CIT vs Parbutty Churn Law (Calcutta High Court)

JUDGMENT MASUD J. – In this reference under section 66(1) of the Income-tax Act 1922, the following question of law arises out of the appellate order of the Tribunal :

“Whether, on the facts of the case, the bona fide annual value and the taxable income as computed by the Tribunal in respect of the property at No. 8, India Exchange Place, for the assessment years 1951-52 to 1953-54 and 1956-57 are in accordance with the provisions of section 9 of the Indian Income-tax Act ?”

The facts of the case may be stated as follows :

The house property at No. 8, India Exchange Place, Calcutta, a fivestoried building belongs to the assessee, Parbutty Churn Law and his co-shares. The entire building is occupied by tenants, the ground floor being in the possession of M/s. Kothari & Sons, and the remaining four floors having been let out to M/s. Birla Brothers Ltd. The rent of the ground floor is Rs. 36,000 per annum and the rent of the remaining floors payable by M/s. Birla Brothers Ltd., is Rs. 81,000. The tenancy of M/s. Birla Brothers Ltd. is held under a deed of lease dated November 16, 1950. Under the terms of the said deed of lease M/s. Birla Brothers Ltd. undertook to bear the costs of such petty repairs as are necessary to keep the demised premises in good tenantable condition. The deed of lease also provides that the tenant is to maintain at their own cost the drainage pipes, water-taps, fittings, latrines, water closets, sanitary arrangements, electrical installations, etc., in good repairs at all times. The landlords including the assessee, Parbutty Churn Law, undertook to execute at their own cost and expense “such structural repairs which may necessitate replacements” and to keep the premises wind and water-tight and to maintain the exterior of the building and all common passages, halls, entrance, lights, etc., in good condition. The lessors further agreed to provide a suitable staff for the working of the lifts and also to pay all municipal rates and taxes. As regards the ground floor of the building in the occupation of M/s. Kothari & Sons, the landlords including the assessee, Parbutty Churn Law, had agreed to bear the cost of all necessary repairs. The Income-tax Officer, in determining the fair annual letting value of the premises, held that the rent of the first, second, third and fourth floors of the said premises amounting to Rs. 81,000 had been fixed at a rate lower than what the property would have otherwise fetched. According to him the said rent of Rs. 81,000 was fixed at a rate lower than the rent of Rs. 36,000 in the occupation of M/s. Kothari & Sons, because, unlike M/s. Kothari & Sons, M/s. Birla Brothers Ltd. had undertaken to do the repairs which ordinarily should have been done by the landlords. Accordingly, the Income-tax Officer estimated the cost of repairs at 1/5th of the actual rental paid by M/s. Birla Brothers Ltd. and added it to the actual rental for the purpose of arriving at the annual value. The Income-tax Officer then deducted from the amount thus arrived at, the municipal taxes and the expenses for maintenance of the lift to arrive at what he called the bona fide annual letting value. The Appellate Assistant Commissioner confirmed the addition made by the Income-tax Officer of 1/5th of the annual rent to get the annual letting value. But the Appellate Assistant Commissioner found that the annual value of the ground floor and the annual value of the first to the fourth floor should be calculated separately to determine the total annual value of the property. He held that, as the landlords, have undertaken to bear the cost of repairs in the case of the ground floor, the bona fide annual value of the property shall be determined under section 9(1)(i) of the Income-tax Act, or, in other words, shall be subject to an allowance of a sum equal to 1/6th of such bona fide annual value after tenancy deductions for tenants share of tax and cost of maintenance of lift, etc. He further held that in the case of M/s. Birla Brothers Ltd., as the latter had undertaken to bear the cost of repairs, the net annual value is to be determined under section 9(1)(i) and shall be, therefore, subject to an allowance equal to the difference between the bona fide annual value and the rent paid by the tenant up to but not exceeding 1/6th of the bona fide annual value. On further appeal, the Tribunal agreed with the income-tax authorities that section 9(1)(ii) would govern the valuation of the first to the fourth floor, and that the ground floor would fall within section 9(1)(i) of the Act. The Tribunal, however, was unable to sustain the addition to the stipulated rent of Rs. 81,000 by 1/5th of that amount adjudged by the Income-tax Officer and the Appellate Assistant Commissioner to determine the bona fide annual letting value. Accordingly, the bona fide annual value of the property for the assessment year 1956-57, the Tribunal held was Rs. 89,453 as against Rs. 1,06,371 computed by the Appellate Assistant Commissioner. The Tribunal also directed the Income-tax Officer to proceed an similar lines to compute the bona fide annual value of the building for the other assessment years.

