COMMISSIONER OF INCOME TAX Vs. JOHNY JOSEPH

JUDGEMENT

(1.) ON the basis of applications under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"), the following questions have been referred for opinion of this court by the Income-tax Appellate Tribunal, Cochin Bench (in short "the Tribunal") :

(2.) THE factual position, as set out in the statement of the case, is as follows: THE assessee is an individual, deriving income from house property. THE Assessing Officer fixed the annual value of the property at Rs. 46,441 on the basis of the actual rent received for the assessment year 1983-84, as against Rs. 27,780 claimed by the assessee. THE determination was challenged in appeal before the Deputy Commissioner of Income-tax (Appeals) (in short the "Deputy CIT(A)"). THE appellate authority accepted the assessee's claim and directed the Assessing Officer to estimate the annual letting value at the figure disclosed by the assessee. THE Revenue preferred second appeal before the Tribunal. With reference to Section 23(1)(a) dealing with annual value, the Tribunal upheld the order of the Deputy Commissioner of Income-tax (Appeals). It was observed that the annual value as mentioned in the provision was the same for which the property might reasonably be let from year to year and the rent receivable had been rightly adopted by the first appellate authority. In the cross-objection filed by the assessee, the Tribunal held that the rent receivable amounting to Rs. 22,680 should be taken for the purpose of assessment instead of Rs. 27,780.

(3.) A bare reading of the provision shows that for the purpose 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 be 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. Obviously, if the amount received or receivable is in excess of the sum for which the property might reasonably be expected to be let from year to year, the amount actually received or receivable shall be the annual value of the property for the purpose of Section 22. It is to be noted that Section 22 deals with income from house property. Prior to the 1975 amendment, i.e., up to assessment year 1975-76, the actual rent received or receivable was not decisive in the determination of the annual value of the property, although it was an important piece of evidence therefor. After 1975 amendment, if the actual annual rent received or receivable is in excess of the notional annual value, the actual annual rent shall be deemed under Section 23(1), to be the annual value, for and from the assessment year 1976-77. The expression "total income" in Section 4 has to be understood as it is defined in Section 2(45). Under that definition total income means "the total amount of income referred to in Section 5, computed in the manner laid down in the Act", that is, computed for the purpose of charge ability, under the sections, from Sections 15 - 59. After amendment in 1975, the above position is applicable. That being the position, the approach and conclusions of the first appellate authority and the Tribunal were not justified. Additionally, we find that a Division Bench of this court in CIT v. G. Ramesan, 2000 241 ITR 426 (Appex.) (infra), expressed a similar view.