Law:

Section:

Sections 23 and 24 of the Income-tax Act, 1961 - Income from house property - Annual value - Property in a state of utter disrepair - ITO ignored annual value shown and deductions claimed by assessee on the ground that such property being unfit for letting out had no annual value and hence outside scope of section 22 - Whether ITO justified - Held, no because such property possessed annual value and had to be determined to consider assessee's claim for deductions - Property not let during the year - Whether claim for deduction of municipal taxes and vacancy remission could be allowed - Held, no Section 256(1) of the Income-tax Act, 1961 - Reference - General - Whether in a reference by assessee high court could direct tribunal to determine annual value when no reference was made by revenue - Held, no, as high court could only decide point of law in its advisory capacity FACTS The assessee owned a property which was requisitioned by the State Government in 1951 for housing refugees. The property was released in December 1960 in a state of utter disrepair so that it was not fit to be let out. The assessee filed its return for the assessment year 1962-63 corresponding to calendar year 1961 showing an annual value of Rs. 1,23,672 from the said building and claiming deductions on account of municipal taxes, fire insurance premium and vacancy remission of the entire annual value as the building had remained vacant throughout 1961. The ITO, considering that the property was not in a condition for letting out, ignored both the annual value shown by the assessee and the deduction claimed by it on the ground that provisions of sections 22 to 26 were not applicable in this case. The AAC held that even though the property was vacant, it had an annual value and accordingly allowed the deductions claimed by the assessee. The Tribunal, however, confirmed the ITO's order that the property fell outside the scope of section 22 and as such disallowed the deduction claimed. The revenue accepted the Tribunal's order while the assessee moved the High Court. The High Court held that the property did possess annual value even though it was in a state of disrepair. As regards the…

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