1991 (9) TMI 122 - AT - Income Tax

Annual Letting Value Annual Value Assessing Officer House Property Income From Property Let Out Tax Proceedings

Summary

Issues:
1. Determination of income from house property.
2. Rejection of claim of loss on sale of shares.

Analysis:
1. The first issue pertains to the determination of income from a house property. The appellant had declared an income of Rs. 59,922, but the Assessing Officer assessed it at Rs. 1,09,922. The dispute arose due to the sub-lease agreement entered into by the appellant, leading to a higher assessed value. The Commissioner (Appeals) upheld the assessment, citing new facts as the reason for not following earlier decisions. However, the Tribunal disagreed, emphasizing that unless new facts emerged, prior decisions should stand. The Tribunal found no valid reasons for deviating from the earlier assessment years' decisions, where the lower income was accepted. The Tribunal also highlighted that the Assessing Officer's presumptions lacked substantial evidence, leading to a decision in favor of the appellant. The Tribunal concluded that only the amount declared by the appellant should be adopted for computing income from the house property, as per the law.

2. The second issue revolved around the rejection of the appellant's claim of a loss of Rs. 80,000 on the sale of shares. The appellant sold preference shares to his daughter, resulting in the claimed loss. The Assessing Officer deemed the transaction a smoke screen to evade tax liability and disallowed the claimed loss. The Commissioner (Appeals) upheld this decision. However, the Tribunal found that the legal transfer of shares had occurred, and the transaction's form was accepted. The Tribunal noted that the tax authorities lacked sufficient evidence to support their claim that the transaction was a device to avoid tax. The Tribunal emphasized that legal consequences must be considered, even if the sale consideration was deemed inadequate. Consequently, the Tribunal ruled in favor of the appellant, directing the Assessing Officer to reevaluate the loss amount considering the nature of the asset as long-term.