TaxTMI 
TaxTMI 
2002 (11) TMI 55
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....se, the Income-tax Appellate Tribunal was right in law in holding that the assessee's right to receive rent as fixed by the Small Causes Court crystallised only when the SLP filed by the tenant was dismissed by the apex court? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee was entitled to exemption under section 5(1)(iv) of the Wealth-tax Act in respect of the godown owned by her?" Notice was ordered in the tax cases to the respondent (assessee). The assessee was served, but there is no representation for and on behalf of the assessee. Mrs. Pushya Sitharaman, learned senior standing counsel for income-tax cases, in her fairness, has brought to the attention of this court all the aspects of the case including certain decisions which are against the Revenue. Necessary facts for the consideration of the tax cases are that the assessee is the owner of the property, viz., a godown at No. 50, Vaidyanatha Mudali Street, Chennai. The assessee let out the said godown on a monthly rent of Rs. 7,812 in favour of the Central Warehousing Corporation. The date of entering into the lease is not very....
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....ixation of fair rent came to be concluded only when the Supreme Court dismissed the special leave petition, by order dated March 4, 1991. The case of the assessee was that till the matter reached finality by the order of the Supreme Court, the assessee did not have any right to receive the fair rent as determined by the Rent Control authorities and therefore, the value of the property under rule 5 of Schedule III to the Wealth-tax Act should be determined on the basis of the actual rent received under the lease agreement during the previous years relevant to the assessment years in question. The Wealth-tax Officer did not accept the contention raised by the assessee and he held that the assessee had actually received the additional rent for the period from September 24, 1985, to August 31, 1992, and, hence, the additional rent received has to be taken into account for fixing the value under rule 5 of Schedule III to the Wealth-tax Act. The Commissioner of Income-tax (Appeals) confirmed the orders of the Assessing Officer and held that the fair rent for the property determined by the judicial forum was much higher than what was actually received by the assessee and disclosed in the ....
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....er section 5(1)(iv) of the Wealth-tax Act and hence, the assessee would be entitled for exemption under section 5(1)(iv) of the Wealth-tax Act. It is against the order of the Appellate Tribunal, the present reference has been made. Mrs. Pushya Sitharaman, learned senior standing counsel for the Revenue, submitted that the view of the Appellate Tribunal is not legally correct as the assessee has the right to receive the fair rent which was quantified by the authorities constituted under the Tamil Nadu Buildings (Lease and Rent Control) Act and the order of the Rent Control Appellate Authority was confirmed by this court and ultimately by the Supreme Court. Learned senior standing counsel therefore submitted that the amount of fair rent fixed by the Rent Control Authorities would represent the actual rent receivable by the landlord/assessee and that should be taken as the basis for determination of the market value of the property under rule 5 of Schedule III to the Wealth-tax Act. Learned senior standing counsel also submitted that when the Wealth-tax Officer made the assessment, the Supreme Court has decided the matter in favour of the assessee and, hence, it is only on the basis ....
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....ed by the local authority in whose area the property is situated for the purposes of levy of property tax or any other tax on the basis of such assessment, whichever is higher;...... Explanation: In this rule- (1) 'annual rent' means,-- (a) where the property is let throughout the year ending on the valuation date (hereinafter referred to as 'previous year'), the actual rent received or receivable by the owner in respect of such year;..." A close reading of the rule shows that where the property was let out, the amount received or receivable by the owner of the property as annual rent or the annual value determined by the local authority for the purposes of levy of property tax or any other tax on the basis of such assessment, whichever is higher, has to be taken as gross maintainable rent. The expression, "annual rent" is defined in the Explanation to mean where the property is let throughout the year ending on the valuation date, the actual rent received or receivable by the owner in respect of such year. There is no difficulty in holding that the gross maintainable rent should be determined on the basis of the actual rent received or receivable for the building which is let....
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....he Supreme Court was rendered subsequent to the valuation date, the decision of the Supreme Court would relate back to the date of filing of the petition by the assessee for determination of fair rent and the landlord/assessee herein has the right to receive the fair rent, as held by the Supreme Court, right from the date of the petition itself. Therefore, during the previous years relevant to the assessment years in question, the assessee had the right to receive the fair rent, and that amount is the actual rent receivable by the assessee during the previous years. Further, on the facts of the case, the decision of the Supreme Court upholding the orders of this court in the rent control proceedings was available at the time of finalisation of the assessment under the Wealth-tax Act by the Wealth-tax Officer. Therefore, the Wealth-tax Officer has not committed any error in taking the amount of fair rent fixed by the Rent Control Appellate Authority which was ultimately upheld by the Supreme Court as the actual rent received by the assessee. We are of the view that if the Wealth-tax Officer had ignored the judgment of the Supreme Court, then, he would have committed a serious mista....
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....tenant has disputed the quantification of the fair rent, that would not mean that the assessee did not have any right to receive the fair rent for the building in question. We therefore, hold that the assessee had the right to receive the fair rent which is statutory one and the rent control authorities have quantified the fair rent for the building in question. The decision of the Supreme Court in CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524 was considered by the Supreme Court in K.C.P. Ltd. v. CIT [2000] 245 ITR 421, wherein the Supreme Court noticed the facts in Hindustan Housing and Land Development Trust Ltd.'s case [1986] 161 ITR 524 as under: "The facts of the case before the Supreme Court were that certain lands belonging to the assessee-company were first requisitioned and then compulsorily acquired by the State Government. On an appeal preferred by the respondent-company, the arbitrator made an award directing compensation to be paid for requisition and acquisition. The arbitrator's award was promptly challenged by the State Government before the High Court. Pending the appeal, the State Government deposited the amount in the court which ....
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....ue of the Tamil Nadu Buildings (Lease and Rent Control) Act and not by virtue of the judgment which quantified the amount of fair rent payable by the tenant. The Supreme Court, in that case, also noticed the decision of the Calcutta High Court in CIT v. Hindusthan Housing and Land Development Trust Ltd. [19771 108 ITR 380 which was the subject-matter of consideration by the Supreme Court in Hindustan Housing and Land Development Trust Ltd.'s case [1986] 161 ITR 524, and held that the assessee's right to receive extra remuneration was not unsettled and the principle laid down in Hindusthan Housing and Land Development Trust Ltd.'s case [1977] 108 ITR 380 (Cal) would not apply. We hold that the ratio of the decision in Babulal Narottamdas's case [19911 187 ITR 473 (SC) would apply as the right of the assessee to receive the fair rent is not unsettled and there was only quantification of the fair rent. Further, it must be remembered that the assessee as the landlord has the right to receive the rent and there are no two separate rights; one to receive the rent under the contract and another to receive the rent under the Tamil Nadu Buildings (Lease and Rent Control) Act. The right of t....