Law:

Section:

Section 23, read with section 256, of the Income-tax Act, 1961 - Income from house property - Annual value - Assessment year 1976-77 - While computing property income, assessee had adopted annual letting value as fixed by Municipal Corporation - ITO found that property had been improved and taking into account cost of such improvement, determined annual letting value of property in question at higher amount -Tribunal held that annual letting value fixed by municipal authorities was to be basis for fixing bona fide annual letting value and, therefore, value adopted by assessee was reasonable - Whether since there was no material to indicate that annual letting value fixed by Municipal Corporation was long before improvements made to property in question, Tribunal was right in assuming that Municipal authorities while fixing annual letting value for building for year in question should have taken into consideration improvements also - Held, yes - Whether, therefore, did not go wrong in accepting Municipal Valuation as such, no question of law arose out of order passed by Tribunal - Held, yes FACTS The assessee, while computing his property income, adopted the annual letting value of the building as fixed by the Municipal Corporation. The ITO, however, found that the property had been improved and working out the return on such investment at 6 per cent, fixed the annual letting value of the entire building at higher amount than that determined by the Municipal Corporation. The AAC upheld the determination of the annual letting value by the ITO. The Tribunal held that the annual letting value fixed by the municipal authorities was to be the basis for fixing the bona fide annual letting value and that the value adopted by the assessee as determined by the Municipal Corporation as the annual letting value for the entire property should be taken as reasonable. In this view, the Tribunal allowed the assessee's appeal and directed the ITO to recompute the income from the house property on the basis of the bona fide letting value adopted by the assessee. On reference: HELD On the material on record it was not possible to say that the annual letting value fixed by the…

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