1987 (12) TMI 77 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of income from flats constructed on plots owned by the assessee.
2. Ownership of flats situated on plots registered in the name of the assessee-company.
3. Timeliness of the reference application filed by the Commissioner.
4. Proper service and communication of the Tribunal's order to the Commissioner.

Detailed Analysis:

1. Taxability of Income from Flats Constructed on Plots Owned by the Assessee
The Tribunal was asked to consider whether the income from flats constructed on plots owned by the assessee was taxable in the hands of the assessee-company. The Tribunal held that the income from such flats was not taxable in the hands of the assessee-company. This decision was based on the facts and circumstances of the case as presented.

2. Ownership of Flats Situated on Plots Registered in the Name of the Assessee-Company
The Tribunal also examined whether the flats situated on plots registered in the name of the assessee-company were owned by it. The Tribunal concluded that the flats were not owned by the assessee-company, again based on the specific facts and circumstances of the case.

3. Timeliness of the Reference Application Filed by the Commissioner
The reference application was reported to be barred by 544 days. The Tribunal's order was served on the Commissioner on August 7, 1985, but the application was filed on April 3, 1987. The Commissioner contended that the order was only received on February 5, 1987, and thus the application was within the time limit. The Tribunal examined the records and found that the order was indeed sent on August 1, 1985, and August 8, 1985, but was refused by the Commissioner's office. The Tribunal held that the application was barred by time, as the initial refusal did not invalidate the service of the order.

4. Proper Service and Communication of the Tribunal's Order to the Commissioner
The Tribunal discussed the legal requirements for serving orders under sections 254(3), 256(1), and Rule 35 of the Income-tax (Appellate Tribunal) Rules. The Tribunal held that it was not necessary to follow the procedure for the service of summons as prescribed under the Code of Civil Procedure. The Tribunal's obligation was to send a copy of the order to the Commissioner, which was done through the peon book entries. The Tribunal found that the copies of the order were duly tendered to the Commissioner on August 1, 1985, and August 8, 1985, and the refusal to accept did not invalidate the service.

The Tribunal emphasized that the rules of limitation are designed to bring finality to proceedings and prevent indefinite litigation. The Tribunal dismissed the application as it was beyond the prescribed time limit and could not be condoned.

Conclusion
The Tribunal dismissed the reference application on the grounds that it was barred by time. The Tribunal also clarified that the income from the flats was not taxable in the hands of the assessee-company, and the flats were not owned by the assessee-company. The Tribunal reiterated that proper service of the order was made, and the refusal to accept the order did not invalidate the service.