COMMISSIONER OF INCOME TAX Vs. MODI INDUSTRIES LTD

JUDGEMENT

(1.) THE question which is involved in this case is with regard to the interpretation of S. 22 of the IT Act. The case of the assessee is that a dwelling house was given to its managing agents and two nominees of the managing agents were living in the said house. The contention was that this house was occupied by the company for the purposes of its business and, therefore, the provisions of s. 22 of the IT Act did not apply.

(2.) IN support of the aforesaid contention, counsel for the assessee referred to a decision of the Circuit Bench of Punjab High Court reported as CIT vs. Delhi Cloth and General Mills Co. Ltd. (1966) 59 ITR 152 (Punj) and also to a decision of a Division Bench of this Court in New Bank of India vs. CIT (1983) 33 CTR (Del) 297 : (1983) 140 ITR 132 (Del). In both these cases, it had been held that when the assessee allows its employees to live in its house, the income therefrom cannot be taxed under S. 22 of the Act as the house was occupied for the purposes of assessee's business.

(3.) UNDER the IT Act, total income is computed under different heads, as provided by S. 14 of the Act. One of the heads is "Income from house property". Sec. 22 inter alia, provides that the annual value of the property consisting of any building or lands appurtenant thereto of which the assessee is the owner shall be chargeable to income-tax under the head "Income from house property". The exception to this is provided in the section itself and that is where portions of such property are in occupation of the assessee for the purpose of any of its business or profession carried on by him the profits of which are chargeable to income-tax, then said portions of property will not be subjected to tax under S. 22. Whereas the assessee is trying to contend that it is this exception which applies, the submission of the learned counsel for the Revenue is that the said exception has no application.