Hon ble Bombay High Court has observed as follows : "However, the questions posed to us are not whether the annual value of the property for the purpose of section 23(1)( a ) should be taken at the actual compensation received or on the basis of standard rent. The question is whether the annual value should be taken at the amount which is actual compensation received or at the amount fixed as municipal rateable value. Obviously, Municipal rateable value cannot be equated to standard rent. In this context, it may be desirable to refer to the Calcutta High Court s decision in the case of CIT v. Prabhabati Bansali [1983] 141 ITR 419. One of the questions involved in that case was whether the Tribunal was justified in directing the Income-tax Officer to re-determine the annual value of the property under section 23(1) afresh with reference to its rateable value as determined by the Municipal Corporation. The question was answered in the affirmative and the court held that the income from house property had to be computed on the basis of the sum for which the property might reasonably be let from year to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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