9911796707
TMI Blog1976 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... court was delivered by KHANNA J.-- These three appeals on certificate by the Commissioner of Income-tax are against the judgment of the Allahabad High Court whereby the High Court answered the following question referred to it under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as "the Act"), in favour of the assessee-respondent and against the revenue : "Wether, in the facts and circumstances of the case, the assessee is entitled for each of the years under consideration to the exclusion from the income under the head 'property' of an amount equal to the irrecoverable rent of the Grand Hotel property for one year which has not been so excluded in the preceding assessments ?" The matter relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the subsequent years. This contention advanced on behalf of the department was not accepted by the Tribunal. The Tribunal took the view that the claim could properly be made for the deduction in the assessment for the three years with which we are concerned in spite of the fact that such claim had been allowed in the assessee's favour in the year 1956-57. On this view the Tribunal directed the Income-tax Officer to compute the total rent which had become irrecoverable in respect of Grand Hotel property. The Tribunal further directed that to the extent the irrecoverable rent had not been exempted in the previous assessment for 1956-57 should be exempted during the years under appeal in so far as income from property was concerned. On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by a number of provisos, but we are not concerned with them in these appeals. Section 60 of the Act empowers the Central Government to make exemptions. According to that section, the Central Government may, by notification in the official Gazette, make an exemption reduction in rate or other modification, in respect of income-tax in favour of any class of income, or in regard to the whole or any part of the income of any class of persons. In exercise of the powers conferred by the above section, the Central Government issued notification No. 878F dated March 21, 1922. Item 38 of that notification reads as under : "The following classes of income shall be exempt from the tax payable under the said Act... (38) Such part of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consideration at that stage, unless it be found that the rent due from the tenant has become irrecoverable. The fact that the rent due from the tenant has become irrecoverable would in a majority of cases be known only in subsequent years and not in the year during which the tenant has remained in occupation. None of the clauses dealing with allowances which are permissible under section 9(1) of the Act deal with rent due from a tenant which remains irrecoverable. It was to meet such an eventuality that exemption was granted as per item No. 38 in Notification No. 878F dated March 21, 1922. Item 38 exempts from payment of tax such part of the income in respect of which tax is payable under the head "Property" as is equal to the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of item 38 which has been reproduced above shows that if other conditions are satisfied, the deduction which can be claimed by the assessee at an assessment cannot exceed the amount of rent payable for a year. The item thus places a limit in respect of the deduction which is permissible in an assessment for one year. In case, however, the amount of irrecoverable rent exceeds the amount of rent payable for a year, the right of the assessee to claim the benefit of the above exemption does not, in our opinion, get exhausted by his having claimed exemption in one year. We find no cogent reason as to why the assessee should become disentitled to claim the benefit of the above exemption in respect of the balance of the irrecoverable rent in subs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
