Supreme Court of India
SHIELA KAUSHISHversusCOMMISSIONER OF INCOME-TAX, DELHI
- Citation
- 1981 INSC 142
- Decided
- 18 August 1981
- Disposal
- Appeal(s) allowed
- Bench
- P N BHAGWATI
Holding
The annual value of a building under s.23(1) of the Income‑Tax Act, 1961 is the standard rent determinable under the applicable Rent Control Act, not the actual rent received.
Summary
Shiela Kaushish, a taxpayer, constructed a warehouse in Delhi and let it out to the American Embassy under several leases, eventually receiving a total rent of Rs.34,797 per month from April 1968. For the assessment years 1969-70 and 1970-71, the Income‑Tax Officer treated the actual rent received as the "annual value" under s.23(1) of the Income‑Tax Act, 1961, and taxed her accordingly. Kaushish contended that, because the property was governed by the Delhi Rent Control Act, the annual value should be the standard rent determinable under that Act, not the actual rent. The Tribunal and the High Court upheld the officer’s view, relying on M.M. Chawla v. J.S. Sethi. The Supreme Court, referring to Dewan Dault Rai Kapoor v. New Delhi Municipal Committee, held that the definition of "annual value" requires the standard rent under the Rent Act, even where the standard rent has not been fixed, and that the actual rent cannot be the measure. Consequently, the Court allowed the appeal, directing that the standard rent be used as the annual value and ordered the Revenue to pay costs.
Issues considered
- Whether, for a property governed by the Delhi Rent Control Act, the actual rent received or the standard rent determinable under the Act should be taken as the "annual value" under s.23(1) of the Income‑Tax Act, 1961.
- Whether the record showing receipt of Rs.4,17,674 from the American Embassy was sufficient to deem that amount a reasonable rent for the purpose of determining annual value.
Legislation cited
- Delhi Municipal Corporation Act, 1957
- Delhi Rent Control Act, 1958s. 12, s. 6, s. 9
- Income Tax Act, 1961s. 22, s. 23(1), s. 23(2)
- Punjab Municipal Act, 1911
- Taxation Laws (Amendment) Act, 1975s. 6
Subjects
Income TaxAnnual ValueHouse PropertyStandard RentRent ControlDelhi Rent Control ActSection 23Tax AssessmentInterpretation of Statutes
Judgment
309
SHIELA KAUSHISH
v.
COMMISSIONER OF INCOME-TAX, DELHI
August 18, 1981
B
[P, N. BHAGWATI AND BAHARUL [SLAM, JJ.]
Income Tax Act, 1961, S. 23(l)-lnco111efrom house property-Chargeability
to income tax-" Annual value" of building-Determination of-fVhether standard
rent determinable under provisions of Rent Act or actual rent received by landlord
from tenant.
c
Words and Phrases-" Annual Vafue"-Meaning of-Income Tax Act, 1961,
s. 23(1).
The appellant-3.ssessee constructed a warehouse and let out different portions
under different tenancies comn1encing on different dates. Later on a new lease
was entered into between the assessee and her tenant for letting out of the entire
warehouse and the assessee started receiving rent at the rate of Rs. 34,797/- per
D
month in respect of the entire warehouse from 1st April, 1968.
In the course of assessment of the assessee for the assessment years 1969-70
and 1970-71 the question arose as to how the "annual value" of the warehouse
should be determined for the purpose of chargeability to income tax under the
head "income fro1n house property". The assessee claimed before the Income. E
Tax Officer that on a proper construction of sub-section (1) of section 23, it was
not the actual rent received by her from the warehouse that was material for
determining the annual value of the warehouse but the hypothetical amount for
which the warehouse might reasonably be expected to be let from year to year ,
and since the Delhi Rent Control Act 1958 was applicable in the area in which the
warehouse was situate, the warehouse could not reasonably be expected to be
let from year to year at a rent exceeding the standard rent determinable under
the provisions of that Act. The Income Tax Officer rejected this claim and took
F
~·he view that the actual rent received by the assessee provided the ·most accurate
-and satisfactory measure of the amount for which the warehouse might reasonably
be expected to let from year to year and the annual value of the warehouse must
therefore be taken to be the actual rent received by the assessee and he accord-
ingly assessed the assessee to tax on the basis of the actual rent.
