Annual letting value based on actual rent where no extraneous factors or rent-control evidence justified municipal valuation

Actual rent received by the assessee was treated as the fair basis for determining annual letting value because it ordinarily reflects what a landlord can reasonably expect to receive, unless inflated or depressed by extraneous considerations. Where rent control legislation applies, fair rent must be ascertained in accordance with that framework, not by municipal valuation alone. As the record did not show that the municipal valuation was fixed under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, and there was no evidence that the rent received was affected by any special relationship or other extraneous factor, the actual rent was rightly accepted for annual letting value.

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Issues: Whether the annual letting value of the property should be determined on the basis of the actual rent received by the assessee or on the municipal valuation fixed by the Corporation.

Analysis: The actual rent received by the assessee was lower than the municipal valuation. In determining annual letting value, the governing principle is that actual rent ordinarily affords reliable evidence of what the landlord may reasonably expect to receive, unless it is shown to be inflated or depressed by extraneous considerations. Where the property is subject to rent control legislation, fair rent must be determined with reference to the applicable rent control framework. The record did not show that the municipal valuation was fixed by applying the rent control principles under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, nor was there evidence that the rent received was depressed because of any special relationship or other extraneous factor.

Conclusion: The actual rent received by the assessee was rightly accepted as the fair rent for determining annual letting value, and the question was answered in the affirmative, in favour of the assessee.

Ratio Decidendi: In the absence of evidence of extraneous considerations, actual rent is a reliable measure of annual letting value, and where rent control legislation applies, fair rent must be determined in accordance with that legislation rather than by municipal valuation alone.

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