Annual letting value for self-occupied property is capped by standard rent under rent control law, not open market rent.

For a self-occupied property governed by rent control legislation, annual letting value is limited to the rent reasonably determinable under that statute and cannot exceed standard rent or fair rent. The applicable rent control framework fixes the norm of reasonable rent, so the property's annual value does not change merely because it is self-occupied rather than let out. Where standard rent has not been formally fixed, the Income-tax Officer must determine rent on the principles of the rent control law, since a landlord cannot reasonably be expected to receive more than such rent from a hypothetical tenant. Computation may then proceed with permissible deductions.

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Issues: Whether, for determining the annual letting value of a self-occupied property, the proper basis is the open market rent or the standard rent determinable under the applicable rent control law.

Analysis: The applicable rent control framework fixes the norm of reasonable rent, and the annual value of a building cannot vary merely because the property is self-occupied rather than tenanted. Where standard rent has not been formally fixed, the Income-tax Officer must determine the rent on the principles laid down in the rent control statute, as the landlord cannot reasonably be expected to receive more than such rent from a hypothetical tenant. The annual letting value must therefore be computed on the basis of the fair rent or standard rent determinable under the Act, with permissible deductions thereafter.

Conclusion: The annual letting value of the self-occupied property had to be determined on the basis of the standard rent or fair rent under the rent control law, not on the basis of open market rent.

Ratio Decidendi: For a self-occupied property governed by rent control legislation, annual letting value is limited to the rent reasonably determinable under that legislation and cannot exceed the standard rent or fair rent.

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