MANOHAR SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal (Delhi Bench C) has referred the following two questions of law for decision by this cour :

(2.) THE assessee is an individual and the matter in dispute relates to three assessment years 1954 -55, 1955 -56, 1956 -57. The assessee had purchased a piece of land in the Friends Colony, Mathura Road, New Delhi, and had built a house consisting of thirteen suites of rooms apart from the residential portion, in which he himself resides. The entire building was not let out as a single unit nor as a block of flats; but the rooms were let out individually. èThe rooms are of different sizes and have separate bath rooms attached to them. The building also has a separate dining room meant for the common use of the residents. The assessee supplies lunches and dinners, etc., if the tenants so desired; but they are not bound to have their meals at the premises. The rooms can be had for a short duration and even for a day or so. There are tenants who have lived in the building for months. The rooms are furnished with curtain, beds, Dunlopilo cushions, cup -boards side tables, ceiling fans and air -conditioners; bed -sheets, bath towels, face towels, blankets, pillow cases are also supplied to each of the tenants. By way of instance as to letting of these rooms, reference may be made to annexure C, which is printed at page 6 of the paper -book. The assessee had on two occasions, published two advertisements in local newspapers advertising for letting out the entire property. The advertisements were even published before the construction of the building was completed.

(3.) THE stand taken up by the assessee with regard to the rental income of these rooms was that it was income from property and, thus, was to be assessed under section 9 of the Act. The Income Tax Officer, however, negatived this contention and held the income as income from business and, therefore, liable to assessment under section 10 of the Indian Income Tax Act, 1922 (hereinafter referred to as the Act).