G
The assessee's appeals for each of the two assessment years to the Appellate
Assistant Commissioner were unsuccessful. The Income-Tax Tribunal took the
same view on further appeals by the assessee and held relying on the deciSion of
this Court in M. M. Chawla v. J. S. Sethi (1970) 2 SCR, 390 tbat!in the absence
of fixation of standard rent, the agreed rent which is legally recoverable and
'" not tainted by fraud, relationship or any other consideration must be taken to be H
the standard rent and hence the actual rent received by the assessee was rightly
taken as the annual value of the warehouse.
\
310 SUPRBME COURT REPORTS [1982] 1 S.C.R.
A The assessee's applications to the Tribunal as welJ as to the High Court )
for the making of a reference uoder section 256 of the Income-Tax Act, 1961
were also dismissed.
Allowing the, appeals to this Court,
HELD: 1.The annual value of the building according to the definition
B given in sub-section (I) of section 23 of the Inrome-Tax Act, 1961 is the standard
rent determinable under the provisions of the Rent Act and not the:actual rent
received by the landlord from the teoant. (316 H-317 A]
2. Jn Dewan Dau/at Rai Kapoor etc. v. New Delhi Muncipal Co1nmittee
[1980] 2 S.C.R. 607 a decision of this Court given on the interpretation of the
definition of 'annual value' in the Delhi Municipal Corporation Act 1957 and
c the Punjab Municipal Act 1911 for the purpose of levy of house tax, it was held
that even if tbe standard rent of a building has not been fixed by the Controller
under section 9 of the Rent Act, the landlord cannot reasonably expect to receive
from a hypothetical tenant anything more than the standard rent determinable
under the provisions of the Rent Act and this would be equally so whether the
building has been let out to a tenant who has lost his right to apply for fixation j
of standard rent by reason of expiration of the period of limitation prescribed
D by section 12 of the Rent Act or the building is selfMoccupied by rhe owner, and
that the standard rent determinable under the provisions of the Rent Act and not
the actual rent received by the landlord would constitute the correct measure of
the annual value of the building. [314 H, 316 A-CJ
3. This decision though given on the interpretation of the definition of
'annual value' in the Delhi Municipal Corporation Act 1957 and the Punjab
E Municipal Act 1911 for the purpose of levy of house tax, would be equally
applicable in interpreting the definition of 'annual value• in sub-section (1) of
section 23 of the Income-Tax Act, 1961 because these definitions are in identical
terms and it is in1possible to distinguish the definition of 'annual value' in sub~
section (1) of section 23 of the Income Tax Act, 1961 from the definition of that
term in the Municipal Corporation Act 1957, and the Punjab Municipal Act, 1911.
(316 F]
F
'In the instant ~Se the annual value of the warehouse for the purpose of
chargeability to income-tax for the assessment years 1969-70 and 1970-71 would
have to be determined on the basis of the standard rents of different portions of
the warehouse determinable under clause (b) of sub-section (2) and paragraph
(b) of sub-clause (2) of pause (B) of sub-section (1) of section 6 of the Rent Act.
(319 CJ
G
CIVIL APPELLATE JuRJSDICTION : Civil Appeal Nos. 2110 and
2111of1978.
Appeals by special leave from the judgment and order dated
H the !st February, 1978 of the Delhi High Court in l.T.C. Nos. 14
and 15 of 1974.
..
SHIELA KAUSHISH v. C.I.T. (Bhagwati, J.) 311
WITH A
Civil Appeal Nos. 1184-85 of 1981.
.
Appeals by special leave from the order dated the 28th
September, 1973 of the Income Tax Appellate Tribunal Delhi Bench
in LT.A. No. 386 and 387 of 1972-73.
'
_,., B
Soli J. Sorabjee, T.A. Ramachandran, Parkash Sarup, Ravinder
Narain and Talat Ansari for the Appellant in all the Appeals.
