JUDGMENT
R.K. Abichandani, J.
1. The Income-tax Appellate Tribunal, Ahmedabad Bench “A”, has referred for the opinion of the High Court the following questions under section 256(2) of the Income-tax Act, 1961 :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in concluding that the assessee’s case fell within the provisions of section 5(1) read with section 11(1)(d) of the Rent Act ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the gross annual letting value was correctly computed at Rs. 18,000 per annum ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that agreed rent of Rs. 500 per month was not standard rent on the ground that the same was nominal rent and whether the said finding is duly supported by material and evidence on record ?”
2. The relevant assessment years are 1973-74, 1974-75 and 1975-76. The trustees of Shri Bipinchandra Vadilal Family Trust No. 1 were assessed as representative assessees in the status of an association of persons. The dispute relates to determination of the annual value of the property in question under the provisions of section 23(1) of the said Act. The property in question is a bungalow situated in Panchwati-Ambawadi area of the city. It consists of ground floor and first floor, the carpet are being 410 sq. yards on the ground floor and 300 sq. yards on the first floor. The bungalow is situated on a plot of land admeasuring 1,913 sq. yards. The said property was gifted by the settlor, Bipinbhai, in favour of the family trust on March 29, 1971, and the value thereof was shown as Rs. 2,15,000 in the gift deed. Within a couple of days thereafter, the property was let out to Suhas Vadilal, brother of the settlor, at the rent of Rs. 500 per month. The Income-tax Officer, considering the relevant material including the report of the Registered Valuer submitted by Shri Bipinbhai in connection with his assessment in wealth-tax, fixed for the purpose of section 23(1), the annual value of the said property at Rs. 18,000. The assessee preferred an appeal before the Appellate Assistant Commissioner for all the three years under consideration, challenging the figure of gross annual value as determined by the Income-tax Officer as the basis for computing the net annual value. The Appellate Assistant Commissioner found that the agreed rent of Rs. 500 per month was only a nominal one as contemplated under section 11(1)(d) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947. Keeping in view the capital value of the property in question and the proximity of the period for which gross annual value had to be determined to the date of the gift deed made on March 29, 1971, by Bipinbhai in favour of the trustees in which the capital value of the property was mentioned at Rs. 2,15,000, the Appellate Assistant Commissioner came to the conclusion that the gross annual value of Rs. 18,000 as determined by the Income-tax Officer was reasonable. The appeals were, therefore, dismissed.
3. In further appeals before the Tribunal, the Tribunal found that rent of Rs. 500 per month which was said to be charged from Suhas Vadilal, brother of the settlor, was only a nominal rent having regard to the value of the property shown as Rs. 2,15,000 in the gift deed. The Tribunal found that an annual interest on the said amount at the rate of 8.4 per cent. would come to Rs. 18,000. The Tribunal, therefore, agreed with the findings of the authorities below in holding that the annual value of Rs. 18,000 fixed for the property in question could not be said be excessive or unreasonable.
4. It would appear that the authorities below have considered all the relevant aspects before arriving at the annual value of the property in question. The Income-tax Officer has taken into consideration the following factors for the purpose –
1. Location of the property being in Panchwati-Ambawadi area of the city.
2. The built up area of the bungalow being 410 sq. yards on the ground floor and 300 sq. yards on the first floor.
3. The area of the plot in which the bungalow was built up being 1,913 sq. yards.
4. Rise in price of the land and building and non-availability of such building.
5. Report of the approved valuer while fixing the maximum gross rent per annum for the bungalow at Rs. 36,300 deducting the outgoings at 45 per cent. of the gross rent per annum for taxes, maintenance, etc., and fixing the net lucrative rent at Rs. 20,000.
5. The Income-tax Officer considering the above relevant factors adopted the annual letting value of the property at Rs. 18,000 per annum.
6. Admittedly, Bipinbhai had, by indenture dated March 25, 1971, settled a trust appointing his wife and one practising advocate as the trustees. On March 29, 1971, the said Bipinbhai made a gift of the said bungalow in favour of the trustees so as to form part of the initially settled trust property. Admittedly, the value of the said property was shown therein as Rs. 2,15,000. It appears that immediately thereafter, the property was let out on April 1, 1971, to the brother of the settlor, one Suhas Vadilal, for a sum of Rs. 500 per month. Admittedly, no lease deed or rent deed was executed in that connection. According to the assessee, on the basis of the rent agreed to be paid by Suhas Vadilal, the annual letting value of the property could be computed at Rs. 6,000 only. It has been found by the Tribunal that the agreed rent of Rs. 500 was just one-third of the expected monthly rent of Rs. 1,500. There are various factors which affect the rental of premises and no hard and fast rule can be laid down for all cases. The criterion of reasonable return to the landlord from the property would be a fair criterion and the percentage of return on the value of the property adopted by the Tribunal cannot be said to be in any manner unjust or improper. The authorities have valued the property in question in its actual physical condition taking into account all the relevant factors which would have a bearing on the annual value of the property. Having regard to the facts and circumstances it cannot be said that the finding that the rent of Rs. 500 per month was nominal, is in any way perverse or unreasonable. On the basis of the report of the approved valuer and taking into account other relevant factors, the Income-tax Officer had arrived at Rs. 18,000 to be the annual value of the property. The same figure is arrived at by the Tribunal even by computation on the basis of annual return at the rate of 8.4 per cent. In our opinion, the authorities have arrived at a correct conclusion as regards the annual value or the property and the finding would be essentially a finding of fact.
7. In view of the above discussion, the questions referred to us are answered in the affirmative, in favour of the Revenue and against the assessee.
8. The reference stands disposed of accordingly with no order as to costs.
