Annual value under section 23(1)(a) follows reasonable expected rent, not necessarily the agreed lease rent.

Annual value under section 23(1)(a) of the Income-tax Act, 1961 is determined by the sum for which the property may reasonably be expected to let from year to year, and the lease rent agreed between the parties is not conclusive for that purpose. The Kerala HC held that the agreed rent did not control the statutory measure of annual value, and the question was answered in the negative, in favour of the Revenue and against the assessees. The remaining controversy was not pressed.

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Issues: Whether the annual value of the property was liable to be determined under section 23(1)(a) of the Income-tax Act, 1961 despite the lease rent agreed between the parties.

Analysis: The question turned on the statutory measure of annual value as the sum for which the property might reasonably be expected to let from year to year. The lease arrangement and the rent stated therein were not accepted as conclusive for that purpose, and the controversy on the remaining questions was not pressed.

Conclusion: The question was answered in the negative, in favour of the Revenue and against the assessees.

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