Annual letting value must follow standard rent principles under rent control law, requiring fresh tax assessment.

Annual letting value under section 23(1) is to be based on the rent the property might reasonably fetch, but where rent control legislation applies, that figure cannot exceed the standard rent under that law. Even if standard rent has not been formally fixed by the rent controller, the assessing authority must determine it by applying the principles of the applicable rent control statute. The assessment therefore required fresh determination by the Assessing Officer on that basis.

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Issues: Whether the annual letting value of the property had to be determined by applying the standard rent principles under the rent control law and, if so, whether the matter required fresh determination by the Assessing Officer.

Analysis: Section 23(1) governs determination of annual value for income from house property by reference to the sum for which the property might reasonably be expected to let from year to year, or the actual rent where that is higher. The decision accepted that where the property is subject to rent control legislation, the reasonable expected rent cannot exceed the standard rent determinable under that law. Even if the standard rent has not been fixed by the rent controller, the assessing authority must arrive at its own figure by applying the principles of the applicable rent control law. The Special Bench view was treated as having displaced the earlier impugned approach, and the matter required reconsideration on that footing.

Conclusion: The annual letting value had to be determined by reference to standard rent principles, and the assessment was to be redone by the Assessing Officer.

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