1992 (10) TMI 22 - HC - Income Tax

Summary

Issues:
1. Interpretation of Rent Control Act applicability to property let out to directors by assessee-company.
2. Estimation of annual letting value of a building used by directors as residence.

Interpretation of Rent Control Act Applicability:
The case involved determining whether the Rent Control Act applied to a property let out to directors by an assessee-company. The Income-tax Officer initially determined the annual letting value of the building at Rs. 6,000, rejecting the plea that the building was governed by the Rent Control Act. The Appellate Assistant Commissioner, however, accepted the contention that the building fell under the Rent Control Act, making it difficult for the assessee to eject the tenants. The Income-tax Appellate Tribunal upheld the Income-tax Officer's view, citing section 2(1)(f) of the U. P. Urban Buildings Act, which exempts buildings held by a company for its own occupation or for its officers from the Act's provisions. Since the bungalow was used by the company's directors as their residence, it was deemed exempt from the Rent Control Act.

Estimation of Annual Letting Value:
The second issue revolved around the correctness of the annual letting value determined by the Income-tax Officer and approved by the Appellate Tribunal. The Income-tax Officer based the value on the rental value of adjacent properties, setting it at Rs. 6,000. The Tribunal found this determination to be a factual finding and noted that the rent of adjacent properties was correctly stated by the Income-tax Officer. As a result, the Tribunal concluded that the fair annual letting value of the bungalow at Rs. 6,000 was appropriate and upheld the Income-tax Officer's decision. Consequently, both questions were answered in favor of the Revenue and against the assessee, with no order as to costs.

This judgment clarifies the application of the Rent Control Act to properties used by directors of an assessee-company and emphasizes the significance of factual findings in determining annual letting values. The decision underscores the exemption under the U. P. Urban Buildings Act for buildings used by a company's officers, ultimately upholding the Income-tax Officer's valuation of the property.