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Commissioner of Income-tax, Delhi-iii Vs. V.K. Narendra - Court Judgment

LegalCrystal Citation
Subject Direct Taxation
CourtDelhi High Court
Decided On
Case NumberIncome-tax Cases Nos. 75 and 76 of 1978, 306 and 307 of 1979 and 35 and 36 of 1980
Judge
Reported in[1983]143ITR418(Delhi)
ActsIncome Tax Act, 1961 - Sections 22, 56(2) and 256(2)
AppellantCommissioner of Income-tax, Delhi-iii
RespondentV.K. Narendra
Excerpt:
- - the claim of the assessed was that the property as well as the rotary printing press were being used for business, and hence, the rental of this portion of the property could not be included in the annual letting value of this property......out of the order of the tribunal. the applications are - i.t.c. nos. 75 of 1978, relating to the assessment year 1968-69, 76 of 1978 relating to the assessment year 1969-70, 307 of 1979 relating to the assessment year 1970-71, 306 of 1979 relating to the assessment year 1971-72, 36 of 1980 relating to the assessment year 1972-73 and 35 of 1980 relating to the assessment year 1973-74. 2. the question sought to be raised for the assessment years 1968-69 to 1969-70 is in the following terms : 'whether, on the facts and under the circumstances of the case, the tribunal was legally correct in upholding the reduction of rs. 22,300 made by the appellate assistant commissioner from the income of the property known as pratap bhawan, 5, mathura road, new delhi, by holding that the assessed was.....
Judgment:

D.K. Kapur, J.

1. Six petitions under s. 256(2) of the I.T. Act, 1961, which raise interconnected questions have been instituted by the Commissioner of Income-tax claiming that questions of law arise out of the order of the Tribunal. The applications are - I.T.C. Nos. 75 of 1978, relating to the assessment year 1968-69, 76 of 1978 relating to the assessment year 1969-70, 307 of 1979 relating to the assessment year 1970-71, 306 of 1979 relating to the assessment year 1971-72, 36 of 1980 relating to the assessment year 1972-73 and 35 of 1980 relating to the assessment year 1973-74.

2. The question sought to be raised for the assessment years 1968-69 to 1969-70 is in the following terms :

'Whether, on the facts and under the circumstances of the case, the Tribunal was legally correct in upholding the reduction of Rs. 22,300 made by the Appellate Assistant Commissioner from the income of the property known as Pratap Bhawan, 5, Mathura Road, New Delhi, by holding that the assessed was carrying on business in this portion of the property and its value was not liable to be included in the annual letting value of Pratap Bhavan, 5-Mathura Raod, New Delhi ?'

3. The way in which this question has arisen is as follows. Originally the assessed had let out a portion of the building to M/s. Babu Offset Printing Press at Rs. 1,860 per month. In that portion, he had, fitted a Rotary Printing Press for which he received Rs. 7,500 monthly. From 1968-69 onwards, the assessed and his son together constituted a partnership relating to the said Rotary Printing Press. This firm then took over the machinery and also the portion of the property and leased out the same together to M/s. Prabhu & Company at Rs. 12,500 per month. The claim of the assessed was that the property as well as the Rotary Printing Press were being used for business, and hence, the rental of this portion of the property could not be included in the annual letting value of this property. The ITO rejected the claim, but the AAC held that the sum of Rs. 12,500 included the rent of Rs. 1,860 and the whole amount was business income, and, hence, a reduction of Rs. 22,300 was allowed from the annual letting value.

4. On appeal to the Tribunal, it was claimed by the Revenue that the machine and the premises in which the machine was installed were not being used for the assessed's own business, but the assessed claimed that he was a 50 per cent. partner of the firm, M/s. Rotary Corporation, which was getting the sum of Rs. 12,500 which included the rent. The Tribunal accepted this view-point and held that it was obvious that the amount of Rs. 12,500 also included the rent of the portion of the building.

5. The Tribunal has refused to make a reference on the ground that a finding of fact is involved. We have heard learned counsel for the parties. We are of the view that the question of law as framed does not arise from the order of the Tribunal. Originally, this portion of the property was let out by the assessed himself, so the income had to be assessed as income from house property under s. 22 of the Act. However, subsequently, there was a composite letting by the assessed in partnership. Even if the assessed had let out this property as an individual, the income would be assessable under s. 56(2) of the Act either as income from other sources or as income under the head 'Profits and gains of business or profession'. In no case, could it be assessed under s. 22.

6. Inasmuch as the composite letting of the building plus machinery, etc., is by a partnership firm, it seems a fortiori that the income cannot be assessed under s. 22 in the hands of the assessed, and so, the proposed question does not arise at all on the facts of this case. On this ground we would dismiss the application. The question proposed is common to all the years though framed in a slightly different form; so this decision will also govern the other cases mentioned in the earlier part of this judgment. The parties are left to bear there own costs.


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