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TMI Blog1980 (4) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the hands of the assessee. Subsequent to this assessment year, when the firm was dissolved, the assessee had let out the property at Rs. 900 per month and earlier this property was let out at Rs. 500 per month. Taking note of these earlier and subsequent developments the ITO determined the annual letting value at Rs. 9,000 and after allowing 1/6th for repairs brought to tax a sum of Rs. 7,500. 2. The assessee appealed to the AAC contesting that the ITO is not reasonable in invoking the provisions of s. 22 to bring the annual letting value of the property used for partnership business to tax. It was also contended that to compensate for the loss of rent the assessee was allowed 60 per cent of the profits in accordance with the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in such circumstances the HUF is assessable in respect of a property. 4. The learned counsel, on the other hand, supported the order of the AAC. Alternatively it was submitted that in view of the fact that the premises were used for the purpose of a business by the Karta of the family the assessee is not assessable on the annual letting value under s. 22 of the Act. 5. The departmental representative submitted that the assessee should not be permitted to raise this contention at this stage. 6. We have carefully considered the matter and perused the material on record. There is a partnership evidenced by a deed executed on 30th April, 1973. Shri B. Chinnaiah Setty and one T.V. Himantharaj are the partners. According to the deed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a HUF. If, on the other hand, it is not transferred to the firm the question arises as to whether the annual letting value of this property is exempt under s. 22. S. 22 makes it clear that annual letting value is not assessable if the property is occupied by the assessee for the purpose of any business or profession carried on by him, the profits of which are chargeable to income-tax. If once this is found then the income from that property is not assessable either under s. 22 or under any other section, if an individual is a partner and if the individual owns a property is exempt under s. 22. On the basis of that decision it is to be held that the assessee is not liable to tax on the annual letting value of such a property. The departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se has been quoted with approval in the case of CIT vs. Kalu Babu Lalchand. (3) The question, therefore, is not whether the business of the firm is the business of the family but whether the family who is the owner of the property has used it for its own business purposes. When a Karta uses a building for the purpose of any business which he carries on it amounts to a business carried on behalf of the family. It is unnecessary to consider the relationship of the HUF and the firm. The share income from the firm is assessable in the hands of the family. That is assessed as a business income in the hands of the family. This property is, therefore, used by the family for earning that business income which is chargeable to tax and, therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a HUF is a partner the asset really belongs to the partnership and for purpose of income-tax since the income is assessable in the hands of the family s. 22 is clearly attracted. In view of these decisions we are unable to follow our earlier decision and it is also seen that these decisions were not noticed in that order. 9. In view of the foregoing we would hold that the annual letting value of this property cannot be assessed in the hands of the assessee family. 10. It is no doubt true that the AAC has decided the issue on the other ground viz. that the assessee is assessable under s. 22 but that the annual letting value will be deducted from the share of profits. We find that there can be no basis for such a decision. What the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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