ADDITIONAL COMMISSIONER OF INCOME TAX Vs. INSTRUMENTATION LIMITED

JUDGEMENT

(1.) ON an application made by the Addl. Commissioner of Income-tax, the Income-tax Appellate Tribunal, Jaipur Bench, has referred the following question of law for the opinion of this court:

(2.) THE brief facts leading to this reference application are that M/s. Instrumentation Limited, Kota (hereinafter referred to as " the assessee company "), had constructed houses for the purpose of residence of its employees at Palghat, Kerala, where it has a branch. THE Income-tax Officer computed the annual value of the property as Rs. 97,699 on the basis of the main provisions of Section 23(1) read with the first proviso and from the above amount of Rs, 97,699, the Income-tax Officer allowed a deduction of an amount of Rs. 62,400 under the second proviso to Section 23(1) of the Act, This deduction was allowed in view of the fact that the assessee company had constructed residential units for its employees. After reducing the amount of Rs. 62,400, the Income-tax Officer worked out the annual value under the second proviso to Section 23(1) of the Act at a net figure of Rs. 35,299 and treated this figure as the annual letting value of the property. THE Income-tax Officer then considered the question of allowing deductions on account of repairs as contemplated under Section 24(1) of the Act. THE Income-tax Officer for the purpose of allowing deductions on account of repairs calculated the annual value of the property at Rs. 35,299. THE contention of the assessee company that for the purpose of deduction on account of repairs, the basis should have been the annual value of Rs. 97,699 was not accepted by the Income-tax Officer, On appeal, the Appellate Assistant Commissioner also upheld the view taken by the Income-tax Officer. On further appeal by the assessee company, the Income-tax Appellate Tribunal did not agree with the above view and held that the annual value of the property is to be determined by applying Section 23(1) together with its first proviso only. According to the Tribunal, the second proviso to Section 23(1) of the Act cannot be taken into account in determining the annual value of the property. THE Additional Commissioner of Income-tax moved an application for making a reference and the learned Tribunal by its order dated July 18, 1974, has referred the question mentioned above for the opinion of this court.