Judgment :- K. A. THANIKKACHALAM, J. In pursuance of the direction by this court in Tax Case Petition No. 563 of 1982 dated April 11, 1983, the Tribunal referred the following question of law for the opinion of this court under section 256(2) of the Income-tax Act, 1961 "Whether, on the facts and in the circumstances of the case and having regard to the provisions of section 23(1) of the Income-tax Act, 1961, the Tribunal was right in holding that the annual letting value of the property at No. 35-A, Mount Road, should be taken on the basis of actual rent received and not on the basis of the value fixed by the Corporation of Madras ?" In the assessment year 1977-78, the assessee, an individual, deriving income from house property, money-lending and other sources, was assessed by the Income-tax Officer by computing the property income adopting the annual letting value at the municipal valuation of Rs. 68, 578 instead of the actual rental receipt of Rs. 51, 150 adopted by the assessee. On appeal, the Appellate Assistant Commissioner accepted the assessee's contention that the annual actual rental value of Rs. 51, 150 should be adopted. The aggrieved Department went in appeal before the Tribunal. The Tribunal, considering the decision of this court in Addl. CIT v. Mrs. Leela Govindan 1978 (113) ITR 136, 1988 (113) ITR 136, 1978 (7) CTR 187, 1978 CTR(Mad) 187 and that of the Delhi High Court in CIT v. H. P. Sharma 1980 (122) ITR 675, 1980 (4) TAXMAN 83 and that of the Supreme Court in Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee 1980 AIR(SC) 541, 1980 (122) ITR 700, 1980 (1) RCJ 468, 1980 (1) RCR 618, 1980 (1) RentLR 87, 1980 (1) SCC 685 , 1980 (2) SCR 607 , 1982 SCC(Tax) 116 and in the absence of any evidence on the side of the Department, that the rent charged by the assessee is on the low side, accepted the actual rent received by the assessee as the fair rent and accordingly confirmed the order passed by the first appellate authority/Appellate Assistant CommissionerLearned standing counsel for the applicant/Department submitted that the annual letting value should be determined in accordance with the provisions contained in section 23 of the Income-tax Act, 1961. It was submitted that the annual letting value determined by the municipality should be taken into account, since the same was fixed under section 100 of the Madras City Municipal Corporation Act. In the present case, the annual letting value fixed by the Municipal Corporation is higher than the actual rent received by the assessee. As per the amended provisions of section 23 of the Income-tax Act, if the actual rent paid is more than the municipal valuation, then the actual rent should be taken into consideration. For this reason, it was submitted that the Tribunal was not correct in adopting the actual letting value received by the assessee, as the fair rent in the matter of determining the annual rental value We have heard learned standing counsel for the Department and perused the records carefully. The actual rent received by the assessee was Rs. 51, 150 and the annual letting value determined by the Corporation was Rs. 68, 578. In the matter of determining the annual letting value, we are guided by the decision of the Supreme Court in Dewan Daulat Rai Kapoor's case 1980 AIR(SC) 541, 1980 (122) ITR 700, 1980 (1) RCJ 468, 1980 (1) RCR 618, 1980 (1) RentLR 87, 1980 (1) SCC 685 , 1980 (2) SCR 607 , 1982 SCC(Tax) 116, wherein the Supreme Court has held as under: "The actual rent payable by a tenant to the landlord would, in normal circumstances, afford reliable evidence of what the landlord might reasonably expect to get from a hypothetical tenant, unless the rent is inflated or depressed by ' reason of extraneous considerations such as relationship, expectation of some other benefit, etc. There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from a hypothetical tenant. But, where the rent of the building is subject to rent control legislation this approximation may and often does get displaced. It is, therefore, necessary to consider the effect of rent control legislation on the determination of annual value." Similarly, in Mrs. But, where the rent of the building is subject to rent control legislation this approximation may and often does get displaced. It is, therefore, necessary to consider the effect of rent control legislation on the determination of annual value." Similarly, in Mrs. Sheila Kaushish v. CIT 1981 AIR(SC) 1729, 1981 (131) ITR 435, 1987 (1) RCR 246, 1981 (4) SCC 121 , 1982 (1) SCR 309 , 1981 UJ 708 , 1981 (24) CTR 171, 1981 (7) TAXMAN 1, 1981 TaxLR 1463, 24 CTR(SC) 311, 1981 SCC(Tax) 286, the Supreme Court held that the fair rent has to be determined on the basis of the cost of construction and market value of the land under section 6(1)(B)(2) of the Delhi Rent Control Act. In view of the abovesaid Supreme Court decisions, the annual letting value of the premises should be determined in accordance with the rent control legislation, where the property is situated in a place covered by the rent control legislation. Under section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, fair rent has got to be fixed on the basis of the value of the land and the value of the building. In the present case, it is not known whether the Madras Corporation has fixed the annual letting value as per the provisions of section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act. The presumption would be that the Municipal Corporation would have followed only the Municipal Corporation Act. Under section 100 thereof, there is no rule for determining the annual letting value on the basis of the value of the land and the building. Therefore, in view of the abovesaid two decisions of the Supreme Court, it is not possible to accept the contention put forward by the Department that the annual letting value as fixed by the municipality, should be accepted. There is also no evidence on record to show that the rent received by the assessee is low because of any extraneous considerations, like relationship between the landlord and the tenant or any other contract. In the absence of such evidence, we are not in a position to reject the conclusion arrived at by the Tribunal that the actual rent received by the assessee would form the fair rent, as contemplated under the Rent Control Act. In the absence of such evidence, we are not in a position to reject the conclusion arrived at by the Tribunal that the actual rent received by the assessee would form the fair rent, as contemplated under the Rent Control Act. Therefore, there is no infirmity in the order passed by the Tribunal in accepting the annual letting value as given by the assessee. Accordingly, we answer the question referred to us in the affirmative. No costs.