1985 (3) TMI 85 - AT - Income Tax

Summary

Issues:
1. Assessment of income from property and fixtures under different heads.
2. Claim of relief under proviso (c) to section 23(1) for a property let out for commercial purposes.
3. Classification of rent from property and fixtures as income from property under section 22 of the Income-tax Act.

Analysis:

1. The judgment addresses the issue of the assessment of income from property and fixtures under different heads by the Income Tax Officer (ITO). The ITO assessed the income from property at Rs. 16,400 and income from fixtures at Rs. 10,000. The assessee appealed to the AAC, arguing that the benefit of proviso (c) to section 23(1) should apply to the property. The AAC allowed a relief of Rs. 2,400 under the proviso. However, the appellate tribunal held that the property was let out for commercial purposes, making it ineligible for the relief under proviso (c) to section 23(1). Therefore, the relief allowed by the AAC was withdrawn.

2. The second issue pertains to the claim of relief under proviso (c) to section 23(1) for a property let out for commercial purposes. The AAC had granted a relief of Rs. 2,400 to the assessee under the proviso. The appellate tribunal, however, determined that the property, being let out for commercial use, did not qualify as a residential unit eligible for the relief under proviso (c) to section 23(1). The tribunal emphasized that the use of the property determines its classification as a residential unit, and since the property was utilized for commercial purposes, it was not entitled to the relief.

3. The final issue involves the classification of the entire rent of Rs. 4,500 as income from the property under section 22 of the Income-tax Act. The AAC directed the Income Tax Officer to reconsider the income from property, including the amount assessed as income from other sources. The department appealed this decision, arguing that the buildings and fixtures were separately let out. The appellate tribunal, after careful consideration, upheld the AAC's decision, stating that the fittings described were integral to the building's habitability and could not be separated. The tribunal ruled that the entire rent of Rs. 4,500 should be treated as income from the property, in line with the decision of the Kerala High Court in a similar case. The tribunal disregarded the lease deed's recitation, emphasizing the legal principles and interpretation of section 22 in determining the income classification.

In conclusion, the appellate tribunal partially allowed the appeal, withdrawing the relief under proviso (c) to section 23(1) and affirming the classification of the entire rent as income from the property under section 22 of the Income-tax Act.