DALMIA J Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) : There are three IT reference before the Court, but they relate to six assessment years, namely, 1963-64 to 1968-69. As the facts are common and only one point arises, it will be convenient to mention the facts first which are quite simple. The assessee is Shri J. Dalmia, a director of M/s Hari Brothers (P.) Ltd. The company had provided him a portion of the house situated at 2, Hardinge Avenue, New Delhi, for the purpose of residence. The building is owned by M/s Dalmia Cement (Bharat) Ltd., of which M/s Hari Brothers (P.) Ltd. was the managing agent. The rent which was being paid for the whole building was Rs. 4,200 per annum. The assessee was to be assessed in respect of the (rental) value of the premises given to him for the purpose of his residence and he was agreeable to treat the entire amount of Rs. 4,200 as the value. The ITO valued the same at Rs. 12,500. This was confirmed by the AAC and also by the Tribunal. The Tribunal proceeded on the basis that the portion which the assessee was allowed to occupy was the entire first floor of the building. The cost of the building was about Rs. 5,00,000, and hence, the value of Rs. 12,500 taken by the Department could not be treated as excessive. IT Ref. No. 12 of 1973, which relates to the asst. yrs. 1963-64 to 1966-67, seeks an answer to the following question:

(2.) THE questions referred involve a somewhat simple point. THE landlord or owner of the building is M/s Dalmia Cement (Bharat) Ltd. THE tenant is M/s Hari Brothers (P) Ltd., who is paying Rs. 4,200 per annum. It is the common case that the rateable value fixed under the Punjab Municipal Act, 1911, is based on the rent of Rs. 4,200 per annum. THE tenant has allowed one of its directors to use half of the building for residential purposes. It may here be said that that half portion contains, according to the ITO, four bed rooms and one dining room on the first floor, one drawing room, three bed rooms, four verandahs, three terraces and a Courtyard plus two store rooms and a kitchen and a pantry. THE bungalow has about 20 servants quarters which are occupied by the servants of the assessee or his relatives (the number is mentioned as 27 in the Tribunal's order wherein it is stated that the servants quarters are occupied by relatives or servants of the assessee). THE built-up area is 16,680 sq.ft. It was on this basis that the Tribunal thought that the value of Rs. 12,500 taken by the Department was not excessive.