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18 April 2010 QUE . Please tell me the difference between annual value of house property and reasonable rent?

As far as my knowledge Annual value of any hp is the inherent capacity of any hp tp yeild income or potentiol of any hp to generate income or the rent earning capacity of any hp and the expected reasonable rent of hp if it is let out from year to year is the reasonable or expected rent.

From the above two defination of Annual valur and reasonable rent both looks similar and i am not able to differniate between them as annual value is defined by sec23(1) whereas Reasonable rent is defined by sec. 23(1) (a)

please explain me the differnce between them as they both looks similar with proper examples..................

thanks in advance

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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18 April 2010 Annual value how determined.

23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be—

(a) the sum for which the property might reasonably be expected to let from year to year; or

(b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or

(c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable :

Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him.

i.e reasonable rent is annual value when the property is not let out.If property is let out then actual rent recd is annaual value.