http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: SHIELA KAUSHISH

       Vs.

RESPONDENT: COMMISSIONER OF INCOME-TAX, DELHI

DATE OF JUDGMENT18/08/1981

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. ISLAM, BAHARUL (J)

CITATION:  1981 AIR 1729            1982 SCR  (1) 309  1981 SCC  (4) 121        1981 SCALE  (3)1225  CITATOR INFO :  R          1982 SC  16  (2)

ACT:      Income  Tax  Act,  1961,  5.  23(1)-Income  from  house property-Chargeability  to   income  tax-"Annual  value"  of building-Determination of-Whether standard rent determinable under provisions  of Rent  Act or  actual rent  received  by landlord from tenant.      Words and  Phrases-"Annual Value"-Meaning of-Income Tax Act, 1961, S. 23(1).

HEADNOTE:      The appellant-assessee  constructed a warehouse and let out different  portions under different tenancies commencing 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 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  from house  property". The assessee claimed before  the Income.  Tax officer  that on  a  proper construction of  sub-section (I)  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 the 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  accordingly assessed  the assessee to tax on the basis of the actual rent.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

    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 that 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 the  standard rent  and hence  the actual  rent received by  the assessee  was rightly  taken as  the annual value of the warehouse. 310      The assessee’s  applications to the Tribunal as well as to the  High Court  for the  making  of  a  reference  under 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 given in sub-section (l) of section 23 of the Income-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 tenant. [316 H-317 A]      2. In  Dewan  Daulat  Rai  Kapoor  etc.  v.  New  Delhi Municipal Committee  [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 the Punjab Municipal Act 1911 for the purpose of levy of house tax,  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 equally  so whether the building has been let out to a tenant who has lost his right to apply for fixation of  standard rent  by reason  of expiration  of the period of  limitation prescribed  by section  12 of the Rent Act or  the building is self-occupied by the 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-C]      3. This  decision though 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,  would  be  equally applicable in  interpreting the definition of ’annual value’ in sub-section (I) of section 23 of the Income-Tax Act, 1961 because these  definitions are  in identical terms and it is impossible 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.      In the  instant case  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 clause (B)  of sub-section (I) of section 6 of the Rent Act. [319 C]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos.  2110

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

and 21 1 1 of 1978.      Appeals by  special leave  from the  judgment and order dated the  1st February,  1978 of  the Delhi  High Court  in I.T.C. Nos. 14 and 15 of 1974. 311                             WITH      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 I.T.A. No 386 and 387 of 1972-73.      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. Subhashini 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 ID 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 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 subsequently 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  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 different dates. On 17th 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 lease came  into effect  from 1st  April, 1968. The assessee thus started  receiving rent at the rate of Rs. 34,797/- per month in  respect of  the entire  warehouse from  1st April, 1968.      The question  arose in  the course of assessment of the assessee 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 purpose of  chargeability  to  income  tax  under  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, therefore, the assessee owns a building, the annual value of such building  is chargeable  to income  tax under  the head "income from  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 (l) of  that section  as  it  stood  at  the  material  time

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

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 (I) of section 23, it was not the  actual  rent  received  by  the  assessee  for  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 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   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  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  accordingly assessed  the assessee to  tax on the basis of the actual rent received by her. The  assessee preferred  an  appeal  to  the  Appellate Assistant Commissioner  for each of the two assessment years challenging the correctness of the view taken by the Income- tax officer  and contending  that the  annual value  of  the warehouse must be taken to be the standard rent determinable under the  provisions of  the Rent Act, but 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 assessments  made on  the assessee  on the  basis of the actual rent  received by  her. The  Tribunal held relying on the decision  of this  Court in  M.M. Chawala v. J S. Sethi, [1970] 2 SCR 390 that, in the 313 absence of  fixation of standard rent, the agreed rent which is  legally   A  recoverable   and  not  tainted  by  fraud, relationship or  any other consideration must be 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  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, 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. Chawla’s case (supra) and so far as the other questions were  concerned, they  were all  questions of fact and hence not referable under section 256 (1) 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 applications also met with  the same  fate and on the same grounds which found

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

favour with  the Tribunal,  they were  rejected by  the High Court by  judgment dated 1st February, 1978. This led to the filing of  two petitions for special leave to appeal, one in respect of  each assessment  year, and  these 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 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  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- 314 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 property  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 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 neighbourhood  let out  to the  Bank  of           Baroda and  Indian Oxygen Company Ltd. were let at           rents considerably lower. 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 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  on 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.      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 question is  concerned, it  stands concluded  by the  recent decision of  this Court in Dewan Daulat Rai Kapoor etc. etc. v.  New  Delhi  Municipal  Committee.(1)  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

