The Tribunal directed that i the income from leasehold property should be assessed as income from business and ii that the income which has to be assessed as income from business from leasehold interest, should be the income as received by M s. Surrendra Overseas Limited, The assessee thereupon applied for and obtained the reference of the above question for the opinion of the High Court.
3, 5, 1, 9, 11, 13 and 15, Park Street Calcutta, from Credit Trans actors.
An application for making a reference under Section 256 1 of the Act filed by the Revenue was rejected by the Tribunal.
The assessee preferred an appeal against the aforesaid orders of the Income Tax Officer passed under Section 251 of the Act.
JUDGEMENT 1996 1 SCR 170 The Judgment of the Court was delivered by P. JEEVAN REDDY, J. 1.
Pursuant to the appellate order, the Income Tax Officer passed an order under Section 251 of the Act giving effect to the appellate order.
The Tribunal dismissed this appeal.
The income so received by M s. Surendra Overseas Limited was sought to be taxed in its hand as income from house property, to which Surrendra Overseas objected.
The deed of sub lease was, however, number registered though it is said that M s. Surendra Overseas Limited, paid a premium of Rs, 63,13,000 and was also paying a rent of Rs, 15,000 p. a. in companysideration of the said sub lease.
Against this order, the Revenue preferred an appeal to the Tribunal.
M s. Surrendra Overseas Limited, was receiving the rental income from the property subleased to it.
Central, Calcutta, 17 I.T.R. 1949 308, The assessee appealed to the Commissioner of Income Tax Appeals who recorded a finding that the income from the leasehold property should be assessed under the head business.
519 Cal.
The Tribunal referred to its aforementioned orders in the appeal preferred by M s. Surrendra Overseas Limited and held that in the absence of a registered deed of sub lease, the assessee companytinued to be liable to tax on the income received from the said property.
According to Revenue, it was liable to be assessed as income from house property.
It rejected the companytention of the assessee that the said income was only a numberional one and number actual or real income.
Under a deed of assignment, dated 3rd September, 1966, the assessee obtained the leasehold interest, for the unexpired period of lease, in respect of premises Nos.
In the accounting year relevant to the Assessment year 1971 72, the assessee executed a sub lease in respect of a portion of its leasehold interest in favour of M s. Surrendra Overseas Limited, another limited companypany associated with the assessee.
He assessed the income from leasehold property as income from business, Against the order of the Commissioner of Income Tax Appeals afore said Dated 5.10.1982 the Revenue filed an appeal before the Tribunal company tending that the Commissioner Appeals was number justified in directing the income from leasehold property to be assessed as income from business.
The assessee objected to the same companytending that inasmuch as it has transferred a portion of its leasehold interest in favour of M s. Surrendra Overseas, the income received from the properties so transferred to M s. Surrendra Overseas limited cannot be included in its total income.
He did number give any specific direction with respect to the quantum of income.
The matter was carried to the Tribunal, which held in I.T.A, No.
Leave granted.
The question referred under Section 256 1 of the Income Tax Act is Whether on the facts and in the circumstances of the ease, the Tribunal was justified in law in holding that the income as received by M s. Surrendra Overseas Limited, be assessed as the income of the assessee from business from lease hold interest?
The Commissioner of Income Tax Appeals while affirming his earlier order that the said income should be assessed as income from business, held that the income received by M s. Surrendra Overseas Limited from the properties sub leased to it, should number be included in the total income of the assessee.
The Income Tax Officer rejected the objection relying upon Sri Ganesh Properties Ltd, v. Commissioner of Income Tax, West Bengal, 44 I.T.R. 1962 606, Sakarchand Chhaganlal v. Controller of Estate Duty, Gujarat 73, I.T.R. 1969 555 and Bengal Jute Mills Co., Ltd., Calcutta v. Commissioner of Income Tax.
For the assessment years in question i.e., 1975 76 to 1979 80, the Income Tax Officer sought to include the rental income received by M s. Surrender a Overseas in the assessment of the assessee.
