COMMISSIONER OF INCOME TAX Vs. ALAGAPPAN M R

JUDGEMENT

(1.) IN these reference applications, the Revenue seeks a direction from this court to the Tribunal to refer the following question of law as arising out of the order of the Tribunal :

(2.) THE assessee in this case along with two others owns a property known as "Laurels" in Chittaranjan Road, Madras. For the assessment year 1976-77, the assessee, while computing his property income, had adopted his share of annual letting value of the building at Rs. 4,000, being the 1/3rd share of the total annual letting value of Rs. 12,000, adopted for the whole building. THE assessee sought to support the annual letting value of Rs. 12,000 adopted by him by referring to the annual letting value fixed by the Corporation of Madras for the same building at Rs. 9,828. THE Income-tax Officer, however, found that the property has been improved at a cost of Rs. 5,58,798 and working out the return on such investment at 6%, fixed the annual letting value of the entire building at Rs. 36,000 and determined the assessee's share of the annual letting value at Rs. 12,000 as against Rs. 4,000 given by the assessee in his return.

(3.) THE Tribunal, after considering the rival contentions, held that the annual letting value fixed by the municipal authorities was to be the basis for fixing the bona fide annual letting value and that the adoption of Rs. 12,000 as the annual letting value for the entire property should be taken as reasonable. In this view, the Tribunal allowed the assessee's appeal and directed the Income-tax Officer to recompute the income from the house property on the basis of the bona fide letting value adopted by the assessee.