·-
P.A. Francis, S.P. Nayar and Miss A. Su&hashini for the
• Respondent in all the Appeals.
The Judgment of the Court was delivered by c
BHAGWATI, J. These appeals by special leave raise a common
question of law relating to the determination of annual value of a
building for the purpose of chargeability to tax under the Income
tax Act, 1961 where the building is governed by the provisions of the
Rent Control legislation but the standard rent has not yet been
D
fixed. The facts giving rise to these appeals are few and may be
•
briefly stated as follows :
The assessee constructed a warehouse in Delhi some time in
1961 at a total cost of Rs. 4,13,000/-. The warehouse consisted of
two portions on the ground floor, one on the north and the other on
the south and also a mezzanine floor and a first floor. On 19th E
March, 1962, the assessee let out the whole of the first floor to the
American Embassy at the rent of Rs. 5810/- per month and subse
quently on 1st April, 1964 she let out the northern portion of the
ground floor together with the mezzanine floor to the same tenant
at the rent of Rs. 6907/- per month and on 7th December, 1964 the
northern portion of the ground floor was let out to the same tenant at F
the rent of Rs. 6640/- per month. Thus the entire warehouse was
let out by the assessee to the American Embassy with different
portions let out under different tenancies commencing on differerit
dates. On I 7th July, 1967, however, a new lease was entered into
between the assessee and the American Embassy for letting out of
the entire warehouse at the rent of Rs. 34,797/- per month and this G
lease came into effect from !st April, 1968. The assessee thus
started receiving rent at the rate of Rs. 34,797/- per month in respect
of the entire warehouse from !st April, 1968:
The question arose in the course of assessment of the assessee
H
to income tax for the assessment years 1969-70 and 1970-71 as to
how the annual value of the warehouse should be determined for the
312 SUPREME COURT REPORTS [1982] ; S.C.R.
)
A purpose of chargeability to income tax undet the head "Income from
house property"'. Now income from house property chargeable to
tax is computable under section 22 which provides that the annual
value of property consisting of any buildings or lands appurtenant
thereto, of which the assessee is the owner, shall be chargeable to
income tax under the head "Income from house property". Where,
8 therefore, the assessee owns a building, the annual value of sue h
building is chargeable to income tax under the head "income from
j
house property" under section 22. But the question immediately
arises : how is the annual value to be determined ? The answer is
provided by section 23 which lays down the mode of determination
of annual value. Sub-section (I) of that section as it stood at the
c material time provided that "for the purposes of section 22, the
annual value of any property shall be deemed to be the sum for
which the property might reasonably be expected to let from year to
year. The assessee therefore claimed that on a proper construction
)
of sub-section (1) of section 23, it was not the actual rent received by
the assessee for the warehouse that was material for determining the
D annual value of the warehouse but the hypothetical amount for which
the warehouse might reasonably be expected to let from year to year
and since the Delhi Rent Control Act 1958 (hereinafter referred to
as the Rent Act) was applicable in the area in which the warehouse
was situate, the warehouse could not reasonably be expected to let
from year to year at a rent exceeding the standard rent determinable
E under the provisions of that Act. The Income Tax Officer however, '
took the view that the actual rent received by the assessee provided
the most accurate and satisfactory measure of the amount for whicn
the warehouse might reasonably be expected to let from year to year
and the annual value of the warehouse must therefore be taken to be
the actual rent received by the assessee and he accordingly assessed
F
the assessee to tax on the basis of the actual rent received by her.