Mr. Balai Lal Pal, on behalf of the Commissioner of Income-tax, Calcutta, has challenged the bona fide annual value of the property arrived at by the Tribunal and has submitted that on the facts and circumstances of the case the addition to the stipulated rent of Rs. 81,000 by 1/5th of that amount by the Income-tax Officer as cost of repairs is the correct method to adopt for arriving at the fair annual letting value.

He has urged the following grounds to substantiate his contention that the basis of computation of the Appellate Assistant Commissioner is correct and that of the Tribunal is incorrect :

(a) Under section 9(2) of the Income-tax Act the annual value of the property is to be taken as a sum which the property might reasonably be expected to fetch. The annual value is no doubt a hypothetical sum. But what is to be taken into consideration is the whole of the consideration which the landlord receives from the tenant for his right to use and occupy the property. For this purpose the rent paid for the tenancies of comparable units in the same locality or in similar situation affords valuable guidance. He has cited, In the matter of Krishna Lal Seal and Lalla Mal Samgham Lal v. Commissioner of Income-tax, for the proposition that the actual terms obtained by the landlord in a particular case are some evidences of “the sum for which the property might reasonably be expected to let from year to year”. He has submitted that in the instant case, obligations of the tenant to do repairs under the deed of lease are much greater than the tenants liabilities under section 108(m) of the Transfer of Property Act and this fact should be taken as a consideration for letting out the property at comparatively lower rent. He, therefore, has concluded that the basis of computation of the Appellate Assistant Commissioner, namely, the addition of the tenants cost of repairs to the actual stipulated rent payable by the tenant for arriving at the annual value, is correct.

(b) He added that, in any event, the Tribunals computation is wholly defective for in computing the annual letting value the Tribunal has deducted the tenants share of the municipal rates and the cost for maintenance of lifts and the staff, and yet in computing the actual rent paid by the tenant the Tribunal has deducted the charges for maintenance of the lifts, etc., but not the tenants share of the municipal taxes.

While there is considerable force in Mr. Pals contention as set out in paragraph (a) above, we cannot accept his argument mentioned in paragraph (b). At page 34 of the paper-book, it is clear that the parties have agreed that the costs of maintenance of the lifts and pumps, etc., which are borne by the landlord should be deducted from the gross rental and naturally the Tribunal has deducted the agreed costs of maintenance of lifts at page 35 of the paper-book from the gross rental for the first to the fourth floor.

As the present reference and the Reference No. 82 of 1960, involve the some point of law and the assessee in both cases are the co-sharers of the same house property, the two references, by consent, were taken up together. Mr. Sukumar Mitra, appearing for the assessee in Reference No. 82 of 1960, has submitted that the Tribunals order is correct inasmuch as, according to him, there is no provision in the Income-tax Act whereby the procedure to add the cost of repairs to the actual rent is warranted. According to him the Appellate Assistant Commissioners conclusion that the rent of M/s. Birla Brothers Ltd., is low or has been reduced is based on no evidence. He has further stated that section 9 is concerned with repairs to the building and not electrical installations, sanitary fittings, etc., and that in the instant case, it is the landlord who has undertaken to do substantial repairs to the building. The tenant has undertaken only to carry out more or less the statutory liabilities under section 108(m) of the Transfer of Property Act. He has made a distinction between “repairs” and “replacements” and has stated that maintenance of fittings, etc., do not mean “repairs”. He has also argued that the point of law raised in this reference is wide enough for us to hold that section 9(1)(i) would apply and not section 9(1)(ii).

