TMI Blog2011 (2) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 4-2-2011 - BHASKAR BHATTACHARYA AND SAMBUDDHA CHAKRABARTI, JJ. R.N. Bajoria and Debasish Mitra for the Appellant. Md. Nizamudduin for the Respondent. JUDGMENT Bhaskar Bhattacharya, J. - This appeal under section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated 5-3-2001 passed by the Income-tax Appellate Tribunal, B Bench, in Income-tax Appeal No. 792 (Cal.) of 1996, relating to the assessment year 1992-93. 2. A Division Bench of this Court by its order dated 5-7-2001 formulated the following questions for determination : "A. Whether the purported findings of the Tribunal that the transaction involved transfer of tenancy right on the part of your petitioner is perverse being based on no material whatsoever and contrary to the terms of the agreements with the Consulate General and materials and/or evidences on record? B. Whether the amount paid for compensation for occupation of a premises after the expiry of the lease and for repair or damage to the premises by the tenant can be treated as an amount received by way of consideration for transfer of any tenancy right? C. Whether the said sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 86 of the Code of Civil Procedure alleging inaction of the Central Government. (d) On 18-3-1985, an assessment was made under section 143(3) of the Income-tax Act, 1961 for the assessment year 1982-83 (financial year 1981-82) assessing Rs. 96,000 as income of the said premises under the head House property although the lease had expired and no rent was received. It was held that the income under the head House property was required to be assessed on the notional income that could be received and the fact that the lease had come to an end and that no rent was received from the lessee was irrelevant. (e) An appeal preferred by the assessee against the said order of assessment was dismissed by CIT (Appeals) holding that the assessment of income under the head House property made on the basis of notional income at the rate of the rent payable under the lease was justified in law. Assessments were also made on similar basis for the subsequent assessment years 1983-84 to 1991-92 assessing the income under the head House property notionally on the basis of rent payable under the expired lease in respect of the said premises. (f) After prolonged litigation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,98,952 was received on account of occupation of the said premises for the period from 1-4-1991 till 31-3-1992. A further sum of Rs. 16 lakhs was received on account of quarterly instalment for damages. (i) On 4-5-1992, a scheme was sanctioned by this High Court for amalgamation of DT with the present appellant before us, namely, Jasmine Commercials Ltd., with effect from 1-4-1991 and all the assets and liabilities of DT vested in the appellant with effect from 1-4-1991. (j) On 1-2-1993 the appellant filed the return of income for assessment year 1992-93 disclosing the receipts of the aforesaid sum of Rs. 99,95,929, Rs. 33,98,952 and Rs. 16 lakhs, respectively from the Consulate. (k) On 28-2-1995, pursuant to the return filed on 1-2-1993, the assessment was made under section 143(3) of the Income-tax Act and in such assessment, the sum of Rs. 33,98,952 for the period April, 1991 to March, 1992 was assessed as rental income under the head House property for the said premises. The sum of Rs. 99,95,929 on account of arrears of rent and Rs. 16 lakh for building repair were assessed as business income. (l) On an appeal being preferred by the assessee against such order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points by either taking any ground in the memorandum of appeal or additional ground by amending the memorandum of appeal and as such, the Tribunal acted without jurisdiction in entering into the aforesaid question. Mr. Bajoria drew our attention to the paragraph 7 of the judgment passed by the Tribunal wherein the Tribunal itself recorded that it was called upon to decide the following two points : "(i) Whether the amount of Rs. 90 lakhs for the period that there was no lease can be assessed in this year, and if so in what head. It may be mentioned that the new rent agreement has been made effective from 15th January, 1991 and, therefore, the rent for the period of 2.5 months for mid January, 1991 to March, 1991 being rent for that period may be assessable under the head of H.P. in the preceding year i.e., assessment year 1991-92. That there are some difference in the amount of this rent for the said period of 2.5 months as has already been pointed out above. (ii) Whether the said damage compensation is assessable under this year and if so, under what head. It may be pointed out here that Assessing Officer has wrongly taken amount of the damage compensation at Rs. 16 lakhs go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving regard to the scope of the appeal as it stood before it. 12. In order to appreciate the said question, it will be profitable to refer to the provisions contained in section 254(1) of the Income-tax Act as it stood at the relevant time which is quoted below : "254. Orders of Appellate Tribunal. (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit." 13. After hearing the learned counsel for the parties and after taking into consideration the provision of section 254 of the Income-tax Act, we find that an Appellate Tribunal may after giving both the parties to the appeal an opportunity of being heard pass such order thereon as it thinks fit. The word "thereon", Mr. Bajoria continues, is significant inasmuch as it restricts the jurisdiction of the Tribunal to the subject- matter of the appeal. In other words, according to Mr. Bajoria, the original grounds of appeal and such additional ground, as may by raised by the Appellant by the leave of the Tribunal, constitute the extent of jurisdiction of the Tribunal and it can adjudicate upon only those grounds and not beyond them. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held, that an income arising from a particular head ceases to arrive from that head because it is received at a certain time. In the said case, the question was whether the outstanding dues received for the professional activity done for a year by the assessee was taxable if the same was received at a time when he was elevated to a Bench of a High Court. In that context, it was held that an income received by an assessee who kept his account on the cash basis in an accounting year in which the provision had not been carried on at all was not chargeable nor could the receipt be brought to tax under section 12 of the old Act as Income from other sources. 17. A Division Bench of this Court in the case of Hamilton Co. (P.) Ltd. (supra), has taken the same view. 18. Relying upon the aforesaid principle, we are of the view that in this case there was no justification of treating the income arising out of the selfsame house property under a different head after the same has been taxed as income under the head House property on the basis of notional rent payable by the selfsame occupant. 19. Similarly, it is preposterous to describe the receipts as outcome of transfer of tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper way to construe a taxing statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. and Bengal Hotels Limited [1977] 47 Comp. Cas. 597 (Guj.) where the learned Judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax." 21. In the case before us, we are unable to brand the agreement between the lessor and the former lessee as a device to avoid tax inasmuch as the said agreement was entered into at the intervention of the Central Government. Moreover, having regard to the consistent views of the Supreme Court that an income already taxed under one head cannot at the subsequent period be taxed under a different head, we are left with no other alternative but to set aside the views of the Tribunal. We have already pointed out that when for long 10 years n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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