Law:

Section:

Section 23 of the Income-tax Act, 1961 - Income from house property - Annual value - Whether Assessing Officer is duty bound to compute annual value of property or sum for which property might reasonably be expected to let as contemplated by sections 22 and 23 only on standard rent basis if he disbelieves rent stated to be receivable by assessee - Held, yes - Whether it is not necessary that standard rent should be fixed by Rent Controller under Rent Act for it to be taken into reckoning for purposes of section 23(1) - Held, yes - Whether where Assessing Officer instead of computing standard rent, proceeded to obtain information of rent obtaining in market and had made a computation under section 23(1), it could be said that Assessing Officer had not correctly computed sum for which property might reasonably be expected to let from year to year and it was appropriate to remand matter to Assessing Officer for a fresh determination under section 23(1) - Held, yes FACTS The assessee was receiving a rent per month from the tenants. As it had failed to prove that the said sum reflected the actual rent received by it in the relevant assessment years, the Assessing Officer, on the basis of the rents it was receiving from its other tenants and the enquiry that he conducted into the market rents prevailing in the contiguous areas, computed the rent under section 23(1). On appeal, the Tribunal upheld the order of the Assessing Officer. On appeal: HELD Section 23 stipulates the method by which the annual value of any property should be assessed to tax under section 22. Section 23(1)(a ) states that the annual value of property shall be deemed to be the sum for which it may reasonably be expected to let from year to year. The Assessing Officer would invariably have to carry out and complete this computation. This is for the reason that section 23(1)(b) envisages that even where the property is let out and the Assessing Officer accepted the veracity of the sum stated by the owner to be receivable by it as rent, this actual rent if it is higher than the 'sum for which the property might reasonably be expected to let' (viz., standard rent), it would constitute the basis of…

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