Law:

Section:

section 23(1) [as it stood prior to 1-4-1976] of the income-tax act, 1961-income from house property-annual value-whether, for determining annual value, what is relevant is standard rent determined under relevant rent control law and not actual rent received by assessee-held, yes section 147(b) of the income-tax act, 1961-reassessment-information-assessment years 1959-60 to 1961-62-ito found that actual rent realised from tenants of certain properties by a and s lessees to whom assessee had leased said properties, was higher than annual value at which assessee had been assessed qua these properties-whether ito could reopen assessee's assessment on the basis of aforesaid finding-held, on facts, no Facts The assessee-company owned certain properties which it had leased to A and S, respectively. The ITO originally assessed the assessee for the assessment years 1959-60 to 1961-62, taking the income from said properties at Rs. 20,000 as estimated in the past. The assessment of S, one of the lessees, was also made by the same ITO. The lessees A and S had let out the said properties to tenants. The ITO obtained a detailed list of the tenants and the rents paid by them to the lessees. On going through these details, the ITO found that the rent realised from the tenants by A and S in respect of the properties leased to them by the assessee was Rs. 28,728 as against Rs. 20,000 which was taken to be assessee's income from the impugned properties. Taking the actual rent realised by the lessees A and S as the real income of the assessee from the impugned property, the ITO reopened the assessment under section 147. The AAC, on appeal, upheld the ITO's action. On further appeal, the Tribunal held : (i) that the question as to whether the assessee was competent under the Rent Control Act to enhance the rent was irrelevant ; and (ii ) that the assessee should be reassessed at annual value which was the rent realised by the lessees A and S and not at what the assessee was entitled to recover under the law as per the lease deed between it and A and S. On reference : Held It is well-settled that where the rent control laws are in force, the annual value of the building under…

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