COMMISSIONER OF INCOME TAX Vs. CHELMSFORD CLUB LIMITED

JUDGEMENT

(1.) IN respect of the asst. yrs. 1977 -78 and 1978 -79 the Tribunal has stated the case and referred the following two questions to this Court :

(2.) BRIEFLY stated, the facts, as found by the Tribunal, are that the club owns an immovable property, viz., a club house. No rent is received by the club. The ITO sought to invoke the provisions of S. 22 of the INCOME TAX ACT, 1961 and assessed the annual letting value of the club house to tax. An appeal was filed to the CIT(A) but without success. A further appeal was filed to the Tribunal. It appears that a similar question had arisen in respect of two earlier asst. yrs. 1971 -72 and 1973 -74 wherein the Tribunal had come to the conclusion that no income was liable to tax in the hands of the assessee. For the present years also the Tribunal followed its earlier decision and came to the conclusion that the income from house property was not liable to tax. It is thereupon that on the application of the Revenue the aforesaid two questions have been referred to this Court.

(3.) THE respondent club has not let out its premises either to its members or to outsiders. It is not carrying on any business or profession in the said premises. The club premises are, therefore, in self -occupation of the club itself. Under S. 22 of the Act it is the annual value of the property which is subjected to tax and which, at the relevant point of time, did not necessarily have a direct relation with the rent which was actually received or could be received. The incidence of tax under s. 22 is on the ownership of the building and it is for this reason that the Allahabad High Court in the case of CIT vs. Wheeler Club Ltd. (1963) 49 ITR 52 (All) came to the conclusion that the provisions of S. 9 of the IT Act, 1922 (corresponding to S. 22 of the 1961 Act) were applicable in the case of a club. Even this Court in the case of CIT vs. Delhi Gymkhana Club Ltd. (1985) 48 CTR (Del) 208 : (1985) 155 ITR 373 (Del) at page 376 observed that :