9911796707
TMI Blog1982 (3) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has let out this property to three tenants, namely, Larsen Tubro, Balmer Lawrie and Western Electronics. In this appeal, we are concerned with the portion of the property let out to Balmer Lawrie and Western Electronics. In the lease agreement entered into between the assessee and the said two tenants, the carried out by them, respectively. parties have agreed to the following condition regarding the repairs to be carried out by them, respectively. BALMER LAWRIE CO. LTD. "(f) To carry out repairs of the nature of maintenance such as white washing and oil painting, etc., as and when the lessee desires and thinks fit provided however that the lessor shall be responsible for all major or structural repairs to the demised premises." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54,378 Less : 1/6 for repairs 9,063 ------------- --------- 45,315 54,378 Less : Ground rent 210 210 ------------- ---------- 45,105 54,168 5. In its return of income as well as at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bear cost of repairs : The grant of deduction for repairs in respect of tenanted property is treated by the statute on the footing that : (i) either the owner has undertaken to bear the cost of the repairs, or (ii) the tenant has undertaken to bear such cost. The Act misses the situation where in respect of tenanted property both the owner and the tenant could undertake the cost of repairs. Clause (m) of section 108 of the Transfer of Property Act throws the obligation impliedly on the tenant to effect the repair in respect of the demised property. This is an obligation which can, of course, be contracted against, since the provisions of section 108 of the Transfer of Property Act regulating the rights and liabilities of the lessor and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in clauses (ii) to (x) are cumulative, the answer would seem to be in the affirmative. Where, however, the lease deed is silent as to the responsibility for repairs, deduction should be granted under clause (i)(b) on the footing that the tenant has undertaken to bear the cost agreeably to clause (m) of section 108 of the Transfer of Property Act. A view has been expressed that the phrase 'cost of repairs' should be understood as meaning 'cost of substantial repairs' (not a minor repair or a repair of petty and trivial nature). The deduction under clause (i)(a) or clause (i)(b) will depend upon the question as to who has undertaken to do the substantial repairs, the lessor or the lessee. If, on the construction of the lease deed and an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the owner has undertaken to bear the cost of repairs, a sum equal to one-sixth of the annual value ; (b) where the property is in the occupation of tenant who has undertaken to bear the cost of repairs,--- (i) the excess of the annual value over the amount of rent payable for a year by the tenant ; or (ii) a sum equal to one-sixth of the annual value whichever is less ;" Since the tenants have also undertaken to bear the cost of repairs, sub-clause (a) of the aforesaid section would not be applicable in the assessee's case. Again, since the assessee has also undertaken to bear the cost of repairs, sub-clause (b) of the section would not again help the assessee. In fact, it would appear from the aforesaid extract of the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion expressed by the editors of Sampath Iyengar's Law of Income-tax, 7th edition, reproduced above. 9. As noted above, in the instant case, both the assessee and his tenants have undertaken to carry on repairs in the house property in question and since the assessee's case neither falls in sub-clause (a) or sub-clause (b) of clause (i) of sub-section (1) of section 24, the income-tax authorities were fully justified in disallowing the assessee's claim for deduction of one-sixth of the annual value by way of repairs. In this connection, it is pertinent to note that the computation of income from house property is made on notional and hypothetical basis and not on actual basis. Therefore, the deductions contemplated in section 24 are to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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