1984 (9) TMI 90 - AT - Income Tax

Summary

Issues:
1. Determination of the period for which income from house property should be included in the assessment.
2. Calculation of annual property income based on rent received or municipal rateable value.

Detailed Analysis:

1. The first issue in this case revolved around the determination of the period for which income from house property should be included in the assessment for the assessment year 1979-80. The Income-tax Appellate Tribunal (ITAT) Bombay-C considered the discrepancy between the date of execution of the conveyance deed and the date of registration of the property. The Commissioner (Appeals) had directed the Income-tax Appellate Commissioner (IAC) to compute the property income only up to the date of conveyance, i.e., 3-8-1978, based on the Indian Registration Act, 1908. However, the revenue appealed against this decision, citing precedents from the Bombay High Court and Delhi High Court emphasizing that ownership of the property passes only upon registration of the transfer deed. The ITAT ultimately ruled in favor of the revenue, holding that the property income should be taxed in the hands of the assessee up to the date of registration, i.e., 21-12-1978, based on the latest Bombay High Court decision in CIT v. Sultan Bros. (P.) Ltd.

2. The second issue involved the calculation of annual property income, either based on rent received or the municipal rateable value. The assessee contested the determination of property income at Rs. 28,000 by the IAC, arguing that since no rent was received during the year, the municipal rateable value should be considered under section 23 of the Income-tax Act. The Commissioner (Appeals) had relied on the rent recovered in the preceding year, leading to the dispute. The ITAT analyzed the relevant legal provisions and precedents, including decisions from the Calcutta High Court, to determine that the income should be computed based on the standard rent applicable under the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944. The ITAT directed the IAC to ascertain the standard rent for the property under consideration and include it in the assessment, aligning with the Supreme Court's rulings on computing property income based on standard rent.

Overall, the ITAT's judgment addressed the intricacies of property income computation, considering legal provisions, precedents, and the specific circumstances of the case to deliver a comprehensive decision on both issues raised in the appeals.