COMMISSIONER OF INCOME TAX Vs. MUSTAFA KHAN

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Allahabad has referred the following questions at the instance of the Commissioner under Section 256(1) of the Income Tax Act, 1961 (here in after referred to as the Act) for opinion to this Court:" Whether, on the facts and in the circumstances of the case, the Tribunal was Justified in holding that the annual letting value of the godown owned by the assessee and used for the business carried on by him in partnership was not liable to be included in his total income under Section 22 of the Income-tax Act, 1961?"

(2.) The reference relates to the assessment year 1981- 82.

(3.) Briefly stated the facts giving rise to the present reference are as under:The assessee-respondent is owner of a house property bearing municipal No. 174/2 situate on plot Nos. 824/2, 823/1 and 825. The assessee is also a partner in a Firm known as M/s. Sikandar Shahi Zarda Factory. A major portion of the! aforesaid house property has been in occupation of M/s. Sikandar Shahi Zarda Factory for the business purposes and a small part was let out for residence. The Income Tax Officer found that no income from house property was disclosed by the assessee in his return. He added the notional rental income from the house property No. 174/2 towards the assumed rent paid by M/s. Sikandar Shahi Zarda Factory in which the respondent assessee is a partner. In appeal before the Commissioner of Income Tax (Appeals), it was contended by the assessee respondent that the income from the property in question is exempt at the hands of the assessee as the said property is in occupation of the Firm M/s. Sikandar Shahi Zarda Factory in which the assessee is one of the partners. Reliance was placed on a decision of Gujrat High Court in the case of CIT v. Rasik Lal Bala Bhai 119 ITR 303 and several other decisions of the Tribunal. The Commissioner of Income Tax (Appeals) accepted the aforesaid contention of the assessee and held that the Income Tax Officer was not justified in adding notional rental income from M/s. Sikandar Shahi Zarda Factory at the hands of the assessee. Such income is exempt under Section 22 of the income Tax Act 1961. The Tribunal has confirmed the order of the Commissioner of Income Tax Appeals).