Law: Income Tax Act, 1961

Section: 23

Income-tax-----House property---Annual value---Property which is let out---Covered by Rent Control-Law ---Agreed rent being fair rent under Rent Control Law---To be taken as annual value---Indian Income Tax Act, 1961, S.23---U.P. (Temporary) Control of Rent and Eviction Act, 1947. The assessee-company had constructed residential quarters in 1948, the letting of which was governed by the U.P. Rent Control Act. It had let three-fourths of these quarters to another company and the rest were in the possession of the assessee and had been allotted by it to its employees. The other company had let the three-fourths of the quarters either to its employees or to some others. For the assessment years 1965-66 to 1967-68, the Appellate Tribunal held that, since under the provisions of the U.P. Rent Control Act, the rent which had been first agreed to be paid by the tenant could not be increased, the actual rent which was received alone could be regarded as the fair market value or the notional value on which the assessee could be taxed. On a reference: Held, affirming the decision of the Appellate Tribunal, that it was not the contention of the Department that the rent agreed between the assessee and the tenants was not a fair and reasonable rent at the time when the property was let and that it was not disputed that the provisions of the U.P. Rent Control Act were applicable. The income from the quarters let to the other company and to outsiders should be assessed on the basis of the rent actually received or receivable and not on any notional value. [p. 14181 A CIT v. Modi Spinning and Manufacturing Mills Co. Ltd. (1980) 125 ITR 361 (All.) fol. JUDGMENT B.N. KIRPAL, J: --This judgment will dispose of the aforesaid reference. Income-tax Reference No.74 of 1982 is in respect of the assessment years 1965-66 and 1966-67, while I.T.R. No.71 of 1982, is in respect of the year 1967-68. The point involved in both the cases pertains to the computation of the annual letting value, though the questions of law have been differently worded. In respect of the assessment years 1965-66 and 1966-67 (I.T.R. No.74 of 1982), the question of law referred is as follows: "Whether, on the…

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