Para 89.

1 Income-tax- Income from house property

detcrmining the annual value of a house property. Inthe majority ot cases, howeve
the following however,
Value can be determined by taking into consideration tour factors annua
a rent payable by the tenant;
b. valuation
municipal oftheproperty;
c fair rent of the
property; and
d standard rent under the Rent Control Acts.
is let
- The actual sum, for which property out, is
89.1 Rent payableby the tenant though it is
not
decisive. This is becaen as
at annual value,
plcccof evidence in arriving
rent payable by the tenant is influenced by many tactors,
such as relation of
the

etc. Jn aWee
fact that Acts,
standard rent fixed
under the Rent Control
the tenant and landlord, to these factors. For insta ng at
the annual value, due consideration should be given or
of thc owner besides paying rent, conversel the
tenant has undertaken any liability the tenant willthe
of the tenant, rent payable by tenant will
Owner has undertaken any obligationof the property. haveto
be adjusted to arrive at de facto rent
The following points one should keep in view. ascertain benefits mra
rent forproperty aswell
the tenant pays a composite
1.Somctimes,
the de facto rent of the property, composite rent mded
by the landlord. To determine form of the basis for computation of abe
andonly that part of it would part annual
disintegrated the out portion of the property.
value which is attributable to
let
from the tenant cannot he ds
share of municipal tax realised
2.Occupier's (ie, tenant's) to pay municipal tax-Ci7 v. Gillanders Arhut
rent as it is the occupier's duty buthnot
to actual
142 ITR 598 (Cal.).
Co. Lid [1983] the amount spent by the
undertaken to bear the cost of repairs, tenant
3.Ifthe tenant has the annual value-CiTv. Parbutty Churm
cannot be added to rent received to arrive at Law
[1965]57 ITR 609 (Cal.). to any
No addition can be made to annual letting value of premises with respect notiona
4.
landlord-CiTv. Satya Co. Ltd [1994]75 Taxman
made by tenant with 3
interest on deposit
(Cal.).
the local authority makes-
89.2 Municipal valuation For collecting municipal taxes, es a
of all buildings in its jurisdiction.Such valuation
may be taken as a strona
periodical survey
a CIT[1973]92 ITR 137
evidence representing the earning capacity of building-CJ.Georgev.
be considered to be conclusive evidence-Jamnadas Prabhudasu
(Ker.).It cannot, however,
Moreover, in some big cities (like Delhi, Bombay, Madras and
CIT[1951] 20 ITR 160 (Bom.). 10 per cent of
authorities determinenet rateable value after deducting
Calcutta) municipal an for service taxes
the gross rateable value, on
accountof repairs, and allowance (such as

therefore, an adjustment
The net valuation, requires
seweragetax and water tax). municipal

for determining annual value for income-tax purposes.

the property can be determined on the basis of
89.3Fair rent of the property Fair rent of
-

two properties
a rent fetched by a similar property in the same or similar locality. Though4 TC 98
cannot be alike in every respect, it has been observed in Stocks v. Sulley that the"

of other in the matter of other properties in the

evidence afforded by transactions parties
relevant in

neighbourhood, more or less comparablewith the property in question, is very

ariving at annualvalue.
Standard rent under the Rent ControlActs The Supreme Court has observed
in the
89.4
Khoslav. CIT[1981)
cases of Mrs. Shiela Kaushishv.CIT[1981]7 Taxman 1 and Amolak Ram
7Taxman51 that the landlord cannot reasonably expect to receive fromahypothetical tenant
be equally
more than the standard rent under the Rent Control Act and this would
anything
applicable
who has lost his right to apply for fixation of the standard rent or to the
to a tenant
it clear that if a property is covered underthe Rent
owner himself. Thesejudgments make
Control Act,its annual value, under section 23(1Xa), cannot
exceed the standard rent(fixedor
tor tne
determinable) under the Rent Control Act. However, these judgments were given