1992 (10) TMI 75 - HC - Income Tax

Summary

Issues:
1. Computation of annual letting value for assessment years 1965-66 and 1966-67.
2. Assessment of income from quarters let out in the year 1967-68 based on actual rent received.

Analysis:
1. For the assessment years 1965-66 and 1966-67, the issue revolved around the computation of the annual letting value of a property. The Tribunal had to determine whether the actual rent received by the assessee should be taxed or a notional value. The Income-tax Officer initially opted for the notional value, but the Appellate Assistant Commissioner overturned this decision based on a previous case involving a similar situation with Modi Spinning and Weaving Mills Co. Ltd. The Tribunal upheld the decision that under the U.P. Rent Control Act, the actual rent received should be considered for taxation purposes. The High Court concurred with this interpretation, citing a similar judgment by the Allahabad High Court in a related case. It was held that if the agreed rent is fair and reasonable at the time of letting out the property, then the actual rent received should be deemed as the fair annual letting value.

2. In the assessment year 1967-68, the question arose regarding the assessment of income from quarters let out to M/s. Modi Spinning and Weaving Mills Co. Ltd. and outsiders. The Department contended that the income should be assessed based on a fixed amount, while the Tribunal maintained that the actual rent received should be the basis for assessment. The Tribunal's decision was consistent with its earlier ruling and the U.P. Rent Control Act provisions. The High Court agreed with this approach, emphasizing that the agreed rent, if fair and reasonable, should be considered the fair annual letting value. As the Department did not dispute the fairness of the agreed rent, the Court ruled in favor of taxing the actual rent received by the assessee.

In conclusion, the High Court upheld the Tribunal's decisions in both cases, emphasizing the importance of considering the actual rent received as the fair annual letting value in line with the U.P. Rent Control Act provisions.