TMI Blog1980 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration, the assessee declared the gross annual letting value of the building at Rs. 6,000 each but the ITO valued it at Rs. 12,000. The AAC, in appeal, confirmed the gross annual letting value at Rs. 12,000, as estimated by the ITO. The assessee filed an appeal which was dismissed by the Tribunal. The contention raised on behalf of the assessee before the Tribunal was that in view of the provisions of the East Punjab Urban Rent Restriction Act, 1949, the assessee could not charge more than the fair rent determined under the provisions of the said Act and thus the annual letting value of the house could not be more than what the assessee could, in law, get as rent if the premises were rented out. The Tribunal placing reliance on a judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t so received or receivable ...... (2) Where the property consists of (i) a house in the occupation of the owner for the purposes of his own residence, the annual value of such house shall first be determined in the same manner as if the property had been let and further be reduced by one-half of the amount so determined or one thousand and eight hundred rupees, whichever is less;...." A bare reading of s. 23 would suggest that where the property is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in cl. (a) of sub-s. (1) of s. 23, the amount so received or receivable shall be deemed to be the annual value of the said property but where the property consists of a house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view. It is no doubt true that in case no order is passed for the fixation of the rent, the market rent may be charged by the landlord from the tenant but if that happens, the income-tax will be charged on the actual income derived as is clear from sub-cl. (b) of s. 23(1) of the Act. For deciding the point in issue we are primarily concerned as to how the notional income, keeping in view the guidelines as provided under s. 23(1)(a) of the Act, is to be worked out. Similar provisions of the Punjab Municipal Act, 1911, came up for consideration before their Lordships of the Supreme Court in New Delhi Municipal Committee v. M. N. Soi, AIR 1977 SC 302. Section 3(1) of the said Act defines " annual value " as under (p. 304): " 3. (1) 'Annua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1)(a), no doubt is left that, although annual value, for purposes of rating land, may be linked to the assessment of land revenue, if the State Government so directs, yet, in the cases of houses or buildings, it is the reasonable expectation to let such buildings, subject to certain reasonable deductions, which governs valuation whatever may have been the origin of rating. Where rent is higher than that which can be legally demanded by the landlord and actually paid by a tenant despite the fact that such violation of the restriction on rent chargeable by law is visited by penal consequences, the municipal authorities cannot take advantage of this defiance of the law by the landlord. Rating cannot operate as a mode of sharing the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expected rent and interpreting the provisions of. s.3(1)(b) of the Punjab Municipal Act, 1911, their Lordships came to the conclusion that the provisions of the Rent Control Act regarding the fixation of fair rent is a relevant factor to be taken into consideration while considering the reasonableness of the expected rent. Similar words have been used in s. 23(1)(A)of the Act and we have no reason to give a different interpretation from the one given by their Lordships, of the Supreme Court in M. N. Soi's case, AIR 1977 SC 302. The Tribunal has placed reliance on a decision of their Lordships of the Supreme Court in M. M. Chawla's case [1970] 2 SCR 390, for basing its finding. The said decision is of no assistance in determining the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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