COMMISSIONER OF INCOME TAX Vs. MODI INDUSTRIES LIMITED

JUDGEMENT

(1.) IN these two references, at the instance of the Revenue, on a direction issued by the Allahabad High Court under S. 256(2) of the INCOME TAX ACT, 1961 (in short, "the Act"), the Tribunal has referred the following questions of law in respect of the asst. yrs. 1963 -64 to 1965 -66 (IT Ref. No. 67 of 1982) and asst. year 1967 -68 (IT Ref. No. 70 of 1982) : IT Ref. No. 67 of 1982

(2.) THE Division Bench before which the case originally came up for hearing was of the view that : (1) the issue raised should be considered by a Full Bench as it was felt that in the decision of this Court in New Bank of India Ltd. vs. CIT (1983) 33 CTR (Del) 29 : (1983) 140 ITR 132 (Del) : TC 27R.586, some aspects, viz., the Supreme Court's decision in East India Housing and Land Development Trust Ltd. vs. CIT (1961) 42 ITR 49 (SC) : TC 13R.800 and the Andhra Pradesh High Court's decision in P.V.G. Raju Rajah of Vizianagaram vs. CIT (1967) 66 ITR 122 (AP) had not been considered; (2) while interpreting Ss. 22 and 23 of the Act, the provisions of S. 38 had to be kept in mind which was not done; (3) the Revenue's counsel's contention regarding non - applicability of the exception in S. 22 had not been dealt with; and (4) there were a large number of important points which required a more detailed consideration. That is how the matter has come up before us.

(3.) MR . B. Gupta, learned counsel for the Revenue, has contended that : (i) various heads of income, classified under S. 14 of the Act, being distinct and mutually exclusive, the income derived from a distinct source falling under a specific head is to be computed under the appropriate section irrespective of its user or purpose of letting and, therefore, the income from Modi Bhawan has to be computed as income from house property even though the said property is held to be a business asset; (ii) the property is in the occupation of the representatives (nominee directors) of M/s R.B. Multani Mal & Sons (P.) Ltd., the managing agents of the assessee -company, which is a distinct entity with an independent business income and, therefore, occupation and user of the said property by the said nominees of the managing agents cannot be equated with occupation and user of the property by the assessee for the purpose of its business; and (iii) the property is used for residential purposes and, therefore, it cannot be taken to be used for business purposes of the assessee so as to entitle it to claim exemption from chargeability to tax under S. 22 of the Act. For his first proposition, Mr. Gupta has relied upon a decision of the Andhra Pradesh High Court in P.V.G. Raju's case (supra). On the other hand, Mr. G.C. Sharma, senior counsel for the assessee, in seeking to support the view taken by the Tribunal, has submitted that in view of the two decisions of this Court in CIT vs. Delhi Cloth & General Mills Co. Ltd. (1966) 59 ITR 152 (Del) and New Bank of India's case (supra), no fault can be found with the order of the Tribunal.