BANERJEE J. - This reference, under section 66(2) of the Indian Income-tax Act, 1922, has been made in circumstances hereinafter stated.
The assessment years with which we are concerned are years 1957-58 and 1958-59.
One Banku Bahari Saha executed a will on November 24, 1925, and thereby intended to found a debutter estate. He dedicated several properties to two deities installed by him, namely, Sri Sri Iswar Benode Behari Jew and Sri Sri Iswar Benodeswar Mahadev. In this reference we are concerned with two of the dedicated properties, namely, No. 12, Benode Behari Saha Lane, and No. 122A, Manicktola Street, both in the town of Calcutta. It is necessary for us to consider the following clauses of the will, in order to understand the question referred to this court. The dedication opens with the following paragraph :
'According to the wishes of my revered father I have built the edifice of a temple, a Thakurabari a premisses No. 12, Benode Behari Saha Lane, in close proximity to our said family dwelling house and have installed therein the deity of Sri Sri Iswar Benode Behari (an image of Sri Sri Iswar Radha Krishna) and Sri Sri Iswar Bendeswari Sina (possibly a misprint for Sri Sri Iswar Benodeswar Mahadev) and have been performing the Puja worship and seva, etc., of the same.
The list of all the immovable properties included in this will is given in the schedules Ka, Kha and Ga written below. This property is my estate lon enjoyed and possessed.'
'Clause (11). By this instrument of Will I dedicate to the deity Sri Sri Iswar Benode Behari and Sri Sri Iswar Benodeswar Mahadev established by me the properties as included in the schedule (Ga) of this will and all such properties that will be included in the schedule (Ga) in future according to the provisions of this Will from and out of the schedule Ka and Kha. From the time of my death the aforesaid properties shall be used in the aforesaid Dev Seva and for pious acts mentioned below and shall not at any time be transferred in any manner such as gift, sale, etc., save and except for reasons stated here below....
Clause (17). Nobody save and except the Brahmin performing the Worship) of the deity and servants shall ever be competent to reside in the Thakurbati at No. 12, Benode Behari Saha Lane and the said Thakurbati shall never be used as a place of agitation and meeting for the sake of interiors (sic-invitation) or for any public functions.'
In schedule 'Ga' premises No. 122, Manicktola Street is not described either as a temple or a Thakurbati but the area of the land only, included in the premises, is given. Premises No. 12, Benode Behari Saha Lane, however, is described in the schedule as 'Thakurbati and temple'. There is no dispute that 122, Manicktola Street, late on was subdivided or renumbered as premises No. 122A, Manicktola Street and a temple was actually constructed on the site.
For the assessment years with which we are concerned, the Income-tax Officer computed the bona fide annual value of the premises No. 12, Benode Behari Saha Lane and 122A, Manicktola Street, at the amounts which they were likely to fetch if let out in the open market. The assessee objected to the assessment of an annual value on the two premises and appealed before the Appellate Assistant Commissioner. The reason which appealed to the Appellate Assistant Commissioner were :
'As regards the second ground, No. 122A, Manicktola Street, Calcutta, and No. 12, Benode Behari Saha Lane, Calcutta are the temples of the two deities mentioned above. These premises have not been let out and no income accrues therefrom. The Income-tax Officer therefore was not justified in adding any income on account of these premises. In the earlier assessment no such addition has been made. The addition of Rs. 3,334 (Rs. 4,000 less Rs. 666 for repairs) would be therefore deleted in each of the two assessment under appeal.'
In the above view the Appellate Assistant Commissioner allowed the objection of the assessee.
Against the order of the Appellate Assistant Commissioner, the revenue appealed before the Appellate Tribunal. We are not concerned with the other grounds involved in the appeal. The Appellate Tribunal agreed with the order of the Appellate Assistant Commissioner deleting the bona fide income from two debuttere premises mentioned above with the following observations :
'The Income-tax Officer computed the bona fide annual value of the house of the amount which they are likely to fetch if let out in the open market. The Appellate Assistant Commissioner has, however, found that these premises were not let out the no income accrued therefrom to the assessee. In fact, clause (17) of the Will aforesaid says that nobody save and except the priest performing the worship of the deity and its servants shall even be competent to reside in the temple and it shall never be used as a place of agitation or meeting or for the sale of any public function. In view of the injuctions contained in the will against the residence of any body in the premises apart from the priest performing the worship of the deity and its servants, it is quite obvious that these premises have no letting value and the Appellate Assistant Commissioner was, therefore, justified in excluding from the assessment the annual value thereof.'
