TaxTMI 
TaxTMI 
2008 (8) TMI 599
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.... 2003-04, the Assessing Officer determined the annual value of the property at Rs. 1,35,000 per month and after allowing deduction under section 24 of the Act, income from house property was determined at Rs. 10,45,565. In assessment years 1999-2000, 2001-02, 2002-03 and 2004-05, the assessee had not offered the aforesaid income for tax; and therefore, for all the aforesaid assessment years, reassessment proceedings were initiated. In response to the notice under section 148, the assessee filed returns of income declaring income from house property at Rs. 1,36,098. According to the assessee, annual value of the property has to be determined in accordance with the Municipal Valuation and the sum declared by the assessee was in accordance with the Municipal Valuation and the same should be accepted. According to the Assessing Officer, annual value declared as above by the assessee was not acceptable. The Assessing Officer made a reference to the proceedings for assessment year 2003-04, wherein, after making field inquiries, the Assessing Officer had come to the conclusion that the monthly rental income from the property would be Rs. 1,35,000. Adopting the reasoning as given in the....
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.... of the property belonging to a company should be considered as use of the property for the purpose of business. We are unable to accept the submission made on behalf of the assessee. Firstly, it is seen that in the return of income filed in response to notice under section 148, the assessee has offered Annual value of the property as income under the head 'Income from house property'. Apart from the above, there has been no plea on behalf of the assessee that the directors occupied the premises belonging to the assessee for their stay while in India. Thirdly, even the plea that the property was used for holding business meetings and conferences, which was put forth before learned CIT(A), was not substantiated with any convincing evidence. Even before us, there was no evidence let in on the above aspects. In the circumstances, we hold that the plea of the assessee that the income in question has to be assessed under the head income from business cannot be accepted. 5. The next issue that arises for consideration is as to what is the annual value of the property; and consequently, quantum of income that has to be assessed under the head 'Income-from house property'. 6. On this....
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....esidence; or (b )cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him the annual value of such house or part of the house shall be taken to be nil. (3) The provisions of sub-section (2) shall not apply if - (a )the house or part of the house is actually let during the whole or any part of the previous year; or (b )any other benefit therefrom is derived by the owner. (4) Where the property referred to in sub-section (2) consists of more than one house- (a )the provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf; (b )the annual value of the house or houses, other than the house in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or" [Emphasis supplied] 7. In the present case, the property in question has not been let out; and therefore, what would be relevant is only provisions of section 23(1)(a) of the Act. Reading of the pr....
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....let from year to year". The Hon'ble Supreme Court held that the annual value is always rent realizable by landlord and that actual rent is only an indicator what the landlord might reasonably expect to get from a hypothetical tenant. The Hon'ble Court further held that where tenancy is subject to rent control legalization, Standard rent would be a proper measure and in any event, annual value cannot exceed such standard rent. In the case of Mrs. Sheila Kaushish v. CIT [1981] 131 ITR 435 (SC), the question arose in the context of provisions of section 23 of the Income-tax Act. The Hon'ble Supreme Court applying the decision of Hon'ble Supreme Court in the case of Dewan Daulat Rai Kapoor (supra) observed as follows :- "Now this was a definition given on the interpretation of the definition of 'Annual value' in the Delhi Municipal Corporation Act, 1957, and the Punjab Municipal Act, 1911, for the purpose of levy of house tax, but it would be equally applicable in interpreting the definition of 'annual value' in sub-section (1) of section 23 of the Income-tax Act, 1961, because these definitions are in identical terms and it was impossible to distinguish the definition of 'annual va....
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....amendment different considerations might arise. But, we are not concerned with such situation in the instant case. Therefore, in view of that position and the municipal law and in view of the decision of the Supreme Court, it appears to us that the income from house property must be computed on the basis of the sum which might reasonably be expected to let from year to year and with the annual municipal value provided such a value is not above the standard rent receivable and that would be the safest guide for this purpose and the rent actually received would not be of any relevance." 11. The Court in the aforesaid decision also relied on the provisions of section 154 of the Bombay Municipal Corporation Act, wherein the manner of determination of rateable value has been laid down. The said provisions also speak of "annual rent for which, the property might reasonably be expected to let from year to year". Thus, the Court con- cluded that the Municipal Valuation and the annual value under section 23(1)(a) are one of the same. The decision of Hon'ble Calcutta High Court has been followed by Hon'ble Bombay High Court in the case of M.V. Sonavala v. CIT [1989] 177 ITR 246, wherein H....