2007 (5) TMI 167

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..... ual letting value by holding that the provisions of section 23(1) (b) contemplates annual rent received or receivable by the owner of the property ?" 2 Bereft of unnecessary details, the facts set out in the statement of case would suffice for our opinion to the aforesaid question. The assessee is a private limited company. For the assessment year 1985-86, in its return, the company claimed a sum of Rs. 33,074 as a deduction on account of payments for stamp duty and registration charges from the income shown under the head "Income from property". The Assessing Officer did n allow the claim of the assessee-company. While doing so, the Assessing Officer held that the expenses in connection with lease agreement are in the nature of capital .....

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..... ction 23 has undergone amendments from time to time. The relevant portion of the then existing section 23 may be reproduced by us. It reads thus "23. Annual value how determined.— (1) For the purposes of section 22, the annual value of any property shall be deemed to be— (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable Provided that where the property is in the occupation of a tenant, the taxes levied by any local authority in respect of the property shall, to the extent such taxes are borne by th .....

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..... the rent being the basis of the computation, one has to decide what is the actual rent received. It is further erroneous to say that in determining the actual rent receipt, the net amount of money received or receivable by the assessee would be relevant. The Tribunal has given illustration thus "If the lessee were to pay the lessor a sum of Rs. 25,000 per month with instruction from the lessee to pay Rs. 5,000 to the lessee's son for his education, Rs. 2,000 to incur some other expenditure from the lessee and another Rs. 3,000 to pay the lessee's wife on some account, the net amount of rent received by the lessor would be only Rs. 25,000-5,000-3,000, i.e., the net amount of Rs. 15,000 and this being the real income this has to be treated .....

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