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TMI Blog2008 (2) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT The judgment of the court was delivered by D. A. MEHTA J. - The Income Tax Appellate Tribunal, Ahmedabad Bench-C, has referred the following three questions at the instance of the Assessee-applicant under section 256(2) of the Income Tax Act, 1961 (the Act). "1. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the rental income earned by the assessee trust was "Income from Business" and not "Income from House Property" or "Income from other sources"? 2. Whether, on the facts and circumstances of the case, the rental income from the hire of the building is taxable as "income from other sources" or "Income from House Property" or "Income from Business"? 3. Whether, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property before letting out the property to the Telephone Department, etc. The order of CIT was confirmed by the Tribunal vide order dated 18.2.1993. In relation to assessment year 1989-90, the assessment has been framed on the basis of fresh assessments framed by the Assessing Officer after the order of CIT under section 263 of the Act. 4. During de-novo assessment pursuant to order under sec. 263 of the Act, the Assessing Officer, after making detailed inquiry, held that the assessee Trust was not the owner of the property and hence the income could not be assessed as "Income from House Property" under section 22 of the Act. It was further held that the owner had carried out day to day supervision of the construction work of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) to the extent that Commissioner (Appeals) had held that the rental income was not income from business. The Tribunal has come to the conclusion that income is liable to be taxed as income from business by placing reliance on the Apex Court's decision in the case of S.G. Mercantile Corporation P. Ltd. (1972)83 ITR, 700, after holding that the facts of the case before the Apex Court and the facts of the present case were similar. 7. Mr JP Shah learned advocate appearing on behalf of the assessee Trust has assailed the impugned order of Tribunal dated 8.9.1995 by contending that the Tribunal has failed to appreciate that instead of the owners of the property themselves hiring out the property, the letting out was done t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He, therefore, urged that the impugned order of Tribunal did not merit any intervention. 9. The basic facts which are not disputed, are that the assessee trust is merely a lessee of the property and has sub-let the property after completing the partly constructed building which the assessee Trust had taken on lease. In the circumstances, in absence of the assessee-Trust being the owner of the property, there can be no question of taxing the rental income from the said property in the hands of the assessee- Trust under the head "Income from House Property". To the aforesaid extent, the findings recorded by the Assessing Officer, Commissioner (Appeals) and the Tribunal, deserve to be accepted. 10. The question that survives for cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enant of the co-owners of the property. 11. Hence, in light of the aforesaid findings of facts, as recorded by the Commissioner (Appeals), when the findings of the Tribunal are appreciated, it becomes apparent that the Tribunal has committed an error in law in applying the legal principles to the facts found. The finding of facts recorded by the Commissioner (Appeals) have not been held to be factually incorrect by the Tribunal and no reasons are advanced as to why and how the said findings are dislodged except to the extent of the aforesaid two findings recorded by the Tribunal. 12. In the circumstances, when the settled principles of law in relation to the controversy are applied to the facts of the case, it becomes apparent that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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