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Commissioner of Income-tax Vs. Kanaiyalal Nimani and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 371 of 1972
Judge
Reported in[1979]120ITR892(Cal)
ActsIncome Tax Act, 1961 - Sections 22 to 27 and 56
AppellantCommissioner of Income-tax
RespondentKanaiyalal Nimani and ors.
Appellant AdvocateB.L. Pal and ;Ajit Sengupta, Advs.
Respondent AdvocateSukumar Mitra and ;Meghnath Banerjee, Advs.
Cases ReferredRowe and Co. v. Secretary of State
Excerpt:
- .....in holding that the rental income from the stalls in ' mangla hat ' was assessable as income from house property under sections 22 to 27 of the income-tax act, 1961, and not as income from other sources under section 56 of the said act ' 6. mr. b. l. pal, learned counsel for the revenue, argues before us that these stalls are not ' buildings ' within the meaning of that word used in section 22 of the act. in support of this contention, he places reliance on the ' marginal heading ' of section 22 and argues that the word 'building' has been used in the sense of a ' house property ' which should be used for residential purpose in view of the decision in the case of rowe and co. v. secretary of state, air 1921 low bur 30, in which it has been held that section 8 of the indian i.t. act,.....
Judgment:

Sudhindra Mohan Guha, J.

1. This reference under Section 256(2) of the I.T. Act, 1961, at the instance of the revenue relates to the assessment year 1962-63, the relevant accounting year being 2018 R.N.

2. The assessee is a lessee of premises No. 1, Strand Road, Howrah, measuring 7 bighas of land with a building thereon for 50 years, under a registered deed of lease dated March 8, 1939. The assessee erected many stalls in the demised premises and set up a market therein commonly known as ' Maagla Hat '.

3. The assessee claimed before the ITO that the income derived from these stalls should be assessed under Sections 22 to 27 of the I.T. Act, 1961, but the ITO rejected the contention and assessed the income under the head ' Other sources '.

4. On appeal by the assessee, the AAC confirmed the order of assessment subject to certain modifications. The assessee preferred a further appeal to the Tribunal. The Tribunal found that these stalls were not either ramshackle in nature or temporary sheds as argued by the department. The Tribunal found that these stalls were built to last for a number of years and were almost permanent in nature and were erected on cement plinths with woaden walls and corrugated iron roofs. The Tribunal also found that these stalls were used by the stallholders for selling their goods and also for the purpose of storing their goods. The Tribunal further found that under the deed of lease the assessee was entitled to erect buildings and was also entitled to make additions to the existing buildings with the consent of the lessor and with the permission of the municipality. The Tribunal also found that these stalls were assessed to municipal rates andtaxes as buildings on their annual letting value. The Tribunal further considered the relevant provisions of the deed of lease and held that these stalls were buildings and the assessee was the owner of these stalls during the period of the lease. The Tribunal further held that the income derived from these stalls is assessable under Sections 22 to 27 of the Act and allowed the appeal.

5. Therefore, at the instance of the Commissioner, the following questions were called for by the court :

' (1) Whether, on the facts and in the circumstances of the case, and on a proper construction of the deed of lease dated 8th March, 1939, the finding of the Tribunal that the stalls in ' Mangla Hat ' are ' buildings ' within the meaning of Section 22 of the Income-tax Act, 1961, is unreasonable or perverse ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the rental income from the stalls in ' Mangla Hat ' was assessable as income from house property under Sections 22 to 27 of the Income-tax Act, 1961, and not as income from other sources under Section 56 of the said Act '

6. Mr. B. L. Pal, learned counsel for the revenue, argues before us that these stalls are not ' buildings ' within the meaning of that word used in Section 22 of the Act. In support of this contention, he places reliance on the ' marginal heading ' of Section 22 and argues that the word 'building' has been used in the sense of a ' house property ' which should be used for residential purpose in view of the decision in the case of Rowe and Co. v. Secretary of State, AIR 1921 Low Bur 30, in which it has been held that Section 8 of the Indian I.T. Act, 1918, as it then stood, deals with the house property which is used for residential purposes and does not deal with business such as shops, offices and godowns. Mr. Pal, therefore, submits that these stalls are not buildings and accordingly both the questions should be answered in favour of the revenue.

7. Though the words ' buildings ' and ' house property ' have not been de6ned in the I.T. Acts, they should be understood, in our opinion, in the same sense as in their ordinary dictionary meaning.

8. Sections 22 to 27 of the Act are wholly silent as to the purpose for which a building or a house property is to be used. Therefore, we are not impressed by the argument of Mr, Pal that the scope of this section is wholly confined to a building or a house property which is used in a market (sic) are buildings and income derived from them by the owner is assessable under the head ' Income from house property ' as held in East India Housing and Land Development Trust Ltd. v. CIT : [1961]42ITR49(SC) by the Supreme Court and, therefore, the case of Rowe and Co., AIR 1921 Low Bur 30 can no longer be followed.

9. Reliance on the case of S. G. Mercantile Corporation P. Ltd. v. CIT : [1972]83ITR700(SC) , was misplaced by Mr. Pal, for it was decided on different facts, namely, that the assessee-company was not the owner of the buildings, whereas in East India Housing and Land Development Trust Ltd.'s case : [1961]42ITR49(SC) , the assessee-company was the owner of the shops and stalls.

10. We may now briefly state the relevant facts found by the Tribunal. These stalls are permanently affixed to the ground. They are not box type shops erected temporarily, nor they are capable of being shifted from place to place. They were erected long ago. The stallholders are using them for selling their merchandise and they can also use these stalls for storing their goods.

11. The assessee is the owner of these stalls during the period of this long lease. Further, there is nothing in the deed of lease even to suggest that these stalls are not buildings. Therefore, and in view of the aforesaid facts found by the Tribunal, the conclusion reached by it that these stalls are ' buildings ' within the meaning of Section 22 of the Act cannot be regarded as perverse. Similarly, it should be held that the Tribunal was right in holding that the rental income from these stalls is assessable under Sections 22 to 27 and not under Section 56 of the Act in view of the decision of the SupremeCourt in East India Housing and Land Development Trust Ltd. : [1961]42ITR49(SC) .

12. We, accordingly, answer question No. 1 in the negative and question No. 2 in the affirmative and both in favour of the assessee.

13. We propose to make no order as to costs.

14. Let it now be recorded here that we express no opinion on the argument of Mr. Sukumar Mitra, learned counsel for the assessee, that two conceivable views are possible regarding the finding of the Tribunal on the question whether these stalls are buildings and, therefore, it cannot be said that the aforesaid finding of the Tribunal is perverse.

Deb, J.

15. I agree.


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