Annual value of rent-free inherited property remains taxable on statutory basis, regardless of actual rent receipt

Annual value of a house property is chargeable under section 9 on the statutory basis of bona fide annual value, not on actual rent received. A rent-free occupation under the terms of a will, or the owner's or trustees' inability to let the property, does not displace the statutory mode of computation for property income. The testamentary arrangement therefore does not prevent inclusion of the property's annual value in assessment, and section 41 was held inapplicable as a ground to avoid tax. The annual value was rightly brought to tax under the property provisions.

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Issues: Whether the annual value of a house property occupied rent-free under the terms of a will could be included in the assessee's assessment under section 9 of the Income-tax Act, 1922.

Analysis: The charging provisions of the Act require income to be computed in the manner laid down by the statute, and section 9 creates a special mode of computation for income from property. The tax is payable on the bona fide annual value of the property, which is a statutory or artificial measure of income and does not depend on actual receipt of rent. The inability of the owner or trustees to let the property, or the fact that the occupants use it rent-free under a testamentary arrangement, does not alter the statutory basis of assessment. The statutory scheme also makes section 41 inapplicable as a basis for escape from tax in these circumstances.

Conclusion: The annual value of the property was rightly included in the assessment under section 9, and the answer was in the affirmative.

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