1963 (7) TMI 96 - HC - Income Tax

Summary

Issues:
1. Interpretation of Finance Department's Notification No. 878-F regarding deduction for unabsorbed irrecoverable rent.
2. Whether the balance of unabsorbed irrecoverable rent can be carried forward and deducted in subsequent years.

Analysis:

Issue 1:
The judgment concerns two Income-tax References regarding the interpretation of Finance Department's Notification No. 878-F. The notification allows for a deduction for irrecoverable rent under specific conditions. The case involved an individual and a Hindu undivided family. The assessee claimed deductions for unabsorbed irrecoverable rent for multiple years. The department and Tribunal denied the deduction, stating that the notification did not permit carrying forward unabsorbed rent. The Tribunal referred the matter to the High Court for interpretation. The High Court analyzed the notification's language, emphasizing that relief is limited to one year's rent, and any balance lapses. The Court held that the notification restricts relief to the extent of a year's rent for irrecoverable rent.

Issue 2:
The second issue revolved around whether the unabsorbed part of irrecoverable rent could be carried forward and deducted in subsequent years. The assessee argued for carrying forward the balance of unabsorbed rent, while the department contended against it. The Court held that the notification's scope cannot be enlarged beyond what is specifically mentioned. It highlighted that the relief is limited to one year's rent and should not be allowed for accumulated arrears. The Court emphasized that the assessee cannot delay action and accumulate rent over multiple years to claim exemptions. Therefore, the Court concluded that the unabsorbed part of irrecoverable rent cannot be carried forward to subsequent years. As a result, the Court answered the questions in the negative, dismissing the petitions and awarding costs to the department.