Thereupon, the Commissioner of Income-tax, at first tried to induce the Appellate Tribunal to refer certain questions of law to this court and therein failing, induced this court to call for a statement of case from the Tribunal on the following point of law :
'Whether, on the facts and in the circumstance of the case, the Tribunal misdirected itself in law in holding that premises No. 12, Benode Behari Shaw Lane, Calcutta, and No. 122A, Manicktola Street, Calcutta had no bona fide annual value within the meaning of section 9(2) of the Income-tax Act, 1922 ?'
In order to answer the question, it is necessary for us to remind ourselves of the provisions of sub-sections (1) and (2) of section 9 of the Income-tax which are couched in the following language :
'9. (1) The tax shall be payable by an assessee under the head income from property in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purpose of any business, profession or vocation carried on by him the profits of which are assessable to tax, subject to the following allowance, namely,......
(2) For the purposes of the section, the annual value of the property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year.'
It is apparent from the section quoted above that even where a property is not let and even where it does not produce any income, the Income-tax Officer is to proceed on the basis of a notional income, which the property might reasonably be expected to yield from year to year. Now, where a property, is not actually let, even then there ought to be included in the annual income of the owner a notional income from the property. The letting value of property, whether let or not, can be objectively ascertained on reasonably basis. If there be restrictions on the letting of the premises, that may merely reduce letting value but it cannot be said, without more, that because of the existence of a restrictive clause there can be no notional annual income deemed to arise from the premises. For this proposition we final ample support from two decision of the Bombay High Court namely, D. M. Vakil v. Commissioner of Income-tax. and Sir Currimbhoy Ebrahim Baronetcy Trust v. Commissioner of Income-tax. In the first mentioned case Kania, Ag. C.J. (as he then was), observed :
'The legislature was therefore expressly provided that the tax shall be payable by the assessee n respect of the bona fide final value irrespective of the question whether he receives that value or not. Section 9(2) provides that for the purposes of this section, the expression annual value shall be deemed to mean the sum for which, the property might reasonably be expected to let from year to year. It is again significant to note that the word used is might and not can or is. Reading these two paragraphs of section 9 together, it is clear that the income from property is thus an artificially defined income and the legibility arises from the fact that the assessee is the owner of the property. It is further provided in the section that if the owner occupies the property he has to pay tax calculated in the manner provided therein. Therefore, by reason of the fact that the property is not let out, the assessee does not escape taxation.
On behalf of the trustees it was urged that in the present case the trustees are prevented from letting out the property to any one by virtue of clays 5 of the will itself. That, however, in my opinion, makes no deference. The liability to tax does not depend o the power of the owner to let the property, as it also dies not depend on the capacity of the owner to receive the bona fide annual value of the property. The law has laid down an artificial rule by which the amounts to be considered the income of the assessee from immovable property and provided that he should be taxed on that footing. In my opinion the argument of the Commissioner on this point is correct.'
In that view of the law, we have to uphold the contention of Mr. Pal, appearing for the revenue, that the Tribunal was not correct in holding that, in view of the injunction contained in the will against the residence of any body in the premises (apart form the priest preferring the worship of the deity and its servants.), the premises have no letting value. That injnction will be or relevant consideration n finding out the bona fide value and the whether of the injunction may very much reduce the bona fide letting value of the house. But because of the existence of the injuction, the premises cannot be said to have no letting value, notional or otherwise. In the view that we take, we have to answer the question refereed to us in the affirmative and in favour of the revenue. We, however, make one position clear. We are not sure that a temple, which is wholly and exclusively occupied by a deity or for use of the deity, comes within the mischief of section 9(2). We do not express any opinion on the point because that points does not call for a decision in the present reference.
In the facts and circumstances of the case we do not make any order as to costs.
K. L. Roy J. - I agree.
Question answered in the affirmative.