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April 2008

House property : S. 23 : Annual value is the rent received/receivable by owner from tenant, even if tenant receives higher rent by subletting property

By K. B. Bhujle, Advocate
Reading Time 2 mins

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4 House Property : Annual value : S. 23 of Income-tax Act,
1961 : Property sublet by tenant : Annual value is the rent received or
receivable by the assessee-owner from the tenants, irrespective whether the
tenants have received higher rents by subletting the properties.


[CIT v. Akshay Textiles Trading & Agencies (P) Ltd.,
214 CTR 316 (Bom.)]

In the appeal filed by the Revenue, the following questions
were raised before the Bombay High Court :

(i) Whether on the facts and in the circumstances of the
case and in law, the rent paid by ultimate user will be treated as Annual
Letting Value of the property as against rent received by the assessee ?

(ii) Whether on the facts and in the circumstances of the
case and in law, the Tribunal was justified in holding that the annual letting
value has to be determined with reference to the annual rent received by the
assessee and not what has been received by its tenants from the ultimate
users ?

The Bombay High Court held that the annual value of the
properties let out by the assessee is the rent received or receivable by the
assessee-owner from the tenants, irrespective of whether the tenants have
received higher rents by subletting the properties.

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