The assessee preferred an appeal to the Appellate Assistant Com·
missioner for each of the two assessment years challenging the
correctness of the view taken by the Income-tax Officer and conten-
ding that the annual value of the warehouse must be taken to be the
standard rent determinable under the provisions of the Rent Act, but
G the appeals were unsuccessful and the determination of the annual
value made by the Income-tax Officer was affirmed. The Tribunal
also took the same view on further appeals by the assessee and by a
consolidated order dated 28th September, 1973, confirmed the
asses~ments made on the assessee on the basis of the actual rent
H
received by her. The Tribunal held relying on the decision of this
Court in M.M. Chawala v. JS. Sethi, ]1970] 2 SCR 390 that, in the
SHIELA KAUSHISH v. C.I.T. (Bh"gwati, J.) 313
. ' absence of fixation of standard rent. the agreed rent which is legally A
recover•ble and not tainted by fraud, relationship or any other
consideration must Le taken to be the standard rent and hence the
actual rent received by the assessee was rightly taken as the annual
value of the warehouse. In the mean time, an application was made
for fixation of the standard rent of the warehouse by the new tenant
who came to occupy the warehouse after the American Embassy B
vacated it and on this application, the Rent Controller by an order
dated 13th March, 1973 fixed the standard rent at Rs. 34,848.00 per
annum under the provisions of the Rent Act. The assessee aggrieved
- by the order dated 28th September 1973 made by the Tribunal,
preferred two applications one in respect of each assessment year,
seeking reference of five questions which, according to the assessee, c
arose out of the order of the Tribunal, but the Tribunal by a
common order dated 26th February, 1974, rejected the applications
on the ground that there was only one question of law which arose
out of the order of the Tribunal but that was concluded by the
decision of this Court in M.M. Chaw/a's case (supra) and so far as D
the other questions were concerned, they were all questions of fact
and hence not referable under section 256 (l) of the Income-tax Act,
1961. The assessee thereupon preferred two applications before the
High Court of Delhi under section 256 (2) of the Income-tax Act,
1961 for directing the Tribunal to make a reference, but these appli-
cations also met with the same fate and on the same grounds which
' found favour with the Tribunal, they were rejected by the High
Court by judgment dated I st February, 1978. This led to the filing
of two petitions for special leave to appeal, one in respect of each
assessment year, and the>e petitions were allowed and special leave
granted by this Court, giving rise to civil appeals Nos. 2110 and 2111
of 1978. Since these two appeals were directed against the judgment F
of the High Court refusing two call for a reference from the Tribunal,
the only question which could have been considered by the Court in
. these appeals was as to whether any questions of law arose out of
' the order of the Tribunal requiring to be referred to the High Court
and therefore even if the assessee succeeded in the appeals there
would not be an end to the litigation but the questions of law
G '
formulated by this Court would have to be referred by the Tribunal
to the High Court and then the High Court would have
to hear the reference and answer the questions referred to it.
This would have delayed considerably the final determination of the
questions of law arising out of the order of the Tribunal and it was,
therefore, agreed between the parties that the following two ques-
H
,-
314 SUPREME COURT REPORTS [1982] 1 S.C.R.
A tions of law should be decided by the Court in these appeals, since
they admittedly arose out of the order of the Tribunal :
(1) "Whether, on the facts and in the circumstances of the
case, the actual rent received by the assessee or the
standard rent under the Delhi Rent Control Act,
should be taken to be the "annual value" of the pro-
perty within the meaning of section 23 of the Income
Tax Act, 1961,
(2) Whether, there was any material on record on which
the Tribunal could hold that the receipt of
c Rs. 4,17,674/- from the American Embassy would he
reasonable rent for which the property might be let in
spite of the fact that properties in the immediate neigh-
bourhood let out to the Bank of Baroda and Indian
Oxygen Company Ltd. were let at rents considerably J
lower.
0
This Court accordingly made an order directing that these two
questions of law should be disposed of by the Court directly, without
calling for a reference from the Tribunal. However, since some
doubt was felt whether this Court could directly dispose of the two
questions of law arising out of the order of the Tribunal without
E calling for a reference, the assessee by way of abundant caution
preferred two petitions for special leave to appeal directed against
the order of the Tribunal dated 28th September, 1973 and o.n these
petitions, special leave was granted by this Court and that is how
Civil Appeal Nos. 1184-1185 of 1981 have come up for hearing
before us along with C.A. Nos. 2110 and 2111 of 1978.
