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Interpretation of income from house property - Standard rent vs. actual compensation received. Analysis: The judgment revolves around the issue of determining the income from house property based on standard rent versus actual compensation received by the assessee. The assessee owned flat Nos. 112 & 122 in a building and had given these premises on license to M/s. J.K. Synthetics Ltd. The assessee declared income based on standard rent certified by a property valuer, while the assessing officer considered the actual compensation received. The CIT (Appeals) upheld the assessing officer's decision, stating that the license to use the premises was akin to letting out the property. The crux of the argument presented by the assessee's counsel was that the income should be estimated based on the standard rent under section 23(1)(a) rather than the actual compensation received. The counsel relied on legal precedents to support this argument. However, the Departmental Representative contended that the compensation received by the assessee was akin to rent, falling under section 23(1)(b) which includes payments made for the use and occupation of a property. The Tribunal analyzed the provisions of section 23(1)(a) and (b) which determine the annual value of a property based on what it might reasonably be expected to let for. The Tribunal noted that the licensee company was paying a higher amount than the certified standard rent, indicating that the compensation received was more in line with rent rather than a mere license fee. The Tribunal also highlighted that the licensee had possessory rights similar to a tenant, despite the nomenclature used in the agreement. The Tribunal ultimately agreed with the CIT (Appeals) that the license to use and occupy the premises was tantamount to letting out the property. Therefore, the order of the CIT (Appeals) was upheld, and all appeals by the assessee were dismissed. The judgment clarifies the distinction between standard rent and actual compensation in determining income from house property, emphasizing the substance of the transaction over the terminology used.
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