COMMISSIONER OF INCOME TAX Vs. CAWNPORE CLUB LIMITED

JUDGEMENT

(1.) THE following questions have been referred by the Income-tax Appellate Tribunal, Allahabad Bench (hereinafter "the Tribunal") under Section 256 of the I.T. Act, 1961 (for brief "the Act"), for the opinion of this court :

(2.) THE facts : THE assessee, "Cawnpore Club Ltd.", is a company and runs a club at Kanpur for the benefit of its members. Out of 15 rooms in its annexe, 13 rooms were let out to members of the club on payment of Rs. 250 per month per room and during the previous year pertaining to the assessment year 1971-72, the total rent collected by the assessee from these rooms amounted Rs. 36,547. THE remaining two rooms were occupied by the manager of the club free of rent. THE claim of the assessee, in respect of the aforesaid collection, was that these were business receipts and that the income earned was exempt from tax on the principle of mutuality. THE Tribunal took the view that the income of the club from the letting out of the rooms was assessable as "income from other sources". It rejected the claim of the assessee that the income was exempt from tax on the principle of mutuality. THE Tribunal, however, referred the aforesaid questions for the opinion of this court when approached both by the assessee as well as the Revenue.

(3.) THE scheme is clear. Any income which does not answer the description of an income under the heads contemplated by Section 14 is chargeable to tax under the head "Income from other sources". That is clear from Section 56(1). Sub-section (2) of Section 56 specifies some sources of which income has to be taxed under the head "Income from other sources " and not otherwise. Clause (iii) is one such instance. Sub-section (2) of Section 56 does not derogate from the generality of the provisions of Sub-section (1).