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TMI Blog1995 (10) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... built-up premises on the plot of land sub-let by her on the premise that she cannot be held to be the owner till the court finally decides in her favour in the action she has raised against the sub-tenant in civil court ? (2) Whether, on the facts and in the circumstances of this case, the Tribunal was right in holding that the rent or compensation which the assessee is entitled to recover from the sub-tenant is chargeable only in the year of receipt since the rent income from the sub-lease is assessable under the head 'Income from other sources' ? " The facts may be briefly stated as under : The assessee is an individual. The matter pertains to the assessment year 1982-83. A plot of land bearing No. 35A of K. H. Road, Bangalore, belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal arrears ; (ii) damages for use and occupation ; and (iii) delivery of vacant possession of the plot with the building thereon, and other incidental reliefs. The suit is being contested by the sub-tenant. In the return of income for the assessment year 1982-83, while declaring a total income of Rs. 25,430, the assessee had not declared any income from the building constructed and occupied by the sub-tenant at No. 35A, K. H. Road, Bangalore. In the assessment, the Income-tax Officer made an addition of Rs. 2,88,000 as "income from house property" on the ground that the assessee having exercised her right of forfeiture under the lease deed had become the owner of the building. The amount was quantified on the basis of the assessee's clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome the owner of the property and that she was entitled only to damages arising out of the breach of contract. It cannot be disputed that the questions whether the lease is validly terminated and whether the forfeiture has come into effect are issues pending adjudication in the suit before the city civil court and unless a final determination is made thereon, the question of the assessee becoming the owner of the building does not arise. In the facts and circumstances, the Commissioner (Appeals) as well as the Tribunal have upheld the assessee's contention on the ground that since the dispute between the assessee and the sub-tenant has arisen out of a contract, which is pending adjudication before a civil court, it cannot be held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had determined the lease by issue of a legal notice with effect from February 24, 1980, she is entitled to mesne profits or compensation for wrongful use and occupation from that day onwards in case her claim for forfeiture is upheld by the court. Since the assessee is consistently following the cash system of accounting, even if it is compensation for wrongful use and occupation, it would be assessable in the year of receipt. The assessee had specifically made a note to the statement furnished with the return for 1982-83 that the income received as rent or compensation would be offered for taxation in the year of receipt. Such a commitment has also been made in the assessment years 1984-85, 1983-84 and 1981-82 and it was mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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