S UJJANNAPPA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee has presented this appeal with a prayer to set aside the order dated April 25, 2001, passed in I. T. A. No. 863 of 1998, on the file of the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore, by which the Tribunal upheld the assessment order passed by the Assessing Officer quantifying the income from letting out the first floor of the premises owned by the assessee at Rs. 1,74,060 and subjecting it to tax under the Act.

(2.) THE assessee is an individual owning a property at No. 380, 15th Cross, II Stage, II Phase, West of Chord Road, Bangalore. THE building consisted of two floors, viz., ground and first. THE assessee had filed return of income disclosing a rental income of Rs. 3,000 per month in respect of the ground floor. In respect of the first floor the assessee had not declared the annual letting value but claimed that it was mortgaged to one Harish Babu for Rs. 1,50,000 for a period of five years and he was not deriving any income from it. THE Assessing Officer did not accede to the no income claim of the assessee in respect of the first floor and added Rs. 36,000 to the income declared by the assessee as notional income from the first floor. In appeal, the Commissioner of Income-tax concurred with the assessment made by the Assessing Officer and dismissed the appeal. THE Tribunal also concurred with the assessment order. Hence, the present appeal.

(3.) THE exemption provided in respect of annual value of property under Section 22 of the Act is restricted only to such portion of such property as may be in the occupation of the owner for the purposes of any business or profession the profits of which are chargeable to income-tax. Where the property is not self-occupied or rented out, Section 23(1)(a) provides the mode for the purposes of determining its annual value. It reads :