Court orders fresh assessment by AO based on standard rent computation for disputed actual rent.

The Appeals are allowed, and the matters are remanded to the Assessing Officer (AO) for fresh assessment based on standard rent computation as per the law outlined in the judgment. The court clarified that the AO must determine the annual value of the property based on standard rent if the actual rent is disputed, even if the Rent Controller has not fixed the standard rent. The AO's duty is to assess the property's annual value based on what it may reasonably be expected to let for, following principles of Rent laws.

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Issues:
1. Computation of 'annual value of property' by AO based on standard rent if actual rent is disputed.
2. Whether computation under Income Tax Act must be on standard rent basis even if Rent Controller has not done so.

Issue 1: Computation of 'annual value of property' based on standard rent:
The AO disputed the actual rent received by the Assessee and calculated the total rental income based on information from other tenants and market rates. Section 23 of the Income Tax Act mandates the AO to assess the annual value of property based on the sum for which it may reasonably be expected to let. The actual rent becomes the basis of taxation if higher than the standard rent. Various court decisions have upheld that 'reasonable' rent should be 'standard' rent. The AO must determine standard rent, and if the Assessee fails to provide necessary information, the calculated standard rent stands. The AO must follow Rent laws' principles in such cases.

Issue 2: Computation based on standard rent irrespective of Rent Controller's action:
The judgment clarifies that it is not necessary for the Rent Controller to fix standard rent for it to be considered under Section 23(1) of the Income Tax Act. The AO's duty is to correctly compute the sum for which the property might reasonably be expected to let from year to year. The judgment sets aside the Tribunal's order and remands the matters to the AO for a fresh determination in accordance with the law's interpretation provided.

In conclusion, the Appeals are allowed, and the matters are remanded to the AO for fresh assessment based on standard rent computation as per the law outlined in the judgment.

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