TMI Blog2000 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... e said premises on lease to NABARD on a monthly rent of Rs. 29,580. This was subsequently increased to Rs. 1,23,350, per month with effect from October 1, 1992. Up to the assessment year 1992-93, the rental income derived from the premises was duly disclosed by the assessee-firm in its hands. However, from the assessment year 1993-94, no such rental income was shown. The return for the assessment year 1993-94 was processed by the Assessing Officer under section 143(1)(a) of the Incometax Act, 1961. While framing the assessment for the assessment year 1995-96, the Assessing Officer noticed the absence of rental income from the said premises in the return of the assessee and when query was raised in this regard, it was explained by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All the authorities below found that rent was paid by NABARD to the assessee firm. All the authorities found that NABARD, in its capacity as the lessee, had not agreed to the above mentioned new arrangement. The Assessing Officer further found that the assessee had received the rent through cheques which was credited in its account and thereafter, the amount was diverted to the partners subsequently and, therefore, the assessee has only appropriated the rental income received from the lessee. Accordingly, all the authorities have come to the conclusion that the change in the partnership deed cannot change the nature of the income received. It was urged on behalf of the appellant that assuming that legal ownership was not transferred, stil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or dissolution of the firm. The facts clearly indicate application of income and not diversion of income. The Assessing Officer has also found that the firm received the rent from NABARD. That, the said rent was credited in its account and thereafter it was diverted to the partners. Therefore, the present case is of appropriation of income. All the authorities below, on facts, have found that NABARD continued to be the lessee of the firm. That NABARD did not accept the individual partners as lessors and that the abovementioned amendment to the partnership deed was only a ruse to reduce the income of the firm. All the authorities found that the rent was being paid by NABARD to the assessee-firm. All the authorities have found that no change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner is a person who is entitled to receive income from the property in his own right. Accordingly, it was held that the liability is on the person who receives the rent from the property in his own right. Therefore, in the context of section 22 of the Act, it was held by the Supreme Court that when a person is in actual physical control of the property realising the entire income and usufructs of the property for his own use having actual power of disposal of the income so received, he cannot be held not liable to tax merely because a vestige of legal ownership or a husk of title may clothe another person with the power of a residual ownership. It is interesting to note that at page 646, the Supreme Court considered the matter from a diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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