M/S Jagatjit Industries Ld. vs Commissioner Of Income Tax
2010 Latest Caselaw 4077 Del

                                                                   R-198

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

                             ITR No. 72 OF 1993

%                                            Date of Decision: 01.09.2010.

M/S JAGATJIT INDUSTRIES LD.                           . . . Appellant

                        Through :         Mr. Satyen Sethi, Advocate

                              VERSUS

COMMISSIONER OF INCOME TAX                           . . .Respondent

                        Through:          Ms. Prem Lata Bansal, Advocate

CORAM :-

      HON'BLE MR. JUSTICE A.K. SIKRI
      HON'BLE MS. JUSTICE REVA KHETRAPAL

      1.     Whether Reporters of Local newspapers may be allowed
             to see the Judgment?
      2.     To be referred to the Reporter or not?
      3.     Whether the Judgment should be reported in the Digest?

A.K. SIKRI, J. (ORAL)

1. These references relate to the assessment years 1981-82 and 1984-

85. In these years, the assessee had disclosed, inter alia, rental income

from certain flats in Ashoka Estates, Barakhamba Road and Bhandari

House, Nehru Place New Delhi. The Income Tax Officer assessed these

rental income under the head "income from house property".

Subsequently, the orders were amended and the income was assessed

under the head "Income from other sources" on the ground that the

registered sale deeds in respect of the flats, were not yet executed in

favour of the assessee-company. This was done in exercise of power

under Section 154 read with Section 155 of the Act. While doing so, the

Assessing Officer relied upon the judgment of this Court in Sushil Ansal

Vs. CIT, Delhi, 160 ITR 308. This position was confirmed in appeals filed

by the assessee before the CIT (A) as well as ITAT. However, the

assessee made application for reference under Section 256 (1) of the Act

and on that, the following two questions are referred for opinion of this

Court :-

"1.Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that for assessment year after 1976-77 the decision of Sushil Ansal in 160 ITR 308 governs taxation of income by way of rent derived by a person, other than the legal owner, as chargeable under the head „Income from other sources‟?

2. Whether on the facts and circumstances of the case, the Tribunal was right in law in upholding jurisdiction/action u/s 154 of the Act of the assessing Officer following the decision of Sushil Ansal Vs. CIT 160 ITR 308?"

2 As pointed out above and is clearly reflected in the first question

formulated by the Tribunal, that the rental income was treated as

"Income from other sources" by modifying the earlier order, relying upon

the judgment of this Court in Sushhil Ansal (supra). However, said

decision has since been overruled by the Supreme Court in the case of

Commissioner of Income Tax Vs. Podar Cement Pvt. Ltd. And

Others, 226 ITR 625. The Supreme Court has held that where the

assessee has not become the owner of the property in question, rental

there from could be treated as income under the head of "income from

house property" and not "income from other sources". Following that

decision of the Supreme Court, first question is answered in favour of the

assessee and against the revenue. In view thereof, need to answer the

second question does not arise.

(A.K. SIKRI) JUDGE

(REVA KHETRAPAL) JUDGE SEPTEMBER 1, 2010 skb