TMI Blog1982 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the front lawn had been reclaimed by the Delhi Municipal Corporation and the land available to the tenant had been reduced, the rent should be reduced by Rs. 1,500 per month effective from March 1, 1968. The assessee agreed. Thus, the rent stood reduced from Rs. 6,000 to Rs. 4,500 from March 1, 1968. This rent was effective till 1972 when the premises were vacated. Though the actual rent received by the assessee was more, she claimed that the rental income from June 15, 1967, to March 31, 1968, should be computed at the rate of Rs. 4,500 per month inasmuch as the fair rent was Rs. 42,750. The difference of Rs. 1,500 per month, it was asserted, was being charged for some period for property which did not belong to the assessee. The ITO did not accept the contention and framed the assessment at Rs. 55,500, the amount actually received by the assessee during the relevant period. In appeal the AAC held that the annual letting value of the property had been fixed by the Municipal Corporation of Delhi at Rs. 46,061 and so, he directed the ITO to compute the annual letting value of the property at that figure. The Department filed an appeal before the Tribunal. There it was held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed by a sum equal to the aggregate of (i) in respect of any residential unit whose annual value as so determined, does not exceed six hundred rupees, by the amount of such annual value; (ii) in respect of any residential unit whose annual value as so determined exceeds six hundred rupees, by an amount of six hundred rupees ; so, however, that the income in respect of any residential unit is in no case a loss. (2) Where the property is in the occupation of the owner for the purposes of his own residence, the annual value shall first be determined as in sub-section (1) and further be reduced by one-half of the amount so determined or one thousand eight hundred rupees, whichever is less: Provided that where the sum so arrived at exceeds ten per cent. of the total income of the owner (the total income for this purpose being computed without including therein any income from such property and before making any deduction under Chapter VI-A or section 280-0), the excess shall be disregarded. Explanation.-Where any such residential unit as is referred to in the second proviso to sub-section (1) is in the occupation of the owner for the purposes of his own residence, nothing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1922) namely, "Income from property ". The corresponding computing section is s. 9 which says that tax shall be payable on income under this head in respect of the bona fide annual value of the property. It is conceivable that income actually received would certainly be liable to be included in the total income u/s. 4. In Sultan Brothers Private Ltd. v. CIT [1964] 51 ITR 353 (SC), again case under the Act of 1922, the principle was reiterated that the owner of the building is liable to tax not on the actual income received from it but on its annual value, irrespective of whether he has let it out or not. In Ganesh Chandra Khan v. ITO [1978] 111 ITR 934 (Cal), the Calcutta High Court following the principle enunciated in the Supreme Court cases noticed above, applied the same rule to ss. 22 and 23 of the Act. A Bench of this court in CIT v. H. P. Sharma [1980] 122 ITR 675 (Delhi),while answering one of the two questions referred to it, namely, " Whether, in assessment of income from property, bona fide annual value under section 23 is the municipal value or the rental value received by the assessee ? ", observed as under (p. 691): "......that where the figures of actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o December 6, 1969, for the assessment year 1970-71 ; and for the period after December 6, 1969, the standard rent would be that ascertainable u/s. 6(1)(B)(2) on the basis of cost of construction and market value of the land. It is strenuously urged that the question referred to us is thus settled. The annual value had to be determined in accordance with the principles laid down in Sheila Kaushish's case [1981] 131 ITR 435 (SC). In other words, the Revenue had to fix the annual value under s. 23 on the same basis as the Municipal Corporation. The Corporation having fixed the annual letting value at Rs. 46,061, that must be regarded as the annual value under s. 23. The principles deducible on a reading of the above decisions are these: (a) For the purposes of s. 23, as read earlier, it is not the amount received for a property which becomes assessable but the sum for which the property might reasonably be expected to let from time to time ; (b) What is taxable under the head "Income from property" would be the rent received for the property belonging to the assessee and not any amount that may have been received for property which was not owned by the assessee. (c) The munic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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