Law: Income Tax Act, 1961

Section: 22

(a) Income-tax-----House property---Members' club---No rent received from property---Not occupied by club for business or vocation--Annual value liable to tax---Indian Income Tax Act, 1961, S.22. The assessee, a members' club, owned and occupied a club house. The assessee did not let out the premises to its members or to outsiders. Nor did it occupy the premises for any business or vocation. For the assessment years 1977-78 and 1978-79, the Income-tax Officer assessed the annual letting value of the club house to tax in the hands of the assessee under section 22 of the Income Tax Act, 1961. But, on appeal, the Appellate Tribunal held that the income from house property was not liable to tax. On a reference: Held, reversing the decision of the Tribunal, (i) that since the assessee had not let out the premises and had not carried on any business or profession therein, and the club house was in self-occupation of the assessee, the provisions of section 22 applied and the assessee was liable to tax on the annual letting value of the club house. (b) Income-tax--- ----General principles---Mutuality---House property owned by members' club-¬No rent received---Principle of mutuality does not arise. Principle of mutuality did not arise in this case because no money had arisen to the assessee by way of rent, the club house was in self-occupation, and the incidence of tax under section 22 was on the ownership of the building. C.I.T. v. Wheeler Club Ltd. (1963) 49 ITR 52 (All.) fol. C.I.T. v. Delhi Gymkhana Club Ltd. (1985) 155 ITR 373 (Delhi) ref. JUDGMENT B.N. KIRPAL, J.---In respect of the assessment years 1977-78 and 1978-79, the Income-tax Appellate Tribunal has stated the case and referred the following two questions to this Court: "(1) Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally correct in holding that the annual letting value of the club building is not assessable to Income-tax under the head 'Income from property'? (2) Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally correct in holding that the principle of mutuality applies to the property income and accordingly it is not…

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