Mr. Sampath Iyengar, on behalf of the assessee in this reference, namely, Parbutty Churn Law, has supported the order of the Tribunal on the following grounds :

(a) The element or the ingredient of the cost of repairs has been taken note of by the legislature only as a deduction from the bona fide annual value to arrive at the chargeable annual value and, therefore, it cannot be used to step up the agreed rent. If the cost of repairs is added to the annual stipulated rent the result will be to reduce the provisions of section 9(1)(i) and section 9(1)(ii) to a nullity. He has analysed the various provisions of section 9 and has submitted that section 9(1) grants seven types of deductions to the assessee because he is the owner of a hereditament and that extraneous considerations should not be allowed to play for denying the owner of the relief granted by the statute.

(b) The rent fixed in the ordinary course of business is the reasonable letting value and it is incorrect to assume that the rent is low or has been reduced unless there are strong reasons for the same. Ordinarily, a landlord has no liability to make repairs unless there is an express covenant to the contrary. In the instant case, far from the tenant having taken the landlords burden to do repairs, the landlord has not only undertaken to do substantial repairs but, in fact, the landlord has agreed to take over the tenants obligations.

(c) Section 9(1) should not be mixed up with section 9(2) in the provisos of which allowable adjustments like municipal taxes, etc., have been specified. In the said provisos to section 9(2) there is not question of stepping up the actual rent by addition of cost of repairs.

It is obvious that section 9(1)(i) applies where the lessor undertakes to do repairs and section 9(1)(ii) applies where the lessee undertakes to do repairs. It may be argued that the cost of repairs in the said two sub-sections means of repairs. If that construction is accepted, then there will be no provision in the Act which would apply in case where both the landlord and tenant have undertaken to do repairs. It is, therefore, incumbent that a reasonable and harmonious construction should be put on the words “cost of repairs”. We are thus constrained to take the view which has been also conceded by both the parties that the “cost of repairs” in sections 9(1)(i) and 9(1)(ii) would mean the cost of substantial repairs. We have, however, to find out whether in the instant case the assessee or M/s. Birla Brothers Ltd, has agreed to do the substantial repairs in respect of the tenancy of the first floor to the fourth floor. If we hold on the construction of the deed of lease and on the facts of this case that the landlord has undertaken to do the substantial repairs, we would answer the question by stating that section 9(1)(i) would apply. If, on the other hand, after examining the said deed and also the statement of case we find that the tenant has undertaken to do substantial repairs, we should state that section 9(1)(ii) would apply.

The deed of lease dated 16th November, 1950, in respect of the tenancy of M/s. Birla Brothers Ltd. is an admitted document and is an annexure to the statement of case. In construing the said deed we may refer to the material portions of section 108 of the Transfer of Property Act which sets out the rights and the liabilities of the lessor and lessee in respect of the repairs of the tenanted portion, as follows :

“108. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased :-

B. Rights and liabilities of the lessee . :- ….

(f) If the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expenses of such repairs with interest from the rent, or otherwise recover it from the lessor…..

(m) The lessee is bound to keep, and on the termination of the lease, to restore the property in as good a condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible forces, and to allow the lessor and his agents at all reasonable times during the terms, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left.”

The language of section 108 shows that ordinarily the landlord has no statutory liability to do repairs to the leasehold premises unless, of course, he expressly covenants himself to do the same, and thus binds himself by such covenant. In support of the said proposition we rely on Charles Stewart v. Patrick Playfair, Bijoi Chandra Singh v. Howrah Amta Light Rly. Co. Ltd., Narayan Rajaram v. Shankar Divakar, Lakshmichand v. Ratanbai and Stewart & Co. Ltd. v. C. Mackertich. In the instant case clause (2) of the said deed of lease at page 8 of the paper-book reads as follows :

“… and also the lessors shall during the continuance of the said term at their own costs and expenses keep the said demised premises wind and water-tight and shall keep the exterior of the building, the passages, entrances, halls, staircases, landings, lifts and common parts of the said building in good condition and shall provide a suitable staff for the proper working of the said lifts. The lessors will also attend to such structural repairs which may necessitate replacements.”

