9911796707
TMI Blog2000 (6) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... , briefly, are as follows : The assessee, during the previous year, relevant to the assessment year 1992-93, purchased premises in the building known as "Mahendra Towers" vide sale deed dated June 28, 1991. The said premises were let out to Raymond Woollen Mills Limited from October 1, 1991. The lessee agreed to deposit an amount as a security deposit for the due performance of the lease. The assessee was not to pay any interest on the security deposit to the lessees. The premises are covered by the provisions of the Bombay Rent Act, 1947. The Assessing Officer concluded that the annual value of the property under section 23(1)(b) was the sum total of the rent actually received by the assessee as lessor plus notional interest for the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the present case. At the outset it may be mentioned that the Department has invoked section 23(1)(b) of the Act which is not in dispute. The Department has not invoked section 23(1)(a) of the Act, The property is covered by the provisions of the Bombay Rent Act. The Tribunal has given a finding of fact that the actual rent received by the assessee even without taking into account the notional interest was more than the annual letting value of the property determinable under section 23(1)(a) of the Act. It is in this factual background that we are required to consider the scope of section 23(1)(b) of the Income-tax Act. In the case of CIT v. Satya Co. Ltd. [1994] 75 Taxman 193, a Division Bench of the Calcutta High Court has hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or standard rent under the rent control legislation. The provisions of section 23(1)(a) of the Income-tax Act apply both to owner-occupied property as also to property which is let out and the measure of valuation to decide the annual value is the standard rent or the fair rent. However, section 23(1)(b) only applies to cases where the actual rent received is more than the reasonable rent under section 23(1)(a) of the Act and it is for this reason that section 23(1)(b) contemplates that in such cases the annual value should be decided on the basis of the actual rent received. As stated hereinabove, in this case, the Department has invoked section 23(1)(b) which, as stated hereinabove, proceeds on the basis that the actual rent received b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), then such higher actual annual rent would constitute the annual value of the property. It is important to bear in mind that under section 22, the measure of income from house property is its annual value. The annual value is to be decided in accordance with section 23(1). By virtue, of the amendment, clause (a) states that the annual value is the sum for which the property might reasonably be expected to be let from year to year whereas clause (b) covers a case where the property is let and the actual rent is in excess of the sum for which the property might reasonably be expected to be let from year to year. In our view, this later insertion of clause (b) by the Taxation Laws (Amendment) Act, 1975, is meant to cover a case where the ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actual rent received, the Assessing Officer finds that the actual rent received is more than the fair rent determinable as above, then the actual rent shall constitute the annual value under section 23(1)(b) of the Act. Now, applying the above test to the facts of this case, we find a categorical finding of fact recorded by the Tribunal that the actual rent received by the assessee was more than the fair rent. Under the above circumstances, in view of the said finding of fact, we do not see any reason to interfere. Before concluding we may point out that under section 23(1)(b), the word "receivable" denotes payment of actual annual rent to the assessee. However, if in a given year a portion of the actual annual rent is in arrears, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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