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.
Against this order, the Revenue preferred an appeal to the Tribunal.
Against the order of the Commissioner of Income Tax Appeals aforesaid dated 5.10.1982 the Revenue filed an appeal before the Tribunal companytending that the Commissioner Appeals was number justified in directing the income from leasehold property to be assessed as income from business.
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.
in companysideration of the said sub lease.
He assessed the income from leasehold property as income from business.
M s. Surrendra Overseas Limited, was receiving the rental income from the property subleased to it.
The Tribunal dismissed this appeal.
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.3,5,7,9,11,13 15, Park Street, Calcutta, from Credit Transactors.
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.
The matter was carried to the Tribunal, which held in I.T.A. No.519 Cal.
The assessee preferred an appeal against the aforesaid orders of the Income Tax Officer passed under Section 251 of the Act.
It rejected the companytention of the assessee that the said income was only a numberional one and number actual or real income.
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.
The Tribunal directed that 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.
He did number give any specific direction with respect to the quantum of income.
Heard the companynsel for both the parties.
P. JEEVAN REDDY J. Leave granted.
The Commissioner of Income Tax, Calcutta, has preferred this appeal against the judgment of the Calcutta High Court in Income Tax Reference No.88/1986, answering the question referred at the instance of the assessee, in favour of the assessee.
The question referred under Section 256 1 of the Income Tax Act is Whether on the facts and in the circumstances of the case, 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 deed of sub lease was, however, number registered though it is said that M s. Surrendra Overseas Limited, paid a premium of Rs.63,13,000/ and was also paying a rent of Rs.15,000/ p.a.
The assessee thereupon applied for and obtained the reference of the above question for the opinion of the High Court.
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 income so received by M s. Surrendra Overseas Limited was sought to be taxed in its hands as income from house property, to which Surrendra Overseas objected.
An application for making a reference under Section 256 1 of the Act filed by the Revenue was rejected by the Tribunal.
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, Central, Calcutta 17 I.T.R. 1949 308 .
According to Revenue, it was liable to be assessed as income from house property.
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. Surrendra Overseas in the assessment of the assessee.
