Law: Income Tax Ordinance, 1979

Section: 19

Income Tax Ordinance (XXXI of 1979)----S.19---Income from property---Annual value---Determination of---Phrase "property might reasonably be expected to let from year to year"--¬Connotation---Annual rental value has to be fixed keeping in view the reasonable expectation of a property to be let out from year to year---Distinction to be maintained between vacant property and property rented out to tenant in view of restrictive laws against eviction of tenant and enhancement of rent. From the words "properly might reasonably be expected to let from year to year" it is clear that what has to be seen is as to what is the rent on which property could reasonably be expected to let out from year to year. The annual rental value has to be fixed keeping in view the reasonable expectation of a property to be let out from year to year. Where a property is already under occupation of the tenant and there is law against the ejection of the tenant and restriction of enhancement of rent it could not be said that the property could reasonably be expected to be let out on a higher rent than what is being paid by the tenant occupying the property. 1989 PTD (Trib.) 859 fol. ORDER ABRAR HUSSAIN NAQVI (JUDICIAL MEMBER).---This is an appeal filed by an individual deriving income from three different sources, namely, from salary as a director of company, interest income and property income. The appeal relates to the assessment year 1988-89. 2. In this appeal the only grievance of the assessee is in regard to the property income. The facts of the case are that there is a building called Lahore Paper Market in the Paper Market, Lahore which was constructed in 1974. The assessee has 39% shares in this property. The assessee declared the Annual Letting Value of this property at Rs. 1,83,996 and after deducting the wealth-tax, property tax, collection charges and 1/5th as repair charges net divisible income was declared at Rs. 98,503. The assessee's 39% share was declared at Rs. 38,416. The ITO, however, did not accept the declared version and he estimated the A.L.V. of this property on estimate basis. Total number of shops in the market is 48 which were bifurcated by the assessing officer…

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