TMI Blog1945 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... -43, that, in view of the aforementioned provision in the will, the trustees cannot be said to have realised any income whatever from the property in question which could be computed under Section 9 of the Income-tax Act. The claim was rejected by the Income-tax Officer and the income from the said house property was computed on the bona fide annual value basis under Section 9 and included in the assessment. 4. On appeal the Appellate Assistant Commissioner held that no income was actually received from the bungalow which was liable to tax under Section 9 and consequently directed the exclusion of the aforementioned item from the calculation of the assessee's property income. 5. The Income-tax Officer appealed to the Tribunal against the Appellate Assistant Commissioner's order and the Tribunal held upon the facts stated above that the mere circumstance that in pursuance of a certain arrangement no rent is to be charged from the occupants of the property does not render the property or the income thereof exempt from assessment under Section 9 of the Act. This conclusion was reached on a scrutiny of the language of Section 9 in relation to the scheme of taxation appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were sought to be assessed under the head of income from property in respect of this Warden Road bungalow. It was contended on their behalf that the trustees cannot be said to have realized any income whatsoever from the property in question which could be computed under Section 9, and, therefore, they were not liable to pay any income-tax in respect of this Warden Road property. The Income-tax Officer rejected that contention of the trustees but on appeal they succeeded before the Assistant Commissioner of Income- tax. The taxing authorities took the matter up to the Income-tax Appellate Tribunal and the Tribunal restored the order of the Income- tax Officer. The present reference is made at the instance of the trustees. The question submitted for the Court's consideration is in these terms:- Whether upon the facts found by the Tribunal, the annual value of the property on Warden Road, Bombay, has been rightly included in the assessment under Section 9 of the Income-tax Act? On behalf of the trustees it was argued before us that the Indian Income-tax Act was enacted with the object of taxing income. In the present case the trustees cannot by virtue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of the rent in the hands of the owner is quite immaterial for the purposes of assessment. The law has laid down a particular method of computation in respect of income from property and that must be applied to arrive at the figure to be inserted against the head income from property in the individual assessee's assessment. In my opinion the contention of the trustees is not correct. The word income has not been defined in the Act, but for the purposes of the Indian Income-tax Act the expression total income is defined in Section 2(15). The legislature has used there the words computed in the manner laid down in this Act. Therefore in order to ascertain the total income of an assessee his income must be computed in the manner laid down in the Act and particularly Chapter III. In this connection the words used in Section 9 may be particularly noted. The section provides as follows:- The tax shall be payable by an assessee under the head 'Income from property' in respect of the bona fide annual value of property consisting of any buildings.... The legislature has therefore expressly provided that the tax shall be payable by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent from the rules of taxation contained in the Indian Income-tax Act. This has been noticed frequently by all Courts, and therefore it will not be proper to apply the observations made in respect of the liability of the occupant to pay tax under the English Act to the liability of the trustees, the owners of the property, under the Indian Income-tax Act. Bejoy Singh Dudhuria v. Commissioner of Income-tax [1933] 1 I.T.R. 135; 60 I.A. 196 does not help the trustees because in that case the Court was not concerned with the taxation of income from immovable property. There it was a general question in respect of the income of the assessee and the Court decided that if in fact the income was charged with the payment of a certain sum and payment was made to satisfy that charge, the amount so paid was never the income of the assessee and could not be considered his income. The report of the case shows that the recipient of the amount was assessed on the amount received and that question was not before the Court. In this connection Mr. Setalvad drew our attention to In the matter of the Official Assignee [1937] 5 I.T.R. 233. In that case on the insolvency of a party a certain house beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maximum rate. Whether the taxation should be at the highest rate or not is a matter of policy, with which we are not concerned. In my opinion, therefore, the answer to the question submitted to us is in the affirmative. The assessees to pay the costs of the reference. CHAGLA, J.--I agree. It is true that under the Indian Income-tax Act the only thing that can be taxed is income and nothing else. The charging section is Section 3; it charges the total income of an assessee; and total income is defined in Section 2(15) as the total amount of income, profits and gains computed in the manner laid down in this Act. Before income can be computed in the manner laid down in the Act there must be income to which the mode of computation can be applied. Now it cannot be disputed that income from property is taxable income. The only question is: what is income from property or how is it to be computed? And for that purpose one must turn to Section 9 of the Indian Income-tax Act. The scheme of the Income-tax Act is that the income from property which is made liable to tax is not the actual income but an artificial or statutory income as defined in Section 9 and that artificial or statut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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