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TMI Blog2013 (4) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961. In view of the discussion as above, we are unable to accept the contention of Mr. Khaitan. If his contention is accepted then the aforesaid income which is not otherwise permitted to be escaped by the Act has to be exempted from income tax. Neither the Hamilton case [(1992) 194 ITR 391] nor Hope (India) [1999 (4) TMI 72 - CALCUTTA HIGH COURT] case has dealt with the aforesaid aspect of the matter. Even the Full Bench decision rendered in case of P.G. and Sawoo Private Ltd. v. Assistant Commissioner of Income Tax [2008 (9) TMI 92 - CALCUTTA HIGH COURT] did not deal with this aspect rather this Full Bench decision has merely explained that there was no conflict between the judgment of this Hon’ble Court in Hamilton case and Hope (India) case. - Decided against the assessee. - I.T.A. No.269 of 2003 - - - Dated:- 13-3-2012 - KALYAN JYOTI SENGUPTA AND JOYMALYA BAGCHI JJ. K.J. SENGUPTA, J.:- This appeal has been admitted for hearing by an order dated 16th May, 2005 on the following substantial questions of law:- (i) Whether the Tribunal acted within its authority and/or jurisdiction by directing assessment of arrears of rent in the year of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 26th July, 1996. In view of the information that the assessee had received arrears of rent pertaining to the years under consideration after the assessee filed returns declaring income received during the said assessment years originally, the Assessing Officer reopened the same. The Assessing Officer observed that assessee has received following arrears of rent pertaining to the respective years: Arrear rent received in assessment years Relatable to assessment years Amount 1993-94 1988-89 to 1992-93 Rs.7,84,047/- 1994-95 1991-92 to 1993-94 Rs.1,15,200/- 1995-96 1988-89 to 1994-95 Rs.56,63,016/- 1996-97 1993-94 to 1995-96 Rs.12,07,251/- 1997-98 1993-94 to 1996-97 Rs.4,53,073/- Assessing Officer held that arrears of rent received during the period subsequent to relevant assessment years under consideration is taxable in the assessment year under consideration. Thus the Assessing Officer included the assessee s share in the amount of arrears of rent received by it in the respective assessment years. Thereafter the appellant had taken this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 740 (Cal) that increase in rent agreed upon after the close of the previous year cannot be considered for impost for year to which it relates because in that year it was mere claim and was not even receivable income so as to bring within the purview of Section 5 or Section 23 of the Act. In case of P.G. and Sawoo P. Ltd. v. Assistant Commissioner of Income Tax reported in (2008) 307 ITR 243 (Cal) the Full Bench of this Court upheld the ratio decided in both the cases Hope (India) and Hamilton s case and it has been explained that there is no conflict between two decisions. Mr. Nizamuddin, learned counsel for the Revenue submits drawing our attention to Sections 2(24)(i), 5(1)(a), 10, 14C and 14F that the learned Tribunal has correctly held the arrears amount of rent is taxable in the relevant assessment years the moment it is received in immediately previous years. It is an admitted position that the assessee actually received the arrears of rent not notional income. Assessee before any of the fora below could not establish that aforesaid income was outside the scope and ambit of Section 2(24)(i) and Section 5(1)(a) of the Act or the same was exempted under Section 10 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions relating to income from house property. That is not permissible. The charging section and the computation provisions together constitute an integrated code. The computation provisions do not envisage taxation as income from house property more than the annual rent that is rent for a period of 12 months. When there is a case to which computation provision cannot apply at all, it is evident that such a case was not intended to fall within the charging section. There being no provision to bring the charge arrears of rent in the previous years in which they were received, it must be held that additional or extra rent from house property attributable to preceding year of account cannot be taxed under the head Income from other Sources . On careful reading of the aforesaid judgment it does not appear that Their Lordships have said that arrears of rent which do not relate to the immediately previous year cannot be made exigible to tax at all. It is true by insertion of Section 25B it has been made clear specifically how the arrears of rent received in relation to past period not relating to relevant previous year should be dealt with. The said Section 25B is set out hereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property which do not relate to the previous year as mentioned in the said Act are exempted from payment of taxes. Had it been so then aforesaid Section 25B would not have been inserted though it has got apparently prospective effect. According to us the aforesaid section has merely provided a mechanism to what extent the income from house property is to be made taxable. Now coming to the question whether this arrears house rent received in relation to the previous years not relating to the immediately preceding previous year of the respective assessment year can be brought under tax while applying Sections 147, 148 of the said Act. The challenge to invocation of Section 147 read with Section 148 of the Act has not been pressed. Therefore, we proceed on the basis that reopening of the assessment for all these relevant years particularly 1993-94, 1994-95 and 1995-96 are lawful and justified. Factually it is found that there has been an escape of income of arrears rent although the same were received during the previous year subsequent to previous year during which it ought to have been received hence apparently it cannot be taken into account. But when it is received subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said income can be brought under Sections 147 and 148. There is no clear decision or indication in the judgment of Delhi High Court that Section 25B of the Act has been declared to be clarificatory in nature. Mr. Khaitan, learned Senior Counsel seems to be right that no ratio has been laid down in that judgment. But ultimately the Court held that arrears of rent is taxable by virtue of the provision of Section 5(1)(a) of the Income Tax Act, 1961. In view of the discussion as above, we are unable to accept the contention of Mr. Khaitan. If his contention is accepted then the aforesaid income which is not otherwise permitted to be escaped by the Act has to be exempted from income tax. Neither the Hamilton case nor Hope (India) case has dealt with the aforesaid aspect of the matter. Even the Full Bench decision rendered in case of P.G. and Sawoo Private Ltd. v. Assistant Commissioner of Income Tax reported in (2008) 307 ITR 243 (Cal) did not deal with this aspect rather this Full Bench decision has merely explained that there was no conflict between the judgment of this Hon ble Court in Hamilton case and Hope (India) case. We, therefore, hold that the judgment and order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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