This clause read with other provisions of the said deed of lease clearly indicates that the lessors have undertaken to do substantial repairs within the meaning of section 9(1)(i) of the Act. Mr. Pals contention, therefore, that because M/s. Birla Brothers Ltd. has undertaken to accept the landlords liability to do repairs in addition to the statutory burden under section 108(m) of the Transfer of Property Act, their rent has been reduced unusually, cannot be accepted. Further, there are no materials on records to show that the rent of M/s. Birla Brothers Ltd. is low compared to the rent of similar premises in the same locality or elsewhere. It is true that the annual rent of M/s. Kothari & Sons, in respect of the ground floor is Rs. 36,000 and that of M/s. Birla Brothers Ltd, in respect of the four upper floors is Rs. 81,000. But that fact, by itself, cannot give rise to the conclusion that the rent of M/s. Birla Brothers Ltd, is low. In our opinion, the fact that the rent of M/s. Birla Brothers Ltd, is not genuine is based on surmises. Thus the fundamental hypothesis or premises in the method of computation of the bona fide annual value and the taxable income, namely, that the rent of M/s. Birla Brothers Ltd, is low, is not correct and, accordingly, section 9(1)(ii) has no application to the present case.

Whether section 9(1)(i) or section 9(1)(ii) is made applicable in a particular case, the more fundamental question of law which requires consideration is to examine the legality of arriving at the bona fide annual value by addition of the cost of repairs to the actual rent if such rent is low or has been reduced for some reason or the other.

Section 9(1) reads as follows :

“Property. – (1) The tax shall be payable by an assessee under the head `income from property in respect of the bona fide annual value of the property consisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purposes of any business, professions or vocation carried on by him the profits of which are assessable to tax, subject to the following allowances, namely :-

(i) Where the property is in the occupation of the owner, or where it is let to a tenant and the owner has undertaken to bear the cost of repairs, a sum equal to 1/6th of such value;

(ii) Where the property is in the occupation of a tenant who has undertaken to bear the cost of repairs, the difference between such value and the rent paid by the tenant up to but not exceeding 1/6th of such value.”

The words “such value” in section 9(1)(i) and (ii) can only refer to “the annual value” as described in section 9(2), which provides as follows :

“For the purposes of this section, 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….”

Thus, whichever sub-section, that is, section 9(1)(i) or section 9(1)(ii), is made applicable to a particular case, the annual value has got to be determined in accordance with section 9(2). It is obvious that the annual value in section 9(1) must bear the same meaning as in section 9(2). Section 9(2) makes it clear that the annual value need not necessarily be the actual rent agreed upon between a lessor and a lessee. If the stipulated rent or the rent payable by a tenant is low or has been, reduced for some reason or the other, the actual rent has got to be increased on the basis of the letting value of the same or similar property or of the comparable units in the same locality or elsewhere. The tax is to be charged on the net chargeable value which can only be arrived at by deducting the proportionate tenants liability of taxes borne by the landlord from the gross annual value. Where there are materials or grounds to show that money payable by a lessee is not the entire consideration which the landlord is receiving or that the rent is not genuine, an estimate for which the property might reasonably be expected to let from year to year, has to be made and the estimated sum in excess of the actual rent payable by the tenant has to be added to the stipulated rent to arrive at the bona fide annual value. Thus, the method or the basis of calculation of the Income-tax Officer and the Appellate Assistant Commissioner, namely, determination of the annual rent by addition of a particular sum is permissible in law if the actual rent is not the genuine rent. Relying on In the matter of Krishna Lal Seal and Lalla Mal Samgham Lal v. Commissioner of Income-tax, we reject the contention of the assessee that such addition is not warranted by law under section 9(1) or section 9(2) of the Act.

But this basis of computation cannot be made applicable to the facts of the instant case. As stated earlier, the determination of the annual value by addition of a particular sum is permissible in law only when the actual rent has been found to be not the genuine rent. In the case of the tenancy of Messrs. Birla Brothers Ltd., we have no reason to hold that the annual rent, namely., Rs. 81,000 is not genuine or is low. As the rent of Messrs. Birla Brothers Ltd, has been held by us earlier as not being low or reduced, the question of stepping up the said rent by addition of the tenants cost of repairs to determine the annual value does not arise. Further, the tenants purported cost of repairs, being 1/6th of the annual value, is a hypothetical sum and based on no material on record.

