M P GANANAMBAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred to this Court under S. 256(1) of the IT Act, 1961 :

(2.) THERE was one A. K. Krishna Iyer, who had a prosperous business in running hotels. On 19th October, 1963, he executed a will creating a life estate in favour of his wife, Thirumathi M. P. Gnanambal, with regard to the properties now under consideration. The question which arose before the ITO was, whether on the occupation of the, properties by her sons free of rent, as contemplated by the will, she was liable to be assessed to income -tax on the usual value thereof. The contention of the assessee was that she could not be assessed and this contention was rejected by the ITO and he added a sum of Rs. 7,000 as income from these properties. On appeal before the AAC, it was contended that the assessee never acquired any legal interest in the properties, that only her sons are using the properties for their business, that they could not be evicted, that even when the will was executed, her sons alone were occupying the said properties, that till they exercised the option to vacate the properties voluntarily, she had no right to take possession of the property and to enjoy the, income therefrom by letting them out to other tenants. The AAC accepted this contention and accordingly deleted the income of Rs. 7,000 from the hands of the assessee with reference to these properties for these years.

(3.) IT may be mentioned here that for the asst. year 1967 -68 which is not under consideration in the present references, the AAC held in this order dated 17th January, 1972, that the assessment of the sum of Rs. 7,000 as income from the properties could not stand. There is no information as to whether the said order was challenged in any appeal before the Tribunal. As he had discussed the contention in the earlier order dated January 17, 1972, he did not consider the contention elaborately in the present order, which was taken on appeal by the Department. Sec. 22 of the IT Act, which relates to the assessment of income from house properties, reads thus: