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Section 24 of the Income-tax Act, 1961 - Income from house property - Deductions - Assessment years 1981-82 and 1982-83 - Whether, in order to determine income from property, statutory deductions embodied in section 24 are to be first considered and, thereafter, deduction for expenses required for earning rental income are to be made - Held, yes FACTS The assessee filed its returns of income. The Assessing Officer, while accepting the gross rent received, computed the income from the house property by first deducting therefrom the expenses incurred for earning the rent as per the claim, and, thereafter, allowed deductions for municipal tax, repairs and ground rent. In other words, from the gross rent received, the expenses incurred for earning the rent were first deducted and, thereafter, the statutory allowances were allowed. On appeal, the AAC accepted the plea of the assessee that, before adjustment of the expenses incurred for earning the rent, the statutory deductions as available in law were to be deducted from the gross rent. The Tribunal affirmed the order passed by AAC. On reference : HELD The method of determination of annual value has been statutorily prescribed in section 23. Since it constitutes the annual rent received or receivable by the owner in respect of the property let, the deductions for repairs is to be made from the annual rent received or receivable. Obviously, therefore, computation has to be made before the expenses are adjusted from the rent received. The AAC and the Tribunal were justified in their conclusion that statutory deductions embodied in section 24 were to be first considered, and, thereafter, deductions for the expenses required for earning the rental income were to be made. Note : The case was decided in favour of the assessee. A.K. Roy for the Applicant. JUDGMENT A. Pasayat, J.-Since both the references made under section 256(1) of the Income-tax Act, 1961 (in short, "the Act "), involve common points, they are disposed of by this judgment which shall govern both. At the instance of the Revenue, the following question has been referred to this court for adjudication : "Whether, on the facts and in the circumstances of…

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