1983 (2) TMI 102 - AT - Income Tax

Summary

Issues:
1. Whether the income of Rs. 12,000 received by the assessee from letting out property to a firm should be assessed as income from property or under another head.
2. Whether the Commissioner's order directing the assessment of the income as income from other sources was legally correct.

Detailed Analysis:

Issue 1:
The appeal was against the Commissioner's order relating to the assessment year 1977-78, where the assessee had let out a property to a firm and received an annual rent of Rs. 12,000. The assessee claimed this income should not be assessed under section 22 of the Income-tax Act, citing a Gujarat High Court decision. The ITO did not assess the income, but the Commissioner disagreed. The Commissioner held that the income should be assessed under section 2(24) as income from other sources, as it was actually being derived by the assessee. The assessee argued that if income cannot be assessed under its proper head, it should not be assessed under another head. The assessee also relied on various court decisions to support this argument.

Issue 2:
The Tribunal analyzed the scope of section 22, which deals with the annual value of property chargeable under the head 'Income from house property.' It was established that properties used for the assessee's business are excluded from this charge. The Tribunal further explained that income not chargeable under specific heads can be assessed under 'Income from other sources' under section 56. In this case, the Commissioner directed the assessment of the income as income from other sources, as the property was used for the firm's business. The Tribunal upheld the Commissioner's decision, stating that the income was always chargeable under section 56 and not section 22. The Tribunal also dismissed the arguments based on previous court decisions and upheld the Commissioner's order under section 263 to assess the income as income from other sources.

In conclusion, the Tribunal dismissed the appeal, confirming the assessment of the income as income from other sources based on the legal provisions and the Commissioner's justified order under section 263.