COMMISSIONER OF INCOME TAX Vs. SHARMA H P

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the IT Act, 1961, arising out of reassessment to income -tax made on the respondent, H. P. Sharma, for the asst. yrs. 1962 -63 and 1963 -64, for which the corresponding previous years were the financial years which ended on March 31, 1962, and March 31, 1963, respectively.

(2.) FOR the asst. year 1962 -63, the assessee returned a property income of Rs. 30,356 and income from other sources of Rs. 1,590. The property income of Rs. 30,356 was comprised of an income from a house property at Esplanade Road, Delhi, computed at Rs. 1,782, income from a house in Karol Bagh, computed at Rs. 2,810, and income from a house property in Asaf Ali Road, computed at Rs. 25,764. Similarly, for the asst. year 1963 -64 the assessee had returned a property income of Rs. 32,073 which comprised of Rs. 1,782 from the house at Esplanade Road, Rs. 2,810 from the house at Karol Bagh, Rs. 311 from a house in Krishan Nagar and Rs. 27,170 from the house in Asaf Ali Road. The ITO completed the original assessments for these two assessment years on November 28, 1962, and March 12, 1964, respectively, accepting the figures of income returned.

(3.) THE dispute in this reference relates to the computation of the income from house property situate at 4/9, Asaf Ali Road, New Delhi. This house, was partly occupied by the assessee for purposes of his own residence and partly let out to various tenants. The portion occupied by the assessee is agreed to be about1/5th of the entire property and the relevant figures in respect of the computation of income from this property as made by the assessee may now be set out : . Rs. Rs. "Annual value . 38,070 Less . . " 1/2 Municipal taxes 1,903 . " 1/6 for repairs 6,345 . " Ground rent 944 . . . 9,192 . . 28,878 Less for 1/5 portion occupied for self -residence . . In the above computation the sum of Rs. 38,070 with which the assessee had started represents the figure of annual value arrived at by the municipal authorities for the purposes of property tax assessment under the Punjab Municipal Act. Similarly, for the asst. year 1963 -64, the assessee again started with the figure of Rs. 38,070 and computed the income from the Asaf Ali Road house at Rs 27,170. The figure thus returned by the assessee for the two years was accepted by the ITO as already stated. Subsequently, the assessments have been reopened under S. 147(b) of the IT Act, 1961. In the reassessment for 1962 -63, the ITO has proceeded to recompute the income from the property on the basis of a sum of Rs. 37,118, which he found was the actual rent derived by the assessee from the above property during the year of account. Starting in this way he has made the computation as follows : . 5,776 . 23,102 Value of rented premises . Add : Value of self resident 5,776 . Less : Minimum allowable 1,800 . 3,976 . The above being more than 10per cent of the total income,, the value of self -residence is taken 10per cent of the total income . 2,662 . Total 25,764 " . Rs. Rs. "A. L. V. 37,118 . Less 1/2 house tax 1,903 . . . 35,215 Less 1/6 for repairs 5,859 . Ground rent 0,944 . . . 6,813 . . 28,402 Self -occupied portion . . The assessee has occupied a portion of the building for residential purpose. I take rental income of this portion at Rs. 400 per month,, i.e.,, Rs. 4,800,, during the accounting period. Notional income from self -occupied property is computed as under : - . . A. L. V. 4,800 . Less allowance limited to 1,800 1,800 . . 3,000 .