1983 (1) TMI 5 - HC - Income Tax

Summary

Issues involved: Assessment of annual letting value for a building, entitlement to relief under the second proviso to section 23(1) of the Income Tax Act, 1961.

Assessment of Annual Letting Value: The case involved two assessment years for the same assessee regarding the annual letting value of a building. The Income Tax Officer (ITO) initially estimated the value at Rs. 36,000, while the assessee reported Rs. 12,000. The Appellate Assistant Commissioner (AAC) and the Tribunal determined the monthly letting value at Rs. 1,800 based on previous orders. The Tribunal considered various factors and concluded that Rs. 21,500 annually, or Rs. 1,800 monthly, was a reasonable letting value, favoring the assessee. The High Court agreed with this determination, upholding the Tribunal's decision.

Entitlement to Relief under Second Proviso to Section 23(1): The assessee claimed relief under the second proviso to section 23(1) of the Income Tax Act, contending that each room in the building constituted a separate residential unit. However, the Tribunal found that the rooms did not meet the criteria of separate residential units as per the Act. The High Court analyzed the provisions of the Act and referred to a similar case from the Kerala High Court, where it was held that individual rooms in a building cannot be considered separate residential units unless they have distinct assessments. Consequently, the High Court ruled against the assessee's claim for relief under the second proviso to section 23(1).

Conclusion: The High Court decided against the assessee on both questions raised in the case, affirming the Tribunal's findings. The assessee was not granted the benefits of the second proviso to section 23(1) for treating each room in the building as a separate residential unit. The judgment concluded with a ruling against the assessee on all questions presented, with no order as to costs.