TaxTMI 
TaxTMI 
2006 (10) TMI 94
X X X X Extracts X X X X
X X X X Extracts X X X X
....tated to be receivable by the assessee. 2.Whether computation under Section 22 and 23 of the Income Tax Act, 1961 must be on standard rent basis irrespective of whether this exercise has been carried out by the Rent Controller. 2. Succinctly stated, the Assessing Officer (AO) has not accepted the version of the Assessee/landlord/owner that it is receiving a rental of Rs.50 per month from its tenant Messrs Venkatraman and Co. and Rs.75 per month from the Bhagat Group of Companies. The AO was of the opinion that the Assessee had failed to prove that these sums reflected the 'actual rent' received by it in the relevant Assessment Years. The concurrent findings are to the effect that the Assessee had not produced its Books of Accounts or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....operty might reasonably be expected to let' (viz. standard rent) the actual rent would constitute the basis of computation of taxation. The difference is that where the property has not been rented out or where the rent stated by the assessee/owner is found by the AO not to be the actual rent, the latter would have to meticulously calculate the 'sum for which the property might reasonably be expected to let' whereas in other instances he would have to arrive at a rough and ready computation so as to ensure that the tax basis is the actual rent if it is higher than the 'reasonable' rent. In other words, the Section leaves no room for the assessee to contend that it is only the 'reasonable' rent and not the 'actual' rent which should be taken....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O had incorrectly computed the market rent of the house and had added the difference between the market rent so calculated and rent which was being actually paid. The same result was reached in L. Bansidhar and Sons vs. Commissioner of Income Tax, [1993] 201 ITR 655 where however it was clarified that the position stood changed with effect from the 1976 amendment, after which the actual rent would be relevant only if it is higher than the standard rent. Once again the decision of this Court in Commissioner of Income-Tax vs. Vinay Bharatram and Sons, [2003] 261 ITR 633 is topical. The Department had assailed the following Remand Order of the Commissioner of Income-tax (Appeals) - "The Assessing Officer is directed to redetermine ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... laid down that the determination of "Rateable Value" is limited by the measure of standard rent under Rent Acts. It was noted that the Bombay Municipal Corporation Act does not contain a statutory definition of rateable value. The Court opined that it would not be 'reasonable', while determining what would be the amount of annual rent for which land or building might reasonably be let from year to year to expect the hypothetical tenant to pay rent in excess of standard rents. It it true that Kamla Mills deals with municipal taxes whereas in the present Appeals we are dealing with Income-tax. In our view there is no reason whatsoever to adopt different yardstick while dealing with these two statutes. This is manifest for the reason that Sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 23(1) is a deeming provision and if the legislature intended that it would be reasonable that income-tax must be paid on limited rent basis it should have expressly and unequivocally stated so. A healthy balance has been introduced by the amendments carried out in 1975 since prior thereto it was possible for an assessee to insist that the standard rent should be calculated for the purpose of accessibility to income-tax and actual rent/income should be ignored. It appears to us that this equilibrium should not be disturbed by interpreting provisions of Income-tax Act in a manner such as would permit a person to be subjected to tax much beyond the 'income' which has actually been received by him. 8. In regard to the second question we ar....