Sushil Ansal vs Commissioner of Income Tax Commissioner of Income Tax Vs Sushil Ansal

Arijit Pasayat, C.J.—These two reference applications are interlinked. Both the assessed and the Revenue moved for references u/s 256(1) of the Income Tax Act, 1961 (in short "the Act"). The Income Tax Appellate Tribunal, Delhi Bench-B ("the Tribunal" in short), referred the following question at the instance of the Revenue for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in deleting the addition of Rs. 18,423 ?"

At the instance of the assessed, three questions have been referred, which ran as follows :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessed was not entitled to vacancy allowance for the period April 1, 1972, to October, 1972, in respect of the portions which had not been let out rill October, 1972, following the ruling of the Supreme Court in the case of Liquidator of Mahamudabad Properties P. Ltd. Vs. Commissioner of Income Tax, West Bengal-II, ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessed could not be treated as the owner of the three flats in the building ''Akash Deep'' ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income enjoyed by the assessed from those flats would be assessed under the head ''Income from other sources'' and not under the head ''Income from house property'' ?"

The question that essentially arises is whether the property which was first let out with effect from November 1, 1972, could have the benefit of vacancy allowance in terms of Section 24(1)(ix) of the Act. As regards the question referred at the instance of the Revenue is concerned, a similar question has come up for consideration of this court in I. T. R, No. 197 of 1981 titled Commissioner of Income Tax Vs. C. Lyall and Co., , disposed of on January 8, 2001. Following the answer given in the said case, we answer the question referred in the affirmative, in favor, of the assessed and against the Revenue.

Coming to the questions referred at the instance of the assesses, the second and third questions are covered by a decision of the apex court in Commissioner of Income Tax, Bombay etc. Vs. M/s. Podar Cement Pvt. Ltd. etc., . Following the said decision, both the sec ond and third questions have to be answered in favor of the assessed and against the Revenue.

So far as the crucial question No. 1 is concerned, we find that the Tribunal did not elaborately deal with the matter and recorded only the following finding :

"The first two grounds of appeal pertain to vacancy allowance in respect of the second and third floors of the building ''Sandhya Deep'' under the provisions of Section 24 of the Act. It is also urged that the authorities below were wrong in assessing the income of the portions of the property which were unoccupied. The contention on behalf of the assessed is that till a building is occupied after it is built, the income thereof cannot be assessed. Alternatively, the claim is for vacancy allowance for that period. The matter is however directly covered by the ruling of the Supreme Court in the case of Liquidator of Mahamudabad Properties P. Ltd. Vs. Commissioner of Income Tax, West Bengal-II, . Respectfully, following the same we hold that the authorities below were correct in denying the claim for vacancy allowance. They were also correct in notionally assessing the income from the property even when it was not let out."

It is agreed at the Bar that the decision in Liquidator of Mahamudabad Properties P. Ltd. Vs. Commissioner of Income Tax, West Bengal-II, , has no direct bearing on the subject-matter at issue. As the Tribunal did not examine the matter and simply stated that the issue was directly covered by the decision of the apex court, we feel that it would be appropriate if the Tribunal hears the matter afresh only in respect of the issue covered by question No. 1, referred at the instance of the assessed. We make it clear that we have not expressed any opinion on the merits of that issue.

References are accordingly disposed of.