P J EAPEN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) At the instance of the assessee, the following question has been referred to for opinion of the Court by the Income Tax Appellate Tribunal, Cochin Bench (in short the 'Tribunal') in terms of S.256(1) of the Income Tax Act, 1961 (in short 'the Act'):

(2.) Background of the facts are undisputed, and as set out in the statement of case stand essentially as follows: Assessee completed construction of his property in the previous year relating to the assessment year 1983-84, and the same was in existence for a period of 10 months in the said previous year. It was let out on a monthly rent of Rs. 3,000/- and in the said previous year, the total rent received was Rs. 30,000/- for a period of ten months. On the basis that "annual value" represents rent for one year, it was contended by the assessee that the property should exist for a whole year to be liable to tax. As the property existed for less than a year, assessee claimed the income as non taxable. Assessing Officer did not accept the plea; but the Commissioner of Income Tax (Appeals) (in short, the C.I.T. 'A') allowed claim of the assessee. Revenue preferred Second Appeal before the Tribunal. By order dated 7.10.93, the Tribunal held that it is "income from property", but since it is not covered by the term "annual value", such income from property cannot be assessed under that head. However, since all incomes are to be subjected to under the scheme of Act, said income is chargeable under the head "other sources". While directing so, the Tribunal directed the assessing officer to consider the question relating to allowability of expenses by way of municipal taxes or otherwise against the rental income from the property. Though three questions were proposed by the assessee for reference, only one question as referred to above has been referred.

(3.) Learned counsel for the assessee submitted that taking into account the definition of "total income" as contained in S.2(45) of the Act, view of the Tribunal is not sustainable. It is not a case where the income was not "chargeable" or "assessable". It is a case of income being not "computable". Therefore, the Revenue could not have fallen upon the residuary clause. It is stated that S.56 deals inter alia with income from "other sources". The said provision is applicable only where the income is not chargeable under any other head in S.14 is; items A to E, Reliance is placed on a decision of the Apex Court in Nalinikant Ambalal Mody v. Commissioner of Income Tax, Bombay ( AIR 1967 SC 193 ) and a decision of the Bombay High Court in Commissioner of Income Tax. Bombay City III v. T. P. Sidhwa ( 1982 (133) ITR 840 in support of the stand. Learned counsel for the Revenue on the other hand submitted that income of every description is subjected to tax and only where it is excluded by the specific provision under the statute, it can be excluded from the scope of computation and levy of income tax. Reference is made to S.2(24) of the Act defining "income". The nature of income earned by the assessee is not one which is excluded from the scope of levy and therefore, the view of the Tribunal was justified.