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TMI Blog1984 (6) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. The Commissioner (Appeals) further substantiated his conclusion by reference to the Tribunal's order dated 9-2-1981, which cancelled the reassessment under section 147 of the Act made for this assessment year. The grounds of appeal of the revenue in this behalf are the following : " 1. The order of the Commissioner (Appeals) is opposed to law and facts of the case. 2. The Commissioner (Appeals) erred in allowing the assessee's appeal by directing the ITO to exclude the income from property of Rs. 46,880 on the ground that the some is no longer correct for the assessment year 1968-69 as in terms of the final orders in the case of the BOI there is no such income from property and that the inclusion of the same in the reassessment in the hands of the assessee stands cancelled by the Appellate Tribunal's order dated 9-2-1981. 3. The Commissioner (Appeals) failed to properly appreciate the facts of the case and erred in not upholding the action under section 155(2) taken by the ITO to bring to tax the assessee's share in the income from building let out by the BOI. 4. The Commissioner (Appeals) failed to consider the fact that the assessee's share in the income from building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditioning plant along with the building in favour of the lessee; since there was no lease of air-conditioning plant, section 56(2) was not applicable ; the rent realised in respect of the lease of the building was assessable in accordance with section 26 and the income realised on account of the lease of the air-conditioning facilities was assessable as income from other sources. In other words, the decision of the Karnataka High Court in D.C. Shah v. CIT [1979] 118 ITR 419 was to the effect that the income from the letting of the building was to be assessed in the hands of individual co-owners under section 26 and the income realised in respect of the provision of the air-conditioning facility was to be assessed in the hands of the BOI as income from other sources. The Tribunal, Bangalore Bench in IT Appeal Nos. 57 to 60 (Bang.) of 1974-75 and 754 (Bang.) of 1975-76 dated 17-7-1979 gave effect to the order of the High Court giving the following directions : " In accordance with the said order, we direct that the income from rent of the property shall be assessed separately in the hands of each co-owners under section 26 of the Income-tax Act so far as the income from letting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the BOI, with reference to which, the member's assessment could be rectified either by way of inclusion or by way of correction, if not correctly included. It was, therefore, urged before the Commissioner (Appeals) that the assessee's share of income from the lease of the building, namely, Rs. 46,880 included in the rectified order should be deleted. Similar claims were made in respect of the assessment years 1968-69, 1970-71 and 1971-72. 4. The Commissioner (Appeals) held that insofar as similar orders relating to the assessment years 1969-70 to 1970-71 were concerned, they were in order in the light of the Tribunal's order dated 27-2-1982 in MP Nos. 74 to 76 (Bang.) of 1981. However, for the assessment year 1968-69, he held that the ITO's rectification order including the share of income of the assessee from the lease of the building was not correct on the ground that the requirements of section 155(2) were not satisfied as to enable the ITO to assume powers under this section. He, accordingly, cancelled the order passed by the ITO under section 155(2) in respect of this assessment year. Aggrieved with the same, the department is in appeal before us. 5. The subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only under these two specific circumstances the assessment of the member of the BOI can be subjected to rectification. He pointed out that in the present case, originally the income realised from the letting of the building was no doubt assessed in the hands of the BOI, but, however, the same was deleted as a result of the direction given by the Karnataka High Court in D.C. Shah's case. In other words, his submission was that what should not have been included in the assessment of the BOI was wrongly included in the first instance and later, as a result of the High Court's decision, the matter was set right, in that the income from the property was directed to be assessed in the individual assessments of the members according to the provisions of section 26. In this view of the matter, he submitted that there was no reduction or enhancement made in the income of the BOI with particular reference to the income realised from the letting of the property so as to give rise to a situation contemplated under this provision. He further submitted that the direction given by the Tribunal in its order in IT Appeal Nos. 57 to 60 (Bang.) of 1974-75 dated 17-7-1979, that the income from rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truck down by the Tribunal on the ground that there was no escapement of income. In the meantime the assessment of the firm was completed and in consequence of the same, the ITO sought to revise the assessment of the assessee. But even then he did not include the wife's share income in his assessment. However, much later, he rectified the assessment under section 155 with a view to making good this lapse. It was held that the provisions of section 155(1) will not have any application to the facts of the case, inasmuch as the action under section 154 of the Act was time barred. In Balkishan Bhatia's case, in the original assessment the share of income of an assessee from a registered firm was treated as earned income and no special surcharge was levied. On completion of the regular assessment of the firm, the ITO rectified the assessment of the partners under section 155 substituting the correct share of income from the firm and also levied special surcharge on his share of income from the firm in question treating it as unearned income. It was held that the provisions of section 155 had no application to the facts of the case. Mr. Sarangan submitted with reference to the above case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded originally, the same can be included ; (2) if the same has been originally included in the member's assessment, but however wrongly, the same can be corrected following the order under section 260 passed in the case of the BOI. In the present case, the Karnataka High Court in its order in D.C. Shah's case clearly directed that the rent realised in respect of the lease of the building was assessable in accordance with section 26 and the income realised on account of the provision of the air-conditioning facility was to be assessed as income from other sources. As a result of this order, the income realised in respect of the lease of the building which was originally assessed in the hands of the BOI had, therefore, to be deleted therefrom and considered separately in the hands of the co-owners, being members of the BOI, under the provisions of section 26. This is exactly what the Hon'ble Tribunal had done while giving effect to the order of the High Court under section 260(1). They directed that the income from the rent of the property should be excluded from the assessment of the BOI and separately assessed in the hands of the co-owners under section 26. As a result of such an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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