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TMI Blog1980 (4) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... (for which the previous year was the calendar year 1961) and the return recited that the annual value of the building was Rs. 1,23,672. However, on the ground that the building had remained vacant throughout the previous year, the assessee claimed a remission in the computation of the income of the entire annual value. The assessee also claimed a deduction on account of insurance premium and municipal taxes relating to the property. The ITO took the view that the property was not in a habitable condition and did not admit of letting and, therefore, no question arose of applying the provisions of the I.T. Act relating to the computation of income from property. Accordingly, he held that the annual value as well as the vacancy claim had to be ignored. The assessee appealed to the AAC, who held that although the property had remained vacant, it possessed an annual value and should be considered for assessment. On that view, he allowed the deductions claimed by the assessee. In second appeal, the Income-tax Appellate Tribunal favoured the view taken by the ITO and accordingly held that the claim to deductions made by the assessee must fail. The Tribunal, in other words, affirmed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onformably to this judgment and the interpretation of the principles enunciated herein under section 260 of the Income-tax Act, 1961. " At the outset a serious controversy arose before us on the point whether the High Court was right in including a direction in its judgment that the Tribunal should take into account its finding that the property possessed an annual value. The assessee says that when the Tribunal had held that the property did not fall within the scope of s. 22, it was for the revenue, in case it desired to charge the assessee on income from this property, to apply for a reference to the High Court. It is urged that the revenue having omitted to do so, it was not open to the High Court to make an order enabling the revenue to tax any income from that property. On behalf of the revenue, the submission is that inasmuch as the assessee had taken the case in reference to the High Court for an adjudication on the deductions claimed by it the point whether the property possessed an annual value and its income was chargeable was directly raised by the assessee itself, and, therefore, the High Court was right in rendering a decision on this point. " Income from house pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight in ignoring the property altogether and in not computing any profit or loss in respect of it. The Tribunal set aside the order of the AAC and restored the order of the ITO. It was in the context of this train of proceedings that the assessee now took the case in reference to the High Court. The question referred to the High Court was rooted in the fundamental submission of the assessee that the property possessed an annual value for the purpose of s. 22 and it was, therefore, entitled to the vacancy remission and other deductions claimed by it. The frame of the question indicates that it has two parts, whether the Tribunal was right in holding that, in computing the income from property, the premises 3, Gun Foundry Road, possessed an annual value and whether the Tribunal was right in disallowing the vacancy remission and other deductions in respect of that property. Plainly, unless the property fell within the scope of s. 22, there was no occasion for considering the assessee's claim to the deductions. The High Court also, when considering the reference, examined the question in its bifurcated character. But although bifurcated, the thrust of the question was directed to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is found entitled runs to a far smaller figure than the annual value properly attributable to the property. In that event the consequence will be a net annual value of some significance. And this will be the consequence notwithstanding that the reference is at the assessee's instance and no reference at all has been brought by the revenue. The result appears anomalous, but after all it is for the assessee to choose whether or not he wishes to take a reference to the High Court, and if he is found entitled to even one of the deductions claimed by him and effect cannot be given to that claim without the annual value of the property being computed, he has only to thank himself. At the same time, we must point out that the High Court, after holding that the property has an annual value, has erred in stating that it sets aside that part of the order of the Tribunal. The High Court, on a reference before it, does not act as a court of appeal. The jurisdiction is advisory and no more. The High Court is empowered to decide the question of law referred to it, and to return its answer to the Tribunal. The Tribunal then takes up the appeal and disposes of it conformably with the answer re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt is right in denying the claim in respect of municipal taxes. The next deduction claimed requires the consideration of s. 24(1)(ix) of the Act. Section 24(1)(ix) reads : " 24. (1) Income chargeable under the head 'Income from house property' shall, subject to the provisions of sub-section (2), be computed after making the following deductions, namely :-... (ix) where the property is let and was vacant during a part of the year, that part of the annual value which is proportionate to the period during which the property is wholly unoccupied or, where the property is let out in parts, that portion of the annual value appropriate to any vacant part, which is proportionate to the period during which such part is wholly unoccupied." The question is whether the property, 3, Gun Foundry Road, which admittedly has remained vacant since December 26, 1960, can attract s. 24(1)(ix). It is plain that it cannot. The provisions of the I.T. Act relating to the charge on income apply in relation to a specific assessment year and the provisions of the Act providing for the computation of the chargeable income (which includes taking into account permissible deductions in the computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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