Annual letting value and municipal valuation aligned where standard rent controlled and no fresh factual basis justified departure.

Under the Indian Income-tax Act, 1922, annual value was required to reflect the rent for which property could reasonably be let from year to year, and the court treated municipal valuation as ordinarily aligned with that measure where the language was similar. Standard rent was the controlling benchmark, and in the absence of any factual change or material basis to estimate a different reasonable rent, the longstanding municipal valuation could be adopted for income-tax purposes. The assessing officer's reliance on cost, rather than expected rent, was not the proper test, so the municipal valuation was accepted as the annual letting value.

---

---

Issues: Whether, for the assessment year 1961-62, the municipal valuation of the properties was rightly treated as the annual letting value under the income-tax law.

Analysis: For the relevant year, the case arose under the Indian Income-tax Act, 1922, and the annual value had to be determined on the basis of the rent for which the property could reasonably be let from year to year. The court relied on the principle that annual value under income-tax law and municipal valuation under the municipal law were governed by similar language and, ordinarily, should be aligned. It was also noted that the standard rent was the controlling measure and that, on the facts, the municipal valuation had long been accepted without any factual change justifying a fresh departure. The Income-tax Officer had not ascertained the expected reasonable rent and had instead relied on cost, which was not a proper test.

Conclusion: The municipal valuation was correctly accepted as the annual letting value, and the question was answered in the negative, in favour of the assessee.

Ratio Decidendi: Where the statutory definition of annual value turns on the rent reasonably expected, and the municipal valuation reflects the standard rent without factual change or ation of a different reasonable rent, the municipal valuation may be adopted for income-tax purposes.

---