Law: Income Tax Act, 1961

Section: 14,22

Income-tax-----Income from business or income from house property---Property or portion occupied by assessee for purpose of business---"Occupy", meaning of---Property originally occupied by employees/directors of assessee-company--¬Continuing to- be occupied by them as nominees of managing agents---Finding that assessee found it expedient to allow their occupation. to facilitate proper supervision of assessees business---Income to be computed as income from business---Actual expenses towards repairs and depreciation allowable- --Indian Income Tax Act, 1961, Ss.14 & 22. A bungalow owned by the assessee-company was in the occupation of G and K since 1932 as employees and directors free of charge. In July, 1960, after managing agents were appointed for. the company, G and K were permitted to continue the user of the bungalow but as nominee directors of the managing agents on payment of nominal rent. The assessee-company effected repairs to the bungalow and also provided modern amenities including air¬conditioners. The questions were whether the income from the bungalow was to be computed as income from business and whether the assessee was entitled to claim allowance for actual repairs and depreciation. The Appellate Tribunal found that the assessee-company found it expedient to allow the benefit of occupation of the property by nominees of the managing agents in order to facilitate proper supervision by them in the interests of smooth running of the business of the assessee and held that the income from the bungalow had to be computed under the head "Income from business" and not under the head "Income from house property" and also that the assessee was entitled to deduction of the actual repairs and depreciation. On a reference: Held, (i) that, in view of the finding of fact by the Tribunal, occupation of the property by G and K for the purpose of effective discharge of their duties vis-a-vis the business of the assessee-company amounted to occupation by the assessee for the purpose of its business and the income, therefore, had to be assessed as income from business. (ii) that the assessee was entitled to deduction of actual repairs and depreciation. The…

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