9911796707
TMI Blog1993 (10) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... aised before him at the time of hearing of the assessment proceedings, regarding exemptability of the entire income from house property, the CIT (Appeals), however, mentions in his appellate order that such a contention was actually raised before the Assessing Officer. The CIT (Appeals) states that although the assessee had included the income from house property in his return, in the course of the assessment proceedings, however, he had contended before the Assessing Officer that since he was the owner of the property, only for a period of 10 months during the year, there was no annual value to be determined and hence no income was to be assessed under the head "Income from house property". The CIT (Appeals) states thereafter that the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of income from the property, by allowing the assessee's liability towards building tax is concerned, the CIT (Appeals) stated that under the first proviso to section 23(1), taxes levied by a local authority in respect of a property are deductible while determining the annual value of the property. He held that when no building tax had admittedly been levied in respect of the building belonging to the assessee, till then the question of its deduction did not arise. The CIT (Appeals) found support to his view in this regard from the decision of the Andhra Pradesh High Court in the case of Hyderabad Co-operative Central Trading Society Ltd. v. CIT [1988] 173 ITR 690 and accordingly rejected this particular ground of the assessee. 3.1 Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention that the rental income from the property under consideration should at least be assessed to tax as "Income from other sources". 4. The learned counsel for the assessee, on the other hand, strongly argued that all the cases as relied upon by the departmental representative related to the provisions of 1922 Act and that the definition of "annual value" as per the 1961 Act is different from that as in the 1922 Act. It has been stated by him that in the 1922 Act, there was no concept of "annual value" at all. He thereafter quoted extensively from the order of the ITAT, Special Bench, Madras, in M. Raghunandan's case to argue that since in the instant case, the assessee was not the owner of the house property for the full year, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be charged to tax only under section 22 of the Income-tax Act, 1961 and as income from house property. This is no real income and the specific provision of section 22 has got to come to play for bringing the notional income of this nature to tax. We, however, feel that although the Special Bench of the ITAT used an expression "where the property does not give rise to an annual income or gives income for a lesser period, notional or otherwise, the income from that property cannot be included in the total income", the Special Bench, however, did not exactly have in mind the case of a property fetching rental income. We are of the opinion that even if a property actually fetches rental income for a period of less than 365 days, the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us years, as the case may be, of every person." The first paragraph of section 5(1) again reads as below: "Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived...." It is clear from above that these two sections providing the basis of charge of income-tax envisage that all income of an assessee (especially in case of a resident) from whatever source derived, is required to be charged to tax. If we now look into the provisions of section 56 we find that sub-section (1) of the said section reads as below: "Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in conditions like ownership of the property and assessing of "annual value" are necessary. There are ample decisions to show that rental income actually derived from house properties can be assessed to tax as business income or as income from other sources. In the instant case also, therefore, since the rental income accruing to the assessee is found to be not chargeable to tax as income from house property and it cannot also be said that the intention of the assessee was to exploit the house property constructed by him commercially, the rental income has necessarily got to be assessed as income from other sources in accordance with the provisions of section 56. Enumeration of different types of income in sub-section (2) of section 56 is m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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