F
Though two questions have been formulated by this Court as
arising out of the order of the Tribunal dated· 28th September, 1973,
it is the first which really formed the subject matter of controversy
,
<
between the parties and since, in our view, that question has to be
answered in favour of the assessee, it is not necessary to embark.
upon a consideration ·Of the second question. So far as the first
G
question is concerned, it stands concluded by the recent decision of
this Court in Dewan Dau/at Rai Kapoor etc. etc. v. New Delhi
Municipal Committee.(') There were three appeals decided by a
common judgment in that case and the question which arose for
determination in these appeals was as to how the annual value of a /
H
(I) [1980] 2 S.C.R. 607.
SHIELA KAUSHISH v. C.l.T. (Bhagwati, J.) 315
building should be determined for levy of house tax where A
the building is governed by the prov1swns of the Rent
Act, but the standard rent has not yet been fixed. One of these
appeals related to a case where the building was situate within
the jurisdiction of the New Delhi Municipal Committee and
was liable to be assessed to house tax under the Punjab Municipal
Act, 1911 while the other two related to cases where the building B
was situate within the limit of the Corporation of Delhi and was
assessable to house tax under the Delhi Municipal Corporation Act,
1957. The house tax under both statutes was levied with reference
to the 'annual value' of the building. The 'annual value' was defined
in both statutes in the same terms, barring a second proviso which
occurred in section 116 of the Delhi Municipal Corporation Act, c
1957, but was absent in section 3 (I) (b) of the Punjab Munici~al
Act, I 91 I. This proviso was however not material as it dealt with
a case where the standard rent was fixed under the provisions of the
Rent Act, while in none of the cases before the Court was the stan-
dard rent fixed in respect of the building involved in such case.
According to the definition given in both statutes, the 'annual value' D
of a building meant the gross annual rent at which the building
might reasonably be expected to let from year to year. The contro-
versy between the parties centered round the question as to what is
the true meaning and effect of the expression "the gross annual rent
at which such house or building ......... may reasonably be expected
to let from year to year" occurring in the definition in both statutes.
E
The argument of the Municipal Authorities was that since the
standard rent of the building was not fixed by the Controller under
section 9 of the Rent Act in any of the cases before the Court and in
each of the cases the period of limitation prescribed by section 12 of
the Rent Act for making an application for fixation of the standard
rent had expired, the landlord in each case was entitled to continue to
F
receive the contractual rent from the tenant without any legal impedi-
ment and hence the annual value of the building was not limited to
the standard rent determinable in accordance with the principles laid
down in the Rent Act, but was liable to be assessed by reference to
the contractual rent recoverable by the landlord from the tenant.
G
The Municipal Authorities urged that if it was not penal for the
landlord to receive the contractual rent from the tenant, even if it be
higher than the standard rent determinable under the provisions of
the Rent Act, it would not be incorrect to say that the landlord
could reasonably expect to let the building at the contractual rent H
and the contractual rent therefore provided a correct measure for
determination of the annual value of the building. This argument
316 SUPREME COURT REPORTS [1982] J S.C.R.
A was hower rejected by the court and it was held that even if the
standard rent of a building has not been fixed by the Controller
under section 9 of the Rent Act, the landlord cannot reasonably
expect to receive from a hypothetical tenant anything more than the
standard rent determinable under the provisions of the Rent Act and
this would be so equally whether the building has been let out to a
B tenant who bas lost bis right to apply for fixation of the standard
rent by reason of expiration of the period of limitation prescribed
v by section 12 of the Rent Act or the building is self-occupied by the )
owner. Therefore, in either case, according to the definition of
'annual value' given in both statutes, the standard rent detenninable
under the provisions of the Rent Act and not the actual rent received
c by the landlord from the tenant would constitute the correct measure
of the annual value of the building. The court pointed out that in
each case the assessing atuhority would have to arrive at its own
figure of the standard rent by applying the priciples laid down in the
Rent Act for determination of the standard rent and determine the I
annual value of the building on the basis of such figure of the stan-
D
dard rent. The court, on this view, negatived the attempt of the
Municipal Authorities in each of the cases to determine the annual
value of the the building on theba sis of the actual rent received by the
landlord and observed that the annual value of the building must be
held to be limited by the measure of the stand,ard rent determinable
on the principles laid down in the Rent Act and it could not exceed
E
such measure of the standard rent. Now this was a decision given on
the interpretation of the definition of 'annual value' in the Delhi
Municipal Corporation Act, 1957 and the Punjab Municipal Act,
1911 for the purpose of levy of house tax, but it would be equally
applicable in interpreting the definition of 'annual value' in sub-sec.
