COMMISSIONER OF INCOME TAX Vs. RASIKLAL BALABHAI

JUDGEMENT

(1.) A neat point of law, which, as described by Krishna Iyer J. in CIT vs. R. M. Chidambaram Pillai (1977) 106 ITR 292 (SC), "lends itself to subtle spinning of gossamer webs of argument" arises for decision in this case. The point which could have been disposed of on the plane of commonsense has given rise to a legal debate where a number of authorities is cited by the rival sides. The question which has been referred to us in this reference for our opinion is as under :

(2.) THE question arises in the following circumstances: The relevant assessment years with which we are concerned in this reference are 1967 68 to 1971 72. The respondent assessee an individual was a partner in the firm of M/s Narendrakumar Maneklal. The assessee owned a godown which was used by the firm as business premises. The ITO concerned estimated the annual letting value of the same and included it in the total income of the assessee. An appeal was, therefore, preferred before the AAC objecting to the inclusion of the annual letting value of the godown in the total income of the assessee on the ground that the premises were being used not as a place of residence but for the purposes of business carried on by the assessee as a partner of the firm. The AAC was favourably impressed with this contention with the result that he deleted the inclusion of the annual letting value of the godown premises from the total income of the assessee for all these years. He, therefore, by his common order of August 14, 1974, allowed five appeals preferred by the assessee.

(3.) BEFORE we deal with the contentions urged on behalf of the Revenue by the learned Government Pleader, we will read the provision contained in S. 22 of the IT Act, 1961, which subjects to tax the income from house property since it is on the construction of this section that the answer to the question referred to us rests. Sec. 22 reads as under :