Law:

Section:

Section 22 of the Income-tax Act, 1961 [Corresponding to section 9 of the Indian Income-tax Act, 1922] - Income from house property - Chargeable as - Assessee-company was granted lease of property in question for period of sixty-six years with renewal clause for further thirty-three years - Under lease assessee was liable to pay certain amount being price of materials of old and existing structures including foundation under neath ground and a progressive monthly rent-lessee has given period of 25 years within which he was to pull down old and existing structures and rebuild new structures and now structures, as soon as they were to re-build, were to become property of lessror - ITO held that lease could be divided into two parts, one part relating to land underneath structures and another part relating to structures standing on the land; that assessee-company was lessee in respect of land underneath structures, but it was owner of structures standing on land - He, therefore, assessed income from property which was covered by said deed and which assessee-company purchased for said sum under section 9 of 1922 Act - Whether on facts assessment of assessee under section 9 of 1922 Act was correct - Held, yes FACTS The property in question, belonging to one 'J' the structures standing on the land were very old, mortars whereof had been loosened and dried up and were in a decaying condition. The Municipal Corporation had served various notices requiring the owner to adequately secure and strengthen the structures and also instituted certain proceedings against the lessor. The lessor had no available funds out of which such rebuilding could be carried out and that it was necessary for the purpose of protecting and preserving the property to make immediate provisions for meeting the expenses required for effecting necessary repairs. For this purpose the lessor granted this lease the assessee-company for a period of 66 years with a renewal clause for another 33 years. The lease was subject to payment by the lessee of a sum of Rs. 4,00,000 'being the price of materials of the old and existing structures including the foundation underneath the ground and a progressive…

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