TMI Blog2007 (2) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... that the arrears of rent amounting to Rs. 2,60,000 relating to the period 1992 to 1995 received during the previous year relevant to the assessment year 1996-97 constituted income from other sources, if not income from property. 3. The learned Commissioner ought to have seen that the Jt. Commissioner of Income-tax while making the assessment had treated the arrears of rent as income from house property giving the statutory deductions. The Commissioner of Income-tax (Appeals) had no justification to treat the income from property as income from other sources. 4. The learned Commissioner of Income-tax (Appeals) as well as the Assessing Officer ought to have seen that being arrears of rent, this is not assessable under property or as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of authorities below. 6. We have heard the parties. The short controversy is regarding the assessability of the arrears of rent received by the assessee in the previous year relevant to the assessment year 1996-97. The argument of the ld. Chartered Accountant for the assessee is that section 25B of the Act is brought on the statute book with effect from the assessment year 2001-02 and it has no retrospective effect to bring to tax the arrears prior to the introduction of the said section as it is not retrospective in operation. We find substance in the argument of the ld. Chartered Accountant. Section 25B which was brought on the statute book reads as under : "25B. Where the assessee ( a )is the owner of any property consisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a house property lose their character as income from house property as the Tribunal s order postulates. The answer would be in the negative. Rent, whether current or in arrears, is the yield of the house property and the source of the income being the letting of a house property by the owner, the rent shall continue to have its character as "income from house property". 8. In the case of Ms. Sadhna Chadha ( supra ), the Hon ble Delhi High Court has held as under: "Clause ( a ) of the sub-section lays down that the annual value is the sum for which the property may reasonably be expected to be let from year to year. Clause ( b ) takes care of the situation where the annual rent of the property let out is in excess of the sum for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1996-97 cannot be brought to tax. We also do not agree with the observations of the ld. CIT (Appeals) that if it is not chargeable to tax under the head "Income from house property" then it must fall under the residuary head of "Income from other sources", as in the case of Hamilton Co. (P.) Ltd. ( supra ), the Hon ble Calcutta High Court has held that the rent whether current or in arrears shall continue to have its character as "Income from house property". Hence, the same cannot be taxed under the head as "Income from other sources". We, therefore, direct the Assessing Officer to delete the amount of Rs. 2,60,000 being the arrears of rent which relates to period prior to the previous year. 10. In the result, the assessee s appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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