COMMISSIONER OF INCOME TAX Vs. M RATANCHAND CHORDIA

JUDGEMENT

(1.) IN pursuance of the direction by this court in Tax Case Petition No. 563 of 1982 dated April 11, 1983, the Tribunal referred the following question of law for the opinion of this court under section 256(2) of the INcome-tax Act, 1961"Whether, on the facts and in the circumstances of the case and having regard to the provisions of section 23(1) of the INcome-tax Act, 1961, the Tribunal was right in holding that the annual letting value of the property at No. 35-A, Mount Road, should be taken on the basis of actual rent received and not on the basis of the value fixed by the Corporation of Madras ?"IN the assessment year 1977-78, the assessee, an individual, deriving income from house property, money-lending and other sources, was assessed by the INcome-tax Officer by computing the property income adopting the annual letting value at the municipal valuation of Rs. 68, 578 instead of the actual rental receipt of Rs. 51, 150 adopted by the assessee. On appeal, the Appellate Assistant Commissioner accepted the assessee's contention that the annual actual rental value of Rs. 51, 150 should be adopted.

(2.) THE aggrieved Department went in appeal before the Tribunal. THE Tribunal, considering the decision of this court in Addl. CIT v. Mrs. Leela Govindan 1978 (113) ITR 136, 1988 (113) ITR 136, 1978 (7) CTR 187, 1978 CTR(Mad) 187 and that of the Delhi High Court in CIT v. H. P. Sharma 1980 (122) ITR 675, 1980 (4) TAXMAN 83 and that of the Supreme Court in Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee 1980 AIR(SC) 541, 1980 (122) ITR 700, 1980 (1) RCJ 468, 1980 (1) RCR 618, 1980 (1) RentLR 87, 1980 (1) SCC 685, 1980 (2) SCR 607, 1982 SCC(Tax) 116 and in the absence of any evidence on the side of the Department, that the rent charged by the assessee is on the low side, accepted the actual rent received by the assessee as the fair rent and accordingly confirmed the order passed by the first appellate authority/Appellate Assistant CommissionerLearned standing counsel for the applicant/Department submitted that the annual letting value should be determined in accordance with the provisions contained in section 23 of the Income-tax Act, 1961. It was submitted that the annual letting value determined by the municipality should be taken into account, since the same was fixed under section 100 of the Madras City Municipal Corporation Act. In the present case, the annual letting value fixed by the Municipal Corporation is higher than the actual rent received by the assessee. As per the amended provisions of section 23 of the Income-tax Act, if the actual rent paid is more than the municipal valuation, then the actual rent should be taken into consideration. For this reason, it was submitted that the Tribunal was not correct in adopting the actual letting value received by the assessee, as the fair rent in the matter of determining the annual rental valueWe have heard learned standing counsel for the Department and perused the records carefully.