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Assessment of income from house property in the hands of the assessee. Detailed Analysis: The case involved a reference under section 256(1) of the Income-tax Act, 1961, for the assessment year 1981-82. The primary question raised was whether the income from house property should be assessable in the hands of the assessee. The assessee, a private limited company, owned a property in Calcutta and was involved in an ejectment suit against a tenant during the relevant assessment year. The assessee claimed deduction of legal charges spent in the ejectment suit, which was denied by the Income-tax Officer based on section 24(1) of the Act. The Commissioner of Income-tax (Appeals) also rejected the claim for deduction of legal charges and determined the income from house property considering the rent receivable as per the Calcutta Corporation's determination. Upon appeal before the Tribunal, the assessee contended that the income from the property could not be assessed due to the pending ejectment suit, and the annual value should be based on the Calcutta Corporation's determination, not the rent receivable. The Tribunal upheld the view of the Commissioner of Income-tax (Appeals), leading to the matter being brought before the High Court. The High Court analyzed the provisions of the Income-tax Act, emphasizing that ownership of the property itself is the criterion for assessment under section 22. The annual value is deemed to be the sum for which the property might reasonably be expected to let from year to year, irrespective of whether the property is actually let out or not. The Court clarified that the liability to tax does not depend on the owner's right to enjoy or let out the property. Therefore, the Court upheld that the assessee was liable to be taxed on the annual value of the property, even with a pending ejectment suit. Conclusively, the High Court answered the reference question in the affirmative and in favor of the Revenue, agreeing with the Tribunal's decision. No costs were awarded in the matter. Judges' Decisions: - AJIT K. SENGUPTA J. delivered the primary judgment, upholding the Revenue's position and denying the assessee's claim for deduction of legal charges. - SHYAMAL KUMAR SEN J. concurred with the decision.
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