JOYMALYA BAGCHI,J. - (1.) This appeal is sought to be preferred against the judgment and order of the learned Tribunal dated 15th July, 2011 in relation to the Assessment Year 2007-08 on the following suggested questions:- "a) Whether on the facts and in the circumstances of the case the Hon'ble Income Tax Appellate Tribunal is justified in dismissing the appeal of the Department relating to computation of annual value of rental properties at Rs. 2,26,26,511/- (Rupees two crores twenty six lakhs twenty six thousand five hundred eleven) only against the annual value of Rs. 1,19,09,942/- (Rupees one crore nineteen lakhs nine thousand nine hundred forty two) only computed by the assessee-Company without considering the facts that in the instant case the main context of Section 23 has not been followed by the Hon'ble Income Tax Appellate Tribunal which is the notional rent and which might reasonably be expected to earn ? b) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in dismissing the appeal of the Department relating to computation of annual value without considering the comparison of rent, the assessee-Company used to get from UCO Bank and Bank of Maharashtra with the companies which were once under the management and control of assessee-Company."
(2.) As far as the first ground is concerned we are of he view while taking note of the detailed reasoning of the learned Tribunal that the point has been decided by the Supreme Court conclusively. While assessing the annual valuation of any property under the Income-tax Act this Court as well as, the Hon'ble Supreme Court in the case of Dewan Daulat Raj Kapoor v. New Delhi Municipal Committee and Anr. Reported in {1980} 122 ITR 700 and also in the case of Mrs. Sheila Kaushish v. Commissioner of Income Tax {1981} 131 ITR 435 (SC) have held where the property is subject to rent control regulation, the municipal valuation should be considered to represent the fair rent for the properties for the purpose of levying Municipal Taxes and also Income Tax.
(3.) Our Court in the case of Commissioner of Income Tax v. Kishanlal and Sons (Udyog) Pvt. Ltd. reported in 2003, 260 ITR 481 (Cal) held that rent actually fetched from the property at the beginning of the relevant previous year should be considered to represent the annual rent value of the property. While taking note of Section 23 of the said Act we are of the view that while computing the income from house property the annual valuation shall be determined on the basis of two materials namely in case of vacant condition the rent that might have been fetched from any hypothetical tenant, and in case of property let to tenant the actual rent fetched from the house property whichever is higher. It appears in this case the actual rent received from the tenants in relation to the house property is higher than the annual valuation as determinable under the West Bengal Premises Tenancy Act or by the Municipal Corporation Act in case of vacant condition. We, therefore, appropriately set out Section 23 of the Income Tax Act and on careful reading thereof the aforesaid proposition of law will emerge. "23. (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 or any part of the property is let and the actual 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; or (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable: Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him.";