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TMI Blog2005 (2) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department and in favour of the assessee. - - - - - Dated:- 2-2-2005 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by P. Krishna J.- The Income-tax Appellate Tribunal, Allahabad, has referred the following question at the instance of the Commissioner under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for opinion to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the annual letting value of the godown owned by the assessee and used for the business carried on by him in partnership was not liable to be included in his total income under section 22 of the Income-tax Act, 1961?" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shahi Zarda Factory at the hands of the assessee. Such income is exempt under section 22 of the Income-tax Act, 1961. The Tribunal has confirmed the order of the Commissioner of Income-tax (Appeals). Heard Shri Sambhu Chopra, learned standing counsel for the Department, and Shri Suyesh Agrawal, brief holder on behalf of the assessee-respondent. Learned standing counsel submitted that on a plain reading of section 22 of the Act, it is clear that it is the owner of the house property who becomes liable to be taxed under the head "Income from house property" unless the house property is used by him for the purpose of his own business or profession. Under section 22 of the Act it is only the owner of the property who can claim exemption and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Rasiklal Balabhai [1979] 119 ITR 303. The Madras, Orissa, Patna, Kerala and Gujarat High Courts are of the view that when a firm carries on business, it is business carried on by the partners of that firm. The income from house property owned by an assessee and used in business carried on by the partnership firm in which the assessee is a partner would qualify for exemption as provided in section 22 of the Act. These High Courts have dissented from the view of the Karnataka High Court in the case of CIT v. K.N. Guruswamy [1984] 146 ITR 34, on which strong reliance has been placed by counsel for the Revenue. Section 22 of the Act reads as follows: "The annual value of property consisting of any buildings or lands a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppears to be the crux of the judgment of the Karnataka High Court in the aforesaid case. The Gujarat High Court in the case of CIT v. Rasiklal Balabhai [1979] 10 119 ITR 303 has examined the matter and reached the conclusion that even where the partnership business is carried on in the premises of one of the partners, the said partner, as individual would be entitled to the exemption under section 22 of the Act. For reaching that conclusion it has examined the judgment of the Supreme Court to the effect that a firm is not a legal entity though it is an assessable unit under the Income-tax Act. A partnership is merely an association of individuals and the firm name is only a collective name of those individuals who constitute the firm. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion, stands satisfied. The other requirement is that the premises in question in respect of which the exemption is claimed should be in occupation of the assessee. The judicial opinion of the Karnataka High Court in the case of K.N. Guruswamy [1984] 146 ITR 34 is based upon the meaning to be assigned to the phrase "the occupation". According to the Karnataka High Court here "occupation" means occupation as owner or his own occupation. The other High Courts have given a broader meaning to the phrase "occupation" and have held that "occupation" will also include "occupation" by the owner along with other persons. We respectfully follow the interpretation put by the Gujarat and other High Courts and respectfully dissent from the view take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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