Municipal ratable value governs annual value for deemed let-out house properties, not a notional market-rent estimate.

Annual value of deemed let-out house properties was required to be determined on the basis of municipal ratable value where that value was available and had been consistently accepted in earlier assessments. The lower authorities had applied a notional estimate linked to market rent and assumed rental value, but that approach was rejected on these facts because the municipal valuation provided the proper basis under the house property provisions. The assessee's method was accepted, and the notional market-rent estimate was held unjustified for computing annual value.

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Issues: Whether the annual value of the assessee's second house properties, treated as deemed to be let out, was to be determined on the basis of municipal ratable value or on a notional market rent estimate.

Analysis: The dispute concerned computation of annual value under the house property provisions where one residential house was treated as self-occupied and the remaining properties fell within the deemed let-out regime. The valuation adopted by the lower authorities proceeded on a notional estimate linked to market value and assumed rent, whereas the assessee relied on the municipal ratable value consistently accepted in earlier assessments. The Tribunal accepted the assessee's position, following the consistent view that where municipal ratable value is available, it provides the proper basis for determining annual value, and the estimate based on market price was not justified on these facts.

Conclusion: The annual value of the properties had to be computed on the basis of municipal ratable value, not on the notional market rent adopted by the Assessing Officer. The assessee succeeded.

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