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Issues:
1. Whether the annual letting value of the club building is assessable to income-tax under the head 'Income from property'? 2. Whether the principle of mutuality applies to the property income, making it not taxable income of the assessee? Analysis: Issue 1: The case involved the assessment years 1977-78 and 1978-79, where the Income-tax Appellate Tribunal referred two questions to the High Court. The club owned a club house but did not receive any rent for it. The Income-tax Officer assessed the annual letting value of the club house to tax under section 22 of the Income-tax Act, 1961. The Tribunal, based on its earlier decision, concluded that the income from the house property was not liable to tax. The High Court noted that the provisions of section 22 of the Act applied as the club premises were not let out and were in self-occupation. The court referred to the principle of tax incidence on the ownership of the building, citing precedents such as CIT v. Wheeler Club Ltd. The court held in favor of the Revenue, stating that the annual letting value of the club building is assessable to income-tax. Issue 2: Regarding the second question on whether the principle of mutuality applied to the property income, the High Court answered in the negative. The court emphasized that no rent was charged from the members for the club premises, and the property was in self-occupation. Therefore, the principle of mutuality did not arise in this case, and the provisions of section 22 of the Act were applied. The court cited the absence of rent as a key factor in determining the taxability of the property income. Consequently, the second question was also answered in the negative, in favor of the Revenue. In conclusion, the High Court ruled that the annual letting value of the club building is assessable to income-tax under the head 'Income from property' and that the principle of mutuality did not apply in this case due to the absence of rent and the self-occupation of the property.
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