Yearly ceiling on irrecoverable rent exemption allows balance relief in later years under an ambiguous taxing provision.

Section 9 of the Indian Income-tax Act, 1922 taxed property income on annual value, while item 38 of Notification No. 878F allowed exemption for rent payable for a year but not paid and proved irrecoverable. The provision imposed a yearly ceiling on relief, but did not state that exemption had to be exhausted in a single assessment year. Where irrecoverable rent exceeded one year's rent, the balance could therefore be carried forward and claimed in later years, provided the annual limit was not exceeded each year. Any ambiguity in the exemption provision was construed in favour of the assessee.

---

---

Issues: Whether the assessee could claim exemption in successive assessment years in respect of the balance of irrecoverable rent under item 38 of Notification No. 878F dated 21.03.1922, where the amount of unrealised rent exceeded the rent payable for one year.

Analysis: Section 9 of the Indian Income-tax Act, 1922 taxes property income on the basis of annual value, and item 38 of the notification granted exemption for rent payable for a year but not paid and proved to be lost and irrecoverable. The notification fixed a ceiling on the deduction admissible in any one assessment year, but its language did not indicate that the right to exemption was exhausted once relief had been obtained for one year. Where the irrecoverable rent exceeded one year's rent, the balance remained capable of being relieved in later years, provided the annual ceiling was not exceeded in any year. The provision being ambiguous to that extent, the interpretation favourable to the assessee was preferred.

Conclusion: The assessee was entitled to claim the exemption in successive years for the balance of irrecoverable rent, subject to the limit that in each year the deduction could not exceed the rent payable for one year.

Ratio Decidendi: Where a taxing exemption provision fixes only a yearly ceiling but does not expressly limit the relief to a single occasion, the balance of the eligible amount may be claimed in later years, and an ambiguous taxing provision must be construed in favour of the subject.

---