The main legal point established in the judgment is the duty of the Assessing Officer to calculate the standard rent of a property under Section 23 of the Income-Tax Act and the requirement to adhere to the principles and methodology laid down in Rent laws when conducting this computation.

VIKRAMAJIT SEN, J.

( 1 ) THE following substantial questions of law arise in this batch of Appeals:-1. Whether the AO is duty bound to compute the 'annual value of property' or 'the sum for which the property might reasonably be expected to be let' as contemplated by Sections 22 and 23 of the Income Tax Act, 1961 only on 'standard rent' basis if he disbelieves the rent stated to be receivable by the assessee. 2. Whether computation under Section 22 and 23 of the Income Tax Act, 1961 must be on standard rent basis irrespective of whether this exercise has been carried out by the Rent Controller.

( 2 ) SUCCINCTLY stated, the Assessing Officer (AO) has not accepted the version of the Assessee/landlord/owner that it is receiving a rental of rs. 50 per month from its tenant Messrs Venkatraman and Co. and Rs. 75 per month from the Bhagat Group of Companies. The AO was of the opinion that the Assessee had failed to prove that these sums reflected the 'actual rent' received by it in the relevant Assessment Years. The concurrent findings are to the effect that the Assessee had not produced its Books of Accounts or other cogent evidence nor has furnished any proper explanation in regard to the quantum of these rental incomes. The AO had computed the total rental income from these two tenants by taking into consideration the rents that the Assessee was receiving from some of its other tenants, namely, Bank of India and United India insurance Company, and rentals in the area of Janpath and Connaught Place which according to his information were not less than Rs. 80 to Rs. 100 per sq. foot. The AO fixed the rate at Rs. 40/- per sq. foot. after "giving benefit of doubts and any adverse circumstances. " Mr. Jolly, learned Counsel for the Revenue has vehemently emphasized the fact that this valuation has not been challenged by the Assessee, but this position is equally strongly controverted. We do not consider it necessary to delve into this controversy because of the conclusion that we have arrived at.

( 3 ) SECTION 23 stipulates the method by which the annual value of any property should be assessed to tax under Section 22. Section 23 (a) states that the annual value of property shall be deemed to be the sum for which it may reasonably be expected to let from year to year. The AO would invariably have to carry out and complete this computation. This is for the reason that section 23 (b) envisages that even where the property is let out and the AO accepts the veracity of the sum stated by the owner to be receivable by it as rent, this actual rent if it is higher than the 'sum for which the property might reasonably be expected to let' (viz. standard rent) the actual rent would constitute the basis of computation of taxation. The difference is that where the property has not been rented out or where the rent stated by the assessee/owner is found by the AO not to be the actual rent, the latter would have to meticulously calculate the 'sum for which the property might reasonably be expected to let' whereas in other instances he would have to arrive at a rough and ready computation so as to ensure that the tax basis is the actual rent if it is higher than the 'reasonable' rent. In other words, the Section leaves no room for the assessee to contend that it is only the 'reasonable' rent and not the 'actual' rent which should be taken into account by the AO. This is the conclusion articulated by the High Court of Calcutta in CIT vs. Satya Co. Ltd. [1997] 140 CTR (Cal) 569. This is exactly the opinion of the High Court of madras as is evident from a reading of CIT vs. Parasmal Choradia, (1998) 145 CTR (Mad) 468, in which it has been opined that the provisions of Section 23 (1) (a)apply to both owner occupied property and property which is let out and that the measure of valuation to determine the said annual value must be the same for both the cases, viz. , the standard or fair rent.

( 4 ) THE next question is whether it is permissible or reason