Mukherjee Estate (P.) Ltd. vs Commissioner of Income Tax

On a reference application u/s 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following question for our opinion :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding" that the sum of Rs. 51,864 received by the assessee from letting out of floor space and wall space on the roofs of the house properties to advertising agencies for putting up hoardings for display of advertisements was income assessable under the head ''Other sources'' and not under the head ''Income from house property'' ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal''s finding that the hoardings which are placed on the roofs of the building let out by the assessee to various companies for display of their respective advertisements is vitiated by reason of ignoring important and relevant evidence produced at the time of the hearing before the Income Tax authorities and/or on record ?

(3) Whether the finding of the Tribunal based on wrong assumption that the hoardings were put up by the assessee itself is not perverse ?"

The assessee derives income from house property, business, capital gains and other sources. The business of the assessee consists of letting out on hire of cinema hall, service charges, realised from the various house properties and share dealing. During the course of the assessment, the Income Tax Officer has also noticed that the assessee has realised, inter alia, a total sum of Rs. 51,864 on account of display of hoardings of various concerns on top of the assessee''s building for advertisement purpose. The Income Tax Officer did not treat the realisation on account of letting out for display of hoardings of various concerns as income from house property and assessed this income as income from other sources. In appeal, the Commissioner of Income Tax (Appeals) has allowed the claim of the assessee that the receipt of Rs. 51,864 be assessed as income from house property. In appeal before the Tribunal, the Tribunal has considered the decision of this court in the case of Commissioner of Income Tax Vs. Kanak Investments (Pvt.) Ltd., , and also the decision of this court in Commissioner of Income Tax, Central-II Vs. Model Manufacturing Co. Pvt. Ltd., , and reversed the view taken by the Commissioner of Income Tax (Appeals) holding that letting out the hoardings on the top of the roof to display the advertisements is not income from the house property as hoardings do not form part of the building which is separable from the cinema hall and other parts of the building.

None appeared for the Revenue. Learned counsel for the assessee submits that the assessee has let out the roof for advertisement for hoarding and advertisement. Therefore, the income should be assessed as income from house property. A query was put to him whether there was an agreement to this effect to conclude whether the hoarding was let out or the roof is let out. He failed to produce that agreement nor is there any reference to such agreement before the authorities below. Therefore, considering the finding of the Tribunal that the assessee has let out the hoardings, these are neither part of the building nor the land appurtenant thereto. Therefore, permitting some companies to display their boards on hoarding''s cannot be taken as income from house property as hoarding''s cannot be treated as part of the building.

Considering this finding", we find no force in the submissions of learned counsel for the assessee.

In the result, we answer questions Nos. 1 and 2 in the affirmative, i.e., in favour of the Revenue and against the assessee.

Question No. 3 whether the finding'' of the Tribunal is perverse--we answer the question in the negative, i.e., in favour of the Revenue and against the assessee.

The application is accordingly disposed of.