The learned counsel for the Commissioner of Income-tax has submitted in reply that the High Court in exercise of its limited advisory jurisdiction under section 66(1) of the Income-tax Act can only answer the question of law under reference by basing their answer on the facts admitted or found by the Tribunal. He has urged that in the instant case, the Tribunal has accepted the position that section 9(1)(ii) applies to the facts of this case. Secondly, the Tribunal has set out relevant facts in the statement of case consistently with that position. Thirdly, in the application for reference, the Appellate Assistant Commissioner has set out the facts in such a way that section 9(1)(ii) alone would apply. Further, he has submitted that, although the assessment by the Tribunal has been made in favour of the assessee, the latter could have raised new points of law on the basis of facts on record. He has added that, in fact, the assessee, Parbutty Churn Law, has raised a second question of law regarding the applicability of section 34 and for that purpose he has referred to certain facts as set out at page 41 of the paper-book. It is true that while drawing up a statement of case the Tribunal keeps before it the facts which are found or admitted by the parties and that the Tribunal has drawn up an agreed statement of case. It is also true that the question referred to this court must be taken to have been raised on the facts in the statement of case and, therefore, has to be answered also on those facts. Relying upon Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd., Commissioner of Income-tax v. Calcutta Agency Ltd., Commissioner of Income-tax v. Amarchand N. Shroff and Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax, he has submitted that we have no jurisdiction to answer the question of law under reference by stating that section 9(1)(i) would apply on the facts and circumstances of the case. Similarly, he has also argued on the basis of the same decisions that we have no jurisdiction to state that the determination of the annual value by addition of a particular sum is not applicable to the facts of this case. In our opinion, the contention of Mr. Pal cannot be accepted. It seems, the question of law under reference is wide enough for us to hold that section 9(1)(i) would apply to the facts of this case. In this connection we may rely upon the following passage in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. :

“…. sometimes the questions are framed in such general terms that, construed literally, they might take in questions which were never in issue. In such cases, the true scope of the reference will have to be ascertained and limited by what appears on the statement of the case….. Where, however, the question is sufficiently specific, we are unable to see any ground for holding that only these contentions can be argued in support of it which had been raised before the Tribunal. In our opinion, it is competent to the court in such a case to allow a new contention to be advanced, provided it is within the framework of the question as referred.”

At page 31 of the paper-book the Appellate Tribunal has stated :

“The main question in the appeal relates to the computation of the bona fide annual value of the building. The question canvassed before us is whether the deduction for repairs is allowable in clause (i) or clause (ii) of section 9(1). As regards the ground floor of the building in the occupation of M/s. Kothari & Sons, the assessee as the landlord has under the terms of the lease agreed to bear the entire cost of repairs and there is no dispute that the allowance for repairs should be granted under clause (i), section 9(1). The dispute is in regard to the upper four floors of the building in the tenancy of M/s. Birla Brothers Ltd.”

