Law:

Section:

Section 23, read with section 22, of the Income-tax Act, 1961 - Income from house property - Annual value - Assessment year 1996-97 - Whether any rent not relating to relevant previous year can form part of 'annual rent' for previous year, for determining annual value of property for purposes of section 22 - Held, no - During relevant assessment year 1996-97, assessee received certain sum as rent, which included arrears of rent for period from 1-3-1994 - Assessee declared in return arrears of rent only for period 1-4-1995 to 31-8-1995 and claimed that balance amount related to earlier years and was not to be assessed in assessment year 1996-97 - Assessing Officer assessed entire amount of arrears of rent in assessment year 1996-97 - Whether Assessing Officer was justified - Held, no FACTS The assessee had leased out a property on rent. Vide agreement dated 1 8 1995, the rent of the property was enhanced. During the accounting year relevant to assessment year 1996-97, the assessee pursuant to the said agreement received a sum of Rs. 6,26,076, which included arrears of rent for the period from 1-3-1994. For the relevant assessment year, the assessee declared the arrears of rent for the period 1-4-1995 to 31-8-1995, falling in the relevant previous year, amounting to Rs. 2,18,700 and offered the same as rental income. She claimed that the difference of Rs. 4,07,786 being the balance amount of arrears of rent relatable to the earlier years was not to be assessed in the assessment year 1996-97. The Assessing Officer rejected the claim of the assessee and brought the entire amount of arrears of rent received during the assessment year 1996-97 as the income for that assessment year. On appeal, the Commissioner (Appeals) deleted the addition holding that the arrears of rent were to be assessed in the year to which they related to and not in the year of actual receipt. On second appeal, the Tribunal upheld the impugned order. On appeal : HELD Income from house property is one of the heads in which different categories of income included in the total income have been classified. As per section 22, the basis of charge of income from house property is its 'annual value'.…

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