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-For assessment year 1968-69, assessee charged a rent of Rs. 6,000 for its let out property from 15-6-1967 to 28-2-1968 from which date it reduced rent to Rs. 4,500 because front lawn of let out property was reclaimed by Delhi municipal corporation to which said portion belonged-Whether rental value of property for impugned period had to be taken at Rs. 4,500, despite the fact that actual rent received by assessee was more, since the difference of Rs. 1,500 was charged by assessee for property which did not belong to it-held, on facts, yes-Whether municipal assessment of annual letting value as such is not relevant for purpose of section 23 unless it is based on standard rent recoverable for a property as postulated by provisions of the Delhi rent control act-Held, yes Facts For the assessment year 1968-69, the assessee had let out her house property from 15-6-1967 at a monthly rent of Rs. 6,000. During the accounting year, the tenant wrote to the assessee that since the front 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 1-3-1968. The assessee agreed to this request. Thus, the rent stood reduced from Rs. 6,000 to Rs. 4,500 per month from 1-3-1968. Though actual rent received by the assessee was more, she claimed that the rental income from 15-6-1967 to 31-3-1968 should be computed at the rate of Rs. 4,500 per month. 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, however, took the annual letting value of the property to be the amount actually received by the assessee by way of rent during the relevant previous year. On appeal, the AAC found that the annual letting value of the property had been fixed by the Municipal Corporation of Delhi at Rs. 46,061 and he directed the ITO to compute the annual letting value of the property at that figure. On second appeal, the Tribunal allowed the department's plea…

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