AI Structured Summary
Not yet generated for this judgment
Judgment
On a reference application u/s 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following questions set out in paragraph 6, at page 7 of the statement of case :
"I. Whether, on the facts and in the circumstances of the case, the amount of Rs. 6,39,971 can be assessed to tax as income ?
If the answer is in the affirmative, can it be brought to tax as income under the head ''Other sources'' ?"
The assessee owns house property at No. 9, Old Post Office Street, Calcutta. The house property income was assessed under the head "House property".
In the earlier years, the assessee was liable to pay corporation tax to the tune of Rs. 11,01,189 and on that basis the liability was allowed, though the assessee has challenged that levy on tax. During the assessment year in question, the liability was settled at Rs. 4,37,898 and the assessee got the relief of Rs. 6,75,191. The Income Tax Officer while completing the assessment took the view that the balance amount, i.e., Rs. 6,73,191, for which the assessee got the relief, that amount cannot be taxed under the provisions of Section 41(1) of the Act, but that can be taxed as income under the head "Other sources" and that amount has been taxed as income under the head "Other sources". The assessee carried the matter before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) has also confirmed the view taken by the Income Tax Officer.
In appeal before the Tribunal, the Tribunal has taken the view that Sections 22 to 27 constitute a separate code of computation of the income from the house property and there is no provision in those sections under which this amount can be taxed. Now the question is whether this can be taxed under the head "Other sources".
Learned counsel for the assessee, Mr. Khaitan submits that before the amendment in 1985, the liability of tax was allowed on accrual basis. But, after that amendment by the introduction of a proviso to Section 23, the liability of tax can be allowed on actual payment basis. Therefore, after that amendment, no liability can be allowed on accrual basis. Therefore, the question of taxing any amount on the basis of the relief in the liability does not arise. As there was no provision corresponding to Section 41(1) of the Act to tax the amount of relief allowed by any court in reducing the liability of tax accrued in the earlier year in respect of income from house property.
Learned counsel for the Revenue has also failed to show any provision under which the amount of Rs. 6,39,971 can be taxed. He fairly admits, that amount cannot be taxed under the provisions of Section 41(1) of the Act.
When there was no provision for taxing the amount of relief in question, in the subsequent years and that lacuna has been filled up by the amendment in April. 1985, the benefit for which the assessee was entitled as per law existing on the date of the liability accrued, that cannot be taken away by the subsequent amendment, unless there is an amendment made in the provisions of the Act, to tax the amount of relief which the assessee subsequently got in the litigation on account of tax liability with retrospective effect.
In view of these facts, we find no reason to interfere with the order of the Tribunal.
We answer question No. 1 in the negative, i.e., in favour of the assessee and against the Revenue.
When we have answered question No. 1 in the negative, i.e., in favour of the assessee, question No. 2 need not be answered and we decline to answer question No. 2.
The reference application is accordingly disposed of.
All parties are to act on a xeroxed signed copy of this dictated order on the usual undertaking.