P N SHUKLA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court:

(2.) Briefly stated, the facts giving rise to the present reference are as follows : The present reference relates to the asst. yr. 1979-80 of which the relevant previous year ends on 31st March, 1979. The applicant is an individual. He derives income from salary and property. He owns a property situated at B-40, Nirala Nagar, Lucknow. The ground floor of the property was let out on 1st Aug., 1978, to the Fertiliser Corporation of India Ltd. on a monthly rent of Rs. 4,500 out of which Rs. 1,250 was payable towards the installation of booster pump and other fixtures. The applicant claimed deduction under Clause (c) of the second proviso to Section 23(1) of the Act. He claimed the total deduction of Rs. 6,400 on the ground that there were four units in the said property. The ITO, however, disallowed the deduction/relief under Section 23(1) of the Act on the ground that the property has been let out for the non-residential purpose. Feeling aggrieved, the applicant preferred an appeal before the AAG, Kanpur, who had allowed a deduction of Rs. 2,400 only instead of Rs. 6,400 as claimed by the applicant. Feeling aggrieved by the said order, the Revenue preferred an appeal before the Tribunal. The Tribunal has reversed the order passed by the AAC on this issue. According to the Tribunal, relief under Clause (c) of the second proviso to Section 23(1) of the Act is admissible to the residential unit only which has to be judged from the use to which the property has been put and since the property in question has been put for non-residential use, he is not entitled to relief under Clause (c) of the second proviso to Section 23(1) of the Act.

(3.) We have heard Sri Vikram Gulati, learned counsel for the applicant, and Sri A.N. Mahajan, learned standing counsel for the Revenue.