Bombay H.C : The said building was let out to a family trust at the annual rent of Rs. 7,20,000. The said trust created a sub-tenancy in favour of the Union of India.

High Court Of Bombay

Zenith Tin Works Ltd. vs. CIT & Ors.

Section 23

Asst. Year 1982-83, 1983-84, 1984-85, 1985-86

S.H. Kapadia & A.P. Shah, JJ.

IT Appeal Nos. 43 of 1999 & 2167 of 1990

7th February, 2000

Counsel Appeared

V.B. Patel, for the Appellant : R.V. Desai with J.P. Deodhar, for the Respondents

JUDGMENT

BY THE COURT :

Since a short point of law is involved in the matter, by consent, the appeal is taken up for final hearing and disposed of.

2. The facts giving rise to this appeal briefly are as follows : The appellants started construction of a building at Mahalaxmi. The said building was let out to a family trust at the annual rent of Rs. 7,20,000. The said trust created a sub-tenancy in favour of the Union of India. For the purpose of computation of the income under the head “Income from house property”, the assessee-company declared Rs. 7,20,000 as actual rent received by the company from the trust as annual letting value. This was for the asst. yr. 1982-83. For the subsequent asst. yrs.1983-84, 1984-85 and 1985-86, the AO has disregarded the actual rent received by the assessee and substituted the same by the rent received by the trust from the Union of India. The CIT(A) confirmed the order of the AO. Being aggrieved by the order passed by the CIT(A), the appellants preferred an appeal to the Tribunal. The Tribunal by its impugned judgment fixed the annual letting value at Rs. 20,41,776, against which the appellant filed a reference under s. 256(1) of the IT Act, being Ref. No. 2 of 1998.

3. The short point which arises for consideration in this matter is whether the determination of the annual letting value at Rs. 20,41,776 for the purpose of s. 23 of the Act is contrary to the provisions of the IT Act. On the facts it may be mentioned that the Court of Small Causes at Bombay has fixed the standard rent of the premises at Rs. 53,325 per month from 1st March, 1982. This evidence, has not been placed on record as indicated by the judgment of the Tribunal dt. 3rd Dec., 1993, in IT Nos. 2882 and 2883 of 1998. In view of the above it is clear that the annual letting value taken into account by the impugned judgment of the Tribunal is without considering the standard rent fixed by the Small Causes Court, which, as stated above, has fixed the standard rent at Rs. 53,325 per month from 1st March, 1982.

4. Under the above circumstances, the appeal is allowed and the impugned order passed by the Tribunal, dt. 25th March, 1999, is hereby set aside and the matter stands remanded back to the AO to decide the matter afresh in the light of the judgment of the Small Causes Court at Bombay referred to hereinabove.

Accordingly, the appeals stand allowed with no order as to costs.

[Citation : 259 ITR 238]

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