COMMISSIONER OF INCOME TAX Vs. SHIV MOHAN LAL

JUDGEMENT

(1.) In compliance with this court's direction under Section 256(2) in Miscellaneous I. T. A. Nos. 325 and 326 of 1976, the Income-tax Appellate Tribunal, Delhi Bench 'D', has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the user of the house property by the partnership firm could be said to be user thereof by the assessee for the purposes of business carried on by the assessee within the meaning of Section 22 of the Income-tax Act, 1961?"

(2.) The assessee is a Hindu undivided family and the aforesaid question concerns its assessment for the assessment years 1968-69 and 1971-72. The assessee owned a house property being half share in building No. 13, M. G. Road, Agra. The said property was being used for purposes of business carried on by a partnership firm, Messrs. Ganeshi Lal and Sons, Agra, in which the assessee's karta, Shiv Mohan Lal, and other members were partners in their individual capacity. The Income-tax Officer assessed the annual letting value of the said property as the assessee's income from house property. This action of the Assessing Officer was upheld by the Appellate Assistant Commissioner. On further appeal by the assessee, the Income-tax Appellate Tribunal, however, observed that no rent had been charged by the assessee from the partnership firm which was using the property for business purposes for the last 62 years and the annual letting value thereof was never assessed to tax as income of the assessee. The Tribunal, therefore, held that the property will be deemed to be used by the assessee for its own business and, therefore, the annual letting value thereof was not taxable as income of the assessee.

(3.) Section 22 of the Income-tax Act, 1961, reads as under : "The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head ' Income from house property'."