TaxTMI 
TaxTMI 
2008 (7) TMI 1064
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....value determined by Small Causes Court?" 2. To examine the aforesaid question, some facts may have relevance which can be summarised as under: 3. The Assessee is a Private Ltd. Company. It is having various properties situated at different places and one of the property which is concerned with the present Reference is known as Shantisadan located at Ahmedabad. As per the Assessee, on the basis of the rental agreement, it had received rental income of Rs. 27,467/- from the property of Shantisadan and the said income was shown in the return by the Assessee. However, in the assessment proceedings, the Assessment Officer based on the gross rental value of the property assessed by Small Causes Court, directed for assessment on the basis of....
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....mall Causes Court for the Municipal Tax purpose, the same could be the basis for arriving at the actual rental income for the purpose of taxation. It was submitted that the income of two other properties of the very Assessee, the assessment based on the Annual Letting Value fixed by the Small Causes Court, is accepted and therefore, it was submitted that the same could be the valid criteria for assessment. He submitted that the Assessing Officer as well as the C.I.T. (Appeals), rightly adopted the criteria, but the Tribunal has reversed. It was the contention that the approach of the Tribunal was erroneous. 8. Whereas, on behalf of the Assessee, Mr. Karia, relied upon the decision of the Apex Court in the case of Dewan Daulat Rai Kapoor ....
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.... evidence of what the landlord might reasonably expect to get from a hypothetical tenant, unless the rent is inflated or depressed by reason of extraneous considerations such as relation, expectation of some other benefit, etc. There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from a hypothetical tenant. But where the rent of the building is subject to rent control legislation, this approximation may and often does get displaced. It is, therefore, necessary to consider the effect of rent control legislation on the determination of annual value." 11.Apart from the above, it is required to consider the effect of the Rent C....
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....erty in which there is no relationship of the landlord or tenant, it may stand on different consideration. In any case, the assessment of a property for municipal taxation purpose by a local authority would stand on altogether different aspects inasmuch as such taxation is in discharge of the obligation upon the local authority as per the relevant legislation. Therefore, while imposing taxation, as per the Municipal laws, the different consideration may prevail. The parity cannot be considered for assessing the income of a landlord and at that stage, the relevant criteria or consideration would be a fetter or restriction provided by the Rent Control Legislation upon the landlord to receive the rental income of the property. 13. As in the....