Even where a property is not let and even where it does not produce any income, the ITO is to proceed on the basis of a notional income, which the property might reasonably be expected to yield from year to year.

Headnote:
INCOME TAX - Bona fide annual value - Whether premises No. 12, Benode Behari Shaw Lane, Calcutta, and No. 122A, Manicktola Street, Calcutta had no bona fide annual value within the meaning of s. 9(2) of the IT Act, 1922 - Held, no.
Fact of the Case:

The assessee, a debutter estate, owned two premises, No. 12, Benode Behari Saha Lane and No. 122A, Manicktola Street, both in Calcutta. The ITO computed the bona fide annual value of the premises at the amounts which they were likely to fetch if let out in the open market. The assessee objected to the assessment of an annual value on the two premises and appealed before the AAC. The AAC allowed the objection of the assessee, holding that the premises had no letting value since they were not let out and no income accrued therefrom. The Revenue appealed before the Tribunal, which agreed with the order of the AAC. The CIT then induced this Court to call for a statement of case from the Tribunal on the following point of law: Whether, on the facts and in the circumstance of the case, the Tribunal misdirected itself in law in holding that premises No. 12, Benode Behari Shaw Lane, Calcutta, and No. 122A, Manicktola Street, Calcutta had no bona fide annual value within the meaning of s. 9(2) of the IT Act, 1922?
Finding of the Court:

The Court held that the Tribunal was not correct in holding that, in view of the injunction contained in the will against the residence of any body in the premises (apart form the priest preferring the worship of the deity and its servants.), the premises have no letting value. That injunction will be of relevant consideration in finding out the bona fide value and the weight of the injunction may very much reduce the bona fide letting value of the house. But because of the existence of the injunction, the premises cannot be said to have no letting value, notional or otherwise.
Issues: Whether the Tribunal was correct in holding that premises No. 12, Benode Behari Shaw Lane, Calcutta, and No. 122A, Manicktola Street, Calcutta had no bona fide annual value within the meaning of s. 9(2) of the IT Act, 1922?
Ratio Decidendi: The Court held that even where a property is not let and even where it does not produce any income, the ITO is to proceed on the basis of a notional income, which the property might reasonably be expected to yield from year to year. The letting value of property, whether let or not, can be objectively ascertained on reasonably basis. If there be restrictions on the letting of the premises, that may merely reduce letting value but it cannot be said, without more, that because of the existence of a restrictive clause there can be no notional annual income deemed to arise from the premises.
Final Decision: The Court answered the question referred to it in the affirmative and in favour of the Revenue.

JUDGMENT

BANERJEE, J.

1. This reference, under s. 66(2) of the Indian IT Act, 1922, has been made in circumstances hereinafter stated. The assessment years with which we are concerned are years 1957- 58 and 1958-59.

2. One Banku Bahari Saha executed a will on November 24, 1925, and thereby intended to found a debutter estate. He dedicated several properties to two deities installed by him, namely, Sri Sri Iswar Benode Behari Jew and Sri Sri Iswar Benodeswar Mahadev. In this reference we are concerned with two of the dedicated properties, namely, No. 12, Benode Behari Saha Lane, and No. 122A, Manicktola Street, both in the town of Calcutta. It is necessary for us to consider the following clauses of the will, in order to understand the question referred to this Court. The dedication opens with the following paragraph :

"According to the wishes of my revered father I have built the edifice of a temple, a Thakurabari a premisses No. 12, Benode Behari Saha Lane, in close proximity to our said family dwelling house and have installed therein the deity of Sri Sri Iswar Benode Behari (an image of Sri Sri Iswar Radha Krishna) and Sri Sri Iswar Bendeswari Sina (possibly a misprint for Sri Sri Iswar Benodeswar Mahadev) and have been performing the Puja worship and seva, etc., of the same.

The list of all the immovable properties included in this will is given in the schedules Ka, Kha and Ga written below. This property is my estate lon enjoyed and possessed.

"Clause (11). By this instrument of Will I dedicate to the deity Sri Sri Iswar Benode Behari and Sri Sri Iswar Benodeswar Mahadev established by me the properties as included in the schedule (Ga) of this will and all such properties that will be included in the schedule (Ga) in future according to the provisions of this will from and out of the schedule 'Ka' and 'Kha'. From the time of my death the aforesaid properties shall be used in the aforesaid Dev Seva and for pious acts mentioned below and shall not at any time be transferred in any manner such as gift, sale, etc., save and except for reasons stated here below....

3. Clause (17). Nobody save and except the Brahmin performing the Worship) of the deity and servants shall ever be competent to reside in the Thakurbati at No. 12, Benode Behari Saha Lane and the said Thakurbati shall never be used as a place of agitation and meeting for the sake of interiors (sic-invitation) or for any public functions.

4. IN schedule "Ga" premises No. 122, Manicktola Street is not described either as a temple or a Thakurbati but the area of the land only, included in the premises, is given. Premises No. 12, Benode Behari Saha Lane, however, is described in the schedule as "Thakurbati and temple". There is no dispute that 122, Manicktola Street, late on was subdivided or renumbered as premises No. 122A, Manicktola Street and a temple was actually constructed on the site.

For the assessment years with which we are concerned, the ITO computed the bona fide annual value of the premises No. 12, Benode Behari Saha Lane and 122A, Manicktola Street, at the amounts which they were likely to fetch if let out in the open market. The assessee objected to the assessment of an annual value on the two premises and appealed before the AAC. The reason which appealed to the AAC were :

"As regards the second ground, No. 122A, Manicktola Street, Calcutta, and No. 12, Benode Behari Saha Lane, Calcutta are the temples of the two deities mentioned above. These premises have not been let out and no income accrues therefrom. The ITO therefore was not justified in adding any income on account of these premises. In the earlier assessment no such addition has been made. The addition of Rs.3,334 (Rs.4,000 less Rs.666 for repairs) would be therefore deleted in each of the two assessment under appeal."

5. In the above view the AAC allowed the objection of the assessee.

6. Against the order of the AAC, the Revenue appealed before the Tribunal. We are not concerned with the other grou

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1967 Supreme(Cal) 160

HIGH COURT OF CALCUTTA BANERJEE, K.L.ROY, JJ. Commissioner Of Income Tax - Appellant VersusBiman Behari Shaw Shebait – RespondentAppeal No : IT Ref. Nos. 118 to 121 of 1963 Decided on : July 19, 1967

Even where a property is not let and even where it does not produce any income, the ITO is to proceed on the basis of a notional income, which the property might reasonably be expected to yield from year to year.

HIGH COURT OF CALCUTTA
BANERJEE, K.L.ROY, JJ.

Commissioner Of Income Tax - Appellant
Versus
Biman Behari Shaw Shebait – Respondent
Appeal No : IT Ref. Nos. 118 to 121 of 1963
Decided on : July 19, 1967