INCOME TAX OFFICER v. P.N. SHUKLA
[Citation -1985-LL-0322-1]

Citation 1985-LL-0322-1
Appellant Name INCOME TAX OFFICER
Respondent Name P.N. SHUKLA
Court ITAT
Relevant Act Income-tax
Date of Order 22/03/1985
Assessment Year 1979-80
Judgment View Judgment
Keyword Tags commercial purpose • monthly rent • letting out • lease deed
Bot Summary: The ITO on the basis of the above clause was of the opinion that the income from the property accruing to the assessee was only Rs. 3,250, while income of Rs. 1,250 being rental of the fixtures was assessable as income from other sources. The income from property was computed by him for the year under appeal at Rs. 16,400. The income from other sources was determined at Rs. 10,000. In working out the income from property, he also allowed certain deductions, permissible under law which deductions were denied from income from other sources. We do not understand the logic that a property can be treated as a residential unit without actually examining the use to which it has been put or if it has been let out for a purpose other than residential and it still can be treated as a residential unit. The next contention before the AAC was that the entire rent of Rs. 4,500 was income from the property and was assessable under section 22 o f the Act. He finally directed the ITO to recompute the income from property including the amount of Rs. 10,000, which he had assessed as income from other sources.


assessee owns property. It was let out to Fertilizer Corporation of India Ltd. letting out was by lease deed dated 1-8-1978. letting out was for period of 11 months. Clause (1) of this deed is relevant for our purpose and is reproduced below: "That lessee shall pay monthly rent of Rs. 3,250 (Three-thousand two hundred and fifty only) and Rs. 1,250 towards installation of booster pump and other fixtures to lesser for premises and fixtures as above, total Rs. 4,500 (Four thousand and five hundred only) to landlord for ground floor of premises." ITO on basis of above clause was of opinion that income from property accruing to assessee was only Rs. 3,250, while income of Rs. 1,250 being rental of fixtures was assessable as income from other sources. He, therefore, assessed these two incomes under two different heads. income from property was computed by him for year under appeal at Rs. 16,400. income from other sources was determined at Rs. 10,000. In working out income from property, he also allowed certain deductions, permissible under law which deductions were denied from income from other sources. He also while computing income from property denied benefit of proviso (c) to section 23(1) of Income-tax Act, 1961 ('the Act'). 2. assessee appealed to AAC with regard to claim under proviso (c) to section 23(1). It was submitted before him that although benefit w s available to residential unit only but it was not necessary that property should have been let out for purpose of residence. AAC accepted this plea and directed relief of Rs. 2,400 permissible under above clause of proviso. 3. department is now in appeal before us against above relief allowed by AAC. In our opinion, finding of AAC cannot be sustained. There is no dispute that relief is admissible to residential unit only. What is meaning of residential unit has to be judged from use to which property has been put. newly constructed property cannot be said to be meant either for residence or for purposes other than residence unless it has been put to one use or other. It had been let out for commercial purpose as case is here, it will be difficult to say that it continues to be residential unit. We do not understand logic that property can be treated as residential unit without actually examining use to which it has been put or if it has been let out for purpose other than residential and it still can be treated as residential unit. Our finding, therefore, is that property belonging to assessee is not entitled to relief under proviso (c) to section 23(1). relief allowed by AAC, is, therefore, directed to be withdrawn. 4. next contention before AAC was that entire rent of Rs. 4,500 was income from property and was, therefore, assessable under section 22 o f Act. In this connection, assessee filed detailed statement of equipments fitted in building. They were only fans, tube lights, brackets, looking glass, wash basin and similar other things. It was submitted before AAC that above fittings and fixtures made building more attractive and habitable and that rent also was integral part of income from property. AAC also found that FCI, tenant, issued consolidated cheque as rent without specifying that amount of Rs. 1,250 per month was being paid for use of fixtures and fittings. In this connection, he also referred to decision of Kerala High Court in Dr. P.A. Varghese v. CIT [1971] 80 ITR 180. He finally directed ITO to recompute income from property including amount of Rs. 10,000, which he had assessed as income from other sources. 5. Here also, department is in appeal before us. It was emphasised by learned departmental representative that AAC had erred and failed to appreciate fact that buildings and fittings were separately let out for which separate rents were charged. On behalf of assessee, reliance was placed on orders of AAC. 6. We have considered facts of case very carefully. In our opinion, finding of AAC is correct. fittings of nature described above are normally part and parcel of building. They are necessary to make building fit for habitation. They are actually embedded in building and cannot be separated nor can be let out separately from building. There is only one thing which attracts our attention, i.e., booster pump. However, in our opinion, even booster pump in modern age is essential part of building. As in olden days, well could be treated as part of building so in modern times, booster pump is necessary for building without which it would remain incomplete or inhabitable. We, therefore, hold that entire rent of Rs. 4,500 should be treated as income from property. This was also view taken by Kerala High Court in case referred to above. We do not attach any importance to recitation in lease deed, that might be for convenience of parties or for some other reasons but certainly it cannot deviate us from correct principles of law or interpretation of section 22. finding of AAC on this issue is, therefore, upheld. 7. In result, appeal is partly allowed. *** INCOME TAX OFFICER v. P.N. SHUKLA
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