315 building should  be determined  for levy  of house tax where the building  is governed by the provisions 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 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,  1957, but  was absent in section 3 (1) (b) of the  Punjab Municipal Act, 1911. 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 standard rent fixed in  respect of  the building involved in such case. L. According to  the definition  given in  both  statutes,  the ’annual value’  of a building meant the gross annual rent at which the  building might reasonably be expected to let from year to  year. The  controversy 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.  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 receive  the contractual rent from the tenant without any legal impediment  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. 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 and the contractual rent  therefore provided  a correct  measure for determination of  the annual  value of  the  building.  This argument 316 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 tenant who has lost his right to apply for fixation of the standard rent by  reason of  expiration of  the period  of limitation prescribed 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   determinable   under   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

provisions of  the Rent Act and not the actual rent received 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 authority would have to  arrive at  its own  figure of  the standard rent by applying the  principles laid  down  in  the  Rent  Act  for determination of  the standard rent and determine the annual value of  the building  on the  basis of  such figure of the standard 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 the basis 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 standard rent determinable on the principles  laid down  in the  Rent Act and it could not exceed 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, .911 for the purpose of levy of  house  tax,  but  it  would  be  equally  applicable  in interpreting, the  definition of  ’annual value’ in sub-sec. (1) of section 23 of the Income-tax Act, 1961, because these definitions 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 term  in the  Municipal Corporation Act, 1957. and  the Punjab Municipal Act, 1911. We must therefore hold, on  an indentical  line of reasoning, 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 limitation 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  building fixed,  the annual value of  the building  according to the definition given in sub-section (l)  of section  23 of  the Income-tax Act, 1961 must be held to be the standard rent determinable under 317 the provisions  of the  Rent Act  and not  the  actual  rent received   by   the   landlord   from   the   tenant.   This interpretation which  we are placing on the language of sub- section (1)  of sec.  23 of the Income-tax Act, 1961, may be regarded as  having received  legislative approval,  for  we find that by section 6 of the Taxation Laws (Amendment) Act, 1975, sub-section  (I) of section 23 has been amended and it has now been made clear by the introduction of clause (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 receivable  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 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 under  the provisions  of the  Rent Act must be taken to  be the  annual value  within the  meaning of  sub- section (1)  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

determinable under  the provisions  of the  Rent Act for the assessment year  1969-70 and 1970-71 the relevant accounting years being 1st April 1968 to 31st March 1969 and I st April 1969 to  31 st 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. Clause (A) of sub-section (1) 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-   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 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 Control Act,  1952, the  standard  rent  was  liable  to  be determined 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 standard rent  of the  premises. There  is a proviso to this paragraph which  says that"  where the  rent  so  calculated exceeds twelve  hundred 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 enacted in  sub-section (2)  which provides  in clause  (b), which is the clause applicable in the present case since the warehouse was  constructed 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 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 1962  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 19th March 1962 up to 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 1st  April 1968  to 31st March 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 1st  April 1964 up to 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 (1). Thus for the accounting year  1st April  1968  to  31st  March  1969  the standard rent  of the  northern portion  of the ground floor

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9  

and the mezzanine floor determinable under the provisions of the Rent  Act would  be Rs.  6907/- per  month while for the accounting year  1st April  1969 to  31st  March  1970,  the standard rent would be that determinable under paragraph (b) of sub-clause  (2) of  clause (B)  of sub-section  (1). 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 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.  66401- per  month for  the period of five years from 7th December,  1964 up  to 6th December, 1969 and thereafter it would be determinable under paragraph (b) of sub-clause 2 of clause  (B) of  sub-section (1).  Thus for the accounting year 1 st April 1968 to 31 st March 1969 and I st April 1969 to 6th  December 1969  the standard  rent  of  the  southern portion  of   the  ground   floor  determinable   under  the provisions of  the Rent  Act would  be Rs. 66401- 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 paragraph (b) of sub-clause (2) of clause  (B) of  sub-section (1).  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 rent of different portions of  the warehouse  determinable under 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. 1 in favour of the assessee by  holding that  the standard  rent  of  different portions of  the warehouse 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  warehouse  within  the meaning of  sub-section (I)  of section 23 of the 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. N. V. K.                                     Appeals allowed 320