9911796707
TMI Blog1981 (9) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... different and it will be necessary for us to reframe the question and answer the real controversy between the parties. But before doing so, it is necessary to set out the facts. The reference arises out of the assessment of the New Bank of India Ltd for the assessment year 1956-57, in respect of which the relevant previous year was the calendar year 1955. During this year of account, the assessee sold premises No. 25, Pusa Road, New Delhi, which it owned, for a sum of Rs. 82,300 after deduction of brokerage. The assessee claimed that the loss of Rs. 67,969, incurred as a result of the sale, was allowable under s. 10(2)(vii) of the 1922 Act. This claim was disallowed by the ITO, allowed on appeal by the AAC but disallowed again by the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or an allowance of the amount by which the written down value of the property exceeds the amount for which the building is sold. " Written down value " is defined in s. 10(5) as meaning, in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to the assessee under the Act. It is seen from the assessment order that the cost of the building to the assessee was Rs. 1,66,394. Subsequently, the assessee claimed some depreciation in respect of this property. It is also seen from the assessment order that the written down value of the property as per the assessment order for 1951-52 was Rs. 1,50,269. It is on the basis of this written down value adjusted against the sale proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad under s. 9. It is on this conduct of the assessee that much stress has been laid by the Department. But what we have already stated will clearly show that it is not only the assessee's conduct that has been inconsistent, the Department has also assessed it in two different ways, for certain years it has been assessed under the head " Business " and for the following years under s. 9 as " Income from house property ". In this state of uncertain mind of the assessee as well as the I.T. Dept., no reliance can be placed and much importance cannot be attached to the actual mode of assessment in the earlier years. This aspect, on which much stress has been laid by the ITO and the Tribunal, does not appear to us to be really conclusive. The ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... let out to its employees, the main business of the assessee was that of manufacture and sale of agricultural implements and it was manifest on the facts that the letting out of the residential quarters was subservient to and incidental to the main business of the company. In this case, it appears that the quarters were constructed pursuant to a certain industrial adjudication and the employees were also occupying the premises not as tenants but as licensees. However, the basic principle of the decision is that though the company might not be actually occupying the premises itself, but using it only to house its employees, the provision of such residential accommodation is necessary as a matter of commercial expediency and that, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of the company. It was pointed out that in a welfare State, it is the duty of the employer to provide residential accommodation to the employees and, therefore, the allotment of houses to the employees was not because the company was trying to earn, or engage in the business of earning rental income from the employees but was in order that the employees may carry on the business of the company more efficiently. The housing accommodation is an amenity which is provided for the purposes of the business of the company and not de hors that business. Discussing the meaning of the expression " occupied for the purpose of business ", used in s. 9 of the 1922 Act, the court pointed out that the word " occupied " should be given a broader mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve stated above, it would be clear that the question that arises in this reference is not whether the loss incurred by the asses see is a capital loss or a revenue loss but whether the assessee is entitled to the loss under s. 10(2)(vii) of the 1922 Act. We, therefore, reframe the question in the following manner:
" Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim the loss of Rs. 67,969 incurred by the sale of the Pusa Road property as an allowance under section 10(2)(vii) of the 1922 Act ?" We answer the above question in the affirmative and in favour of the assessee. As the assessee has succeeded, it will be entitled to the costs of this reference : Counsel's fee Rs. 350. X X X X Extracts X X X X X X X X Extracts X X X X
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