COMMISSIONER OF INCOME TAX Vs. P BHAGAWATI AMMAL

JUDGEMENT

(1.) AN interesting question of law on the scope and interpretation of Rule 5 of the Schedule III to the WT Act, 1957, hereinafter referred to as 'the WT Act' arises in the tax case reference. The Income-tax Appellate Tribunal, hereinafter referred to as 'the Appellate Tribunal' has stated a case and referred the following three questions of law in relation to the assessments of the assessee for the asst. yrs. 1989-90 and 1990-91 under the WT Act :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee's right to receive rent as fixed by the Small Causes Court crystallised only when the SLP filed by the tenant was dismissed by the apex Court?

(3.) MRS. Pushya Sitharaman, learned senior standing counsel for the Revenue, submitted that the view of the Tribunal is not legally correct as the assessee has the right to receive the fair rent which was quantified by the authorities constituted under the Tamil Nadu Buildings (Lease and Rent Control) Act and the order of the Rent Control Appellate Authority was confirmed by this Court and ultimately by the Supreme Court. Learned senior standing counsel therefore, submitted that the amount of fair rent fixed by the rent control authorities would represent the actual rent receivable by the landlord/assessee and that should be taken as the basis for determination of the market value of the property under Rule 5 of Schedule III to the WT Act. Learned senior standing counsel also submitted that when the WTO made the assessment, the Supreme Court has decided the matter 'in favour of the assessee and hence, it is only on the basis of the decision of the Supreme Court, the fair market value of the property should be determined. Learned senior standing counsel, therefore, submitted that the Tribunal was wrong in its view that the market value of the property should be determined on the basis of the rent payable under the agreement entered into between the parties after the decision of the Supreme Court. Learned senior standing counsel submitted that the decision of the Supreme Court in the case of CIT v. Hindustan Housing and Land Development Trust Ltd. (supra), far from supporting the case of the assessee, supports the case of the Revenue in the sense that the right to receive the rent is admitted and the quantification only of the amount payable is left to be determined in accordance with the settled or accepted principles. Learned senior standing counsel relied upon the decision of the Supreme Court in K.C.P. Ltd. v. CIT . Babulal Narottamdas and Ors. v. CIT , K.S. Krishna Rao v. CIT and CIT v. New Horizon Sugar Mills Ltd. and submitted that on the basis of the above decisions, the order of the Tribunal is not legally correct. Learned senior standing counsel, in her fairness, has brought to the attention of this Court the decisions of this Court in CWT v. M. Appuswamy and CWT v. R. Ariff and submitted that this Court held that the commercial establishment owned by the assessee has also to be taken as 'house'.