Similarly, at page 2 of the statement of case it is stated, “as regards the ground floor of the building in the occupation of M/s. Kothari & Sons, it is common ground that the landlord including the assessee, Parbutty Churn Law, has agreed to bear the entire cost of all necessary repairs…..” On further appeal the Tribunal agreed with the income-tax authorities that the case fell within clause (i) of section 9(1) so far as the first to the fourth floor are concerned, as though the tenant only had undertaken to bear the cost of repairs. With regard to the ground floor there was no dispute, as already stated, that the landlord under the terms of the corresponding lease had agreed to bear the entire cost of repairs and that the allowance for repairs should be granted under clause (i) of section 9(1). The Tribunal pointed out that the amount of the allowance under section 9(1)(ii) was to be computed with reference to the difference between “the rent and the bona fide annual value of the property”. Further, at page 33 of the paper-book the Tribunal has stated, “it is necessary, therefore, to ascertain what is the annual value of the property and what is the rent paid by the tenant.” Thus it is obvious that the question of determination of the bona fide annual value and the rent payable by M/s. Birla Brothers Ltd. has not only been raised but dealt with by the Tribunal. Further, the orders of the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal show that the assessee has not admitted that section 9(1)(ii) would apply so far as the first to the fourth floor are concerned. The application of section 9(1)(ii), presupposes a finding of fact that the rent of M/s. Birla Brothers Ltd. in respect of the first floor to the fourth floor is low and is not a genuine rent for some reason or the other. In fact, the assessee, as evident from the statement of the case, has challenged this fact at every stage of the proceedings. Similarly, in our opinion, the question of law under reference is wide enough for us also to hold that on the facts of this case we can decide the legality of the addition of 1/5th of the cost of repairs to the stipulated rent. The question of addition to the cost of repairs is not only implicit but also directly connected with the question raised in the reference. In fact, we have been asked to consider the bona fide annual value as computed by the Tribunal on the facts of this case. As referred to earlier, the Tribunal has, at page 33 of the paper-book, stated, “it is necessary, therefore, to ascertain what is the annual value of the property and what is the rent paid by the tenant”. The question of addition to stipulated rent payable by M/s. Birla Brothers Ltd. by 1/5th of the annual value as cost of repairs in arriving at the bona fide annual value and the taxable income has been raised before the Tribunal and, therefore, this question, arises out of the order of the Tribunal. It has been strenuously argued by both Mr. Mitra and Mr. Iyengar on behalf of the assessee that the addition to the rent payable by M/s. Birla Brothers Ltd. i.e., Rs. 81,000 by 1/5th of that value as cost of repairs is wholly illegal and arbitrary. The correctness of the annual rent of M/s. Birla Brothers Ltd, i.e., Rs. 81,000, is a disputed figure from the very beginning and this sum being the stipulated rent of M/s. Birla Brothers Ltd, is an essential ingredient in the calculation of the bona fide annual value and the taxable income as computed by the Tribunal. In this connection I rely upon the principles decided in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. :

“it is, therefore, clear that under section 66(2), the court cannot direct the Tribunal to refer a question unless it is one which arises out of the order of the Tribunal and was specified by the applicant in his application under section 66(1).

(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.

(2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order (page 611)… a question of law might be a simple one, having its impact at one point, or it may be a complex one, trenching over an area with approaches leading to different points therein. Such a question might involve more that one aspect, requiring to be tackled from different standpoints. All that section 66(1) requires is that the question of law which is referred to the court for decision and which the court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to these aspects of the question which had been argued before the Tribunal. It will be an over-refinement of the position to hold that each aspect of the question is itself a distinct question for the purposes of section 66(1) of the Act….. some-times the questions are framed in such general terms that, construed literally, they might take in questions which were never in issue. In such cases, the true scope of the reference will have to be ascertained and limited by what appears on the statement of the case (page 612).”

In our view, the genuineness of the annual value of the portion occupied by M/s. Birla Brothers Ltd. is an essential ingredient in the calculation of the bona fide annual value and the taxable income as computed by the Tribunal. Further, in our opinion, the correctness of the addition of the stipulated rent by 1/5th of the said sum of Rs. 81,000 as cost of repairs was not only raised before the Tribunal and dealt with by it, but was clearly an issue before the Tribunal.

We may, therefore, summarise the conclusions arrived at by us on the points raised as follows :

Firstly, section 9(1)(i) of the Income-tax Act applies where the landlord has undertaken to bear the cost of substantial repairs. Secondly, section 9(1)(ii) of the Act applies where the tenant has undertaken to bear the cost of substantial repairs. Thirdly, in the instant case, for the reasons stated above, section 9(1)(i) will apply. Lastly, there is no legal bar to the jurisdiction of this court taking into consideration the applicability of section 9(1)(i) in this reference as the main contention of the assessee before the Tribunal was that no amount should be added to the rent payable by M/s. Birla Brothers Ltd, to arrive at the bona fide annual value.

Thus we answer the question in the negative and say that on the facts of the case the bona fide annual value and the taxable income as computed by the Tribunal in respect of the property at No. 8, India Exchange Place, for the assessment years 1951-52, 1953-54 and 1956-57 should not be in accordance with the provisions of section 9(1)(ii) of the Income-tax Act and that section 9(1)(i) should be made applicable to the facts of this case. In view of the fact that contentions of both the parties are partially accepted, we direct that each party will bear and pay its own costs.

MITRA J. – I agree.

Question answered in the negative.

NF