TMI Blog1977 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... he income from these two house properties. The annual municipal value of these two properties was Rs. 7,502 and Rs. 10,374 respectively. The Income-tax Officer found, on the basis of those municipal annual valuations, that the income according to section 23(1) of the Income-tax Act was Rs. 5,021 and Rs. 6,944, respectively, after adding to the annual municipal valuation 1/9th and deducting from the total the full municipal tax and 1/6th for repair, and deducting from the figure so arrived at a sum of Rs. 1,309 at 6 per cent. of that amount towards collection charges. This was on the ground that the income from the properties should be computed on the basis of the annual municipal value or rent received, whichever was higher. In the assessee's appeal to the Appellate Assistant Commissioner it was contended that at the time of the purchase of the properties by the assessee in 1961 there was a subsisting lease dated December 20, 1935, for a period up to May 1, 1969, on a rent of Rs. 225 per mensem with an option for the lessee to extend the lease for a further period of 15 years and the tenancy continued in spite of the change in the ownership. It was further contended that though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been fixed low for any ulterior reason. Accordingly, the Tribunal agreed with the Appellate Assistant Commissioner and dismissed the appeal. The legal representative of the assessee raised the same contention before the Income-tax Officer for the assessment year 1969-70. But she adopted the annual municipal value as the income from the properties, as had been done by her for the previous assessment year 1968-69. The legal representative of the assessee filed an appeal before the Appellate Assistant Commissioner who differed from his predecessor's order dated July 17, 1969, in the appeal relating to the previous assessment year 1968-69 and confirmed the order of the Income-tax Officer. The legal representative of the assessee went up in appeal before the Income-tax Appellate Tribunal, Madras Bench. The Tribunal accepted the view of the Cochin Bench in the revenue's appeal relating to the previous assessment year 1968-69 and allowed the appeal, accepting the assessee's basis. Hence, these references under section 256(1) of the Act. The question referred in T.C. No. 221 of 1972 is: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building at Rs. 33,000. The Income-tax Appellate Tribunal was of the view that there was no material on record to accept the assessee's contention that the notional letting value was less than Rs. 33,000 for which the building had actually been let, and, accordingly, the Tribunal rejected the certificate produced by the assessee showing that the annual letting value had been fixed by the local authority at Rs. 18,000. The Bench of the Kerala High Court held that the reasons given by the Tribunal for not accepting the certificate showing the annual letting value fixed by the local authority was not tenable and that prima facie the certificate afforded evidence to sustain the contention of the assessee that the contract rent was in excess of the reasonable rent that could be expected from the building. The present sub-clauses (a) and (b) of sub-section (1) of section 23 of the Income-tax Act had been substituted for the portion, namely: "For the purposes of section 22, the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to be let from year to year" with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 41 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the building or part exceeded Rs. 400. That exemption was later removed by Madras Act XI of 1964, which received the assent of the President on 5th June, 1964. The Bench of this court which decided that case on November 26, 1968, held that the Rent Controller had jurisdiction to entertain and dispose of the application for fixation of fair rent filed by the assessee on its merits. Therefore, it is clear that though the lessees, Messrs. Raval and Company, appear to have sublet the building for a larger rent of Rs. 25,000 per annum, what the assessee was entitled to get under the terms of the lease deed dated December 20, 1935, under which the properties had been let by the assessee's predecessor-in-title, was only Rs. 225 per mensem which by persuasion of the subsequent owners of the property had been slightly raised by the addition of the rent, etc., referred to above. The assessee's attempt at having the rent enhanced by the Rent Controller under the provisions of the Madras Buildings (Lease and Rent Control) Act, 18 of 1960, was being thwarted by the lessees, Messrs. Raval and Company, until the decision was rendered by the Bench of this court in the case in Ramachandran v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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