Commissioner of Income Tax vs Sudhir Mandke and Co.

T.D. Sugla J.

By this application u/s 256(2) of the Income Tax Act, 1961, the Department has sought to refer the following two questions as questions of law :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the income from flats/bungalows in respects of which conveyance deeds in favour of the respective owners could not be executed during the accounting year is not assessable as income from property in the hands of the assessee-firm ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in relying on the decision in Commissioner of Income Tax Vs. Fazalbhoy Investment Co. Pvt. Ltd., while the Department placed reliance on the decisions in Commissioner of Income Tax, Bombay City III Vs. Zorostrian Building Society Ltd., and Addl. CIT v. Sahay Properties and Investment Co., P. Ltd., [1983] 357 (Patna) ?"

In our view, a question of law does arise out of the order of the Tribunal. However, we would like to reframe the question so as to bring out the real controversy between the parties. The question is reframed as under :

"Whether, on the facts and in the circumstances of the case, the assessee is liable to be assessed on notional income as income from house property in respect of flats/bungalows constructed by it and sold to third parties to whom possession was handed over but deeds of conveyance were not executed ?"

Rule is, accordingly, made absolute. The Tribunal is directed to draw up a statement of the case and refer the question reframed by us above to this court within six months from today.

No order as to costs.