TMI Blog1960 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... buildings and quarters let out. The type of premises allotted to any of the company's employees depended upon his status as an employee. The company collected rents from its employees and in its turn the company granted rent allowance to its employees. The rent charged from them was set off against house rent allowance. In case the employee was allotted quarters carrying lower rent than the house allowance granted to him, the difference between the two amounts was paid to the employee in cash. It is also admitted that there is no compulsion upon the employees to stay in the buildings owned by the company. For the assessment year 1948-49, the company realised a rental income of ₹ 52,479 which included a sum of ₹ 7,979 rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the employees also should be assessed as income from property under section 9 of the Income-tax Act. The Tribunal accepted the contention of the Income-tax Department and held that the assessment should be made under section 9 of the Income-tax Act even with regard to the rent realised by the assessee from the employees. Under section 66(1) of the Income-tax Act the Appellate Tribunal has submitted the following question of law for the opinion of the High Court: Whether, on the facts and in the circumstances of the case, the rents realised by the company from the buildings of which it is the owner and which had been let out to its employees is assessable under section 9 or section 10 of the Indian Income-tax Act? Section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich carried on the business of manufacturing and selling of agricultural implements, had constructed residential quarters for its employees and let out the quarters to its employees as incidental to its main business. The assessee incurred expenditure for the repairs and maintenance of the residential quarters and claimed that the expenditure incurred for the repairs and maintenance should be deducted from the profits of the business under section 10(2)(xv) of the statute. It was held by the Division Bench that letting out of the residential quarters was subservient to and incidental to the main business of the assessee and, therefore, section 9 of the Income-tax Act did not apply to the case, and the expenditure incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 9 of the Indian Income-tax Act. In our opinion, the principle laid down by this High Court in Jamshedpur Engineering and Machine Mfg. Co. Ltd. v. Commissioner of Income-tax [1957] 32 I.T.R. 41 governs the present case. Applying the principle laid down in the case we hold that in the facts and circumstances of the present case the rent realised by the assessee company from the buildings of which it is the owner and which have been let out to its employees is assessable under section 10 of the Indian Income-tax Act and not under section 9 of the Indian Income-tax Act. We accordingly allow the application and answer the question of law referred to the High Court in favour of the assessee and against the Income-tax Department. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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