COMMISSIONER OF INCOME TAX Vs. PURSHOTTAM DASS

JUDGEMENT

(1.) AT the instance of Revenue, following question has been referred for the opinion of this Court under s. 256(1) of the INCOME TAX ACT, 1961 (in short "the Act"), by the Income -tax Appellate Tribunal, Delhi Bench -C (in short, "the Tribunal") :

(2.) FACTUAL position in a nutshell is as follows : For the asst. year 1973 -74, assessee claimed exemption of Rs. 6,000 (Rs. 1,200 per unit) under s. 23(1)(b)(ii) of the Act. Claim was in respect of a house property in Green Park Extension, New Delhi, let out to cabinet secretariat, Government of India; on a monthly rent of Rs. 4,000. Claim was rejected by the AO on the ground that property was not being utilized for residential purposes as it was used by the cabinet secretariat. Assessee preferred an appeal before the Appellate Assistant Commissioner of Income -tax (in short "the AAC"). The said authority allowed exemption on the ground that property was constructed as a residential unit and was situated in a residential area. A temporary use by the cabinet secretariat for office work did not change the position. 'Said order of AAC was challenged by the Revenue before the Tribunal. According to the Revenue, house having not been used for residential purposes, the exemption under S. 23(1)(b)(ii) of the Act was not allowable. Tribunal upheld the conclusions of the AAC. It was noted that notice had been sent by Delhi Development Authority (in short "DDA") to the assessee where it was indicated that building is residential, but was being used for office purposes. It was view of the DDA that there was contravention. Cabinet secretariat indicated that due to special circumstances, this had to be done and it sought permission to do so. Tribunal concluded that the building consists of 5 residential units and temporary user for office purposes will not alter its basic nature. On being moved by the Revenue, as aforesaid reference has been made.

(3.) BARE perusal of the provision indicates that exemption is granted in case of a residential building comprising one or more residential units where erection was made during a particular period. Question whether a particular unit is residential or not is to be determined by taking into account various factors, like, the intention of the constructor at the time of construction, intended user, actual user, potentiality for a different user and several other related factual aspects. The provision only stresses on erection of a building comprising of resident(s) during a particular period.