Notional Interest Cannot Be Added to Fair Rent u/s 23: Bombay HC Upholds AO’s ₹22 Lakh Market Valuation Using Comparable Instances

The Bombay High Court upheld the Assessing Officer’s method of valuing property at ₹22 lakh using comparable market instances, ruling that notional interest cannot be added to fair rent under Section 23 of the Income Tax Act. The article explains the Court’s rationale that only actual rent received or receivable can be considered for taxation, not hypothetical income. It further elaborates on valuation principles, judicial precedents, and their impact on property owners. This judgment provides clarity on rental income assessment and prevents inflated tax liabilities based on presumptive calculations. It ensures a realistic approach to income computation from house property.