Commissioner of Income Tax vs Santram C. Sheth

D.A. Mehta, J.—Commissioner of Income Tax has filed Income Tax Reference No. 39 of 2003 for Assessment Years 1983-84 to 1986-87 by raising the following question, which has been referred by the Tribunal u/s 256(1) of the Income Tax Act, 1961:

Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in deciding that compensatory service charges cannot be included in the annual letting value?

In case of the same respondent-assessee for Assessment Year 1990-91 following question has been referred in Income Tax Reference No. 6 of 1999 by the Tribunal at the instance of the revenue:

Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) directing the A.O. not to treat the alleged service charges as additional rent but to bring the same to tax under the head ''income from other sources?

In case of another co-owner identical question as raised and referred in Income Tax Reference No. 6 of 1999 is referred by the Tribunal at the instance of the revenue for Assessment Year 1990-91 in Income Tax Reference No. 7 of 1999:

Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) directing the A.O. not to treat the alleged service charges as additional rent but to bring the same to tax under the head ''income from other sources?

When the matter came up for hearing the Court had enquired of the learned Counsel appearing for the applicant-revenue as to what has happened in case of other co-owners qua the same property, the dispute being in relation to the amount of service charges being brought to tax under the head ''Income from Property'' or should be brought to tax under the head ''Income from Other Sources''. Learned advocate appearing for the respondent-assessee has placed on record the computation of income and assessment orders for various assessment years in case of two other co-owners viz. Brinda Santram Sheth and Jigisha Santram Sheth.

It is apparent that the same income which has been allocated as ''Income from Property'' and ''Income from Other Sources'' has been taxed in hands of the co-owners under the said two heads of income, whereas in case of two respondent-assessees revenue has clubbed the incomes under the head ''Income from Property''.

Learned advocate for the applicant was not in a position to point out that any remedial action has been taken in so far as assessments of the other two co-owners are concerned. Hence, without entering into merits of the controversy between the parties, the references are required to be disposed of only on the limited count of two of the four co-owners having been assessed separately under two different heads parity being required to be maintained. Accordingly, there is no infirmity in the impugned orders of the Tribunal and the questions are accordingly answered in favour of the assessees and against the revenue. The references stand disposed of accordingly with no order as to costs.

Registry to place a copy of this order in connected matters.