Rent-controlled property valuation cannot exceed standard rent, and arrears are taxable only in the year of receipt.

For rent-controlled property, annual value cannot be taken above the statutory standard rent, and a rent determination for one disputed unit cannot be mechanically extended to other tenanted units without specific evidence for each premises. Unrealised rent or arrears are taxable only under the special receipt-based provisions in the year of receipt, not in the year for which the assessing authority sought to tax them. Applying these principles, the enhanced deemed rental addition was held unsustainable and relief for the assessee was maintained.

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Issues: Whether the Assessing Officer was justified in enhancing the income from house property by adopting a deemed rental value for rent-controlled premises and by extrapolating the rent determined for one disputed unit to other tenanted units; and whether amounts relating to disputed occupation charges could be taxed in the assessment year in question.

Analysis: The property was subject to the Delhi Rent Control Act, 1958, and the annual value for such property could not exceed the standard rent where rent was controlled by statute. The determination of rent in relation to one disputed unit could not be mechanically applied to other premises without a specific determination for those properties. The Tribunal also noted that unrealized rent or arrears, if any, could be brought to tax only in the year of receipt under the special provisions governing such receipts, and not in the year for which the Assessing Officer sought to assess them. The Revenue did not bring any contrary decision to displace the earlier appellate view in the assessee's own case, so the same approach was followed for the remaining assessment years as well.

Conclusion: The addition based on enhanced deemed rental income was not sustainable, and the relief granted by the first appellate authority was upheld in favour of the assessee.

Final Conclusion: The Revenue failed to establish that the house-property income could be computed by extrapolating the disputed rent order to all tenanted units or by taxing such receipts before the year of receipt; the appeals therefore stood rejected.

Ratio Decidendi: For property covered by rent-control legislation, annual value under the income-tax law cannot exceed the statutory standard rent, and unrealized rent or arrears are taxable only in the year of receipt under the specific deeming provisions.

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