(I) of section 23 of the Income-tax Act, 1961, because these defini-
F
tions are in identical terms and it is impossible to distinguish the
definition of 'annual value' in sub-sec. (I) of section 23 of the
Income-tax Act, 1961 from the definition of that tenn in the
Municipal Corporation Act, 1957, and the Punjab Municipal Act,
1911. We must therefore hold, on an indentical line of reasoning.
G that even if the standard rent of a building has not been fixed by the
Controller under section 9 of the Rent Act and the period of limi·
tation prescribed by section 12 of the Rent Act for making an
application for fixation of the standard rent having expired, it is no
longer competent to the tenant to have the standard rent of the
H building fixed, the annual value of the building according to the
definition given in sub-section (I) of section 23 of the Income-tax
Act, 1961 must be held to be the standard rent determinable under
SHIELA KAUSHISH v. C.l.T. (Bhagwati, J.) 317
- \
the provisions of the Rent Act and not the actual rent received by
the landlord from the tenant. This interpretation which we are
A
placing on the language of sub-section (!) of sec. 23 of the Income-
tax Act, 1961, may be regarded as having received legislative appro-
val, for we find that by section 6 of the Taxation Laws (Amendment)
Act, 1975, sub-section (!) of section 23 has been amended
and it has now been made clear by the introduction of clause B
(b) in that sub-section that where the property is let and the
annual rent received or receivable by the owner in respect thereof
is in excess of the sum for which the property might reasonably be
expected to let from year to year, the amount so received or receiva-
- ble shall be deemed to the annual value of the property. The newly
added clause (b) clearly postulates that the sum for which a building
might reasonably be expected to let from year to year may be less
c
than the actual amount received of receivable by the landlord from
the tenant. We are therefore of the view that in the present case the
\ standard rent of the warehouse determinable undo:r the provisions of
the Rent Act must be taken to be the annual value within the
meaning of sob-section (I) of section 23 of the Income-tax Act, 1961 D
and the actual rent received by the assessee from the American
Embassy cannot of itself be taken as representing the correct measure
of the annual value.
We must therefore address ourselves to the question as to what
would be the standard rent of the warehouse determinable under the E
provisions of the Rent Act for the assessment year 1969-70 and
1970-71 the relevant accounting years being !st April 1968 to 31st
March 1969 and !st April 1969 to 31st March 1970. Now 'standard
- rent' is defined in section 2 (k) to mean the standard rent referred to
in section 6 or where the standard rent has been increased under
section 7, such increased rent. Section 6 lays down different formulae
for determination of standard rent according to different situations.
F
Clanse (A) of snb·sectiou (!) enacts provisions for determination of
standard rent in case of residential premises, but we need not refer
to those provisions, since we are concerned in the present case not
with residential premises but with a warehouse which constitutes non- G
residential premises. The provisions applicable for determination of
standard rent in the case of non-residential premises are set out in
clause (B) of sub-section (I) and there also, we are concerned only
with sub-clause (2) because the warehouse was admittedly let out
for the first time after 2nd June, 1944. Since the standard rent of
', H
the warehouse was not at any time fixed under the Delhi and Ajmer
Merwara Rent Control Act, 1947, or the Delhi and Ajmer Rent
318 SUPREME COURT REPORTS [1982] I S.C.R.
A Control Act, 1952, the standard rent was liable to be determined r' ...
under paragraph (b) of sub-clause (2) which provides that "the rent
calculated on the basis of seven and one-half per cent per annum of
the aggregate amount of the reasonable cost of construction and the
market price of the land comprised in the premises on the date of
the commencement of the construction" shall be taken to be the
B standard rent of the premises. There is a proviso to this pragraph
which says that" where the rent so calculated exceeds twelve hun-
dred rupees per annum, this clause shall have effect as if.for the )
words "seven and one-half per cent" the words "eight and five-
eighth per cent" had been substituted." But all these provisions for
determination of standard rent are subject to the overriding provision
c enacted in sub-section (2) which provides in clause (b), which is the
clause applicable in the present case since the warehouse was cons-
tructed on or after 19th June, 1955, that in case of such premises ....
