JUDGMENT
B.N. Kirpal, J.
1. These are two references, one at the instance of the assessed and the other at the instance of Department. The three questions of law referred at the instance of the assessed are as follows :
“1. Whether, on the facts and in the circumstances of the case, the amount of Rs. 2,49,874 received by L. Bansidhar from the insurance company on account of the insurance policy covering the risk of life of his father, L. Murli Dhar, is correctly treated as ancestral property of the Hindu undivided family of which L. Bansi Dhar is the karta and not the individual property of L. Bansi Dhar ?
2. Whether, on the facts and in the circumstances of the case, dividend income amounting to Rs. 31,921 earned by L. Bansi Dhara from shares of various companies held in the name of L. Bansi Dhar is correctly treated as belonging to the Hindu undivided family of which L. Bansi Dhar is the karta and not to the individual, L. Bansi Dhar ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that income from house property at S. P. Road, New Delhi, was to be computed on the basis of the actual rent received and not the standard rent under the Delhi Rent Control Act ?”
2. At the instance of the Department, the following question of law has been referred :
“Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that 308 shares of Messrs. Madan Mohan Lal Sri Ram (P.) Ltd., belonged to Lala Bansidhar in his individual capacity and not to the joint family of the assessed and that the dividend on these shares be excluded from the assessment of the assessed’s joint family ?”
3. With regard to question Nos. 1 and 2, which have been referred at the instance of the assessed, briefly stated the facts are that the Delhi Cloth and General Mills of which Shri Murli Dhar was an employee, had taken an accident insurance policy in the name of Murli Dhar. On December 12, 1949, Shri Murli Dhar and his wife died in an air crash and the insurance company paid Rs. 5,00,000 on account of his death. The two sons of Murli Dhar were Bansi Dhar and Sri Dhar and the actual amount credited in the name of Bansi Dhar, out of the amount received from the insurance company, was Rs. 2,49,874. With the aid and assistance of this money. Shri Bansi Dhar acquired shares of various companies. The Income-tax Officer came to the conclusion that the amount of Rs. 2,49,874 was inherited by Bansi Dhar on the death of his father and it was joint family property and the shares purchased with the help of that money also belonged to the joint family and the dividend earned there from was to be assessed in the hands of the Hindu undivided family. This conclusion was upheld in appeal and also in the second appeal by the Tribunal. It is thereafter the aforesaid question of law were referred.
4. In respect of earlier assessment years, i.e., 1957-58 to 1959-60, similar questions had been referred and vide the decision of this court in L. Bansi Dhar and Sons v. CIT [1980] 123 ITR 58, it was held that the accident insurance money received was the personal property of the sons of Murli Dhar and was not the property of their respective Hindu undivided families. It was further held that the shares which were purchased with the help of that money also belonged to Bansi Dhar in his individual capacity. Following the said decision, question Nos. 1 and 2 have to be answered in favor of the assessed.
5. As regards question No. 3, the house belonging to the assessed was let out with effect from April 1, 1961, at Rs. 2,800 per month. The rent was increased with effect from April 1, 1964, to Rs. 3,500 per month. The Revenue authorities as well as the Tribunal held that the actual rent received has to be regarded as the annual letting value for the purposes of computing the income from house property.
6. The Supreme Court in Mrs. Sheila Kaushish v. CIT [1981] 131 ITR 435 has held that the standard rent, even for purpose of the Income-tax Act, has to be regarded as being the annual letting value. Under the provisions of the Delhi Rent Control Act, the rent of the property when it is first let is the standard rent for a period of five years. In this case, the first rent of the property was Rs. 2,800 per month. Even though the rent was increased to Rs. 3,500 per month during the period of five years, the settled law is that the standard rent will not alter and it will remain as the rent when the property was first let, namely, at Rs. 2,800 per month. It is only with effect from 1976 that an amendment has been made in the provisions of section 23 of the Income-tax Act, 1961, whereby now it is the actual rent received which is regarded as the annual value. In view of the settled position of law, it must follow that the annual letting value for the assessment year in question, namely, assessment year 1965-66, would be at Rs. 2,800 per month. The question of law is, therefore, decided in the aforesaid terms.
7. As regards the question referred at the instance of the Department we are informed by Mr. Aggarwal that in respect of the assessment year 1978-79, in order to avoid future litigation, and despite the decision of the Tribunal in its favor, the assessed has agreed to the stand of the Department, namely, that the dividend from the said 308 shares of Madan Mohan Lal Sri Ram Pvt. Ltd. belongs to the Hindu undivided family. Mr. Aggarwal further states that as the assessed has accepted this position in respect of the later assessment year, namely, 1978-79, he has instructions from his client to contend that the question of law referred at the instance of the Department may be answered in favor of the Department. He submits that this is being done so that the litigation between the Department and the assessed, in this connection, comes to an end.
8. In view of the aforesaid statement of learned counsel for the assessed, the question of law referred to this court by the Tribunal is answered in favor of the Department.
9. There will be no order as to costs.