"the annual rent calculated with reference to the rent agreed upon
between the landlord and the tenant when such premises were first I
D let out shall be deemed to be the standard rent for a period of five
years from the date of such letting out.." Now the first floor of the
warehouse was first let out at the rent of Rs. 5810/- per month from
19th March I 962 and therefore under clause (b) of sub-section (2) the
rent of Rs. 5810/- per month would be the standard rent of the first
floor of the warehouse for the period of five years from I 9th March
E 1962 upto 18th March 1967 and thereafter the standard rent would
have to be determined under paragraph (b) sub-clause (2) of clause
(B) of sub-section (I) ~and this latter figure would represent the
standard rent of the warehouse determinable under the provisions of
the Rent Act for the accounting years !st April 1968 to 31st March
F 1969 and 1st April 1969 to 31st March 1970. The next portion of
the warehouse let out to the American Embassy was the northern
portion of the ground floor together with the mezzanine floor for the
period of five years from !st April 1964 upto 31st March 1969 under
-
clause (b) of sub-section (2) and thereafter it would have to be deter-
mined under paragraph (b) of sub-clause (2) of clause (B) of sub- ,
section (I). Thus for the accounting year !st April 1968 to 31st
G March 1969 the standard rent of the northern portion of the
ground floor and the mezzanine floor determinable under the
provisions of the Rent Act would be Rs. 6907 /- per month
while for the accounting year !st April 1969 to 31st March
1970, the standard rent would be that determinable under
H paragraph (b) of sub-clause (2) of clause (B) of sub-section
(!). That leaves the southern portion of the ground floor which was
first let out to the American Embassy at the rent of Rs. 6640/- per
SHIELA KAUSHISH v. C.l.T. (Bhagwoti, J.) 319
\
month from 7th December 1964, and according to clause (b) of sub- A
section (2), the standard rent of this portion would be Rs. 6640/- per
month for the period of five years from 7th December, J 964 up to
6th December, 1969 and thereafter it would be detrminable under
paragraph (b) of sub-clause 2 of clause (B) of sub.section (I). Thus
for the accounting year !st April 1968 to 31st March 1969 and 1st
April 1969 to 6th December 1969 the standard rent of the~ southern B
portion of the ground floor determinable under the provi~ions of the
.... Rent Act would be Rs. 6640/- per month, while for the remaining
portion of the accounting year from 7th December 1969 to 31st
March 1970, the standard rent would be determinable under para-
graph (b) of sub·clause (2) of clause (B) of sub·section (1). The
annual value of the warehouse for the purpose of chargeability to c
income tax for the assessment years 1969-70 and 1970-71 would have
to be determined on the basis of the standard rent of different por-
tions of the warehouse determinablelunder clause (b) of sub·section (2)
and paragraph (b) of sub-clause (2) of clause (B) of sub·section (1)
of section 6 of the Rent Act as discussed above.
D
We accordingly answer question No. I in favour of the assessee
by holding that the standard rent of different portions of the ware-
house determinable under the provisions of the Rent Act as indicated
above and not the actual rent received by the assessee from the
American Embassy should be taken be the annual value of the ware-
house within the meaning of sub-section (I) of section 23 of the E
' Income-tax Act, 1961. On this view taken by us, the the assessee
did not press question No. 2 and hence it is not necessary to answer
it. We allow the appeals of the assessee to this limited extent and
direct that the Revenue will pay the costs of the appeals to
the assessee.
F
N. V.K. Appeals allowed
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